~~Table~~UNITED ~~of Contents~~STATES

~~UNITED STATES~~ SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009

		or

¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO ______________

or Commission File Number: 1-6776

oCENTEX ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO~~CORPORATION

~~Commission~~(Exact ~~File~~name ~~Number:~~of ~~1-6776~~ registrant as specified in its charter)

CENTEX CORPORATION

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

~~(Exact~~2728 ~~name~~N. ofHarwood, ~~registrant~~Dallas, ~~as specified in its charter)~~Texas 75201

~~Nevada~~ (~~State~~Address of ~~incorporation~~principal executive offices) (Zip Code)

~~75-0778259~~ (~~I.R.S. Employer Identification No.~~214) 981-5000

~~2728 N. Harwood, Dallas, Texas 75201~~ (~~Address of principal executive offices) (Zip Code) (214) 981-5000 (~~Registrant’s telephone number, including area code)

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 ü No o

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~and ~~filer,~~posted ~~a non-accelerated~~on ~~filer,~~its orcorporate aWeb ~~smaller~~site, ~~reporting~~if ~~company.~~any, ~~See~~every ~~definitions~~Interactive ofData ~~“large~~File ~~accelerated filer,”~~required ~~“accelerated~~to ~~filer”~~be submitted and ~~“smaller~~posted ~~reporting~~pursuant ~~company”~~to in Rule ~~12b-2~~ 405 of ~~the~~Regulation ~~Exchange~~S-T ~~Act~~(§229.405 of this chapter) during the preceding 12 months (~~Check~~or ~~one~~for such shorter period that the registrant was required to submit and post such files): . Yes o No o

þIndicate ~~Large~~by check mark whether the registrant is a large accelerated filer, oan ~~Accelerated~~accelerated filer, oa ~~Non~~non-accelerated filer, ~~(Do~~or ~~not check if~~ a smaller reporting company). See othe ~~Smaller~~definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Indicate~~þ byLarge ~~check~~accelerated ~~mark~~filer ~~whether~~o ~~the~~Accelerated ~~registrant~~filer iso aNon-accelerated ~~shell~~filer o Smaller reporting company (asDo ~~defined~~not incheck ~~Rule 12b-2~~if ofa ~~the~~smaller ~~Exchange~~reporting ~~Act~~company)~~. Yes No ü~~

Indicate ~~the~~by ~~number~~check ofmark ~~shares~~whether ~~outstanding of each of~~ the ~~issuer’s~~registrant ~~classes~~is ofa ~~common stock,~~shell company (as ofdefined ~~the~~in ~~close~~Rule of12b-2 ~~business on January 28, 2009: 124,349,404 shares~~ of ~~common~~the ~~stock,~~Exchange ~~par value $~~ Act).25 Yes ~~per~~¨ No ~~share.~~ þ

~~Centex~~Indicate ~~Corporation~~the ~~and~~number ~~Subsidiaries~~ of shares outstanding of each of the issuer’s classes of common stock, as of the close of business on July 22, 2009: 125,319,612 shares of common stock, par value $ .25 per share.

~~Form 10-Q~~Centex ~~Table~~Corporation ofand ~~Contents~~ Subsidiaries

~~December 31,~~Form ~~2008~~ 10-Q Table of Contents

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Statements of Consolidated Operations	2
	Consolidated Balance Sheets with Consolidating Details	4
	Statements of Consolidated Cash Flows with Consolidating Details	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	60
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 5.	Other Information	66
Item 6.	Exhibits	67
Signatures		69
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

June 30, 2009

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Statements of Consolidated Operations	2
	Consolidated Balance Sheets	3
	Statements of Consolidated Cash Flows	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6.	Exhibits	53
Signatures		55

~~Table of Contents~~1

~~PART~~Table Iof ~~— FINANCIAL INFORMATION~~ Contents

~~Item 1.~~PART ~~Financial~~I ~~Statements~~ - FINANCIAL INFORMATION

~~Centex~~Item ~~Corporation~~1. Financial ~~and Subsidiaries~~ Statements

~~Statements~~Centex ofCorporation ~~Consolidated~~and ~~Operations~~Subsidiaries

~~(Dollars~~Statements inof ~~thousands,~~Consolidated ~~except per share data)~~Operations

(~~unaudited~~Dollars in thousands, except per share data)

	For the Three Months Ended December 31,
	2008			2007
Revenues
Home Building	$	843,156		$	1,811,084
Financial Services		29,032			62,203
		872,188			1,873,287
Costs and Expenses
Home Building		1,368,478			2,375,824
Financial Services		43,361			122,687
Other		(60	)		(125	)
Corporate General and Administrative		40,683			37,850
Interest Expense		17,758			—
		1,470,220			2,536,236
Loss from Unconsolidated Entities		(74,396	)		(63,140	)
Interest and Other Income		11,565			3,935
Loss from Continuing Operations Before Income Taxes		(660,863	)		(722,154	)
Income Tax Provision		3,043			253,897
Loss from Continuing Operations		(663,906	)		(976,051	)
Earnings from Discontinued Operations, net of Tax Provision of $0 and $595		—			863
Net Loss	$	(663,906	)	$	(975,188	)
Basic and Diluted Earnings (Loss) Per Share
Continuing Operations	$	(5.34	)	$	(7.95	)
Discontinued Operations		—			0.01
	$	(5.34	)	$	(7.94	)
Average Shares Outstanding
Basic and Diluted		124,360,192			122,787,414
Cash Dividends Per Share	$	—		$	0.04

(unaudited)

See Notes to Consolidated Financial Statements.


	For the Three Months Ended June 30,
	2009			2008
Revenues
Home Building:
Housing	$	544,584		$	1,032,191
Land Sales and Other		6,518			17,508
		551,102			1,049,699
Financial Services		22,871			76,423
		573,973			1,126,122
Cost of Revenues
Home Building:
Housing		480,584			909,320
Land Sales and Other		222,255			88,262
		702,839			997,582
Financial Services		2,095			4,725
		704,934			1,002,307

Selling, General and Administrative Expenses		155,114			290,485

Loss from Unconsolidated Entities		15,267			20,297

Interest Expense		26,355			6,180

Interest and Other Income		5,478			10,400

Loss from Continuing Operations Before Income Taxes		(322,219	)		(182,747	)
Income Tax Benefit		407,334			13,635

Earnings (Loss) from Continuing Operations		85,115			(169,112	)
Earnings from Discontinued Operations, net of Tax Provision of $0 and $20,231		–			19,013

Net Earnings (Loss)	$	85,115		$	(150,099	)

Basic and Diluted Earnings (Loss) Per Share
Continuing Operations	$	0.68		$	(1.36	)
Discontinued Operations		–			0.15
	$	0.68		$	(1.21	)
Average Shares Outstanding
Basic		123,724,483			124,231,358
Dilutive Securities:
Other		68,528			–
Diluted		123,793,011			124,231,358

Cash Dividends Per Share	$	–		$	0.04

2 See Notes to Consolidated Financial Statements.

~~Table of Contents~~2

~~Centex~~Table ~~Corporation~~of ~~and Subsidiaries~~ Contents

~~Statements~~Centex ofCorporation ~~Consolidated~~and ~~Operations~~Subsidiaries

~~(Dollars~~Consolidated inBalance ~~thousands, except per share data)~~Sheets

(~~unaudited~~Dollars in thousands)

	For the Nine Months Ended December 31,
	2008			2007
Revenues
Home Building	$	2,845,451		$	5,720,388
Financial Services		157,864			240,869
		3,003,315			5,961,257
Costs and Expenses
Home Building		3,590,414			7,357,765
Financial Services		210,284			340,466
Other		(1,170	)		(348	)
Corporate General and Administrative		152,757			117,371
Interest Expense		28,911			—
		3,981,196			7,815,254
Loss from Unconsolidated Entities		(107,595	)		(125,333	)
Interest and Other Income		29,821			37,118
Loss from Continuing Operations Before Income Taxes		(1,055,655	)		(1,942,212	)
Income Tax Benefit		(21,017	)		(189,319	)
Loss from Continuing Operations		(1,034,638	)		(1,752,893	)
Earnings from Discontinued Operations, net of Tax Provision of $38,544 and $3,716		48,643			5,913
Net Loss	$	(985,995	)	$	(1,746,980	)
Basic and Diluted Earnings (Loss) Per Share
Continuing Operations	$	(8.32	)	$	(14.35	)
Discontinued Operations		0.39			0.05
	$	(7.93	)	$	(14.30	)
Average Shares Outstanding
Basic and Diluted		124,290,248			122,188,922
Cash Dividends Per Share	$	0.08		$	0.12

(unaudited)

See Notes to Consolidated Financial Statements.



	June 30, 2009			March 31, 2009
Assets
Cash and Cash Equivalents	$	1,443,365		$	1,364,556
Restricted Cash		454,834			403,992
Receivables -
Mortgage Loans, net		187,360			214,179
Taxes, Trade and Other, including Notes of $18,955 and $20,045		143,239			375,762
Inventories -
Direct Construction		882,914			898,129
Land Under Development		1,567,335			1,792,349
Land Held for Development and Sale		438,527			470,561
Land Held Under Option Agreements Not Owned		99,294			107,614
Other		19,385			21,134
Investments in Joint Ventures		127,839			136,504
Property and Equipment, net		21,076			24,813
Other Assets -
Deferred Income Taxes, net		37,587			–
Goodwill		9,933			9,933
Deferred Charges and Other, net		92,842			98,588
	$	5,525,530		$	5,918,114
Liabilities and Stockholders’ Equity
Accounts Payable	$	113,089		$	96,749
Accrued Liabilities		1,197,463			1,618,775
Senior Notes and Other Debt		3,106,122			3,104,872
Financial Services Mortgage Warehouse Facilities		49,038			119,052
Commitments and Contingencies
Stockholders’ Equity -
Preferred Stock, Authorized 5,000,000 Shares, None Issued		–			–
Common Stock, $.25 Par Value; Authorized 300,000,000 Shares; Outstanding 125,319,612 and 124,437,033 Shares		32,149			31,940
Capital in Excess of Par Value		87,935			87,341
Noncontrolling Interests		53,462			60,852
Retained Earnings		1,052,108			966,993
Treasury Stock, at Cost; 3,276,380 and 3,323,454 Shares		(165,836	)		(168,460	)
Total Stockholders’ Equity		1,059,818			978,666
	$	5,525,530		$	5,918,114

3 See Notes to Consolidated Financial Statements.

~~Table of Contents~~3

~~Centex~~Table ~~Corporation~~of ~~and Subsidiaries~~ Contents

~~Consolidated~~Centex ~~Balance~~Corporation ~~Sheets~~and ~~with Consolidating Details~~Subsidiaries

~~(Dollars~~Statements inof ~~thousands,~~Consolidated ~~except~~Cash ~~per share data)~~Flows

(~~unaudited~~Dollars in thousands)

	Centex Corporation and Subsidiaries
	December 31, 2008			March 31, 2008
Assets
Cash and Cash Equivalents	$	1,471,865		$	586,810
Restricted Cash		46,754			51,440
Receivables -
Mortgage Loans, net		269,534			515,880
Trade and Other, including Notes of $19,945 and $17,388		224,462			823,861
From Affiliates		—			—
Inventories -
Housing Projects		3,319,811			4,628,860
Land Held for Development and Sale		489,850			558,756
Land Held Under Option Agreements Not Owned		114,782			147,792
Other		19,147			27,023
Investments -
Joint Ventures		139,789			206,822
Unconsolidated Subsidiaries		—			—
Property and Equipment, net		40,057			77,931
Other Assets -
Deferred Income Taxes, net		50,275			191,246
Goodwill		9,933			51,622
Deferred Charges and Other, net		122,526			172,300
Assets of Discontinued Operations		—			96,989
	$	6,318,785		$	8,137,332
Liabilities and Stockholders’ Equity
Accounts Payable	$	88,424		$	259,170
Accrued Liabilities		1,592,938			1,805,519
Senior Notes and Other Debt		3,103,594			3,325,167
Financial Services Mortgage Warehouse Facilities		157,965			337,053
Liabilities of Discontinued Operations		—			34,001
Commitments and Contingencies
Minority Interests		61,261			77,761
Stockholders’ Equity -
Preferred Stock, Authorized 5,000,000 Shares, None Issued		—			—
Common Stock, $.25 Par Value; Authorized 300,000,000 Shares; Outstanding 124,316,835 and 123,278,881 Shares		31,940			31,763
Capital in Excess of Par Value		88,028			95,088
Retained Earnings		1,369,752			2,365,634
Treasury Stock, at Cost; 3,443,652 and 3,774,643 Shares		(175,117	)		(193,824	)
Total Stockholders’ Equity		1,314,603			2,298,661
	$	6,318,785		$	8,137,332

(unaudited)

See Notes to Consolidated Financial Statements.


	For the Three Months Ended June 30,
	2009			2008
Cash Flows – Operating Activities
Net Earnings (Loss)	$	85,115		$	(150,099	)
Adjustments
Depreciation and Amortization		5,167			11,586
Stock-based Compensation		4,068			6,587
Provision for Losses on Mortgage Loans		(2,379	)		646
Impairments and Write-off of Assets		201,811			60,216
Deferred Income Tax (Benefit) Provision		(37,587	)		36,419
Reduction in Liability for Uncertain Tax Positions		(370,794	)		–
Loss of Joint Ventures		15,267			20,297
Distributions of Earnings of Joint Ventures		400			8,151
Gain (Loss) on Sale of Assets		154			(39,244	)
Changes in Assets and Liabilities, Excluding Effect of Dispositions
(Increase) Decrease in Restricted Cash		(3,713	)		1,279
Decrease in Taxes, Trade, Notes and Other Receivables		222,503			606,204
Decrease (Increase) in Mortgage Loans Held for Sale		17,347			(69,078	)
Decrease in Direct Construction, Land Under Development and Land Held for Development and Sale		68,567			255,817
Decrease in Other Inventories		10,593			10,834
Decrease in Accounts Payable and Accrued Liabilities		(25,009	)		(209,893	)
Decrease in Other Assets, net		3,722			3,500
Other		260			(431	)
		195,492			552,791
Cash Flows – Investing Activities
Payments received on (Issuance of) Notes Receivable		998			(1,350	)
Decrease in Construction Loans		3,007			16,403
Investment in and Advances to Joint Ventures		(4,659	)		(40,528	)
Distributions of Capital from Joint Ventures		118			396
Purchases of Property and Equipment, net		(275	)		(1,352	)
Proceeds from Dispositions		74			136,923
		(737	)		110,492
Cash Flows – Financing Activities
Increase in Restricted Cash		(47,129	)		–
Net Issuance (Repayment) of Senior Notes and Other Debt		1,201			(71,732	)
Net (Repayment) Issuance of Financial Services Mortgage Warehouse Facilities		(70,014	)		63,387
Proceeds from Stock Option Exercises		–			(1,569	)
Excess Tax Benefit from Stock-Based Awards		–			126
Purchases of Common Stock, net		(4	)		(8	)
Dividends Paid		–			(4,942	)
		(115,946	)		(14,738	)

Net Increase in Cash and Cash Equivalents		78,809			648,545
Cash and Cash Equivalents at Beginning of Period (1)		1,364,556			586,838
Cash and Cash Equivalents at End of Period	$	1,443,365		$	1,235,383

4 See Notes to Consolidated Financial Statements.

~~Table~~(1) Amount includes cash and cash equivalents of ~~Contents~~discontinued operations of $0 as of March 31, 2009 and $28 as of March 31, 2008.

~~Centex Corporation and Subsidiaries~~ 4

~~Consolidated~~Table ~~Balance~~of ~~Sheets with Consolidating Details~~Contents

~~(Dollars~~Centex inCorporation ~~thousands)~~and Subsidiaries

~~(unaudited)~~Notes to Consolidated Financial Statements

Centex*						Financial Services
December 31, 2008			March 31, 2008			December 31, 2008			March 31, 2008
$	1,432,694		$	562,766		$	39,171		$	24,044
	27,175			28,562			19,579			22,878
	—			—			269,534			515,880
	220,504			800,275			3,958			23,586
	—			—			26,606			(43,463	)
	3,319,811			4,628,860			—			—
	489,850			558,756			—			—
	114,782			147,792			—			—
	6,977			16,173			12,170			10,850
	139,789			206,822			—			—
	151,149			292,647			—			—
	34,034			65,298			6,023			12,633
	38,752			119,590			11,523			71,656
	4,569			42,670			5,364			8,952
	106,590			145,719			15,936			26,581
	—			96,989			—			—
$	6,086,676		$	7,712,919		$	409,864		$	673,597
$	84,898		$	250,096		$	3,526		$	9,074
	1,522,361			1,727,684			70,577			77,835
	3,103,594			3,325,167			—			—
	—			—			157,965			337,053
	—			34,001			—			—
	61,220			77,310			41			451
	—			—			—			—
	31,940			31,763			1			1
	88,028			95,088			527,467			478,467
	1,369,752			2,365,634			(349,713	)		(229,284	)
	(175,117	)		(193,824	)		—			—
	1,314,603			2,298,661			177,755			249,184
$	6,086,676		$	7,712,919		$	409,864		$	673,597

June 30, 2009

*(Unless Inotherwise ~~the supplemental data presented above~~indicated, ~~“Centex”~~dollars ~~represents~~and ~~the~~shares ~~consolidation of all subsidiaries other than those included~~ in ~~Financial~~thousands, ~~Services.~~except ~~Transactions~~per ~~between~~share ~~Centex and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets.~~data)

5 (unaudited)

~~Table~~(A) SIGNIFICANT ofACCOUNTING ~~Contents~~POLICIES

~~Centex~~Basis ~~Corporation~~of Presentation and ~~Subsidiaries~~ Merger Transaction

~~Statements~~The consolidated interim financial statements include the accounts of ~~Consolidated~~Centex ~~Cash~~Corporation ~~Flows~~and all subsidiaries and other entities in which Centex Corporation has a controlling interest (the “Company”). Also, included in the consolidated financial statements are certain variable interest entities, as discussed in Note (D), “Inventories.” The Company’s principal Home Building subsidiary is Centex Homes, a Nevada general partnership. All significant intercompany balances and transactions have been eliminated. The unaudited statements have been prepared in conformity with ~~Consolidating~~accounting ~~Details~~principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States have been condensed or omitted.

In the opinion of the Company’s management, all adjustments (~~Dollars~~consisting inof ~~thousands~~normal, recurring adjustments) necessary to present fairly the information in the consolidated financial statements of the Company have been included. The results of operations for such interim periods are not necessarily indicative of results for the full year. The Company suggests that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes to consolidated financial statements included in the Company’s latest Annual Report on Form 10-K.

On April 7, 2009, the Company and Pulte Homes, Inc. (~~unaudited~~“Pulte”) entered into a definitive merger agreement pursuant to which the Company 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, the Company’s stockholders will receive 0.975 shares of Pulte common stock for each share of the Company’s common stock they own. Upon closing of the transaction, Pulte stockholders will own approximately 68% of the combined company, and the Company’s stockholders will own approximately 32%. Although the exchange ratio is fixed, and is not subject to adjustment prior to the date the merger is consummated, the value of the Pulte shares to be received by the Company’s stockholders will fluctuate with the market price of Pulte common stock until the merger is consummated. The transaction is subject to approval by Pulte and the Company’s stockholders. Pulte and the Company have scheduled their respective special meetings of stockholders for August 18, 2009 and, if stockholder approvals are obtained and other customary closing conditions are satisfied, expect to consummate the merger promptly thereafter.

	Centex Corporation and Subsidiaries
	For the Nine Months Ended December 31,
	2008			2007
Cash Flows — Operating Activities
Net Loss	$	(985,995	)	$	(1,746,980	)
Adjustments
Depreciation and Amortization		27,523			40,384
Stock-based Compensation		16,339			29,620
Provision for Losses on Mortgage Loans and Real Estate Owned		12,139			122,124
Impairments and Write-off of Assets		670,092			1,641,304
Deferred Income Tax Provision (Benefit)		129,149			(27,029	)
Loss of Joint Ventures and Unconsolidated Subsidiaries		107,595			125,333
Distributions of Earnings of Joint Ventures and Unconsolidated Subsidiaries		5,066			6,769
Gain on Sale of Assets		(92,070	)		(16,966	)
Changes in Assets and Liabilities, Excluding Effect of Dispositions
Decrease (Increase) in Restricted Cash		4,686			27,916
Decrease (Increase) in Trade, Notes and Other Receivables		597,374			(185,541	)
Decrease in Mortgage Loans Held for Sale		184,653			727,052
(Increase) Decrease in Receivables from Affiliates		—			—
Decrease in Housing Projects and Land Held for Development and Sale		751,468			179,189
Decrease in Other Inventories		8,088			15,256
Decrease in Accounts Payable and Accrued Liabilities		(371,621	)		(455,766	)
Decrease (Increase) in Other Assets, net		27,222			24,455
Other		(297	)		(71	)
		1,091,411			507,049
Cash Flows — Investing Activities
(Issuance of) Payments received on Notes Receivable		(1,974	)		4,158
Decrease in Construction Loans		44,805			59,546
Investment in and Advances to Joint Ventures		(65,734	)		(160,877	)
Distributions of Capital from Joint Ventures		12,343			67,755
Distributions from (Investment in and Advances to) Unconsolidated Subsidiaries		—			—
Purchases of Property and Equipment, net		(3,310	)		(9,595	)
Proceeds from Dispositions		217,264			21,978
Other		—			(3,563	)
		203,394			(20,598	)
Cash Flows — Financing Activities
Increase in Restricted Cash		—			47,123
Decrease in Short-term Debt, net		(183,138	)		(1,034,766	)
Centex
Repayment of Long-term Debt		(217,728	)		(281,214	)
Financial Services
Repayment of Long-term Debt		—			(60,000	)
Proceeds from Stock Option Exercises		631			32,052
Excess Tax Benefit from Stock-Based Awards		437			4,606
Purchases of Common Stock, net		(93	)		(598	)
(Dividends Paid) and Capital Contributions Received		(9,887	)		(14,536	)
		(409,778	)		(1,307,333	)
Net Increase (Decrease) in Cash and Cash Equivalents		885,027			(820,882	)
Cash and Cash Equivalents at Beginning of Period (1)		586,838			882,754
Cash and Cash Equivalents at End of Period (2)	$	1,471,865		$	61,872

Except for the matters disclosed in Note (M), “Subsequent Events,” the Company has determined that there were no subsequent events to recognize in these consolidated financial statements. The Company has evaluated subsequent events through the time of filing this Form 10-Q on August 4, 2009.

~~See Notes to Consolidated Financial Statements.~~ 5

(1)		Amount includes cash and cash equivalents of discontinued operations of $28 as of March 31, 2008 and $220 as of March 31, 2007.
(2)		Amount includes cash and cash equivalents of discontinued operations of $0 as of December 31, 2008 and $142 as of December 31, 2007.

Table of Contents

6 Interest Expense

~~Table~~Interest expense relating to the Financial Services segment is included in Financial Services cost of ~~Contents~~revenues. Home Building capitalizes interest incurred as a component of land under development’s inventory cost. Capitalized interest is included in Home Building cost of revenues as related housing inventories are sold or otherwise charged to cost of revenues. Due to the reduction in homebuilding inventories, the Company’s debt level exceeded its inventory subject to capitalization during the three months ended June 30, 2009 and 2008. As a result, a portion of the interest incurred during the three months ended June 30, 2009 and 2008 was charged directly to interest expense.

Centex Corporation and Subsidiaries


	For the Three Months Ended June 30,
	2009			2008

Total Interest Incurred	$	55,167		$	61,752
Less - Interest Capitalized		(27,059	)		(51,269	)
Financial Services Interest Expense		(1,753	)		(4,303	)
Interest Expense, net	$	26,355		$	6,180
Capitalized Interest Charged to Home
Building Cost of Revenues	$	37,106		$	25,535

~~Statements~~Income ~~of Consolidated Cash Flows with Consolidating Details~~Taxes

The Company accounts for income taxes on the deferral method whereby deferred tax assets and liabilities are provided for the tax effect of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In accordance with the provisions set forth by the Financial Accounting Standards Board (~~Dollars~~“FASB”) under Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes” (“SFAS 109”), the Company assesses, on a quarterly basis, the realizability of its deferred tax assets. A valuation allowance must be established when, based upon the evaluation of all available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon taxable income in ~~thousands~~prior carryback years, estimates of future taxable income, tax planning strategies and reversals of existing taxable temporary differences. For additional information regarding the Company’s valuation allowance, please refer to Note (J), “Income Taxes.”

In accordance with the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (~~unaudited~~“FIN 48”), the Company recognizes in its financial statements the impact of tax return positions or future tax positions if it is more likely than not to prevail (defined as a likelihood of more than fifty percent of being sustained upon audit, based on the technical merits of the tax position). Tax positions that meet the more likely than not threshold are measured (using a probability weighted approach) at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement.

Centex *						Financial Services
For the Nine Months Ended December 31,						For the Nine Months Ended December 31,
2008			2007			2008			2007
$	(985,995	)	$	(1,746,980	)	$	(56,729	)	$	(61,706	)
	24,240			35,688			3,283			4,696
	16,339			29,620			—			—
	—			—			12,139			122,124
	670,092			1,641,304			—			—
	69,016			13,116			60,133			(40,145	)
	164,324			187,039			—			—
	68,766			21,769			—			—
	(47,414	)		(16,966	)		(44,656	)		—
	1,387			28,365			3,299			(449	)
	578,704			(202,314	)		18,670			16,773
	—			—			184,653			727,052
	—			—			(51,069	)		49,614
	751,468			179,189			—			—
	4,659			8,763			3,429			6,493
	(356,383	)		(429,124	)		(15,238	)		(26,642	)
	16,687			25,547			10,535			(1,092	)
	113			150			(410	)		(221	)
	976,003			(224,834	)		128,039			796,497
	(1,974	)		4,158			—			—
	—			—			44,805			59,546
	(65,734	)		(160,877	)		—			—
	12,343			67,755			—			—
	21,069			(252,614	)		—			—
	(2,975	)		(7,900	)		(335	)		(1,695	)
	161,858			21,978			55,406			—
	—			(3,563	)		—			—
	124,587			(331,063	)		99,876			57,851
	—			—			—			47,123
	(4,050	)		(807	)		(179,088	)		(1,033,959	)
	(217,728	)		(281,214	)		—			—
	—			—			—			(60,000	)
	631			32,052			—			—
	437			4,606			—			—
	(93	)		(598	)		—			—
	(9,887	)		(14,536	)		(33,700	)		188,000
	(230,690	)		(260,497	)		(212,788	)		(858,836	)
	869,900			(816,394	)		15,127			(4,488	)
	562,794			870,688			24,044			12,066
$	1,432,694		$	54,294		$	39,171		$	7,578

The Company’s estimated liability for unrecognized tax benefits is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, certain changes and/or developments with respect to audits, and expiration of the statute of limitations. The outcome for a particular audit cannot be determined with certainty prior to the conclusion of the audit and, in some cases, appeal or litigation process. The actual benefits ultimately realized may differ from the Company’s estimates. As each audit is concluded, adjustments, if any, are appropriately recorded in the Company’s financial statements. Additionally, in future periods, changes in facts, circumstances, and new information may require the Company to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur.

*The InCompany ~~the~~recognizes ~~supplemental~~accrued ~~data~~interest ~~presented~~and ~~above,~~penalties ~~“Centex”~~related ~~represents~~to unrecognized tax benefits in the ~~consolidation~~financial statements as a component of ~~all~~the ~~subsidiaries~~income ~~other~~tax ~~than~~provision. The ~~those~~Company’s ~~included~~liability infor ~~Financial~~unrecognized ~~Services.~~tax ~~Transactions~~benefits ~~between~~combined ~~Centex~~with accrued interest and ~~Financial~~penalties ~~Services~~is ~~have~~reflected ~~been~~as ~~eliminated~~a ~~from~~component of accrued liabilities. For additional information regarding the ~~Centex~~Company’s ~~Corporation~~liability ~~and~~for ~~Subsidiaries~~unrecognized ~~statements~~tax ofbenefits, ~~consolidated~~please ~~cash~~refer ~~flows~~to Note (J), “Income Taxes.”

7 Earnings Per Share

~~Table~~Basic earnings (loss) per share are computed by dividing income (loss) available to common shareholders (the “numerator”) by the weighted-average number of ~~Contents~~shares of common stock, par value $.25 per share, outstanding, including vested shares of restricted stock and vested restricted stock units (the “denominator”) for the period. Diluted earnings (loss) per share are computed based upon the basic weighted-average number of shares plus the dilutive

~~Centex Corporation and Subsidiaries~~ 6

~~Notes~~Table toof ~~Consolidated Financial Statements~~Contents

~~December 31~~impact of the stock options, ~~2008~~unvested shares of restricted stock and unvested restricted stock units. Stock options, unvested shares of restricted stock and unvested restricted stock units are not considered in the diluted earnings (loss) per share calculation when the Company has a loss from continuing operations.

Effective April 1, 2009, the Company adopted FASB Staff Position (~~Unless~~“FSP”) ~~otherwise~~Emerging ~~indicated~~Issues Task Force (“EITF”) No. 03-6-1, ~~dollars~~“Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). The Company’s unvested restricted stock contains nonforfeitable rights to dividends and, ~~shares~~therefore, under FSP EITF 03-6-1, is a participating security that is included in ~~thousands~~the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 was retrospectively applied, ~~except~~but it did not have an impact on the per share ~~data)~~amounts previously disclosed for the three months ended June 30, 2008. The following table presents the calculation of earnings per share of common stock for the three months ended June 30, 2009:

(unaudited)


Net Earnings	$	85,115
Earnings attributable to Unvested Restricted Stock		(871	)
Net Earnings available to Common Stockholders	$	84,244

Basic and Diluted Earnings Per Share	$	0.68

Average Shares Outstanding
Basic		123,724,483
Diluted		123,793,011

~~(A) SIGNIFICANT~~Stock-Based ~~ACCOUNTING~~Employee ~~POLICIES~~ Compensation Arrangements

~~Basis~~The Company accounts for its stock-based compensation arrangements in accordance with the provisions of ~~Presentation~~SFAS No. 123(R), “Share-Based Payment” (“SFAS 123R”). The following information represents the Company’s grants of stock-based compensation to employees and directors during the three months ended June 30, 2009 and the year ended March 31, 2009:

The consolidated interim financial statements include the accounts of Centex Corporation and all subsidiaries and other entities in which Centex Corporation has a controlling interest (the “Company”). Also, included in the consolidated financial statements are certain variable interest entities, as discussed in Note (D), “Inventories.” The Company’s principal homebuilding subsidiary is Centex Homes, a Nevada general partnership. All significant intercompany balances and transactions have been eliminated. The unaudited statements have been prepared in conformity with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States have been condensed or omitted.


Period of Grant	Grant Type	Number of Shares Granted	Fair Value of Grant

For the year ended March 31, 2009	Stock Options	1,827.0	$	14,072.9
	Restricted Stock Units	375.2	$	8,265.7
	Restricted Stock	663.0	$	9,699.8

For the three months ended June 30, 2009	Restricted Stock Units	278.5	$	2,612.2
	Restricted Stock	835.5	$	7,837.0

~~Balance~~The ~~sheet~~Company recognizes compensation expense of a stock-based award over the vesting period based on the fair value of the award on the grant date, net of estimated forfeitures. The fair value of stock units and ~~cash~~restricted ~~flow~~stock ~~data~~are isbased ~~presented~~on inthe fair market value of the ~~following~~Company’s ~~categories:~~stock on the date of grant, while the fair value of stock options granted is calculated under the Black-Scholes option-pricing model. If the merger with Pulte is consummated, the restricted stock units awarded during the quarter ended June 30, 2009 will be forfeited in their entirety with no additional payments to the holders.

•In ~~Centex~~addition ~~Corporation~~to the stock-based awards in the above table, the Company issued to officers and ~~Subsidiaries~~employees during the first quarter of fiscal years 2009 and 2008 long-term performance awards that vest after three years. ~~This~~These ~~represents~~awards will be settled in cash and adjusted based on the ~~consolidation~~Company’s ofperformance ~~Centex~~relative to its peers in total stockholder return (fiscal year 2009 awards) and in earnings per share growth and return on equity (fiscal year 2008 awards), ~~Financial~~as ~~Services~~well as changes in the Company’s stock price between the date of grant and ~~all~~the end of ~~their~~the ~~consolidated~~performance ~~subsidiaries~~period. The Company’s fiscal year 2008 awards are valued using management’s estimate of future earnings per share growth, ~~related~~return ~~companies~~on equity and ~~certain~~changes ~~variable~~in ~~interest~~stock ~~entities~~price. The Company’s fiscal year 2009 awards are valued using a lattice model. The ~~effects~~awards granted in fiscal year 2008 had an initial aggregate value of ~~transactions~~$18.9 ~~among~~million ~~related~~and ~~companies~~have ~~within~~been ~~the~~adjusted ~~consolidated~~to ~~group~~an aggregate value of $1.4 million as of June 30, 2009. The awards granted in fiscal year 2009 had an initial aggregate value of $28.3 million and have been ~~eliminated~~adjusted to an aggregate value of $4.36 million as of June 30, 2009. In accordance with the provisions of SFAS 123(R), these awards are accounted for as liability awards for which compensation expense will be recognized over the vesting period with a corresponding increase in accrued liabilities.

• Centex. This information is presented as supplemental information and represents the consolidation of all subsidiaries and certain variable interest entities other than those included in Financial Services, which are presented on an equity basis of accounting.7

•Table ~~Financial~~of ~~Services. This information is presented as supplemental information and represents Centex Financial Services, its subsidiaries and related companies.~~Contents

InIf the ~~opinion~~merger ofwith ~~the~~Pulte ~~Company’s~~is ~~management~~consummated, all adjustments (consisting of normal, recurring adjustments) necessary to present fairly the information in the consolidated financial statements of the Company have been included. The results of operations for such interim periods are not necessarily indicative of results for the full year. The Company suggests that these ~~consolidated financial~~awards ~~statements~~would be ~~read~~paid inout ~~conjunction~~at ~~with~~target ~~the~~level ~~consolidated~~(not ~~financial statements and~~ the ~~notes~~ toperformance ~~consolidated~~adjusted ~~financial~~level) ~~statements~~based ~~included~~on in the Company’s ~~latest~~stock ~~Annual~~price ~~Report~~the onday ~~Form 10-K~~before the merger.

~~Certain~~Statements ~~operations have been classified as discontinued. For additional information, refer to Note (L), “Discontinued Operations.” Associated results~~ of ~~operations and financial position are separately reported for all periods presented. Information in these Notes to~~ Consolidated ~~Financial~~ ~~Statements,~~Cash ~~unless~~Flows ~~otherwise~~– ~~noted,~~Supplemental ~~does not include the accounts of discontinued operations.~~ Disclosures

8 In accordance with the provisions of SFAS No. 95, “Statement of Cash Flows,” the Statements of Consolidated Cash Flows have not been restated for discontinued operations. For further information on the Company’s discontinued operations, see Note (L), “Discontinued Operations.”

~~Table~~The following table provides supplemental disclosures related to the Statements of ~~Contents~~Consolidated Cash Flows:

Interest Expense


	For the Three Months Ended June 30,
	2009			2008

Cash Paid for Interest (1)	$	59,794		$	59,293
Net Cash Refund for Taxes	$	(203,415	)	$	(625,105	)

~~Interest~~(1) ~~expense~~Amounts ~~relating~~include tocapitalized ~~the Financial Services segment is included in Financial Services’ costs and expenses. Home Building capitalizes~~ interest ~~incurred as a component of housing projects’ inventory cost~~. Capitalized interest is included in Home Building’s costs and expenses as related housing inventories are sold or otherwise charged to costs and expenses. In prior years, the Company’s inventory subject to interest capitalization exceeded its debt levels. Due to the reduction in homebuilding inventories, the Company’s debt level exceeded its inventory subject to capitalization during the three and nine months ended December 31, 2008. As a result, a portion of the interest incurred was charged directly to interest expense.

	For the Three Months						For the Nine Months
	Ended December 31,						Ended December 31,
	2008			2007			2008			2007
Total Interest Incurred	$	55,814		$	68,206		$	170,404		$	226,643
Less — Interest Capitalized		(35,710	)		(56,999	)		(131,301	)		(178,369	)
Financial Services’ Interest Expense		(2,346	)		(11,207	)		(10,192	)		(48,274	)
Interest Expense, net	$	17,758		$	—		$	28,911		$	—
Capitalized Interest Charged to Home
Building’s Costs and Expenses	$	67,032		$	69,854		$	119,799		$	209,618

As explained in Note (D), “Inventories,” pursuant to the provisions of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” as revised (“FIN 46”), as of June 30, 2009 and March 31, 2009, the Company consolidated $56.4 million and $64.2 million, respectively, of land as inventory under the caption “land held under option agreements not owned.” The Company also recorded $19.4 million as of June 30, 2009 and March 31, 2009 of lot option agreements as financing arrangements pursuant to the provisions of SFAS No. 49, “Accounting for Product Financing Arrangements” (“SFAS 49”).

~~Income~~In ~~Taxes~~ addition to the items noted above, transfers of mortgage loans between loan categories have been treated as non-cash items.

~~The~~Recent Company accounts for income taxes on the deferral method whereby deferred tax assets and liabilities are provided for the tax effect of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In accordance with the provisions set forth by the Financial Accounting Standards Board (“FASB”) under Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes” (“SFAS 109”), the Company assesses, on a quarterly basis, the realizability of its deferred tax assets. A valuation allowance must be established when, based upon the evaluation of all available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies and reversals of existing taxable temporary differences. For additional information regarding the Company’s valuation allowance, please refer to Note (J), “Income Taxes.” Pronouncements

OnIn ~~April~~December 1, 2007, the ~~Company adopted~~ FASB ~~Interpretation~~issued SFAS No. 48160, “~~Accounting~~Noncontrolling ~~for~~Interests ~~Uncertainty~~ in ~~Income~~Consolidated ~~Taxes~~Financial —Statements – an ~~interpretation~~amendment of ~~FASB~~ARB ~~Statement~~ No. ~~109~~51” (“~~FIN 48~~SFAS 160”). Under ~~The~~the ~~cumulative~~provisions ~~effect~~ of SFAS 160, a noncontrolling interest in a subsidiary, or minority interest, must be classified as equity and the ~~adoption~~amount of ~~FIN~~consolidated 48net ~~was~~income ~~recorded~~specifically asattributable ato ~~$208~~the minority interest must be clearly identified in the statement of consolidated earnings.3 SFAS ~~million~~160 ~~reduction~~also torequires ~~beginning~~consistency ~~retained~~in ~~earnings~~ the manner of reporting changes in the ~~first~~parent’s ~~quarter~~ownership interest and requires fair value measurement of ~~fiscal~~any ~~year~~noncontrolling ~~2008~~interest retained in a deconsolidation. The ~~Please~~Company ~~refer~~adopted toSFAS 160 ~~Note~~as ~~(J),~~of ~~“Income~~April ~~Taxes~~1,” 2009, ~~for~~and ~~additional information~~the ~~relating~~retrospective topresentation ~~FIN~~and 48disclosure requirements outlined by SFAS 160 have been incorporated into this report. The adoption of SFAS 160 did not have a material impact on the Company’s consolidated financial statements.

In ~~accordance~~February 2008, ~~with~~ the ~~provisions~~FASB ofissued ~~FIN~~FSP 48No. FAS 157-2, ~~the~~“Effective ~~Company~~Date ~~recognizes~~of inFASB ~~its~~Statement ~~financial statements~~No. 157,” ~~the~~which ~~impact~~delayed ofthe aeffective ~~tax~~date ~~position~~of ifSFAS aNo. 157, ~~tax~~“Fair ~~return’s~~Value ~~position~~Measurements” or(“SFAS 157”) ~~future~~for ~~tax~~nonfinancial ~~position~~assets isand ~~“more~~nonfinancial ~~likely~~liabilities, ~~than~~except ~~not”~~for toitems ~~prevail~~that ~~(defined~~are asrecognized aor ~~likelihood~~disclosed ofat ~~more~~fair ~~than~~value ~~fifty~~in ~~percent~~the offinancial ~~being~~statements ~~sustained upon~~on ~~audit,~~a ~~based~~recurring onbasis, ~~the~~to ~~technical~~fiscal ~~merits~~years ofbeginning ~~the~~after ~~tax~~November 15, ~~position)~~2008. On ~~Tax~~April 1, ~~positions~~2009, ~~that meet~~ the ~~“more likely~~Company ~~than~~adopted ~~not”~~SFAS ~~threshold~~No. 157 ~~are~~for ~~measured~~these ~~(using~~assets aand ~~probability~~liabilities. The ~~weighted~~adoption ~~approach)~~of at the ~~largest amount~~Statement ofdid ~~tax~~not ~~benefit~~have ~~that has~~ a ~~greater~~material ~~than~~impact ~~fifty~~on ~~percent~~the ~~likelihood~~Company’s ofconsolidated ~~being~~financial ~~realized upon settlement~~statements.

~~The~~In ~~Company’s~~June 2008, ~~estimated~~the ~~liability~~FASB ~~for~~issued ~~unrecognized~~FSP ~~tax~~EITF ~~benefits is periodically assessed for adequacy and may be affected by changing interpretations of laws~~03-6-1, ~~rulings~~which byclarifies ~~tax~~that ~~authorities, certain~~unvested ~~changes~~share-based ~~and/or~~awards ~~developments~~ with ~~respect~~a right to ~~audits,~~receive ~~and~~nonforfeitable ~~expiration~~dividends ofare ~~the~~participating ~~statute~~securities ~~of limitations. The outcome~~ for apurposes ~~particular~~of ~~audit~~applying ~~cannot~~the betwo-class ~~determined~~method ~~with certainty prior to the conclusion~~ of ~~the~~computing ~~audit~~earnings ~~and,~~per ~~in some cases, appeal or litigation process~~share. This ~~The actual benefits~~FSP ~~ultimately~~was ~~realized~~effective ~~may~~for ~~differ from~~ the Company’s ~~estimates.~~on ~~As each audit is concluded~~April 1, ~~adjustments,~~ if2009 ~~any,~~and ~~are~~requires ~~appropriately~~retrospective ~~recorded in the Company’s financial statements~~application. ~~Additionally,~~ The inapplication ~~future~~did ~~periods,~~not ~~changes~~have ina ~~facts,~~material ~~circumstances,~~impact ~~and~~on ~~new information may require~~ the Company’s toreported ~~adjust~~earnings ~~the~~per ~~recognition and measurement estimates with regard to individual tax positions~~share. ~~Changes in recognition and measurement estimates are recognized in the period in which the changes occur.~~

~~The~~In ~~Company~~April 2009, ~~recognizes~~the ~~accrued~~FASB ~~interest~~issued FSP No. FAS 107-1 and ~~penalties~~APB 28-1, ~~related~~“Interim toDisclosures ~~unrecognized~~about ~~tax~~Fair ~~benefits~~Value ~~in the~~of ~~financial~~Financial ~~statements~~Instruments.” The asFSP aamends ~~component~~SFAS No. 107, “Disclosures about Fair Value of ~~the~~Financial ~~income~~Instruments,” ~~tax~~and ~~provision~~Accounting Principles Board (“APB”) Opinion No. 28, “Interim Financial Reporting,” to require disclosures about the fair value of financial instruments during interim reporting periods. The ~~Company’s~~FSP ~~liability~~is effective for ~~accrued~~ ~~interest~~interim and ~~penalties,~~annual ~~net~~periods ofending ~~unrecognized~~after ~~tax~~June 15, ~~benefits~~2009, which is ~~reflected~~June 30, as2009 afor ~~component~~the Company. The Company has included the required disclosures into this Quarterly Report on Form 10-Q for the quarter ended June 30, 2009. The adoption of ~~accrued~~the ~~liabilities~~FSP did not have a material impact on the Company’s consolidated financial statements.

9In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale,

~~Table of Contents~~8

~~Stock-Based~~Table ~~Employee~~of ~~Compensation Arrangements~~ Contents

~~The~~clarifies ~~Company~~other ~~accounts~~sale-accounting ~~for~~criteria, ~~its~~and ~~stock-based~~changes ~~compensation~~the ~~arrangements~~initial inmeasurement ~~accordance~~of ~~with~~a ~~the provisions~~transferor’s ofinterest in transferred financial assets. SFAS No. ~~123(R),~~166 ~~“Share-Based~~is ~~Payment”~~applicable ~~(“SFAS~~for ~~123R”).~~annual ~~The~~periods ~~following~~beginning ~~information represents~~after ~~the~~November 15, ~~Company’s~~2009 ~~grants~~and ofinterim ~~stock-based~~periods ~~compensation~~therein toand ~~employees~~thereafter. The ~~and~~Company ~~directors~~is ~~during~~currently ~~the~~assessing ~~nine~~the ~~months~~impact, ~~ended~~if ~~December 31~~any, ~~2008~~of ~~and~~SFAS ~~the~~166 ~~year~~on ~~ended~~its ~~March 31,~~consolidated ~~2008:~~ financial statements.

		Number of
		Shares		Fair Value
Period of Grant	Grant Type	Granted		of Grant
For the year ended March 31, 2008	Stock Options		646.6	$	10,116.9
	Stock Units		283.3	$	11,901.2
	Restricted Stock		160.1	$	5,035.0
For the nine months ended December 31, 2008	Stock Options		1,827.0	$	14,072.9
	Stock Units		375.2	$	8,265.7
	Restricted Stock		663.0	$	9,699.8

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 eliminates Interpretation 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary of a variable interest entity, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS No. 167 is effective for fiscal years beginning after November 15, 2009. Earlier application is prohibited. The first such reporting period for the Company will be the fiscal year beginning April 1, 2010. The Company is currently assessing the impact, if any, of SFAS 167 on its consolidated financial statements.

~~The~~In ~~Company~~June 2009, ~~recognizes~~the ~~compensation~~FASB ~~expense~~approved ofthe a“FASB ~~stock-based~~Accounting ~~award~~Standards ~~over~~Codification” (“Codification”) as the ~~vesting~~single ~~period based~~source of authoritative nongovernmental U.S. GAAP launched on ~~the~~July 1, ~~fair~~2009. The ~~value~~Codification ofdoes ~~the~~not ~~award~~change oncurrent U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the ~~grant~~authoritative ~~date,~~literature ~~net~~related ofto ~~forfeitures~~a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered nonauthoritative. The ~~fair~~Codification ~~value~~is ~~of stock~~effective ~~units~~for interim and ~~restricted~~annual ~~stock~~periods ~~are~~ending ~~based~~after onSeptember 15, 2009. The Codification is effective for the ~~fair~~Company ~~market~~during the ~~value~~interim ofperiod ending September 30, 2009 and will not have an impact on the Company’s ~~stock~~financial oncondition ~~the date~~or results of ~~grant,~~operations. The ~~while~~Company is currently evaluating the ~~fair~~impact ~~value~~to ofits ~~stock~~financial ~~options~~reporting ~~granted~~process isof ~~calculated~~providing ~~under~~Codification ~~the~~references ~~Black-Scholes option-pricing~~in ~~model~~its public filings.

In addition to the stock-based awards in the above table, the Company issued to officers and employees during the first quarter of fiscal years 2009 and 2008 long-term performance awards that vest after three years. These awards will be settled in cash and adjusted based on the Company’s performance relative to its peers in total shareholder return (fiscal year 2009 awards) and in earnings per share growth and return on equity (fiscal year 2008 awards), as well as changes in the Company’s stock price between the date of grant and the end of the performance period. Those awards granted during the first quarter of fiscal year 2009 had an initial aggregate value of $28.3 million. Those awards granted during the first quarter of fiscal year 2008 were adjusted to an aggregate value of $3.0 million as of December 31, 2008. In accordance with the provisions of SFAS 123(R), these awards are accounted for as liability awards for which compensation expense will be recognized over the vesting period with a corresponding increase in accrued liabilities. Reclassifications

~~Statements~~Certain ofprior ~~Consolidated~~year ~~Cash~~balances ~~Flows~~have —been ~~Supplemental~~reclassified ~~Disclosures~~ to be consistent with the June 30, 2009 presentation.

In accordance with the provisions of SFAS No. 95, “Statement of Cash Flows,” the Statements of Consolidated Cash Flows have not been restated for discontinued operations. For further information on the sale of Westwood Insurance Agency, the Company’s home services operations and the Company’s construction services operations (~~“Construction Services”~~B)~~, see Note (L), “Discontinued Operations.” Accordingly, all amounts reported in discontinued operations are included with the Company~~ STOCKHOLDERS’s ~~cash flows.~~ EQUITY

~~The~~A ~~following~~summary ~~table~~of ~~provides~~changes ~~supplemental~~in ~~disclosures~~stockholders’ ~~related~~equity tois ~~the~~presented ~~Statements of Consolidated Cash Flows~~below:

	For the Three Months					For the Nine Months
						Capital in								Treasury
	Ended December 31,					Ended December 31,
	Common Stock					Excess of			Noncontrolling			Retained		Stock,
	2008			2007		2008			2007
	Shares			Amount		Par Value			Interests			Earnings		at Cost			Total
Cash Paid for Interest (1)	$	54,068		$	65,318	$	161,001		$	219,313
Balance, March 31, 2009		124,437		$	31,940	$	87,341		$	60,852		$	966,993	$	(168,460	)	$	978,666
Net Cash Paid (Refund) for Taxes	$	(78,749	)	$	81	$	(704,580	)	$	209,286
Issuance of Restricted Stock and Restricted Stock Units		884			209		(3,474	)		–			–		2,628			(637	)
Stock Compensation		–			–		4,068			–			–		–			4,068
Purchase of Common Stock for Treasury		(1	)		–		–			–			–		(4	)		(4	)
Changes in Agreements		–			–		–			(7,390	)		–		–			(7,390	)
Net Earnings		–			–		–			–			85,115		–			85,115
Balance, June 30, 2009		125,320		$	32,149	$	87,935		$	53,462		$	1,052,108	$	(165,836	)	$	1,059,818

~~(1)~~Noncontrolling ~~Amounts~~interests ~~include~~are ~~capitalized~~primarily ~~interest~~related to land option agreements consolidated under FIN 46. During the quarter ended June 30, 2009, the Company deconsolidated $4.9 million of noncontrolling interests related to the write-off of $0.4 million of option deposits included in Home Building Land Sales and Other Cost of Revenues in the accompanying Statements of Consolidated Operations.

As explained in Note (D), “Inventories,” pursuant to the provisions of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” as revised (“FIN 46”), as of December 31, 2008 and March 31, 2008, the Company consolidated $64.4 million and $75.3 million, respectively, of land as inventory under the caption “land held under option agreements not owned.” The Company also recorded $24.3 million and $38.1 million as of December 31, 2008 and March 31, 2008, respectively, of lot option agreements as financing arrangements pursuant to the provisions of SFAS 49, “Product Financing Arrangements” (“SFAS 49”). 9

10 Table of Contents

~~Table~~(C) MORTGAGE ofLOANS ~~Contents~~RECEIVABLE

InMortgage ~~addition~~loans toreceivable ~~the~~consists ~~items~~of ~~noted~~mortgage ~~above,~~loans ~~the~~held ~~Company’s~~for ~~adoption~~sale ofand ~~FIN~~other ~~48,~~mortgage ~~effective April 1~~loans, ~~2007,~~ ~~was~~net ~~treated as a non-cash item in the Statements~~ of ~~Consolidated~~their ~~Cash~~related ~~Flows~~allowances. Mortgage ~~The~~loans ~~adoption~~held ~~of FIN~~for 48sale ~~resulted~~represent inmortgage aloans ~~$116.0 million~~originated ~~increase~~by toFinancial ~~deferred income taxes~~Services, awhich ~~$329.2 million~~will ~~increase~~be ~~in accrued~~sold ~~liabilities~~to ~~and~~third ~~a $213~~parties.~~2 million~~ Other mortgage ~~reduction~~loans ininclude ~~stockholders’~~performing ~~equity~~and innonperforming ~~the~~construction ~~first~~loans ~~quarter~~and ~~of fiscal~~other ~~year~~nonperforming ~~2008. Transfers of~~ mortgage loans. Mortgage ~~between~~loans ~~loan~~receivable ~~categories~~consists ~~have~~of ~~been~~the ~~treated as non-cash items.~~ following:

Recent Accounting Pronouncements


	As of
	June 30, 2009							March 31, 2009
	Gross		Allowance			Net		Gross		Allowance			Net

Mortgage Loans Held for Sale	$	141,518	$	(775	)	$	140,743	$	153,416	$	(837	)	$	152,579
Other Mortgage Loans		104,023		(57,406	)		46,617		148,683		(87,083	)		61,600
Mortgage Loans Receivable	$	245,541	$	(58,181	)	$	187,360	$	302,099	$	(87,920	)	$	214,179

InChanges ~~September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), that serves to define fair value, establishes a framework for measuring fair value~~ in generally accepted accounting principles, and expands disclosures about fair value measurements. The Company adopted SFAS 157 effective April 1, 2008. For additional information, refer to Note (H), “Fair Values of Financial Instruments.” In February 2008, the ~~FASB~~allowance ~~issued FASB Staff Position (“FSP”) FAS 157-2 which delays the effective date of SFAS 157~~ for ~~all~~losses ~~nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements~~ on amortgage ~~recurring~~loans ~~basis~~receivable ~~(at~~for ~~least annually). Examples of items to which this FSP applies include, but are not limited to, reporting units measured at fair value in~~ the ~~first~~three ~~step~~months ofended ~~a goodwill impairment test and long-lived assets (asset groups) measured at fair value for an impairment assessment (i.e.~~June 30, ~~inventory~~2009 ~~impairment assessments). This FSP defers the effective date for nonfinancial assets~~ and ~~nonfinancial liabilities of SFAS 157 for~~ the ~~Company~~year toended ~~April~~March 131, 2009~~. The~~ ~~Company~~were isas ~~currently evaluating the impact, if any, of SFAS 157 related to nonfinancial assets and nonfinancial liabilities on the Company’s results of operations or financial position.~~ follows:

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). Under the provisions of SFAS 159, companies may elect to measure specified financial instruments, warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings. The election, called the “fair value option,” enables companies to reduce the volatility in reported earnings caused by measuring related assets and liabilities differently, and it is simpler than using the complex hedge-accounting requirements in SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) to achieve similar results. The Company adopted SFAS 159 effective April 1, 2008. For additional information, refer to Note (H), “Fair Values of Financial Instruments.”


	June 30, 2009			March 31, 2009 (1)

Balance at Beginning of Period	$	87,920		$	155,696
Provision for Losses		(2,379	)		1,723
Charge-offs/Recoveries		(27,360	)		(69,499	)

Balance at End of Period	$	58,181		$	87,920

~~In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51”~~ (~~“SFAS 160”~~1). ~~Under~~For the ~~provisions~~three ofmonths ~~SFAS~~ended ~~160, a~~June ~~noncontrolling interest in a subsidiary~~30, ~~or minority interest~~2008, ~~must~~provision befor ~~classified~~losses ~~as equity~~ and ~~the~~ ~~amount~~charge-offs/recoveries ofwere ~~consolidated~~$646 net income specifically attributable to the minority interest must be clearly identified in the statement of consolidated operations. SFAS 160 also requires consistency in the manner of reporting changes in the parent’s ownership interest and ~~requires fair value measurement of any noncontrolling interest retained in a deconsolidation. SFAS 160 will be effective for the Company as of April 1~~$(14,383), ~~2009~~respectively. ~~The Company does not expect the adoption of SFAS 160 to have a material impact on its financial statements.~~

InDuring ~~March 2008,~~ the ~~FASB~~year ~~issued~~ended ~~SFAS No.~~March ~~161~~31, ~~“Disclosures~~2008, ~~about~~Financial ~~Derivative~~Services ~~Instruments~~ceased ~~and Hedging~~originating ~~Activities~~new —construction anloans; ~~amendment~~however, ~~to FASB Statement No. 133” (“SFAS 161”). SFAS 161 requires disclosures about why the Company utilizes derivative instruments and how~~ it ~~accounts~~intends ~~for~~to ~~them~~fulfill ~~as well~~its asexisting ~~how~~funding ~~the~~commitments. As ~~instruments~~of ~~and the related hedged items affect the Company’s financial position~~June 30, ~~results~~ ~~of operations~~2009, ~~and~~Financial ~~cash~~Services ~~flows.~~is ~~SFAS~~committed, ~~161 applies to all derivative instruments and hedged items accounted for~~ under ~~SFAS~~existing ~~133~~construction ~~and~~loan ~~will be effective for the Company on January 1~~agreements, ~~2009. The~~ ~~Company~~to ~~does~~fund ~~not~~up ~~expect the adoption of SFAS 161~~ to ~~have~~an aadditional ~~material~~$0.3 ~~impact on its financial statements~~million.

~~Reclassifications~~ The Company has established a liability for anticipated losses associated with mortgage loans originated and sold. Please refer to Note (G), “Commitments and Contingencies,” for information on this reserve at June 30, 2009 and March 31, 2009.

~~Certain prior year balances have been reclassified to be consistent with the December 31, 2008 presentation, including reclassifications of discontinued operations.~~ (D) INVENTORIES

11For the three months ended June 30, 2009 and 2008, the Company recorded $200.6 million and $50.1 million, respectively, in land-related impairments, which is included in land sales and other cost of revenues in the accompanying Statements of Consolidated Operations. For the three months ended June 30, 2009 and 2008, the Company recorded $2.2 million and $2.1 million, respectively, in real estate owned impairments.

~~Table of Contents~~10

~~(B) STOCKHOLDERS’~~Table ~~EQUITY~~ of Contents

ALand ~~summary~~Held offor ~~changes~~Development inand ~~stockholders’~~Sale ~~equity~~and isLand ~~presented~~Held ~~below:~~ Under Option Agreements Not Owned

						Capital in						Treasury
	Common Stock					Excess of			Retained			Stock,
	Shares			Amount		Par Value			Earnings			at Cost			Total
Balance, March 31, 2008		123,279		$	31,763	$	95,088		$	2,365,634		$	(193,824	)	$	2,298,661
Issuance of Restricted Stock and Stock Units		1,004			166		(24,456	)		—			18,800			(5,490	)
Stock Compensation		—			—		16,339			—			—			16,339
Exercise of Stock Options		37			9		531			—			—			540
Tax Benefit from Stock-Based
Awards		—			—		437			—			—			437
Cash Dividends		—			—		—			(9,887	)		—			(9,887	)
Purchase of Common Stock for
Treasury		(9	)		—		—			—			(93	)		(93	)
Other Stock Transactions		6			2		89			—			—			91
Net Loss		—			—		—			(985,995	)		—			(985,995	)
Balance, December 31, 2008		124,317		$	31,940	$	88,028		$	1,369,752		$	(175,117	)	$	1,314,603

The Company enters into land option purchase agreements. Under the option agreements, the Company pays a stated deposit or posts a letter of credit in consideration for the right to purchase land at a future time, usually at predetermined prices. These options generally do not contain performance requirements from the Company nor do they obligate the Company to purchase the land, and expire on various dates. A summary of the Company’s land option agreements is provided below:


	As of
	June 30, 2009		March 31, 2009

Number of Land Option Agreements		61		55

Total Cash Deposits in Inventory	$	26,774	$	25,684
Letters of Credit		747		747
Total Invested through Deposits or Secured with Letters of Credit	$	27,521	$	26,431

Total Purchase Price of Land Option Agreements	$	445,729	$	476,974

~~Mortgage~~A ~~loans~~summary ~~receivable consist~~ of ~~mortgage~~the ~~loans~~Company’s land held for ~~sale~~development and ~~other mortgage loans, net of their related allowances. Mortgage loans held for~~ sale ~~represent mortgage loans originated by Financial Services, which will be sold to third parties. Other mortgage loans include performing~~ and ~~nonperforming~~land ~~construction~~held ~~loans~~under ~~and~~option ~~other~~agreements ~~nonperforming~~not ~~mortgage loans. Real estate~~ owned is ~~foreclosed~~provided property that once served as the underlying collateral for a mortgage loan receivable. Real estate owned is reflected as a component of other inventory in the Consolidated Balance Sheets. Mortgage loans receivable and real estate owned consist of the followingbelow:

	As of
	As of June 30, 2009					As of March 31, 2009
	December 31, 2008							March 31, 2008
	Land Held for Development and Sale		Land Held Under Option Agreements Not Owned			Land Held for Development and Sale		Land Held Under Option Agreements Not Owned
	Gross		Allowance			Net		Gross		Allowance			Net
Cash Deposits	$	8,137	$	18,637		$	6,397	$	19,287
Mortgage Loans Held for Sale	$	199,143	$	(1,042	)	$	198,101	$	388,385	$	(4,092	)	$	384,293
Pre-acquisition Development Costs		1,541		4,830			1,687		4,700
Other Mortgage Loans		175,705		(104,272	)		71,433		283,191		(151,604	)		131,587
Remaining Purchase Price of Land
Mortgage Loans Receivable	$	374,848	$	(105,314	)	$	269,534	$	671,576	$	(155,696	)	$	515,880
Options Recorded Pursuant to:
Real Estate Owned	$	37,870	$	(25,700	)	$	12,170	$	23,635	$	(12,785	)	$	10,850
FIN 46 (1)		–		56,448			–		64,231
SFAS 49 (2)		–		19,379			–		19,396
Owned Land Held for Development and Sale (3)		428,849		–			462,477		–
	$	438,527	$	99,294		$	470,561	$	107,614

~~Changes~~(1) inIn accordance with the ~~allowance~~provisions ~~for~~of ~~losses~~FIN on46, ~~mortgage~~the ~~loans~~Company ~~receivable~~is ~~and~~the ~~real~~primary ~~estate~~beneficiary ~~owned~~of ~~for~~certain ~~the nine~~option ~~months~~agreements ~~ended~~to ~~December 31,~~purchase ~~2008~~land. ~~and~~Land ~~the~~consolidated ~~year~~under ~~ended~~FIN ~~March 31~~46 is recorded with a corresponding increase to noncontrolling interests. At June 30, ~~2008~~2009, eight land option agreements were asconsolidated ~~follows:~~ pursuant to FIN 46.

	December 31, 2008			March 31, 2008 (1)
Balance at Beginning of Period	$	168,481		$	17,576
Provision for Losses		12,139			176,109
Charge-offs/Recoveries		(49,606	)		(25,204	)
Balance at End of Period	$	131,014		$	168,481

(2)	As of June 30, 2009, the Company recorded two land option agreements as financing arrangements pursuant to the provisions of SFAS 49. The remaining obligation under such financing arrangements is recorded in accrued liabilities.

(13) ~~For~~Amount ~~the~~includes ~~nine~~owned ~~months~~land, ~~ended~~including ~~December~~development 31costs, ~~2007,~~that ~~provision~~is not currently anticipated to be developed for ~~losses~~more than two years and ~~charge-offs/recoveries~~land ~~were~~that ~~$122,124~~the ~~and~~Company ~~$(7,863),~~intends ~~respectively~~to sell within one year.

AsThe ofCompany ~~December 31,~~writes ~~2008,~~off ~~Financial~~deposits ~~Services~~and ispre-acquisition ~~committed,~~costs ~~under~~when ~~existing~~it ~~construction loan~~determines ~~agreements,~~that toit ~~fund~~is upprobable tothe anproperty ~~additional~~will $3not be acquired.~~6 million.~~ Write-offs ~~During~~of ~~the~~land ~~year~~deposits ~~ended~~and ~~March 31,~~pre-acquisition ~~2008, Financial~~costs ~~Services~~were ~~ceased~~$1.3 ~~originating~~million ~~new~~and ~~construction~~$10.1 ~~loans;~~million ~~however,~~for itthe ~~intends~~three tomonths ~~fulfill~~ended ~~its existing~~June 30, ~~funding~~2009 ~~commitments~~and 2008, respectively.

12 11

Table of Contents

~~The Company has established a liability for anticipated losses associated with mortgage loans originated and sold. Please refer to Note~~ (GE)~~, “Commitments and Contingencies,” for information on this reserve at December 31, 2008 and March 31, 2008.~~ GOODWILL

~~(D) INVENTORIES~~A summary of goodwill by segment is presented below:

For the three and nine months ended December 31, 2008, the Company recorded $467.1 million and $594.1 million, respectively, in land-related impairments. For the three and nine months ended December 31, 2007, the Company recorded $502.9 million and $1,492.4 million, respectively, in land-related impairments.


	As of
	June 30, 2009		March 31, 2009
Home Building
Central	$	4,569	$	4,569
Total Home Building		4,569		4,569
Financial Services		5,364		5,364
Total	$	9,933	$	9,933

~~Housing~~Goodwill ~~Projects~~represents the excess of purchase price over net assets of businesses acquired. Goodwill is tested for impairment at the reporting unit level on an annual basis (January 1) or when management determines that due to certain circumstances the carrying amount of goodwill may not be recoverable.

~~A summary of housing projects is provided below:~~(F) INDEBTEDNESS

	As of
	December 31, 2008		March 31, 2008
Direct Construction	$	1,268,872	$	1,746,016
Land Under Development		2,050,939		2,882,844
Housing Projects	$	3,319,811	$	4,628,860

A summary of the Company’s debt, net of unamortized discounts as applicable, is presented below:

Land Held for Development and Sale and Land Held Under Option Agreements Not Owned


	As of
	June 30, 2009		March 31, 2009
Senior Notes (unsecured):
Senior Notes due September 2009 at 5.8%	$	210,920	$	210,920
Senior Notes due November 2010 at 4.55%		300,000		300,000
Senior Notes due February 2011 at 7.875%		392,495		392,495
Senior Notes due January 2012 at 7.5%		324,422		324,373
Senior Notes due August 2012 at 5.45%		295,000		295,000
Senior Notes due October 2013 at 5.125%		300,000		300,000
Senior Notes due May 2014 at 5.7%		350,000		350,000
Senior Notes due June 2015 at 5.25%		450,000		450,000
Senior Notes due May 2016 at 6.5%		480,000		480,000
Land Acquisition Notes and Other due through May 2017 (1)		3,285		2,084

Total Senior Notes and Other		3,106,122		3,104,872

Financial Services Mortgage Warehouse Facilities (secured) (2)		49,038		119,052

Total Debt	$	3,155,160	$	3,223,924

~~The~~(1) ~~Company~~Weighted-average ~~enters~~interest ~~into~~rates ~~land~~of ~~option~~5.48% ~~purchase~~and ~~agreements~~7.01% ~~Under~~at ~~the~~June ~~option agreements~~30, ~~the Company~~2009 ~~pays~~and aMarch ~~stated deposit or posts a letter of credit in consideration for the right to purchase land at a future time~~31, ~~usually at predetermined prices. These options generally do not contain performance requirements from the Company nor obligate the Company to purchase the land~~2009, ~~and~~ ~~expire on various dates~~respectively. ~~A summary of the Company’s land option agreements is provided below:~~

	As of
	December 31, 2008		March 31, 2008
Number of Land Option Agreements		65		145
Total Cash Deposits in Inventory	$	28,443	$	53,941
Letters of Credit		747		943
Total Invested through Deposits or Secured with Letters of Credit	$	29,190	$	54,884
Total Purchase Price of Land Option Agreements	$	593,258	$	1,131,976

(2)	Weighted-average interest rates of 2.79% and 2.72% at June 30, 2009 and March 31, 2009, respectively.

13The weighted-average interest rates, including amortization of related issuance costs, for the Company’s debt during the three months ended June 30, 2009 and 2008 were:


	For the Three Months Ended June 30,
	2009		2008
Centex:
Senior Notes		6.05%		6.01%
Land Acquisition Notes and Other		5.47%		7.97%

Financial Services:
Mortgage Warehouse Facilities		6.43%		4.81%

~~A summary of the Company’s land held for development and sale and land held under option agreements not owned is provided below:~~ 12

	As of December 31, 2008				As of March 31, 2008
			Land Held				Land Held
	Land Held for		Under Option		Land Held for		Under Option
	Development		Agreements		Development		Agreements
	and Sale		Not Owned		and Sale		Not Owned
Cash Deposits	$	8,368	$	20,075	$	20,711	$	33,230
Pre-acquisition Development Costs		4,913		5,994		10,810		1,084
Remaining Purchase Price of Land Options Recorded Pursuant to:
FIN 46 (1)		—		64,423		—		75,344
SFAS 49 (2)		—		24,290		—		38,134
Owned Land Held for Development and Sale (3)		476,569		—		527,235		—
	$	489,850	$	114,782	$	558,756	$	147,792

Table of Contents

(1)		In accordance with the provisions of FIN 46, the Company is the primary beneficiary of certain option agreements to purchase land. Land consolidated under FIN 46 is recorded with a corresponding increase to minority interests. At December 31, 2008, nine land option agreements were consolidated pursuant to FIN 46.
(2)		As of December 31, 2008, the Company recorded six land option agreements as financing arrangements pursuant to the provisions of SFAS 49. The remaining obligation under such financing arrangements is recorded in accrued liabilities.
(3)		Amount includes owned land, including development costs, that is not currently anticipated to be developed for more than two years and land that the Company intends to sell within one year.

Maturities of the Company’s senior notes and other are as follows:

The Company writes off deposits and pre-acquisition costs when it determines that it is probable the property will not be acquired. Write-offs of land deposits and pre-acquisition costs amounted to $13.9 million and $37.9 million for the three and nine months ended December 31, 2008, respectively, and $26.4 million and $87.6 million for the three and nine months ended December 31, 2007, respectively.


	For the Fiscal Years Ending March 31,

2010	$	211,012
2011		692,607
2012		325,799
2013		296,364
2014		300,150
Thereafter		1,280,190
	$	3,106,122

~~(E) GOODWILL~~ As described in more detail below, the Company is required to maintain compliance with certain financial covenants in the Company’s multi-bank revolving credit facility. At June 30, 2009, the Company was in compliance with its financial covenants under such facility.

AAs ~~summary~~described in more detail below, Financial Services maintains a committed mortgage warehouse credit facility that contains various affirmative and negative covenants that are generally customary for a facility of ~~goodwill~~this bytype. At ~~segment~~June 30, is2009, ~~presented~~Financial ~~below:~~Services was in compliance with its financial covenants under this facility.

	As of		Goodwill			Goodwill			As of
	March 31, 2008		Disposed			Impairments			December 31, 2008
Home Building
East	$	30,594	$	—		$	(30,594	)	$	—
Central		9,671		—			(5,102	)		4,569
West		2,405		—			(2,405	)		—
Other homebuilding		—		—			—			—
Total Home Building		42,670		—			(38,101	)		4,569
Financial Services		8,952		(3,588	)(1)		—			5,364
Total	$	51,622	$	(3,588	)	$	(38,101	)	$	9,933

Credit Facilities

~~(1)~~The ~~Represents~~Company’s ~~disposal~~credit offacilities ~~goodwill~~and ~~related~~available tocapacity ~~the~~as ~~sale~~ of ~~Westwood~~June ~~Insurance~~30, ~~Agency.~~2009 are summarized below:

Goodwill is tested for impairment at the reporting unit level on an annual basis (January 1) or when management determines that due to certain circumstances the carrying amount of goodwill may not be recoverable. For the quarter ended December 31, 2008, management determined that events and circumstances had occurred that indicated the remaining goodwill balances within the homebuilding reporting units of the segment may not be recoverable. These events included, but were not limited to, continued significant land-related impairments, significant curtailment of housing demand, deteriorating conditions in the overall economy and a relatively low market capitalization compared to the overall book value of the Company. Based on these factors, the Company’s goodwill was evaluated for impairment at December 31, 2008. As a result of the impairment test, the Company recorded goodwill impairments as outlined in the table above.


	Credit Facilities		Available Capacity

Multi-Bank Revolving Credit Facility	$	500,000	$	196,639
Financial Services Secured Credit Facility		100,000		53,057

	$	600,000	$	249,696

14The Company maintains a $500 million committed, unsecured, multi-bank revolving credit facility, maturing in July 2010 that provides funding for general corporate purposes and letters of credit. Material covenants under the credit facility include a maximum leverage ratio, a minimum tangible net worth and a borrowing base limitation on the availability of borrowings. The borrowing base limitation applies whenever the Company does not have an investment grade senior unsecured debt rating from at least two of the following rating agencies: Standard & Poor’s (“S&P”), Moody’s Investors Service (“Moody’s”) and Fitch Ratings (“Fitch”). At June 30, 2009, the Company did not have investment grade ratings and was therefore subject to the borrowing base limitation. At June 30, 2009, the Company’s long-term debt ratings were BB-, Ba3 and BB from S&P, Moody’s and Fitch, respectively. Under the borrowing base limitation, the sum of the net senior debt (as defined in the credit agreement), any amounts drawn on the revolving credit facility for direct borrowings and outstanding financial letters of credit cannot exceed an amount calculated based on applying certain percentages to various categories of unencumbered homebuilding inventory and other assets. The Company had no amounts drawn on the revolving credit facility for direct borrowings at June 30, 2009 or at any time during the three months then ended. As of June 30, 2009, the Company had $303.4 million of outstanding letters of credit under its facility, including $116.4 million of financial letters of credit. Financial letters of credit are generally issued as a form of financial or payment guaranty. At June 30, 2009, available capacity amounts for the revolving credit facility were also further subject to certain limitations by features in the Company’s credit facility commonly referred to as anti-cash hoarding provisions.

~~Table~~In addition, the Company’s credit facility includes an interest coverage ratio, which determines whether the Company is required to establish a liquidity reserve deposit. If the interest coverage ratio is less than 2 to 1, the Company is required to establish a liquidity reserve of ~~Contents~~cash balances to be maintained in segregated accounts with certain lenders in the credit facility. These amounts are not subject to a security interest, but are classified as restricted cash in the accompanying Consolidated Balance Sheets. The amount of the liquidity reserve is equal to eight times consolidated net interest expense (as defined in the credit agreement) for the most recent completed fiscal quarter.

~~(F)~~The Company may withdraw or must increase amounts on deposit in the liquidity reserve at the end of each fiscal quarter if the amount on deposit exceeds or is below the amount required for that fiscal quarter. The Company may withdraw all amounts on deposit once it satisfies the interest coverage ratio of 2 to 1. At June ~~INDEBTEDNESS~~30, 2009, the liquidity reserve requirement on deposit was $403.5 million.

~~A summary of the Company’s debt, net of unamortized discounts as applicable, is presented below:~~13

	As of
	December 31, 2008		March 31, 2008
Centex:
Senior Notes (unsecured):
Senior Notes due August 2008 at 4.875%	$	—	$	150,000
Senior Notes due September 2009 at 5.8%		210,920		225,000
Senior Notes due November 2010 at 4.55%		300,000		300,000
Senior Notes due February 2011 at 7.875%		392,494		399,992
Senior Notes due January 2012 at 7.5%		324,325		349,198
Senior Notes due August 2012 at 5.45%		295,000		315,000
Senior Notes due October 2013 at 5.125%		300,000		300,000
Senior Notes due May 2014 at 5.7%		350,000		350,000
Senior Notes due June 2015 at 5.25%		450,000		450,000
Senior Notes due May 2016 at 6.5%		480,000		480,000
Land Acquisition Notes and Other due through May 2017 (1)		855		5,977
Total Senior Notes and Other		3,103,594		3,325,167
Financial Services (secured):
Mortgage Warehouse Facilities (2)		157,965		337,053
Total Debt	$	3,261,559	$	3,662,220

Table of Contents

(1)		Weighted average interest rates of 10.00% and 6.45% at December 31, 2008 and March 31, 2008, respectively.
(2)		Weighted average interest rates of 2.33% and 3.63% at December 31, 2008 and March 31, 2008, respectively.

Funding of Mortgage Loans

~~The~~At ~~weighted-average~~June 30, ~~interest~~2009, ~~rates~~CTX Mortgage Company, ~~including~~LLC ~~amortization~~was funding its mortgage originations primarily through borrowings under a committed mortgage warehouse credit facility with a commitment of ~~related~~$100 ~~issuance~~million, ~~costs~~which expires in October 2009. Borrowings under the warehouse facility constitute short-term debt of Financial Services. At June 30, 2009, the available capacity under the warehouse facility was $53.1 million. The warehouse facility generally allows CTX Mortgage Company, LLC to sell to the bank, on a revolving basis, mortgage loans up to an aggregate specified amount. Simultaneously, the bank has entered into an agreement to transfer such mortgage loans back to CTX Mortgage Company, LLC on a specified date or on the Company’s demand for subsequent sale by CTX Mortgage Company, LLC to third parties. Mortgage loans eligible for sale by CTX Mortgage Company, LLC under the warehouse facility are conforming loans, FHA/VA eligible loans, and jumbo loans meeting conforming underwriting guidelines except as to the size of the loan. Under the committed mortgage warehouse credit facility, the bank has the right to convert the facility to an amortizing loan based on the ultimate sale of the underlying collateral and not to purchase any additional mortgage loans under the warehouse facility if the Company’s long-term unsecured debt ~~during~~ratings ~~the~~fall ~~nine~~below ~~months~~a ~~ended~~specified ~~December~~level. At June 3130, ~~2008~~2009, CTX Mortgage Company, LLC had outstanding $2.1 million of short-term debt under a $100 million committed mortgage warehouse credit facility that expired on May 30, 2009. The $2.1 million outstanding represents the remaining balance under the facility and ~~2007~~will ~~were:~~be repaid as the related mortgage loans are sold in the ordinary course of business.

	For the Nine Months Ended December 31,
	2008			2007
Centex:
Senior Notes		5.99	%		5.86	%
Land Acquisition Notes and Other		10.00	%		6.91	%
Medium-term Note Programs		—			5.68	%
Financial Services:
Mortgage Warehouse Facilities		5.47	%		6.05	%
Harwood Street Funding I, LLC Variable-Rate Subordinated Extendable Certificates		—			7.42	%

CTX Mortgage Company, LLC bears the credit risk associated with loans originated until such loans are sold to third parties. In connection with the loans it originates and sells to third parties, CTX Mortgage Company, LLC makes representations and warranties to the effect that each mortgage loan sold satisfies the criteria of the sale agreement. CTX Mortgage Company, LLC may be required to repurchase mortgage loans sold to third parties if such mortgage loans are determined to breach the representations and warranties of CTX Mortgage Company, LLC, as seller. CTX Mortgage Company, LLC establishes a loan origination reserve for its estimated losses for these obligations.

~~Maturities~~If ofthe current funding source was to become unavailable, Financial Services would need to make other financing arrangements to fund its mortgage loan origination activities, or the Company’s ~~senior~~may ~~notes~~be required to fund Financial Services loan originations and make additional capital contributions to Financial Services. Although the Company believes that Financial Services could broker loans to other ~~are~~mortgage ascompanies, ~~follows:~~sell loans directly to the Federal National Mortgage Association or arrange for alternative financing that is common for other homebuilders and mortgage companies, there can be no assurance that such financing would be available on satisfactory terms, and any delay in obtaining such financing could adversely affect the results of operations of Financial Services.

	For the Fiscal Years Ending
	March 31,
2009	$	23
2010		211,021
2011		692,606
2012		324,449
2013		295,136
Thereafter		1,580,359
	$	3,103,594

(G) COMMITMENTS AND CONTINGENCIES

15Joint Ventures

~~Table~~The Company conducts a portion of ~~Contents~~its land acquisition, development and other activities through its participation in joint ventures in which the Company holds less than a majority interest. These land-related activities typically require substantial capital; however, partnering with other homebuilders or developers and, to a lesser extent, financial partners, allows Home Building to share the risks and rewards of ownership and to provide broader strategic advantages.

The Company is required to maintain compliance with certain financial covenants in the Company’s multi-bank revolving credit facility. At December 31, 2008, material covenants included a maximum leverage ratio, a minimum tangible net worth and a borrowing base limitation on the availability of borrowings. The Company’s credit facility also included an interest coverage ratio. This ratio was a determinant of the maximum leverage ratio covenant and certain of the credit facility’s pricing provisions.14

OnTable ~~January 23, 2009, the Company obtained from lenders a waiver~~ of any potential non-compliance with its minimum tangible net worth covenant as of December 31, 2008, and the credit facility was amended as described more fully below. At December 31, 2008, the Company was in compliance with all of the other financial covenants contained in this credit facility.Contents

InA ~~addition,~~summary ~~Financial Services maintains two committed mortgage warehouse credit facilities that contain various affirmative and negative covenants that are generally customary for facilities~~ of ~~this type. At December 31, 2008, Financial Services was not in compliance with a covenant in one of~~ the ~~facilities~~Company’s ~~which~~Home ~~was~~Building ~~subsequently~~joint ~~waived~~ventures byis ~~the~~presented ~~lender during January 2009. At December 31, 2008, Financial Services was in compliance with its remaining financial covenants.~~below:

Credit Facilities


	As of June 30, 2009						As of March 31, 2009
	Number of JVs (1)		Investments		Centex’s Share of Debt (2)		Number of JVs (1)		Investments		Centex’s Share of Debt (2)

Unleveraged Joint Ventures		27	$	124,856	$	–		29	$	133,149	$	–
Joint Ventures with Debt:
Repayment Guarantee (3)		1		899		3,819		1		836		4,357
Completion Guarantee (4)		2		2,084		–		3		2,519		84,861
		30		127,839		3,819		33		136,504		89,218
No Recourse or Guarantee		2		–		–		4		–		35,385

		32	$	127,839	$	3,819		37	$	136,504	$	124,603

(1) The number of joint ventures includes unconsolidated Home Building joint ventures for which the Company’s ~~credit~~has ~~facilities~~an investment balance as of ~~December~~ the end of the period and/or current fiscal year activity. The Company was the managing member of 18 and 22 of the active joint ventures as of June 30, 2009 and March 31, ~~2008~~2009, ~~are~~respectively. ~~summarized~~The ~~below:~~number of joint ventures includes 11 and 13 joint ventures as of June 30, 2009 and March 31, 2009, respectively, for which substantially all of the joint ventures’ activities are complete.

	Credit Facilities
Centex
Multi-Bank Revolving Credit Facility
Revolving Credit	$	750,000
Letters of Credit		600,000
		1,350,000
Financial Services
Secured Credit Facilities		250,000
	$	1,600,000	(1)

(2)

Centex’s share of debt represents the Company’s maximum exposure related to the joint ventures’ debt at each date. Amounts shown in the column as of June 30, 2009 do not include $34.9 million in debt-related and other joint venture obligations recorded by the Company as accrued liabilities in its Consolidated Balance Sheets.

(13) ~~Prior~~The Company has guaranteed repayment of a portion of certain joint venture debt limited to ~~amendment~~its ownership percentage of ~~revolving~~the ~~credit~~joint ~~facility~~venture ~~during~~or ~~January~~a ~~2009~~percentage thereof.

At December 31, 2008, the Company maintained a $1.35 billion committed, unsecured, multi-bank revolving credit facility, maturing in July 2010, that provided funding for general corporate purposes and letters of credit up to a sub limit of $600 million. The revolving credit facility included a borrowing base limitation that applied whenever the Company did not have an investment grade senior unsecured debt rating from at least two of the following rating agencies: Standard & Poor’s (~~“S&P”~~4), ~~Moody’s~~Certain ~~Investors~~joint ~~Service~~venture ~~(“Moody’s”)~~agreements ~~and~~require ~~Fitch Ratings (“Fitch”). At December 31, 2008,~~ the Company ~~did not have investment grade ratings and was therefore subject~~ to ~~the~~ ~~borrowing~~guarantee ~~base limitation. At December 31, 2008,~~ the ~~Company’s~~completion ~~long-term debt ratings were BB-, Ba3 and BB from S&P, Moody’s and Fitch, respectively. Under the borrowing base limitation, the sum~~ of ~~the~~a ~~net~~project ~~senior~~or ~~debt~~phase ~~(as~~if ~~defined in~~ the ~~credit~~joint ~~agreement),~~venture ~~any~~does ~~amounts drawn on the revolving credit facility for direct borrowings and outstanding financial letters of credit could~~ not ~~exceed~~perform ~~an amount calculated based on applying certain percentages to various categories of unencumbered homebuilding inventory and other assets. The Company had no amounts drawn on~~ the ~~revolving~~ ~~credit~~required ~~facility~~land ~~for direct borrowings at December 31, 2008 or at any time during the nine months then ended~~development. AsA ofportion ~~December 31, 2008, the Company had $349.7 million~~ of ~~outstanding~~these ~~letters of~~completion ~~credit~~guarantees ~~under its facility, including $149.7 million of financial letters of credit. Financial letters of credit~~ are ~~generally~~joint ~~issued~~and asseveral awith ~~form of financial or payment guaranty. At December 31, 2008, available capacity amounts for~~ the ~~revolving credit facility were also further subject to certain limitations by features in the~~ Company’s ~~credit facility commonly referred to as anti-cash hoarding provisions~~partners.

InTotal ~~January 2009,~~joint ~~the~~venture ~~Company~~debt ~~amended~~outstanding ~~its~~as ~~multi-bank~~of ~~revolving~~June 30, ~~credit~~2009 ~~facility~~and ~~to,~~March ~~among other things~~31, ~~reduce~~2009 ~~the~~was ~~total~~$166.8 ~~commitment,~~million atand ~~the~~$270.3 ~~Company’s~~million, ~~request~~respectively, towhich ~~$500 million~~includes ~~from~~certain ~~$1.35 billion, reduce~~joint ~~the~~venture ~~letter~~debt of ~~credit~~a ~~sublimit,~~joint ~~which~~venture isin ~~part~~bankruptcy ~~of,~~that ~~and~~is not included in ~~addition~~the ~~to,~~table ~~the~~above ~~total commitment,~~and tohas ~~$500 million~~no ~~from~~recourse ~~$600 million.~~to ~~The~~the ~~amended~~Company. Debt agreements ~~revolving~~for ~~credit~~joint ~~facility~~ventures ~~continues~~vary ~~to include~~by alender ~~borrowing~~in ~~base~~terms ~~limitation~~of structure and ~~anti-cash~~level ~~hoarding~~of ~~provisions~~recourse. For ~~Given~~certain ~~current~~of ~~debt~~the ~~ratings~~joint ventures, the Company ~~anticipates~~is ~~operating~~also ~~under~~liable ~~the~~on ~~borrowing~~a ~~base~~contingent ~~limitation~~basis, ~~for~~through ~~the~~other ~~foreseeable future. At December 31~~guarantees, ~~2008,~~letters ~~and~~of ~~after~~credit ~~giving~~or ~~effect~~other toarrangements, ~~the~~with ~~amendment,~~respect ~~the~~to ~~available~~a ~~capacity~~portion ~~under~~of the ~~amended~~ ~~revolving~~construction ~~credit facility was $150~~debt.~~3 million.~~ Additionally, ~~The amendment also increased~~ the ~~pricing structure~~Company ~~used~~has agreed to ~~determine~~indemnify the ~~amount~~construction oflender ~~the~~for ~~interest~~certain ~~rate~~environmental ~~and~~liabilities ~~other~~in ~~charges~~the ~~for~~case ~~direct borrowings, letters~~ of ~~credit~~most ~~and~~joint ~~facility fees~~ventures. The ~~amended~~Company ~~facility~~has ~~also~~recorded ~~changed~~obligations ~~the definition~~in ofits ~~minimum~~financial ~~tangible~~statements ~~net~~to ~~worth~~reflect inits ~~the~~share ~~credit~~of ~~agreement~~certain ~~effectively~~completion ~~lowering~~and ~~the~~repayment guarantees.

16Two of the Company’s joint ventures were in default as of June 30, 2009. The Company’s obligation for one of the joint ventures in default was $22.5 million at June 30, 2009, which has been recorded by the Company. At June 30, 2009, the Company had satisfied its obligation under a completion guarantee for the other joint venture in default.

~~Table~~Letters of ~~Contents~~Credit and Surety Bonds

~~level~~In the normal course of ~~minimum~~business, ~~tangible~~the ~~net~~Company ~~worth~~posts ~~required~~letters of credit and surety bonds: (1) pursuant to becertain ~~maintained~~performance byrelated ~~the~~obligations, ~~Company~~(2) ~~beginning~~as ~~with~~security ~~the fiscal~~for ~~quarter~~certain ~~ending~~land ~~March 31,~~option ~~2009~~purchase toagreements ~~$650 million~~of Home Building, ~~subject~~and to(3) ~~certain~~under ~~adjustments.~~various insurance programs. The ~~definition~~Company ofalso ~~leverage~~previously ~~ratio~~obtained (surety bonds, which are reflected as ~~defined~~discontinued operations in the ~~credit~~table ~~agreement)~~below, ~~was~~pursuant ~~also~~to ~~amended~~construction ~~and~~obligations ~~the~~of ~~maximum leverage~~Construction ~~ratio~~Services ~~permitted~~prior to bethe ~~maintained~~sale byof this segment on March 30, 2007. No event has occurred that has led the Company ~~was~~to ~~increased~~believe tothat ~~65%,~~these ~~which~~letters isof acredit ~~fixed percentage~~or ~~not~~bonds ~~subject~~will tobe ~~further~~drawn ~~adjustment~~upon.

In addition, the amended facility provides that, if the Company’s interest coverage ratio is less than 2 to 1, the Company is required to establish a liquidity reserve of cash balances to be maintained in segregated accounts with certain lenders in the credit facility. These amounts are not subject to a security interest, but will be classified as restricted cash. The amount of the liquidity reserve is equal to eight times consolidated net interest expense (as defined in the credit agreement) for the most recent completed fiscal quarter. 15

InTable ~~January 2009, the Company deposited an aggregate~~ of $354.9 million with certain lenders to comply with the liquidity reserve requirement for the quarter ended December 31, 2008. The Company may withdraw or must increase amounts on deposit in the liquidity reserve at the end of each fiscal quarter if the amount on deposit exceeds or is below the amount required for that fiscal quarter. The Company may withdraw all amounts on deposit once it satisfies the interest coverage ratio of 2 to 1. Contents

~~Funding~~A summary of ~~Mortgage~~the ~~Loans~~ Company’s outstanding letters of credit and surety bonds as of June 30, 2009 and March 31, 2009 is presented below (dollars in millions):

CTX Mortgage Company, LLC historically funded its origination of mortgage loans through the sale of such mortgage loans to Harwood Street Funding I, LLC (“HSF-I”) and, to a lesser extent, through borrowings under more traditional committed mortgage warehouse credit facilities and mortgage loan sale agreements. As a result of the significant disruptions in the mortgage and asset-backed commercial paper markets, beginning in the second quarter of fiscal year 2008, HSF-I was unable to finance the purchase of mortgage loans from CTX Mortgage Company, LLC. In November 2007, HSF-I and the related swap arrangements were terminated and all outstanding obligations were redeemed.


	As of June 30, 2009					As of March 31, 2009
	Letters of Credit		Surety Bonds			Letters of Credit		Surety Bonds

Home Building	$	82.1	$	790.7	(1)	$	85.6	$	863.3
Financial Services		30.9		7.3			30.9		7.2
Other		158.1		0.2			158.1		0.2
Discontinued Operations (2)		33.1		1,604.3			33.1		1,583.7
	$	304.2	$	2,402.5		$	307.7	$	2,454.4

~~CTX~~(1) ~~Mortgage~~The Company, ~~LLC~~estimates isthat ~~currently funding its mortgage originations primarily through borrowings under two committed mortgage warehouse credit facilities with commitments of~~ $~~150 million~~319.5 ~~and $100~~ million ~~at December 31, 2008. Borrowings under the warehouse facilities constitute short-term debt~~ of ~~Financial~~work ~~Services.~~remains ~~At December 31, 2008, the available capacity under warehouse facilities was $92.0 million. The warehouse facilities generally allow CTX Mortgage Company, LLC~~ to ~~sell~~be toperformed ~~the banks,~~ on athese ~~revolving~~projects basis, mortgage loans up to an aggregate specified amount. Simultaneously, the banks have entered into an agreement to transfer such mortgage loans back to CTX Mortgage Company, LLC on a specified date or on the Company’s demand for subsequent sale by CTX Mortgage Company, LLC to third parties. Mortgage loans eligible for sale by CTX Mortgage Company, LLC under the warehouse facilities are conforming loans, FHA/VA eligible loans, and jumbo loans meeting conforming underwriting guidelines except as ~~to the size~~ of ~~the loan.~~June ~~Under the $100 million committed mortgage warehouse credit facility~~30, the bank has the right to convert the facility to an amortizing loan based on the ultimate sale of the underlying collateral and not to purchase any additional mortgage loans under the warehouse facility if the Company’s long-term unsecured debt ratings fell below a specified level2009.

~~CTX~~(2) ~~Mortgage~~After ~~Company,~~the ~~LLC~~sale ~~bears~~of Construction Services, the ~~credit~~Company ~~risk~~remains ~~associated~~responsible ~~with~~to ~~loans~~a ~~originated~~surety ~~until~~for ~~such loans~~certain ~~are~~surety ~~sold~~bond obligations relating to ~~third~~Construction ~~parties~~Services projects commenced prior to March 30, 2007. InThese ~~connection~~surety ~~with~~bonds ~~the~~have ~~loans~~a ittotal ~~originates~~face ~~and~~amount ~~sells~~of to$1.60 ~~third parties,~~billion ~~CTX~~at ~~Mortgage~~June ~~Company~~30, ~~LLC~~2009, ~~makes~~although ~~representations~~the ~~and~~risk ~~warranties~~of liability with respect to these surety bonds declines as the ~~effect~~relevant ~~that~~construction ~~each mortgage~~projects ~~loan~~are ~~sold~~performed. ~~satisfies~~At June 30, 2009, the ~~criteria~~Company estimates that $177.5 million of ~~the~~work ~~sale~~remains ~~agreement~~to be performed on these projects. ~~CTX~~In ~~Mortgage~~connection ~~Company~~with certain of these surety bond obligations, ~~LLC~~the ~~may~~Company ~~be required~~posted toa ~~repurchase~~$100 ~~mortgage~~million ~~loans~~letter ~~sold~~of credit to ~~third~~such ~~parties~~surety ifwhich ~~such~~is ~~mortgage~~included ~~loans~~in ~~are~~Other ~~determined~~ above. The purchaser of Construction Services agreed to ~~breach~~indemnify the ~~representations~~Company ~~and~~against ~~warranties~~losses ofrelating ~~CTX~~to ~~Mortgage~~such ~~Company,~~surety ~~LLC~~bond obligations, asincluding ~~seller~~amounts drawn under such letter of credit. ~~CTX~~The ~~Mortgage~~ Company, ~~LLC~~purchased ~~establishes~~for its benefit an additional back-up indemnity provided by a ~~loan~~financial ~~origination~~institution ~~reserve~~with ~~for~~an ~~its~~A ~~estimated~~(S&P) ~~losses~~and ~~for~~A2 ~~these~~(Moody’s) ~~obligations~~credit rating. The obligation of such financial institution under the back-up indemnity is $400.0 million as of June 30, 2009 and will remain at $400.0 million until termination in 2016.

~~CTX~~Community ~~Mortgage~~Development ~~Company, LLC~~ and ~~its~~Other ~~related~~Special ~~companies~~District sold $690.6 million and $1.95 billion of mortgage loans to investors during the three months ended December 31, 2008 and 2007, respectively, and $3.37 billion and $7.03 billion during the nine months ended December 31, 2008 and 2007, respectively. CTX Mortgage Company, LLC and its related companies recognized gains on sales of mortgage loans and related derivative activity of $8.2 million and $21.8 million during the three months ended December 31, 2008 and 2007, respectively, and $55.0 million and $91.2 million during the nine months ended December 31, 2008 and 2007, respectively. Obligations

17A Community Development District or similar development authority (“CDD”) is a unit of local government created under various state statutes that utilizes the proceeds from the sale of bonds to finance the construction or acquisition of infrastructure assets of a development. A portion of the liability associated with the bonds including principal and interest is assigned to each parcel of land within the development. This debt is typically paid by subsequent special assessments levied by the CDD on the landowners. In accordance with EITF 91-10, “Accounting for Special Assessments and Tax Increment Financing,” the Company records a liability for future assessments, which are fixed or determinable for a fixed or determinable period. In addition and in accordance with SFAS No. 5, “Accounting for Contingencies,” the Company evaluates whether it is contingently liable for any of the debt related to the bond issuance. This is typically the case where bonds issued by the CDD have maturity dates of ten years or less that will be paid by the Company as the developer and current landowner and not by future homeowners. At June 30, 2009 and March 31, 2009, the Company had recorded $297.9 million and $309.7 million, respectively, in accrued liabilities for outstanding CDD obligations.

~~Table~~Warranties ofand ~~Contents~~Guarantees

~~(G) COMMITMENTS~~In ~~AND~~the ~~CONTINGENCIES~~normal course of its business, the Company issues certain warranties and guarantees or makes certain representations related to its home sales, land sales and mortgage loan sales. The Company believes that it has established the necessary accruals for these warranties, guarantees and representations.

~~Joint~~Home ~~Ventures~~Building offers a ten-year limited warranty for most homes constructed and sold. The warranty covers defects in materials or workmanship in the first two years of the customers’ ownership of the home and certain designated components or structural elements of the home in the third through tenth years. Home Building estimates the costs that may be incurred under its warranty program for which it will be responsible and records a liability at the time each home is closed. Factors that affect Home Building warranty liability include the number of homes closed, historical and anticipated rates of warranty claims, and cost per claim. Home Building periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary.

The Company conducts a portion of its land acquisition, development and other activities through its participation in joint ventures in which the Company holds less than a majority interest. These land-related activities typically require substantial capital; however, partnering with other homebuilders or developers and, to a lesser extent, financial partners, allows Home Building to share the risks and rewards of ownership and to provide broader strategic advantages.16

ATable ~~summary~~ of ~~the Company’s Home Building joint ventures is presented below:~~Contents

	As of December 31, 2008							As of March 31, 2008
						Centex’s						Centex’s
	Number					Share		Number				Share
	of JVs(1)		Investments			of Debt(2)		of JVs (1)		Investments		of Debt (2)
Unleveraged Joint Ventures		27	$	152,620		$	—		29	$	70,043	$	—
Joint Ventures with Debt:		10							13
Limited Maintenance Guarantee (3) (4)				—			—				43,311		27,500
Repayment Guarantee (5)				(2,959	)		4,197				3,154		13,692
Completion Guarantee (4)				(9,373	)		123,755				78,274		133,935
No Recourse or Guarantee				(499	)		24,000				12,040		24,000
		37	$	139,789		$	151,952		42	$	206,822	$	199,127

Changes in Home Building contractual warranty liability are as follows for the three months ended June 30, 2009 and the year ended March 31, 2009:

(1)	The number of joint ventures includes unconsolidated Home Building joint ventures for which the Company has an investment balance as of the end of the period and/or current fiscal year activity. The Company was the managing member of 22 and 23 of the active joint ventures as of December 31, 2008 and March 31, 2008, respectively. The number of joint ventures includes 12 and 17 joint ventures as of December 31, 2008 and March 31, 2008, respectively, for which substantially all of the joint ventures’ activities are complete.
	June 30, 2009			March 31, 2009 (1)
(2)	Centex’s share of debt represents the Company’s maximum exposure related to the joint ventures’ debt at each respective date, exclusive of any debt-related obligations recorded by the Company.
Balance at Beginning of Period	$	13,550		$	29,155
(3)	The Company guaranteed that certain of the joint ventures would maintain a specified loan to value ratio. For certain joint ventures, the Company contributed additional capital in order to maintain loan to value requirements.
Warranties Issued		2,368			15,201
(4)	Certain joint venture agreements require the Company to guarantee the completion of a project or phase if the joint venture does not perform the required land development. A portion of these completion guarantees are joint and several with the Company’s partners.
Settlements Made		(2,352	)		(17,251	)
(5)	The Company has guaranteed repayment of a portion of certain joint venture debt limited to its ownership percentage of the joint venture or a percentage thereof.
Changes in Liability of Pre-Existing Warranties, Including Expirations		(1,475	)		(13,555	)
Balance at End of Period	$	12,091		$	13,550

~~Total~~(1) ~~joint~~For ~~venture~~the ~~debt~~three ~~outstanding~~months asended ofJune ~~December 31~~30, 2008, ~~and~~warranties ~~March 31~~issued, ~~2008~~settlements ~~was $340.9 million~~made and ~~$423.2 million,~~changes ~~respectively. Debt agreements for joint ventures vary by lender~~ in ~~terms~~liability of ~~structure~~pre-existing ~~and~~warranties ~~level~~were ~~of recourse. For certain of the joint ventures~~$3, ~~the Company is also liable on a contingent basis~~918, ~~through other guarantees~~$(4,517) letters of credit or other arrangements, with respect to a portion of the construction debt. Additionally, the Company has agreed to indemnify the construction lender for certain environmental liabilities in the case of most joint ventures, and ~~most guarantee arrangements provide that the Company is liable for its proportionate share of the outstanding debt if the joint venture files for voluntary bankruptcy. To date~~$(3, ~~the Company has not been requested to perform under the environmental liabilities or voluntary bankruptcy guarantees for any of its joint ventures. However~~419), ~~the Company has recorded obligations pursuant to its share of certain completion and repayment guarantees~~respectively.

~~Eight~~Financial ofServices ~~the~~has ~~Company’s~~established ~~joint~~a ~~ventures~~liability ~~are~~for inanticipated ~~default~~losses ofassociated ~~their~~with ~~joint~~mortgage ~~venture~~loans ~~debt~~originated ~~agreements as of December 31, 2008. The Company’s share of the total debt of these joint ventures that are in default is $142.6 million~~ and ~~is included in the table above~~sold. Changes ~~The Company is~~ in ~~discussions~~Financial ~~with the~~Services ~~joint~~liability ~~venture~~are ~~partners~~as ~~and~~follows ~~lenders~~for ~~with respect to each joint venture. For all of~~ the ~~Company’s~~ ~~joint~~three ~~ventures,~~months ~~recourse~~ended ~~under debt agreements is limited to the Company’s share of the debt~~June 30, ~~the~~2009 ~~underlying~~and ~~collateral or completion obligations of~~ the ~~joint~~year ~~venture~~ended ~~partners.~~March ~~In some cases~~31, ~~however, the Company may elect to make additional contributions or payments, beyond its~~2009: share of the debt, if the Company determines that doing so is in its best interests or allows it to preserve all or part of the value of its investment in a particular property or project, which may otherwise be subject to foreclosure.


	June 30, 2009			March 31, 2009 (1)

Balance at Beginning of Period	$	28,968		$	13,903
Provision for Losses		73			765
Settlements		(4,921	)		(9,890	)
Changes in Pre-Existing Reserves		13,643			24,190
Balance at End of Period	$	37,763		$	28,968

~~Table~~(1) ofFor ~~Contents~~the three months ended June 30, 2008, provision for losses, settlements and changes in pre-existing reserves were $309, $(810) and $2,619, respectively.

AInsurance summary of the estimated maturities of the Company’s share of joint ventures’ debt is provided below. The Company has estimated the debt maturities with the assumption that all payments are first applied to pay down the outstanding debt balances as of December 31, 2008. The Company’s share of joint ventures’ debt for which the joint ventures are in default is included in fiscal year ending 2009 in the table below. Accruals

	For the Fiscal Years Ending
	March 31,
2009	$	144,566
2010		3,189
2011		4,197
	$	151,952

The Company has certain self-insured retentions and deductible limits under its workers’ compensation, automobile and general liability (including claims for construction defects) insurance policies. The Company establishes reserves for its self-insured retentions and deductible limits based on an analysis of historical claims and an estimate of claims incurred but not yet reported. Projection of losses concerning these liabilities, in particular construction defect exposures, is subject to a high degree of variability due to factors such as claim settlement patterns, litigation trends and legal interpretations, among others. In addition, construction defect claims may occur over an extended period after the closing of a home. On an annual basis, the Company engages actuaries to assist in the evaluation and development of claim rates and required reserves for self insurance including reserves related to construction defects and general liability claims. The Company periodically assesses the adequacy of its insurance accruals and adjusts the amounts as necessary.

~~Letters~~Although the Company considers the insurance accruals reflected in its Consolidated Balance Sheets to be adequate, there can be no assurance that this accrual will prove to be sufficient over time to cover ultimate losses. Expenses associated with insurance claims up to the Company’s deductible limits for the three months ended June 30, 2009 and 2008 were $2.9 million and $8.0 million, respectively. As of ~~Credit~~June 30, 2009 and ~~Surety~~March 31, ~~Bonds~~ 2009, accrued insurance included in accrued liabilities in the accompanying Consolidated Balance Sheets was $231.4 million and $235.3 million, respectively, and consisted primarily of general liability retentions associated with construction defects.

InForward ~~the~~Trade ~~normal course of business, the Company posts letters of credit~~ and ~~surety~~Interest ~~bonds:~~Rate ~~(1) pursuant~~Lock to certain performance related obligations, (2) as security for certain land option purchase agreements of Home Building, and (3) under various insurance programs. The Company also previously obtained surety bonds, which are reflected as discontinued operations in the table below, pursuant to construction obligations of Construction Services prior to the sale of this segment on March 30, 2007. No event has occurred that has led the Company to believe that these letters of credit or bonds will be drawn upon. Commitments

AInterest ~~summary~~rate oflock commitments (“IRLCs”) represent individual borrower agreements that commit the Company’s ~~outstanding~~to ~~letters~~lend ofat ~~credit~~a ~~and~~specified ~~surety~~interest ~~bonds~~rate for a specified period as long as there is no violation of ~~December 31,~~any condition established in the commitment contract. IRLCs ~~2008~~are recorded in the Consolidated Balance Sheets in deferred charges and ~~March~~other assets or accrued liabilities. At June 3130, ~~2008~~2009, isthe ~~presented~~Company ~~below~~had ~~(dollars~~loan incommitments ~~millions):~~ to prospective borrowers of $112.7 million.

	As of December 31, 2008					As of March 31, 2008
	Letters of Credit		Surety Bonds			Letters of Credit		Surety Bonds
Home Building	$	118.2	$	1,032.3	(1)	$	168.6	$	1,527.9
Financial Services		30.9		9.7			35.7		12.3
Other		168.4		0.2			167.0		0.2
Discontinued Operations (2)		33.1		1,868.3			35.3		3,093.9
	$	350.6	$	2,910.5		$	406.6	$	4,634.3

Forward trade commitments represent contracts with investors for delayed delivery of mortgage loans at a specified future date at a specified interest rate. At June 30, 2009, the Company had $108.2 million of commitments to deliver mortgages to investors against interest rate lock commitments. These forward trade commitments are

(1)		The Company estimates that $398.5 million of work remains to be performed on these projects as of December 31, 2008.
(2)		After the sale of Construction Services, the Company remains responsible to a surety for certain surety bond obligations relating to Construction Services’ projects commenced prior to March 30, 2007. These surety bonds have a total face amount of $1.87 billion at December 31, 2008, although the risk of liability with respect to these surety bonds declines as the relevant construction projects are performed. At December 31, 2008, the Company estimates that $263.4 million of work remains to be performed on these projects. In connection with certain of these surety bond obligations, the Company posted a $100 million letter of credit to such surety which is included in Other above. The purchaser of Construction Services agreed to indemnify the Company against losses relating to such surety bond obligations, including amounts drawn under such letter of credit. The Company purchased for its benefit an additional back-up indemnity provided by a financial institution with an A+ (S&P) and A1 (Moody’s) credit rating. The obligation of such financial institution under the back-up indemnity is $400.0 million as of December 31, 2008 and will remain at $400.0 million until termination in 2016.

~~Community~~Table ~~Development~~of ~~and Other Special District Obligations~~ Contents

Arecorded ~~Community~~in ~~Development District or similar development authority (“CDD”) is a unit of local government created under various state statutes that utilizes~~ the ~~proceeds~~Consolidated ~~from~~Balance ~~the~~Sheets ~~sale~~in ofdeferred ~~bonds to~~charges ~~finance~~and ~~the~~other ~~construction or acquisition of infrastructure~~ assets of a development. A portion of the liability associated with the bonds including principal and interest is assigned to each parcel of land within the development. This debt is typically paid by subsequent special assessments levied by the CDD on the landowners. In accordance with EITF 91-10, “Accounting for Special Assessments and Tax Increment Financing,” the Company records a liability for future assessments, which are fixed or ~~determinable~~accrued ~~for a fixed or determinable period~~liabilities. In addition, ~~and~~at ~~in accordance with SFAS No.~~June 530, ~~“Accounting for Contingencies~~2009,” the Company ~~evaluates~~had ~~whether~~commitments itto isdeliver ~~contingently liable~~approximately ~~for~~$142.6 million ~~any~~ of ~~the~~mortgage ~~debt~~loan ~~related~~inventory to ~~the bond issuance~~investors. These ~~This~~forward istrade ~~typically~~commitments ~~the~~are ~~case~~recorded ~~where~~in ~~bonds issued by~~ the ~~CDD have maturity dates of ten years or less that will be paid by the Company as the~~ ~~developer~~Consolidated ~~and~~Balance ~~current~~Sheets ~~landowner~~together ~~and~~with ~~not by future homeowners. At December 31, 2008 and March 31, 2008,~~ the ~~Company~~related ~~had~~mortgage ~~recorded~~loans ~~$315~~receivable.~~3 million and $351.9 million, respectively, in accrued liabilities for outstanding CDD obligations.~~

19 For additional information on forward trade commitments and interest rate lock commitments, please refer to Note (H), “Fair Values of Financial Instruments,” and Note (I), “Derivatives and Hedging.”

~~Table~~Litigation ofand ~~Contents~~Related Matters

~~Warranties~~In the normal course of its business, the Company is involved in claims and ~~Guarantees~~disputes and is named as a defendant in certain suits filed in various state and federal courts. These claims, disputes and lawsuits include construction defect claims, contract disputes and employee-related matters. Management believes that none of the litigation matters in which the Company is involved would have a material adverse effect on the consolidated financial condition or operations of the Company.

InThe ~~the~~Company ~~normal~~and ~~course~~its ofdirectors ~~its~~are ~~business~~named as defendants in five putative class action lawsuits filed between April 15 and April 23, 2009 in the ~~Company~~District ~~issues~~Courts ~~certain~~of ~~warranties~~Dallas ~~and~~County, ~~guarantees~~Texas. An ~~or makes~~additional ~~certain~~putative ~~representations~~class ~~related~~action tolawsuit against the Company and its ~~home~~directors ~~sales~~was filed on April 24, ~~land~~2009 ~~sales~~in ~~and~~the District ~~mortgage~~Court ~~loan~~of ~~sales.~~Clark County, Nevada. The ~~Company~~ ~~believes~~cases ~~that~~assert itclaims ~~has~~in ~~established~~connection with the ~~necessary~~proposed ~~accruals~~combination ~~for~~between ~~these~~Centex ~~warranties, guarantees~~ and ~~representations~~Pulte announced on April 8, 2009.

~~Home~~On ~~Building~~June 1, ~~offers~~2009, athe ~~ten-year~~five ~~limited~~cases ~~warranty~~pending in the District Court of Dallas Country, Texas were consolidated under the case number 09-4396 for ~~most~~all ~~homes~~purposes, ~~constructed~~including pretrial proceedings and ~~sold~~trial. The consolidated case is styled In ~~warranty~~re ~~covers~~Centex ~~defects~~Corporation inShareholder ~~materials~~Class orAction ~~workmanship~~Litigation and will proceed in the ~~first~~160th ~~two~~Judicial ~~years~~District of the ~~customers’ ownership~~District Court of Dallas County, Texas. On June 22, 2009, the ~~home~~plaintiffs filed a consolidated amended class action complaint. This consolidated complaint asserts claims on behalf of a purported class of Centex stockholders against Centex, Pulte and ~~certain~~each ~~designated~~of ~~components~~Centex’s ordirectors, ~~structural~~related to ~~elements~~an alleged breach of ~~the~~fiduciary ~~home~~duty in ~~the third~~connection ~~through~~with ~~tenth~~the ~~years~~merger. The ~~Home~~consolidated ~~Building~~complaint ~~estimates~~alleges, ~~the~~among ~~costs~~other things, that ~~may~~the beCentex ~~incurred~~directors, ~~under~~aided ~~its warranty~~and ~~program~~abetted ~~for~~by ~~which~~Centex itand ~~will~~Pulte, bebreached ~~responsible~~their ~~and~~fiduciary ~~records~~duties aby ~~liability~~failing atto ~~the~~obtain ~~time~~an ~~each~~adequate ~~home~~price ~~is closed.~~for ~~Factors~~Centex ~~that~~shares, ~~affect~~by ~~Home~~conducting ~~Building’s~~a ~~warranty~~flawed ~~liability~~process ~~include~~culminating in the ~~number~~sale of ~~homes~~Centex, ~~closed~~by engaging in self-dealing, ~~historical~~ and ~~anticipated~~by ~~rates~~soliciting ofstockholder ~~warranty~~votes ~~claims~~based upon inadequate disclosures. Among other things, ~~and~~the ~~cost~~consolidated ~~per~~complaint seeks ~~claim~~to enjoin the defendants from completing the merger. The ~~Home~~consolidated ~~Building periodically~~complaint ~~assesses~~also seeks a constructive trust into which the ~~adequacy~~court ofshould ~~its~~direct ~~recorded~~any ~~warranty~~benefits ~~liability~~improperly ~~and~~received ~~adjusts~~by the ~~amounts~~defendants as ~~necessary~~ a result of their alleged wrongful conduct. No due date has been set for an answer or responsive pleading.

~~Changes~~On July 17, 2009, the plaintiffs in ~~Home~~In ~~Building’s~~re ~~contractual~~Centex ~~warranty~~Corporation ~~liability~~Shareholder ~~are~~Class asAction ~~follows~~Litigation ~~for~~and the ~~nine~~defendants ~~months~~entered into a memorandum of understanding reflecting a preliminary settlement of the case. The ~~ended~~memorandum ~~December 31~~of understanding sets forth the general terms of a settlement to be embodied in a stipulation of settlement to be submitted to the court. The settlement is subject to, ~~2008~~among other things, approval by the court and additional confirmatory discovery by the ~~year~~plaintiffs. Pursuant ~~ended~~to ~~March 31~~the memorandum of understanding, ~~2008:~~ the defendants agreed to provide certain additional disclosure in the joint proxy statement/prospectus for the merger.

	December 31, 2008			March 31, 2008 (1)
Balance at Beginning of Period	$	29,155		$	44,293
Warranties Issued		11,592			27,858
Settlements Made		(13,445	)		(40,915	)
Changes in Liability of Pre-ExistingWarranties, Including Expirations		(11,155	)		(2,081	)
Balance at End of Period	$	16,147		$	29,155

The sixth case, styled Anbar Holdings Ltd. v. Eller, et al. (Case No. 09-588699), asserts claims on behalf of a purported class of Centex stockholders against Centex, Pulte and each of Centex’s directors, related to an alleged breach of fiduciary duty in connection with the merger. The complaint alleges, among other things, that the Centex directors, aided and abetted by Centex and Pulte, breached their fiduciary duties by failing to obtain an adequate price for Centex and by acting to deter competing bids. Among other things, the complaint seeks to enjoin the defendants from completing the merger. The complaint also seeks damages. On June 4, 2009, Centex and the Centex directors responded to the Nevada complaint. Both Centex and its directors moved to stay the Nevada case pending the resolution of the earlier-filed consolidated action in Dallas County, Texas. In a separate filing, Centex’s directors moved to dismiss the claims against them for lack of personal jurisdiction. Finally, Centex moved to dismiss, for failure to state a claim upon which relief can be granted, the allegations against Centex for aiding and abetting the Centex directors’ alleged breach of fiduciary duty. On June 23, 2009, Pulte filed a motion joining in the motion to stay, and also filed a separate motion to dismiss the complaint. The plaintiffs filed an amended class action complaint on June 22, 2009, which largely restates the allegations from the complaint filed on April 24, 2009, and adds new allegations asserting, among other things, that the Centex directors, aided and abetted by Centex and Pulte, breached their fiduciary duties by not protecting against alleged conflicts of interest and soliciting stockholder votes based upon inadequate disclosures. No due date has been set for an answer or responsive pleading to the amended complaint.

~~(1)~~Based ~~For~~on the ~~nine~~facts ~~months~~known ~~ended~~to ~~December 31~~date, ~~2007,~~the ~~warranties~~defendants ~~issued,~~believe ~~settlements~~that ~~made~~the ~~and~~claims ~~changes~~asserted inagainst ~~liability~~them ofare ~~pre-existing~~without ~~warranties~~merit, ~~were~~and ~~$24,634,~~the ~~$(32,762)~~defendants ~~and~~intend ~~$(863),~~to ~~respectively~~defend vigorously against the claims.

Financial Services has established a liability for anticipated losses associated with mortgage loans originated and sold. Changes in Financial Services’ liability are as follows for the nine months ended December 31, 2008 and the year ended March 31, 2008: 18

	December 31, 2008			March 31, 2008 (1)
Balance at Beginning of Period	$	13,903		$	16,863
Provision for Losses		643			1,676
Settlements		(5,730	)		(9,251	)
Changes in Pre-Existing Reserves		16,668			4,615
Balance at End of Period	$	25,484		$	13,903

Table of Contents

(1H) FAIR ~~For~~VALUES ~~the~~OF ~~nine~~FINANCIAL ~~months ended December 31, 2007, provisions for losses, settlements and changes in pre-existing reserves were $1,270, $(6,752) and $4,614, respectively.~~INSTRUMENTS

~~Insurance~~The ~~Accruals~~Company adopted SFAS 157 on April 1, 2008 for its financial instruments measured at fair value. As defined in SFAS 157, fair value is based on exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

~~The~~● ~~Company~~Level ~~has~~1 ~~certain self~~-~~insured~~ ~~retentions~~Quoted ~~and~~prices ~~deductible~~in ~~limits~~active ~~under~~markets ~~its workers’ compensation, automobile and general liability (including claims~~ for ~~construction~~identical ~~defects) insurance~~assets ~~policies.~~or The Company establishes reserves for its self-insured retentions and deductible limits based on an analysis of historical claims and an estimate of claims incurred but not yet reported. Projection of losses concerning these liabilities~~, in particular construction defect exposures, is subject to a high degree of variability due to factors such as claim settlement patterns, litigation trends and legal interpretations, among others~~. In addition, construction defect claims may occur over an extended period after the closing of a home. On an annual basis, the Company engages actuaries to assist in the evaluation and development of claim rates and required reserves for self insurance including reserves related to construction defects and general liability claims. The Company periodically assesses the adequacy of its insurance accruals and adjusts the amounts as necessary.

~~Although~~● ~~the~~Level ~~Company~~2 ~~considers~~- ~~the~~Inputs ~~insurance~~other ~~accruals~~than ~~reflected~~quoted inprices ~~its~~included ~~Consolidated~~within ~~Balance Sheets~~Level to1 ~~be adequate, there can be no assurance~~ that ~~this~~are ~~accrual~~observable ~~will~~either ~~prove~~directly toor beindirectly ~~sufficient~~through ~~over time~~corroboration ~~to cover ultimate losses. Expenses associated~~ with ~~insurance~~market ~~claims up to the Company’s deductible limits for the nine months ended December 31, 2008 were $22~~data.~~1 million and $47.0 million for fiscal year 2008. As of December 31, 2008 and March 31, 2008, accrued insurance included in accrued liabilities in the accompanying Consolidated Balance Sheets~~

20 ● Level 3 - Unobservable inputs that reflect the Company’s own estimates about the assumptions market participants would use in pricing the asset or liability.

~~Table~~Mortgage ofloans ~~Contents~~held for sale, forward trade commitments and interest rate swap agreements are valued based upon quoted market prices for similar instruments. The servicing asset is reflected in deferred charges and other assets in the accompanying Consolidated Balance Sheets and is valued based upon servicing sales contracts entered into with third parties. Interest rate lock commitments are valued at quoted market prices, plus the related service release premium, multiplied by a projected customer close ratio. The service release premium is based upon the Company’s servicing sales contracts, and the projected customer close ratio is based upon the Company’s historical customer fall-out rate.

~~was~~The ~~$236.3 million~~following ~~and~~table ~~$221.0 million,~~presents ~~respectively,~~the ~~and~~Company’s ~~consisted~~financial ~~primarily~~instruments ofmeasured ~~general~~at ~~liability retentions~~fair ~~associated~~value ~~with~~on ~~construction~~a ~~defects.~~recurring basis at June 30, 2009 for each hierarchy level:

Forward Trade and Interest Rate Lock Commitments


	Level 1		Level 2		Level 3		Total
Assets
Mortgage Loans Held for Sale	$	–	$	138,106	$	–	$	138,106
Servicing Asset		–		194		–		194
Interest Rate Lock Commitments		–		–		2,933		2,933
Forward Trade Commitments
(Mortgage Loans Held for Sale)		–		2,637		–		2,637
Total	$	–	$	140,937	$	2,933	$	143,870

Liabilities
Interest Rate Swap Agreements	$	–	$	4,949	$	–	$	4,949
Forward Trade Commitments
(Interest Rate Lock Commitments)		–		1,053		–		1,053
Total	$	–	$	6,002	$	–	$	6,002

~~Forward~~As ~~trade~~of ~~commitments~~June 30, ~~represent~~2009, ~~contracts~~the ~~with~~aggregate ~~investors~~fair ~~for~~value ~~delayed~~was ~~delivery~~less ofthan ~~mortgage loans~~the atunpaid aprincipal ~~specified~~balance ~~future~~of ~~date~~mortgage atloans aheld ~~specified~~for ~~interest~~sale ~~rate~~by $0.4 ~~The~~million. Changes ~~Company~~in ~~utilizes~~the ~~such~~fair ~~delayed delivery~~value ~~contracts~~of tomortgage ~~hedge~~loans ~~market~~held ~~risk~~for ~~based~~sale ~~upon~~are ~~the~~recognized ~~number~~in ofcurrent ~~commitments~~earnings ~~issued~~within toFinancial ~~borrowers~~Services revenues. For ~~that~~the ~~are~~three ~~expected~~months toended ~~close. At December~~June 3130, ~~2008~~2009, the ~~Company~~net ~~had~~change ~~$179.2 million~~in ofthe ~~commitments~~fair ~~to deliver~~value ~~mortgages~~of tomortgage ~~investors~~loans ~~against~~held ~~interest~~for ~~rate~~sale ~~lock~~resulted ~~commitments.~~in ~~These~~a ~~forward~~loss ~~trade commitments~~of ~~are~~$4.3 ~~recorded~~million. Interest inincome ~~the~~on ~~Consolidated~~mortgage ~~Balance~~loans ~~Sheets~~held infor ~~other~~sale ~~assets~~is orcalculated ~~accrued~~based ~~liabilities. In~~upon ~~addition, at December 31, 2008,~~ the ~~Company~~stated ~~had~~interest ~~commitments~~rate ~~to deliver approximately $199.2 million~~ of ~~mortgage~~each loan ~~inventory~~and tois ~~investors.~~included ~~These forward trade commitments are recorded~~ in ~~the~~ ~~Consolidated~~Financial ~~Balance~~Services ~~Sheets together with the related mortgage loan receivables~~revenues.

Interest rate lock commitments (“IRLCs”) represent individual borrower agreements that commit the Company to lend at a specified interest rate for a specified period as long as there is no violation of any condition established in the commitment contract. IRLCs are recorded in the Consolidated Balance Sheets in other assets or accrued liabilities. At December 31, 2008, the Company had loan commitments to prospective borrowers of $182.8 million. 19

~~For~~Table ~~additional information on forward trade commitments and interest rate lock commitments, please refer to Note (H), “Fair Values~~ of ~~Financial Instruments,” and Note (K), “Derivatives and Hedging.”~~ Contents

~~Litigation~~The ~~and~~following ~~Related~~table ~~Matters~~ summarizes changes in Level 3 financial instruments measured at fair value on a recurring basis for the three months ended June 30, 2009:

In the normal course of its business, the Company is involved in claims and disputes and is named as a defendant in certain suits filed in various state and federal courts. These claims, disputes and lawsuits include construction defect claims, contract disputes and employee-related matters. Management believes that none of the litigation matters in which the Company is involved would have a material adverse effect on the consolidated financial condition or operations of the Company.


	Interest Rate Lock Commitments

Balance at beginning of period	$	3,243
Purchases, issuances, and settlements		(295	)
Loss included in earnings due to change in valuation of items held		(15	)
Fair value at June 30, 2009	$	2,933

~~(H) FAIR~~In ~~VALUES~~addition, OFcertain ~~FINANCIAL~~of ~~INSTRUMENTS~~the Company’s assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value may not be recovered. The following table presents for each hierarchy level the Company’s assets measured at fair value on a non-recurring basis and represents only those assets whose carrying values were adjusted to fair value during the quarter ended June 30, 2009:

The Company adopted SFAS 157 on April 1, 2008 for its financial instruments measured at fair value. SFAS 157 establishes a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:


	Level 1		Level 2		Level 3		Total
Assets
Other Mortgage Loans	$	–	$	–	$	46,617	$	46,617
Land Under Development		–		–		291,615		291,615
Land Held for Development and Sale		–		–		22,580		22,580
Other Inventories		–		–		16,198		16,198
	$	–	$	–	$	377,010	$	377,010

•Other ~~Level~~mortgage 1loans —are ~~Quoted~~measured ~~prices~~at infair ~~active~~value ~~markets~~on a non-recurring basis and include performing and nonperforming construction loans and other nonperforming mortgage loans. Other mortgage loans are reported at their unpaid principal balance less an allowance. The allowance for ~~identical~~loans ~~assets~~the orCompany ~~liabilities~~expects to convert to permanent loans that will be held for sale is based on the estimated market value of the loans. The allowance for construction loans and other nonperforming mortgage loans that the Company expects to eventually default is based on the underlying collateral value. The Company recovered $2.4 million in provisions for losses to Other Mortgage Loans during the quarter ended June 30, 2009.

•The ~~Level~~Company 2reviews —its ~~Inputs~~long ~~other~~lived ~~than~~assets, ~~quoted~~including ~~prices~~Land ~~included~~Under ~~within~~Development, ~~Level~~Land 1Held for Development and Sale, and Real Estate Owned for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If long lived assets are ~~observable~~considered ~~either~~to ~~directly~~be orimpaired, ~~indirectly~~the ~~through~~impairment ~~corroboration~~to ~~with~~be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value is determined primarily based on estimated cash flows discounted for market ~~data~~risks associated with the long-lived assets. During the quarter ended June 30, 2009, the Company recorded $200.6 million in land related impairments.

•The ~~Level~~fair 3values —of ~~Unobservable~~investments ~~inputs~~in ~~that~~joint ~~reflect~~ventures ~~the~~were ~~Company’s~~determined ~~own~~in ~~estimates~~accordance ~~about~~with ~~the~~APB ~~assumptions~~No. 18, ~~market~~“The ~~participants~~Equity ~~would~~Method ~~use~~of Accounting for Investments in ~~pricing~~Common Stock,” primarily using a discounted cash flow model to value the ~~asset~~underlying ornet ~~liability~~assets of the respective entities. During the quarter ended June 30, 2009, the Company did not record any impairments related to its investments in joint ventures.

~~Mortgage~~The ~~loans~~estimated ~~held~~fair ~~for~~values ~~sale~~shown ~~and~~below ~~forward~~have ~~trade~~been ~~commitments~~determined ~~are~~using ~~valued~~current ~~based upon~~ quoted market prices ~~for~~where ~~similar~~available ~~instruments.~~and, ~~The~~where ~~servicing~~necessary, ~~asset~~estimates isbased ~~reflected~~on inpresent ~~deferred~~value ~~charges~~methodology ~~and~~suitable ~~other assets~~for ineach ~~the~~category ~~accompanying~~of ~~Consolidated~~financial ~~Balance~~instruments. Considerable ~~Sheets~~judgment ~~and~~ is ~~valued~~required ~~based upon servicing sales~~in ~~contracts~~interpreting ~~entered~~market ~~into~~data ~~with~~to ~~third~~develop ~~parties.~~the ~~Interest~~estimates ~~rate~~of ~~lock~~fair ~~commitments are valued at quoted market prices~~value. Accordingly, ~~plus~~ the ~~related~~estimates ~~service~~presented ~~release~~herein ~~premium,~~are ~~multiplied~~not bynecessarily aindicative ~~projected~~of ~~customer~~the ~~close ratio.~~amounts ~~The~~that ~~service release premium is based upon~~ the Company’s ~~servicing~~could ~~sales~~realize ~~contracts,~~in ~~and~~a ~~the projected~~current ~~customer~~market ~~close ratio is based upon the Company’s historical customer fall-out rate~~exchange.

21 20

Table of Contents

The ~~following~~consolidated ~~table~~carrying ~~presents~~values ~~the~~of ~~Company’s~~cash ~~financial~~and ~~instruments~~cash ~~measured~~equivalents, atrestricted cash, taxes, trade and other receivables, accounts payable and accrued liabilities, forward trade commitments, IRLCs and short-term debt approximate their fair ~~value~~values. The oncarrying avalues and ~~recurring~~estimated ~~basis~~fair atvalues ~~December 31,~~of ~~2008~~other ~~for~~financial ~~each~~assets ~~hierarchy~~and ~~level~~liabilities were as follows:

	Level 1		Level 2		Level 3			Total
	As of
Assets
	June 30, 2009				March 31, 2009
Mortgage Loans Held for Sale	$	—	$	204,150	$	—		$	204,150
	Carrying Value		Fair Value		Carrying Value			Fair Value
Forward Trade Commitments (Interest Rate Lock Commitments)		—		—		—			—
Financial Assets:
Servicing Asset		—		30		—			30
Mortgage Loans, net	$	187,360	$	187,360	$	214,179	$	214,179
Interest Rate Lock Commitments		—		—		4,251			4,251
Financial Liabilities:
Total	$	—	$	204,180	$	4,251		$	208,431
Senior Notes and Other	$	3,106,122	$	2,906,666	$	3,104,872	$	2,605,917
Liabilities
Interest Rate Swap Agreements	$	—	$	1,072	$	—		$	1,072
Forward Trade Commitments (Mortgage Loans Held for Sale)		—		6,049		—			6,049
Total	$	—	$	7,121	$	—		$	7,121

AsThe ofCompany ~~December~~adopted SFAS ~~31,~~159 ~~2008~~on a prospective basis for mortgage loans held for sale, ~~the~~effective ~~aggregate~~April 1, ~~fair~~2008. In ~~value~~accordance ~~exceeded~~with the ~~unpaid~~provisions ~~principal balance~~ of SFAS 159, mortgage loans held for sale byoriginated ~~$5.9 million~~subsequent ~~and,~~to ~~accordingly~~April 1, ~~this~~2008 ~~amount~~are ~~has~~measured ~~been recognized~~at asfair avalue. The ~~gain~~adoption inof ~~current~~SFAS ~~earnings~~159 ~~within~~for ~~Financial~~mortgage ~~Services’~~loans held ~~revenues.~~for ~~Interest~~sale ~~income~~improves on consistency of mortgage ~~loans~~loan ~~held~~valuation ~~for~~between ~~sale~~the isdate ~~calculated~~the ~~based~~borrower ~~upon~~locks the ~~stated~~ interest rate ofon ~~each~~the pending mortgage loan and ~~is included~~the indate ~~Financial~~of ~~Services’~~the ~~revenues~~mortgage loan sale.

~~The~~(I) DERIVATIVES ~~following~~AND ~~table summarizes changes in Level 3 financial instruments measured at fair value on a recurring basis for the nine months ended December 31, 2008:~~ HEDGING

	Interest Rate
	Lock
	Commitments
Balance at beginning of period	$	9,271
Purchases, issuances, and settlements		(5,020	)
Loss included in earnings due to change in valuation of items held		—
Fair value at December 31, 2008	$	4,251

Financial Services enters into IRLCs with its customers under which it commits to lend at a specified interest rate for a specified period, generally from one to 30 days, if certain conditions are met. Initially, the IRLCs are treated as derivative instruments and their fair value is recorded on the balance sheet. Subsequent changes in the fair value of the IRLCs are recorded as an adjustment to earnings.

~~Other~~The ~~mortgage~~Company ~~loans~~is ~~are~~exposed ~~measured~~to atthe ~~fair~~risk ~~value~~of oninterest arate ~~nonrecurring~~fluctuations ~~basis~~on ~~and~~its ~~include~~debt ~~performing~~ and ~~nonperforming construction loans and~~ other ~~nonperforming mortgage loans~~obligations. Financial ~~Other~~Services ~~mortgage~~enters ~~loans are~~into ~~reported~~mandatory atforward ~~their~~trade ~~unpaid~~commitments ~~principal~~to ~~balance~~manage ~~less~~the aninterest ~~allowance.~~rate ~~The~~risk ~~allowance~~related ~~for~~to ~~loans~~IRLCs ~~the Company~~and ~~expects~~its toportfolio ~~convert~~of tomortgage ~~permanent~~ loans ~~that will be~~ held for sale. Forward trade iscommitments ~~based~~are ontreated ~~the~~as ~~estimated market~~derivative ~~value~~instruments ofand ~~the~~their ~~loans.~~initial ~~The~~fair ~~allowance~~value ~~for~~is ~~construction~~recorded ~~loans~~on ~~and~~the ~~other~~balance ~~nonperforming~~sheet. Subsequent ~~mortgage loans~~changes ~~that~~in the ~~Company~~fair ~~expects~~value toof ~~eventually~~forward ~~default~~trade iscommitments ~~based~~are onrecorded ~~the~~as ~~underlying~~an ~~collateral~~adjustment ~~value~~to earnings.

~~The~~From ~~following~~time ~~table~~to ~~presents~~time, ~~for~~the ~~each~~Company ~~hierarchy~~may ~~level~~enter into other forms of derivatives, including interest rate swap agreements, to hedge changes in market values of certain assets and liabilities. These derivatives are designated as fair value hedges, whereby, the ~~Company’s~~gains ~~financial~~or ~~instruments~~losses ~~measured~~in atthe ~~fair~~value of the interest rate swap agreements are offset by an equal and opposite gain or loss in the value onof athe ~~nonrecurring~~hedged ~~basis~~items. The notional value of such derivatives was $63.2 million at ~~December~~June 30, 2009 and $64.2 million at March 31, ~~2008:~~ 2009.

	Level 1		Level 2		Level 3		Total
Assets
Other Mortgage Loans	$	—	$	—	$	71,433	$	71,433

~~The~~Table ~~Company adopted SFAS 159 on a prospective basis for mortgage loans held for sale, effective April 1, 2008. In accordance with the provisions~~ of SFAS 159, mortgage loans held for sale originated subsequent to April 1, 2008 are measured at fair value. The adoption of SFAS 159 for mortgage loans held for sale improves consistency of mortgage loan valuation between the date the borrower locks the interest rate on the pending mortgage loan and the date of the mortgage loan sale. Contents

22 A summary of the Company’s derivatives is as follows:


	As of June 30, 2009						As of March 31, 2009
	Mortgage Loans Held for Sale		Deferred Charges and Other Assets		Accrued Liabilities		Mortgage Loans Held for Sale			Deferred Charges and Other Assets		Accrued Liabilities

Derivatives Designated as Hedging Instruments
Interest Rate Contracts
Interest Rate Swap Agreements	$	–	$	–	$	4,949	$	–		$	–	$	5,000


Derivatives Not Designated as Hedging Instruments
Interest Rate Contracts
Interest Rate Lock Commitments		–		2,933		–		–			3,243		–
Forward Trade Commitments		2,637		–		1,053		(4,168	)		–		1,342
Total Derivatives Not Designated as Hedging Instruments		2,637		2,933		1,053		(4,168	)		3,243		1,342

Total Derivatives	$	2,637	$	2,933	$	6,002	$	(4,168	)	$	3,243	$	6,342

(I) BUSINESS SEGMENTS


	For the Three Months Ended June 30,
	2009			2008
	Gain (Loss) on Sale of Mortgage Loans (1)			Gain (Loss) on Sale of Mortgage Loans (1)
Derivatives Not Designated as Hedging Instruments
Interest Rate Contracts
Interest Rate Lock Commitments	$	(310	)	$	(3,490	)
Forward Trade Commitments		7,094			6,221
Total Derivatives Not Designated as Hedging Instruments	$	6,784		$	2,731

As(1) ofIncluded ~~December 31,~~as ~~2008,~~a ~~the~~component ~~Company operated in two principal lines~~ of ~~business: Home Building and~~ Financial Services. ~~These lines of business operate in the United States, and their markets are nationwide~~revenues. ~~Revenues from any one customer are not significant to the Company.~~

In fiscal year 2007, the Company completed the sale of Construction Services. In April 2008, the Company completed the sale of its home services operations. For additional information regarding the sale of these businesses, refer to Note (LJ), INCOME ~~“Discontinued Operations.” All prior year segment information has been revised to conform to the current year presentation.~~ TAXES

~~Home~~The ~~Building~~Company recognized an income tax benefit from continuing operations of $407.3 million and $13.6 million for the three months ended June 30, 2009 and 2008, respectively. The Company’s effective tax rate from continuing operations was 126.4% and 7.5% for the three months ended June 30, 2009 and 2008, respectively. The Company’s effective tax rate for June 30, 2009 and 2008 differed from the federal statutory rate primarily as a result of the change in uncertain tax positions and the related accrued interest and penalties and changes in the deferred tax asset valuation allowance.

~~The~~In accordance with the provisions of SFAS 109, the Company’s ~~Home~~assesses, ~~Building~~on ~~operations~~a ~~currently~~quarterly ~~involve~~basis, the ~~construction~~realizability ~~and~~of ~~sale~~its deferred tax assets. A valuation allowance must be established when, based upon the evaluation of ~~detached~~all available evidence, it is more likely than not that ~~and~~all ~~attached~~or ~~single-family~~a ~~homes~~portion of the deferred tax assets will not be realized. Realization ~~Home~~of ~~Building~~deferred ~~consists~~tax assets is dependent upon taxable income in prior carryback years, estimates of ~~the~~future ~~following~~taxable ~~reporting~~income, ~~segments~~tax planning strategies and reversals of existing taxable temporary differences. SFAS 109 provides that ~~have~~ ~~operations~~forming ~~located~~a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in ~~the~~recent ~~following~~years ~~states:~~ or losses expected in early future years.

~~East:~~The ~~Florida~~Company’s realization of its deferred tax assets ultimately depends on the existence of sufficient taxable income in the carryback and/or carryforward periods (both federal and state). After considering all positive and negative evidence including all potential sources of taxable income, ~~Georgia~~the Company concluded that, ~~Maryland~~as of March 31, ~~New~~2009, ~~Jersey~~a full valuation allowance was required. As of June 30, ~~North~~2009, ~~Carolina~~after taking into account the Internal Revenue Service (“IRS”) settlements and the related impact to the FIN 48 liability that occurred during the quarter, ~~South~~the ~~Carolina~~Company determined $37.6 million of the deferred tax assets are realizable as a result of the remaining federal uncertain tax positions (and ~~Virginia~~related FIN 48 liability) that generates a future source of taxable income.

~~Central: Colorado, Illinois, Indiana, Michigan, Minnesota, Missouri, Tennessee and Texas~~ 22

~~West:~~Table ~~Arizona,~~of ~~California, Hawaii, Nevada, New Mexico, Oregon and Washington~~ Contents

~~Other~~The ~~homebuilding~~Company’s (deferred tax assets before the valuation allowance increased to $1).32 billion as of June 30, 2009 from $1.29 billion as of March 31, 2009. The Company’s deferred tax valuation allowance decreased to $1.28 billion as of June 30, 2009 from $1.29 billion as of March 31, 2009. The Company’s deferred tax assets before valuation allowance includes $482.1 million resulting from tax credits and net operating loss carryforwards at June 30, 2009. If unused, the various tax credits and net operating loss carryforwards will expire (beginning at various times depending on the tax jurisdiction) in the years 2013 through 2030.

~~(1)~~Based ~~Other~~on ~~homebuilding~~an ~~includes~~analysis ~~certain~~performed ~~resort/second~~under ~~home~~Internal ~~projects~~Revenue inCode ~~Florida~~Section 382 ~~that~~as of June 30, 2009, the Company ~~plans~~does tonot ~~build-out~~believe it has experienced a change in ownership as defined by Section 382 and, ~~liquidate~~therefore, the Company does not believe, at June 30, 2009, the net operating losses, built-in losses and ~~holding~~tax ~~companies.~~credits Inare ~~addition~~subject to a Section 382 limitation. However, ~~Other~~if ~~homebuilding~~the ~~includes~~proposed ~~amounts~~merger ~~consolidated~~with ~~under~~Pulte is consummated, the ~~caption~~Company ~~“land~~will ~~held~~experience ~~under~~an ~~option~~ownership ~~agreements~~change; ~~not~~therefore, ~~owned”~~its use of net operating losses, built-in losses and ~~capitalized~~tax ~~interest~~credits ~~for~~will ~~all~~be ~~regions~~limited pursuant to Section 382.

~~During~~On ~~the~~May 18, ~~first~~2009, ~~quarter~~the ofCompany ~~fiscal~~and ~~year~~the ~~2009,~~IRS ~~the~~settled ~~Company~~several ~~reclassified~~disputed ~~its~~tax ~~Colorado operations~~issues relating to the ~~Central~~audit ~~reporting~~of ~~segment~~the ~~from~~Company’s ~~the~~federal ~~Northwest~~income ~~reporting~~tax ~~segment~~returns ~~and~~filed ~~its~~for ~~New~~fiscal ~~Mexico operations~~years 2001 through 2004. The disputed issues related primarily to the ~~Texas~~Company’s ~~reporting~~use ~~segment~~of ~~from~~net operating ~~the~~losses, ~~Southwest~~among ~~reporting~~other ~~segment~~items. The ~~During~~settlement ~~the~~resulted ~~second quarter~~in a tax liability of ~~fiscal~~approximately ~~year~~$63 million of which $62 million was paid in June 2006. On May 26, 2009, the Company ~~consolidated~~received ~~its~~a ~~seven~~Revenue ~~reporting~~Agent’s ~~segments~~Report ~~into~~from the ~~four reporting~~IRS ~~segments~~proposing ~~set~~certain ~~forth~~adjustments ~~above.~~to ~~The~~the ~~reclassifications~~Company’s ~~reflect~~federal ~~how~~income ~~the~~tax returns for fiscal years 2005 and 2006. The Company ~~currently manages~~believes that its ~~business~~fiscal years 2005 and ~~were~~2006 ~~not~~tax ~~material~~return topositions ~~the~~are ~~results~~supported ofand ~~operations~~will ofvigorously dispute the ~~respective reporting~~proposed ~~segments~~adjustments. In ~~All~~addition, ~~prior~~on ~~period~~May 28, ~~amounts~~2009, ~~have~~the ~~been~~Company ~~reclassified~~settled toseveral ~~conform~~disputed tax issues relating to its California income tax for fiscal years 2000 through the current period ~~presentation~~.

~~Financial~~As ~~Services~~a result of these developments, the Company, in connection with its quarterly assessment, adjusted its liability for unrecognized tax benefits resulting in an income tax benefit of $372.0 million during the three months ended June 30, 2009. In addition, $8.9 million of the liability for unrecognized tax benefits was reclassified to current income taxes payable in connection with the amounts agreed/settled as payable by the Company to the taxing jurisdictions.

~~The~~Pursuant ~~Company’s~~to ~~Financial~~the ~~Services~~provisions ~~reporting segment consists~~ of ~~its~~FIN ~~mortgage~~48, ~~lending~~the ~~and~~Company’s ~~title agency~~gross ~~services.~~unrecognized ~~Financial~~tax ~~Services~~benefits ~~originates~~as ~~loans~~of ~~for~~June 30, ~~homes~~2009 ~~sold by the Company~~ and ~~its subsidiaries~~March 31, ~~which~~2009, ~~are~~respectively ~~referred~~(which toexcludes asinterest, ~~“Builder~~penalties, ~~Loans.”~~and ~~Financial~~the ~~Services~~tax ~~also~~benefit ~~originates~~relating ~~loans for~~to ~~homes built by others, as well as~~ the ~~refinancing~~deductibility of ~~existing~~interest ~~mortgages,~~and ~~which~~state ~~are~~income ~~referred~~tax) tois as$124.9 ~~“Retail~~million ~~Loans~~and $374.”4 Asmillion. The afollowing ~~result~~table ofsummarizes the ~~significant~~changes ~~disruptions~~ in ~~the~~gross ~~mortgage~~unrecognized ~~markets~~tax ~~and~~benefits for the ~~related~~ ~~reductions~~three inmonths ~~the~~ended ~~mortgage~~June 30, ~~market~~2009 ~~liquidity,~~and the ~~Company~~year ~~focused~~ended ~~its~~March 31, ~~mortgage operations on Builder Loans to support Home Building.~~ 2009:

During July 2008, Financial Services made a decision to cease its Retail Loan operations. The wind-down was executed in an orderly manner and was substantially completed as of December 31, 2008. Financial Services, which originally operated approximately 80 retail branches, substantially ceased originating Retail Loans during the third quarter of fiscal year 2009. Since July 2008, the Company has recorded $26.3 million in costs related to the wind-down of the Retail Loan operations including $19.4 million of severance costs, primarily associated with the reduction of personnel in the retail branches, $3.3 million of contract termination costs related to various lease agreements associated with the retail branch locations, and $3.6 million of asset write-downs. At December 31, 2008, accrued expenses related to the wind-down of the Retail Loan operations amounted to $3.5 million and primarily related to contract termination costs.


	As of
	June 30, 2009			March 31, 2009

Gross Unrecognized Tax Benefits, Beginning of Period	$	374,351		$	353,147
Tax positions taken relating to a prior year		(180	)		17,576
Tax positions taken relating to the current year		–			4,767
Settlements/Effective Settlements of tax positions with taxing authorities		(249,321	)		(1,139	)
Gross Unrecognized Tax Benefits, End of Period	$	124,850		$	374,351

Interest and Penalties relating to Unrecognized Tax Benefits, End of Period	$	40,976		$	180,392

~~Due~~It tois ~~the~~possible ~~exit~~that, ~~from~~within the ~~Retail~~next ~~Loan~~twelve ~~market~~months, ~~Financial~~the ~~Services~~amount ~~has~~of ~~focused~~the ~~its~~Company’s ~~mortgage operations~~unrecognized ~~primarily~~tax onbenefits ~~Builder~~may ~~Loans~~decrease by as much as $71.1 Inmillion ~~response,~~as ~~during~~a result of the ~~third~~potential ~~quarter~~resolution with the IRS of ~~fiscal~~the ~~year~~Company’s ~~2009, Financial~~appeal ~~Services~~of ~~began~~the adjustments relating to ~~transition~~the audit of the ~~origination~~Company’s offederal ~~Builder~~income ~~Loans~~tax toreturns afor ~~centralized~~fiscal ~~production model.~~years ~~During~~2005 and 2006 and the ~~third~~expiration ~~quarter~~of the statutes of ~~fiscal~~limitations ~~year~~relating ~~2009,~~to ~~Financial~~other ~~Services~~uncertain ~~incurred~~tax ~~approximately $4~~positions.~~4 million~~ In ~~related~~addition, towithin ~~this~~the ~~transition~~next twelve months, ~~and~~unrecognized ittax ~~expects~~benefits relating to ~~incur~~state anincome ~~additional~~taxes ~~$5 million~~may todecrease ~~$10 million~~as ~~during~~a result of the ~~fourth~~possible ~~quarter~~resolution and expiration of ~~fiscal~~the ~~year~~statutes ~~2009~~of limitations relating to ~~complete~~various ~~this~~state ~~process~~audits and/or appeals. However, the change that could occur relating to these potential resolutions cannot be estimated at this time.

~~Financial~~The ~~Services’~~Company ~~revenues~~files ~~include~~numerous ~~interest~~ income oftax ~~$4.2 million~~returns ~~and~~in ~~$14.6 million~~both ~~for the three months, and $16~~U.~~4 million and $61~~S.~~8 million~~ ~~for~~federal ~~the nine months, ended December 31, 2008~~ and ~~2007,~~ ~~respectively~~state jurisdictions. The ~~Financial~~federal ~~Services’~~statute ~~cost~~ of ~~sales~~limitations ishas ~~comprised~~expired offor ~~interest~~the ~~expense~~Company’s ~~related~~federal ~~to debt~~tax ~~issued~~returns tofiled ~~fund~~for ~~its~~tax ~~home~~years ~~financing~~through ~~activities~~March 31, 2000.

23The total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate (excluding any resulting changes related to the deferred tax asset valuation allowance) was $88.3 million and $283.9 million as of June 30, 2009 and March 31, 2009, respectively. For the three months ended June 30, 2009 and 2008, the Company accrued $1.4 million and $7.3 million, respectively, of gross accrued interest and penalties. As of June 30, 2009 and March 31, 2009, gross accrued interest and penalties were $41.0 million and $180.4 million, respectively. The Company’s liability for unrecognized tax benefits combined with accrued interest and penalties is reflected as a component of accrued liabilities.

~~Table of Contents~~23

~~Other~~ Table of Contents

~~The~~(K) BUSINESS ~~Company’s Other segment consists of corporate general and administrative expense, including Home Building corporate-related general and administrative expense and interest income.~~ SEGMENTS

~~The~~As ~~following~~of ~~are~~June 30, ~~components~~2009, the Company operated in two principal lines of business: Home Building and Financial Services. These lines of business operate in the ~~Other~~United ~~segment’s~~States, ~~loss~~and their markets are nationwide. Revenues from ~~continuing~~any ~~operations~~one ~~before income~~customer ~~tax:~~are not significant to the Company.

	For the Three Months Ended						For the Nine Months Ended
	December 31,						December 31,
	2008			2007			2008			2007
Corporate General and Administrative Expense	$	(40,683	)	$	(37,850	)	$	(152,757	)	$	(117,371	)
Interest Expense		(17,758	)		—			(28,911	)		—
Interest and Other Income		6,953			1,445			19,346			24,493
	$	(51,488	)	$	(36,405	)	$	(162,322	)	$	(92,878	)

In April 2008, the Company completed the sale of its home services operations. For additional information regarding the sale of this business, refer to Note (L), “Discontinued Operations.” All prior year segment information has been revised to conform to the current year presentation.

~~Summary~~Home ~~of the Company’s Results of Operations by Segment~~ Building

	For the Three Months Ended December 31,
	2008								2007
						Earnings (Loss)								Loss from
			Loss			from Continuing					Loss			Continuing
			from			Operations					from			Operations
			Unconsolidated			Before					Unconsolidated			Before
	Revenues		Entities(1)			Income Tax			Revenues		Entities (1)			Income Tax
Home Building
East	$	339,570	$	(61,809	)	$	(285,977	)	$	561,826	$	(8,046	)	$	(177,125	)
Central		261,684		(7,717	)		(61,757	)		452,258		(108	)		(37,032	)
West		240,966		(4,870	)		(262,173	)		763,002		(54,986	)		(377,589	)
Other homebuilding		936		—			14,861			33,998		—			(33,519	)
Total Home Building		843,156		(74,396	)		(595,046	)		1,811,084		(63,140	)		(625,265	)
Financial Services		29,032		—			(14,329	)		62,203		—			(60,484	)
Other		—		—			(51,488	)		—		—			(36,405	)
Total	$	872,188	$	(74,396	)	$	(660,863	)	$	1,873,287	$	(63,140	)	$	(722,154	)

The Company’s Home Building operations currently involve the construction and sale of detached and attached single-family homes. Home Building consists of the following reporting segments that have operations located in the following states:

~~(1)~~East: Florida, ~~Included~~Georgia, inMaryland, ~~Home~~New ~~Building’s~~Jersey, ~~loss~~North ~~from unconsolidated entities for the three months ended December 31~~Carolina, ~~2008~~South ~~and~~Carolina ~~2007 is the Company’s share of joint ventures’ impairments totaling $70.6 million~~ and ~~$24.9 million, respectively.~~Virginia

	For the Nine Months Ended December 31,
	2008								2007
						Earnings (Loss)					Earnings			Loss from
			Loss			from Continuing					(Loss)			Continuing
			from			Operations					from			Operations
			Unconsolidated			Before					Unconsolidated			Before
	Revenues		Entities(1)			Income Tax			Revenues		Entities (1)			Income Tax
Home Building
East	$	958,646	$	(90,444	)	$	(419,241	)	$	1,856,359	$	(38,696	)	$	(310,088	)
Central		855,672		(11,652	)		(97,709	)		1,423,409		459			(64,781	)
West		1,013,637		(5,499	)		(334,566	)		2,307,220		(87,096	)		(1,196,135	)
Other homebuilding		17,496		—			10,603			133,400		—			(178,733	)
Total Home Building		2,845,451		(107,595	)		(840,913	)		5,720,388		(125,333	)		(1,749,737	)
Financial Services		157,864		—			(52,420	)		240,869		—			(99,597	)
Other		—		—			(162,322	)		—		—			(92,878	)
Total	$	3,003,315	$	(107,595	)	$	(1,055,655	)	$	5,961,257	$	(125,333	)	$	(1,942,212	)

Central: Colorado, Illinois, Indiana, Michigan, Minnesota, Missouri, Tennessee and Texas

~~(1)~~West: Arizona, ~~Included~~California, inHawaii, ~~Home~~Nevada, ~~Building’s~~New ~~loss from unconsolidated entities for the nine months ended December 31~~Mexico, ~~2008~~Oregon and ~~2007 is the Company’s share of joint ventures’ impairments totaling $102.2 million and $88.5 million, respectively.~~Washington

24 Other homebuilding (1)

~~Table~~(1) ofOther ~~Contents~~homebuilding includes certain resort/second home projects in Florida that the Company plans 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.

ADuring ~~summary~~the first and second quarters of fiscal year 2009, the Company’s ~~impairments~~reclassified ~~and~~its ~~write-offs,~~Home byBuilding ~~segment,~~operations isto asreflect ~~follows:~~how the Company currently manages its business. These reclassifications were not material to the results of operations of the respective reporting segments. All prior period amounts have been reclassified to conform to current period presentation.

	For the Three Months Ended December 31,
	2008						2007
	Goodwill		Land-related		Land-related		Goodwill		Land-related		Land-related
	Impairments		Impairments		Write-offs		Impairments		Impairments		Write-offs
Home Building
East	$	30,594	$	185,992	$	2,392	$	—	$	157,284	$	11,477
Central		5,102		49,409		1,009		—		33,009		4,810
West		2,405		231,673		10,464		—		283,580		10,126
Other homebuilding		—		—		—		—		29,076		(47	)
Total Home Building		38,101		467,074		13,865		—		502,949		26,366
Financial Services		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	38,101	$	467,074	$	13,865	$	—	$	502,949	$	26,366

Financial Services

	For the Nine Months Ended December 31,
	2008						2007
	Goodwill		Land-related		Land-related		Goodwill		Land-related		Land-related
	Impairments		Impairments		Write-offs		Impairments		Impairments		Write-offs
Home Building
East	$	30,594	$	238,960	$	19,654	$	22,452	$	260,861	$	40,900
Central		5,102		76,881		3,423		4,339		74,856		15,299
West		2,405		271,075		14,835		34,531		984,677		31,224
Other homebuilding		—		7,163		—		—		172,034		131
Total Home Building		38,101		594,079		37,912		61,322		1,492,428		87,554
Financial Services		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	38,101	$	594,079	$	37,912	$	61,322	$	1,492,428	$	87,554

The Company’s Financial Services reporting segment consists of its mortgage lending and title insurance and settlement services. Financial Services originates loans for homes sold by the Company and its subsidiaries, which are referred to as “Builder loans.” In prior quarters, Financial Services also originated loans for homes built by others, as well as the refinancing of existing mortgages, which are referred to as “Retail loans.”

AAs ~~summary~~a result of ~~inventory~~the significant disruptions in the mortgage markets and ~~total~~the ~~assets~~related reductions in the mortgage market liquidity, byFinancial ~~segment~~Services made a decision to cease its Retail loan operations during July 2008. Financial Services, iswhich asoriginally ~~follows:~~operated approximately 80 retail branches, ceased originating Retail loans during the fourth quarter of fiscal year 2009. In addition, during the fourth quarter of fiscal year 2009, Financial Services transitioned its mortgage operations to a centralized production model.

	As of
	December 31, 2008				March 31, 2008
	Inventory		Total Assets		Inventory		Total Assets
Home Building
East	$	1,939,043	$	2,133,496	$	2,357,273	$	2,631,144
Central		737,725		759,457		963,999		1,007,937
West		970,765		1,062,394		1,701,506		1,842,358
Other homebuilding		283,887		1,247,855		328,803		1,128,285
Total Home Building		3,931,420		5,203,202		5,351,581		6,609,724
Financial Services		12,170		409,864		10,850		673,597
Other (1)		—		705,719		—		757,022
Discontinued Operations		—		—		—		96,989
Total	$	3,943,590	$	6,318,785	$	5,362,431	$	8,137,332

~~(1)~~Table ~~The Company’s Other segment includes cash, income taxes receivable and substantially all~~ of ~~the Company’s deferred income tax asset valuation allowance.~~Contents

25 The following includes condensed balance sheets and operating earnings for the Company’s Financial Services segment:


	As of
	June 30, 2009		March 31, 2009

Cash and Cash Equivalents	$	8,104	$	21,311
Restricted Cash		19,541		18,955
Mortgage Loan Receivables		187,360		214,179
Other Inventories (Real Estate Owned)		16,198		16,367
Goodwill		5,364		5,364
Deferred Charges and Other Assets		22,086		38,301
Total Assets	$	258,653	$	314,477

Accounts Payable and Accrued Liabilities	$	75,109	$	48,215
Mortgage Warehouse Facilities		49,038		119,052
Members’ Equity		134,506		147,210
Total Liabilities and Members’ Equity	$	258,653	$	314,477

(J) INCOME TAXES


	For the Three Months Ended June 30,
	2009			2008
Revenues
Gain on Sale of Mortgages	$	6,820		$	30,311
Interest Income		1,737			6,455
Title Policy and Other Income		14,314			39,657
Cost of Revenues
Interest Expense		(1,753	)		(4,303	)
Title Policy Expense		(342	)		(422	)
Selling, General and Administrative Expenses		(33,769	)		(65,631	)
Earnings (Loss) from Continuing Operations
Before Income Taxes	$	(12,993	)	$	6,067

~~The~~CTX ~~Company~~Mortgage ~~recognized income tax expense from continuing operations of $3.0 million and $253.9 million for the three months ended December 31~~Company, ~~2008~~LLC and ~~2007,~~its ~~respectively,~~related ~~and~~companies ansold ~~income tax benefit from continuing operations of~~ $21379.0 9 million and $~~189~~1.~~3 million~~61 ~~for~~billion ~~the~~of ~~nine~~mortgage ~~months ended~~loans ~~December 31,~~to ~~2008~~investors ~~and~~during ~~2007, respectively. The Company’s effective tax rate was (0.5%) and (35.2%) for~~ the three months ended ~~December~~June 3130, ~~2008~~2009 and ~~2007, respectively. For the nine months ended December 31,~~ 2008 ~~and 2007~~, ~~the Company’s effective tax rate was 2.0% and 9.7%,~~ respectively. ~~The difference in the Company’s tax rate primarily results from the change in the deferred tax asset valuation allowance.~~

As of December 31, 2008 and March 31, 2008, the Company had a federal income tax receivable of $85.3 million and $648.5 million, respectively, primarily relating to net operating loss carryback refund claims. During the nine months ended December 31, 2008, the Company received federal tax refunds of $699.3 million. The Company’s net deferred tax assets before the valuation allowance increased to $1.23 billion as of December 31, 2008 from $1.02 billion as of March 31, 2008. The Company had a $170.0 million deferred tax asset resulting from tax credits and net operating loss carryforwards at December 31, 2008. If unused, the various tax credits and net operating loss carryforwards will expire (beginning at various times depending on the tax jurisdiction) in the years 2013 through 2029. Other

~~Based~~The onCompany’s anOther ~~analysis~~segment ~~performed~~consists ~~under Internal Revenue Code Section 382 as~~ of ~~December 31, 2008,~~corporate ~~the~~general ~~Company does not believe it has experienced a change in ownership as defined by Section 382~~ and, ~~therefore,~~administrative ~~the Company does not believe~~expense, atincluding ~~December 31,~~Home ~~2008,~~Building ~~the net operating losses, built~~corporate-inrelated ~~losses~~general and ~~tax~~administrative ~~credits~~expense, ~~are~~interest ~~subject~~income toand ainterest ~~Section 382 limitation~~expense.

InThe ~~accordance~~following ~~with~~are ~~the~~components ~~provisions~~ of ~~SFAS 109,~~ the ~~Company~~Other ~~assesses,~~segment’s onloss afrom ~~quarterly~~continuing ~~basis,~~operations ~~the realizability~~before of its deferred tax assets. A valuation allowance must be established when, based upon the evaluation of all available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon taxable income ~~in prior carryback years, estimates of future taxable income,~~ tax planning strategies and reversals of existing taxable temporary differences. SFAS 109 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. :

Based on the Company’s assessment, the realization of approximately $1.18 billion of the Company’s deferred tax assets is dependent upon future taxable income. Based on the Company’s consideration of the current economic conditions, the homebuilding industry, and the related uncertainty in projections of future taxable income, the Company increased its valuation allowance by $354.1 million during the nine months ended December 31, 2008. The valuation allowance was $1.18 billion and $830 million as of December 31, 2008 and March 31, 2008, respectively.


	For the Three Months Ended June 30,
	2009			2008
Corporate General and Administrative Expense	$	(44,705	)	$	(58,639	)
Interest Expense		(26,355	)		(6,180	)
Interest and Other Income		2,091			6,302
	$	(68,969	)	$	(58,517	)

The Company’s future realization of its deferred tax assets ultimately depends on the existence of sufficient taxable income in the carryforward periods (both federal and state). Changes in existing laws could affect the valuation of deferred tax assets for future periods. 25

~~Pursuant~~Table ~~to the provisions~~ of FIN 48, the Company recorded gross unrecognized tax benefits of $352.0 million and $353.1 million as of December 31, 2008 and March 31, 2008, respectively (which excludes interest, penalties, and the tax benefit relating to the deductibility of interest and state income tax). Contents

ItSummary ~~is possible that, within the next 12 months, the amount~~ of the Company’s ~~unrecognized~~Results ~~tax benefits may decrease as a result~~ of ~~the~~Operations ~~potential~~by resolution with the IRS of issues stemming from fiscal years 2001 through 2004 federal income tax returns, in addition to the resolution of various state income tax audits and/or appeals. However, the change that could occur within the next 12 months cannot be estimated at this time. Segment

The Company files numerous income tax returns in both U.S. federal and state jurisdictions. The federal statute of limitations has expired for the Company’s federal tax returns filed for tax years through March 31, 2000. In July 2007, the Company received a Revenue Agent’s Report from the IRS relating to the ongoing audit of the Company’s federal income tax returns for fiscal years 2001 through 2004. The Company believes that its tax return positions are supported and will vigorously dispute the proposed adjustments. In fiscal year 2008, the IRS commenced an examination of the Company’s federal tax returns for fiscal years 2005 and 2006. Certain of the Company’s state income tax returns are under audit and are at various stages of the audit process.


	For the Three Months Ended June 30, 2009
	Revenues		Earnings (Loss) from Unconsolidated Entities (1)			Earnings (Loss) from Continuing Operations Before Income Tax			Land-related Impairments		Land-related Write-offs
Home Building
East	$	232,977	$	(4,985	)	$	(140,605	)	$	122,878	$	1,140
Central		154,971		75			636			–		110
West		162,598		(10,357	)		(81,751	)		66,577		–
Other homebuilding		556		–			(18,537	)		11,106		–
Total Home Building		551,102		(15,267	)		(240,257	)		200,561		1,250
Financial Services		22,871		–			(12,993	)		–		–
Corporate & Other		–		–			(68,969	)		–		–
Total	$	573,973	$	(15,267	)	$	(322,219	)	$	200,561	$	1,250

~~The~~(1) ~~total~~Included ~~amount~~in ofHome ~~unrecognized~~Building ~~tax~~loss ~~benefits~~from ~~that,~~unconsolidated ifentities ~~recognized,~~for ~~would affect~~ the ~~Company’s effective~~three ~~tax~~months ~~rate~~ended ~~was~~June ~~$279.2 million and $272.3 million as of December 31~~30, ~~2008~~2009 ~~and~~is ~~March 31, 2008, respectively. For~~ the ~~three~~Company’s ~~and~~share ~~nine~~of ~~months~~joint ~~ended~~ventures’ ~~December 31,~~impairments ~~2008,~~totaling ~~the Company accrued~~ $89.9 ~~million~~ ~~and $23.6~~ million~~, respectively, of gross accrued interest and penalties~~. ~~As of December 31, 2008, gross accrued interest and penalties were $177.2~~


	For the Three Months Ended June 30, 2008
	Revenues		Loss from Unconsolidated Entities (1)			Earnings (Loss) from Continuing Operations Before Income Tax			Land-related Impairments		Land-related Write-offs
Home Building
East	$	308,039	$	(19,983	)	$	(86,801	)	$	34,874	$	5,182
Central		298,179		(128	)		(13,470	)		8,465		2,013
West		429,187		(186	)		(30,487	)		6,776		2,906
Other homebuilding		14,294		–			461			–		–
Total Home Building		1,049,699		(20,297	)		(130,297	)		50,115		10,101
Financial Services		76,423		–			6,067			–		–
Corporate & Other		–		–			(58,517	)		–		–
Total	$	1,126,122	$	(20,297	)	$	(182,747	)	$	50,115	$	10,101

~~Table~~(1) Included in Home Building loss from unconsolidated entities for the three months ended June 30, 2008 is the Company’s share of ~~Contents~~joint ventures’ impairments totaling $19.7 million.

~~million.~~Summary ~~The~~of ~~Company’s~~Inventory ~~liability for unrecognized tax benefits combined with accrued interest~~ and ~~penalties~~ isTotal ~~reflected~~Assets asby ~~a component of accrued liabilities.~~Segment

(K) DERIVATIVES AND HEDGING


	As of
	June 30, 2009				March 31, 2009
	Inventory		Total Assets		Inventory		Total Assets
Home Building
East	$	1,553,639	$	1,719,826	$	1,712,698	$	1,878,751
Central		617,312		635,431		619,555		639,516
West		559,135		653,856		665,663		777,361
Other homebuilding		261,171		1,164,094		275,504		1,177,702
Total Home Building		2,991,257		4,173,207		3,273,420		4,473,330
Financial Services		16,198		258,653		16,367		314,477
Corporate & Other (1)		–		1,093,670		–		1,130,307
Total	$	3,007,455	$	5,525,530	$	3,289,787	$	5,918,114

(1) The Company’s isOther ~~exposed~~segment toincludes ~~the~~cash, ~~risk~~income oftaxes ~~interest~~receivable ~~rate fluctuations on its debt~~ and ~~other obligations.~~substantially ~~Financial~~all ~~Services enters into mandatory forward trade commitments to manage the interest rate risk related to IRLCs and its portfolio~~ of ~~mortgage loans held for sale. Forward trade commitments related to IRLCs are treated as derivative instruments and their initial fair value is recorded on~~ the ~~balance~~Company’s ~~sheet~~deferred inincome ~~other~~tax ~~assets~~valuation ~~or accrued liabilities~~allowance. Forward trade commitments related to mortgage loans are treated as derivatives and are recorded on the balance sheet together with the related mortgage loan receivables. Subsequent changes in the fair value of forward trade commitments are recorded as an adjustment to earnings. The net change in the estimated fair value of forward trade commitments treated as derivatives resulted in a loss of $4.3 million for the three months ended December 31, 2008 compared to a gain of $0.2 million for the three months ended December 31, 2007. The net change in the estimated fair value of forward trade commitments treated as derivatives resulted in losses of $3.8 million and $2.7 million for the nine months ended December 31, 2008 and 2007, respectively.

Prior to April 1, 2008, the forward trade commitments used to hedge the interest rate risk related to Financial Services’ portfolio of mortgage loans held for sale were designated as fair value hedges. Changes in the fair value of these forward trade commitments and the mortgage loans, for which the hedge relationship was deemed effective, were recorded as an adjustment to earnings. To the extent the hedge was effective, gains or losses in the value of the hedged loans due to interest rate movement were offset by an equal and opposite gain or loss in the value of the forward trade commitment with no impact to earnings. To the extent the hedge contained some ineffectiveness, the ineffectiveness was recognized immediately in earnings. For the three and nine months ended December 31, 2007, the amount of hedge ineffectiveness included in earnings was a gain of $0.5 million and a loss of $10.7 million, respectively. Due in part to the adoption of SFAS 159 as it relates to the fair value measurement of mortgage loans held for sale discussed in Note (H), “Fair Values of Financial Instruments,” beginning April 1, 2008, the Company no longer accounts for these forward trade commitments as fair value hedges. 26

~~Financial~~Table Services enters into IRLCs with its customers under which Financial Services agrees to lend at a specified interest rate for a specified period, generally from one to 30 days, if certain conditions are met. Initially, the IRLCs are treated as derivative instruments and their fair value is recorded on the balance sheet in other assets or accrued liabilities. The fair value of these loan commitment derivatives includes future cash flows related to the associated servicing of the loan, but does not include the value of any internally-developed intangible assets. Subsequent changes in the fair value of the IRLCs are recorded as an adjustment to earnings. The net change in the estimated fair value of IRLCs resulted in a gain of $0.3 million and a loss of $5.0 million for the three and nine months ended December 31, 2008, respectively, compared to a loss of $0.1 million for the three months ended December 31, 2007 and a gain of $1.1 million for the nine months ended December 31, 2007. Contents

~~From~~(L) DISCONTINUED time to time, the Company may enter into other forms of derivatives, including interest rate swap agreements, to hedge changes in market values of certain assets and liabilities. At December 31, 2008, the loss of $6.4 million of these derivatives is included in accrued liabilities in the Consolidated Balance Sheets. The notional value of such derivatives was $65.2 million at December 31, 2008. OPERATIONS

~~(L) DISCONTINUED~~Home ~~OPERATIONS~~ Services

OnThe ~~March 30, 2007, the~~ Company completed the sale of ~~Construction~~its ~~Services~~home services operations to an unrelated third ~~parties~~ ~~and~~party ~~received~~on ~~$344.8 million~~April ~~in cash~~3, ~~net~~2008 ofand ~~related~~received ~~expenses. The Company is entitled to receive an aggregate of~~ $60131.0 1 million in cash. Prior to beits ~~paid~~sale, inthe ~~annual~~Company’s ~~installments~~home ofservices ~~$4.0 million over~~operations awere ~~15-year~~included ~~period~~in ~~after~~ the ~~closing~~Other ~~date (the “Additional Payments”)~~segment. The ~~Additional Payments~~Company’s ~~will~~home beservices ~~made~~operations inwere ~~connection~~reclassified ~~with an election with respect~~ to ~~the~~discontinued ~~tax~~operations ~~treatment~~in ~~of the transaction pursuant to Section~~March ~~338(h)(10) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”)~~2008. A Ifsummary ~~the Internal Revenue Code is amended so that the purchaser is no longer entitled to the benefits~~ of the ~~Section 338(h)(10)~~Company’s ~~election,~~calculation ~~the amount~~ of the ~~Additional~~related ~~Payments will~~gain beon subject to change to ensure that any subsequent payments to be made by the purchaser do not exceed 50% of the tax benefits to be realized by it thereafter as a result of such election. The Additional Payments are an unsecured receivable from the purchaser that was not recorded in connection with the sale ofis ~~Construction Services. As the Additional Payments are received in future periods, the amounts will be reflected in the Statements of Consolidated Operations.~~ below:


	For the Three Months Ended June 30, 2008

Sales and Related Proceeds, net of Related Expenses	$	124,320
Assets Sold		(85,076	)
Pre-tax Gain on Sale		39,244
Income Tax Expense		(20,231	)
Net Gain on Sale	$	19,013

~~Table~~During the three months ended September 30, 2008, the Company’s gain on sale of ~~Contents~~home services was adjusted for post-closing adjustments.

On(M) SUBSEQUENT April 3, 2008, the Company completed the sale of its home services operations to an unrelated third party and received $131.1 million in cash. A summary of the Company’s calculation of the related gain on sale is below: EVENTS

	For the Nine Months Ended
	December 31, 2008
Sales and Related Proceeds, net of Related Expenses	$	127,810
Assets Sold		(88,431	)
Pre-tax Gain on Sale		39,379
Income Tax Expense		(20,282	)
Net Gain on Sale	$	19,097

On July 17, 2009, the Company and other defendants entered into a memorandum of understanding with the plaintiffs in certain class action litigation. For additional information, please refer to Note (G), “Commitments and Contingencies.”

~~Prior~~As todescribed ~~their~~in ~~sale,~~more ~~Construction~~detail ~~Services~~in ~~was~~Note a(F), ~~separate~~“Indebtedness,” ~~reporting segment and~~ the Company~~’s home~~ ~~services~~maintains ~~operations~~a ~~were~~multi-bank ~~included~~revolving incredit ~~the Other segment~~facility. The ~~Construction Services and the~~ Company’s ~~home~~currently ~~services~~has ~~operations~~no ~~were~~cash ~~reclassified~~borrowings tounder ~~discontinued~~the ~~operations~~credit infacility ~~March 2007~~but ~~and March 2008, respectively. All prior period information for these operations~~ has ~~been~~outstanding ~~reclassified to~~letters ~~discontinued~~of ~~operations~~credit.

On In ~~September 30~~connection with the pending merger with Pulte, ~~2008~~on August 4, 2009, the Company ~~completed~~gave ~~the~~notice ~~sale~~to Bank of ~~Westwood~~America, ~~Insurance~~N.A., ~~Agency~~as toadministrative ~~an unrelated~~agent ~~third~~under ~~party~~the ~~and~~credit ~~received~~facility, ~~$55.4 million~~of inthe ~~cash,~~termination ~~which~~of isthe ~~subject~~total tocommitment ~~post-closing adjustments.~~under Asthe afacility, ~~result~~subject to, and effective as of, the ~~sale,~~closing of the merger. The Company ~~recognized~~will anot ~~pre-tax~~be ~~gain~~required ofto ~~$47.8 million, which~~pay ~~has~~an ~~been~~early ~~included~~termination penalty in ~~discontinued~~connection ~~operations.~~with ~~Historical~~the ~~operations~~termination of ~~Westwood~~the ~~Insurance Agency~~credit ~~are~~facility. The ~~not~~Company ~~material~~understands tothat, ~~the~~in ~~financial~~connection ~~performance~~with the closing of the ~~Company and~~merger, ~~accordingly,~~Pulte ~~have~~will ~~not~~take ~~been reclassified~~action to ~~discontinued~~maintain ~~operations~~the letters of credit outstanding under the credit facility.

~~Earnings~~The ~~from~~credit ~~discontinued~~facility ~~operations~~agreement ~~include~~was ~~the~~filed ~~financial~~as ~~information~~Exhibits ~~for~~10.17, ~~entities included in discontinued operations~~10.17a, ~~the gains on the sale of such entities~~10.17b, ~~intercompany~~10.17c ~~eliminations between entities in discontinued operations~~ and ~~entities~~10.17d into ~~continuing~~the ~~operations,~~Company’s ~~and~~Annual ~~certain general~~Report ~~and~~on ~~administrative~~Form ~~expenses~~10-K ~~incurred~~for in the ~~sale~~fiscal ofyear ~~such~~ended ~~entities.~~March 31, ~~The~~2009 ~~following~~filed ~~table provides~~with ~~summary~~the ~~information~~SEC ~~for~~on ~~amounts~~May 21, ~~included in discontinued operations:~~ 2009.

	For the Three Months Ended					For the Nine Months Ended
	December 31,					December 31,
	2008(1)		2007 (2)			2008(1)		2007 (2)
Revenues	$	—	$	32,800		$	—	$	102,247
Costs and Expenses		—		(31,342	)		—		(98,081	)
Earnings Before Income Taxes		—		1,458			—		4,166
Provision for Income Taxes		—		595			—		1,629
Gain on Sale, net of Tax		—		—			48,643		3,376
	$	—	$	863		$	48,643	$	5,913

(1)		Includes the Company’s home services operations and the gain from sale of Westwood Insurance Agency.
(2)		Includes the Company’s home services operations and Construction Services.

Table of Contents

~~(M) SUBSEQUENT~~Item ~~EVENTS~~ 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

InPulte January 2009, the Company amended its multi-bank revolving credit facility. For additional information, refer to Note (F), “Indebtedness.” Also, during January 2009, in connection with the amendment, the Company deposited an aggregate of $354.9 million with certain lenders to comply with the liquidity reserve requirement for the quarter ended December 31, 2008. This amount is not subject to a security interest but will be classified as restricted cash in the Company’s future financial statements. Merger

28On April 7, 2009, Centex Corporation and Pulte Homes, Inc., or Pulte, 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%. Although the exchange ratio is fixed, and is not subject to adjustment prior to the date the merger is consummated, the value of the Pulte shares to be received by our stockholders will fluctuate with the market price of Pulte common stock until the merger is consummated. The transaction is subject to approval by Pulte and Centex stockholders and the satisfaction of other customary closing conditions. Pulte and Centex have scheduled their respective special meetings of stockholders for August 18, 2009 and, if stockholder approvals are obtained and other customary closing conditions are satisfied, expect to consummate the merger promptly thereafter.

~~Table~~After the proposed merger, Pulte may elect to make changes in our business and our organizational and financial structure, many of ~~Contents~~which could significantly affect our operations, liquidity and capital resources. For additional information regarding the proposed merger, including the potential effects of such transaction, please see our proxy statement filed with the SEC on July 17, 2009.

~~Item 2.~~Executive ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ Summary

Any reference herein to we, us, our or the Company refers to Centex Corporation and its subsidiary companies or, if the context requires, the particular segment or unit of our business that is being discussed. The following discussion is intended to help the reader gain a better understanding of our financial condition and our results of operations. It is provided as a supplement to, and should be read in conjunction with, our financial statements and accompanying notes.

~~Executive~~Our ~~Summary~~results of operations for the three months ended June 30, 2009 were materially affected by continuing adverse conditions impacting our homebuilding and mortgage lending operations. The current adverse market conditions began in fiscal year 2006 and have continued in part due to disruptions in financial and credit markets and the current national economic recession, which is one of the most pronounced economic 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.

~~Our~~A ~~results~~summary of ~~operations for the three and nine months ended December 31, 2008 were materially affected by continuing adverse market conditions impacting~~ our ~~homebuilding~~results ~~and~~of ~~mortgage lending~~ operations. ~~These adverse market conditions began in fiscal year 2006, and in the most recent periods, have been exacerbated~~ by ~~significant~~line ~~decreases~~of inbusiness ~~demand for new housing and the current national economic recession, which~~ is ~~one~~as offollows ~~the~~(dollars ~~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. thousands):

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


For the Three Months Ended June 30,
2009	2008	Change

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