10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2006

or

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

Commission File Number: 1-6776

CENTEX CORPORATION

(Exact name of registrant as specified in its charter)

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

2728 N. Harwood, Dallas, Texas
75201
(Address of principal executive offices)
(Zip Code)

(214) 981-5000
(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

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

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Act. (Check one):

Large accelerated filer þ Accelerated filer o Non–accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

     On September 30, 2005, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $8.25 billion based upon the last sale price reported for such date on the New York Stock Exchange. As of May 10, 2006, 121,368,266 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain of the information contained in the definitive Proxy Statement for the registrant’s Annual Meeting of Stockholders to be held on July 13, 2006 is incorporated by reference into Part III hereof.

FORM 10-K

March 31, 2006

TABLE OF CONTENTS

PART I
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Submission of Matters to a Vote of Security Holders	21
Item 4A.	Executive Officers of the Registrant	21
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	22
Item 6.	Selected Financial Data	23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 8.	Financial Statements and Supplementary Data	51
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	94
Item 9A.	Controls and Procedures	94
Item 9B.	Other Information	94
PART III
Item 10.	Directors and Executive Officers of the Registrant	94
Item 11.	Executive Compensation	95
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	95
Item 13.	Certain Relationships and Related Transactions	95
Item 14.	Principal Accountant Fees and Services	95
PART IV
Item 15.	Exhibits and Financial Statement Schedules	95
SIGNATURES		100
Amended and Restated 1987 Stock Option Plan
Tenth Amended and Restated 1998 Employee Non-Qualified Stock Option Plan
Amended and Restated 2001 Stock Option Plan
Amended and Restated Long Term Incentive Plan
Amended and Restated 2003 Equity Incentive Plan
Form of Stock Option Agreement for 2003 Equity Incentive Plan
Form of Stock Unit Agreement for 2003 Equity Incentive Plan
Amended and Restated Executive Deferred Compensation Plan
Computation of Ratio of Earnings to Fixed Charges
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm
Powers of Attorney
Certification of CEO Pursuant to Rule 13a-14(a)
Certification of CFO Pursuant to Rule 13a-14(a)
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

2

PART I

ITEM 1. BUSINESS

General Development of Business

     Centex Corporation is a Nevada corporation. Our common stock, par value $.25 per share, began trading publicly in 1969. Our common stock is traded on the New York Stock Exchange, or the NYSE. As of May 10, 2006, 121,368,266 shares of our common stock were outstanding. Any reference herein to we, us, our or the Company includes Centex Corporation and its subsidiary companies.

     Since our founding in 1950 as a Dallas, Texas-based residential construction company, we have evolved into a company whose principal operations are focused on residential and commercial construction and related activities, including mortgage financing. As of March 31, 2006, our subsidiary companies operated in three principal business segments: Home Building, Financial Services and Construction Services. We provide a brief overview of each segment below, with a more detailed discussion of each segment later in this section.

     Home Building’s operations currently involve the purchase and development of land or lots and the construction and sale of detached and attached single-family homes (including resort and second home properties and lots) and land or lots. We have participated in the homebuilding business since 1950. We believe we currently rank as the 4^th largest homebuilder in the United States, based upon publicly reported homebuilding revenues for the most recent twelve-month period for which financial information is available.

     Financial Services’ operations consist primarily of mortgage lending, title agency services and the sale of title insurance and other insurance products. These activities include mortgage origination, servicing, and other related services for homes sold by our subsidiaries and others. We have been in the mortgage lending business since 1973.

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

     In September 2005, we sold our international homebuilding operations to an unrelated third party. As a result of the sale, international homebuilding is now reflected as a discontinued operation in our financial statements.

     On March 30, 2006, we announced that we signed a definitive agreement to sell our sub-prime home equity lending operations, which we refer to as Home Equity, to an unrelated third party. As a result, Home Equity is now reflected as a discontinued operation in our financial statements. However, the sale of Home Equity is subject to certain conditions, including obtaining a substantial number of regulatory approvals from state financial services or other regulatory authorities. The purchase price to be received in connection with the sale of Home Equity will consist of payments based on the book value of Home Equity, plus a premium to be calculated in accordance with an agreed upon formula.

Financial Information about Segments

     Note (I), “Business Segments,” of the Notes to Consolidated Financial Statements contains additional information about our business segments for fiscal years 2006, 2005 and 2004.

Narrative Description of Business

HOME BUILDING

     The business of Home Building consists of purchasing and developing land or lots and constructing and selling detached and attached single-family homes (including resort and second home properties and lots) and land or

3

lots. In fiscal year 2006, 80% of the homes closed were single-family detached homes, which includes homes from our resort and second home and on-your-lot operations.

Markets

     Home Building follows a strategy of reducing exposure to local market volatility by maintaining operations across geographically and economically diverse markets. As of March 31, 2006, Home Building was building in 86 market areas located in 25 states and the District of Columbia. Each market is listed below by geographic area.

Region	States	Markets	States and Markets (continued)
Mid-Atlantic	Maryland	Bethesda/Frederick/Gaithersburg	Pennsylvania	Pittsburgh
		Washington, D.C./Arlington/Alexandria	South	Charleston/N. Charleston
	New Jersey	Edison Newark/Union New York/Wayne/White Plains	Carolina   Virginia	Myrtle Beach/Conway N. Myrtle Beach Charlottesville
	North Carolina	Charlotte/Gastonia/Concord		Richmond
		Durham		Virginia Beach/Norfolk
		Greensboro/High Point		Newport News
		Raleigh/Cary		Winchester
		Wilmington
		Winston-Salem
Southeast	Florida	Cape Coral/Ft. Myers	Florida (cont)	Tampa/St. Petersburg/Clearwater
		Ft. Lauderdale/Pompano		Vero Beach
		Beach/Deerfield Beach		West Palm Beach/Boca
		Jacksonville		Raton/Boynton Beach
		Naples/Marco Island	Georgia	Atlanta/Sandy Springs/Marietta
		Orlando		Savannah
		Port St. Lucie/Ft. Pierce	Tennessee	Nashville/Davidson
		Punta Gorda		Murfreesboro
		Sarasota/Bradenton/Venice
Midwest	Colorado	Boulder	Michigan	Flint
		Denver/Aurora	(cont)	Warren/Farmington Hills/Troy
		Ft. Collins/Loveland	Minnesota	Minneapolis/St. Paul/Bloomington
		Greeley		Rochester
	Indiana	Indianapolis	Missouri	St. Louis
		Ft. Wayne	Ohio	Akron
	Illinois	Chicago/Naperville/Joliet		Cincinnati/Middletown
	Kentucky	Louisville		Columbus
	Michigan	Ann Arbor		Dayton
		Detroit/Livonia/Dearborn		Monroe
				Toledo
Southwest	Arizona	Phoenix/Mesa	Texas	Austin/Round Rock
	Nevada	Las Vegas/Paradise		Dallas/Plano/Irving
	New Mexico	Albuquerque		Ft. Worth/Arlington
		Santa Fe		Houston/Baytown/Sugar Land
				Killeen/Temple/Ft. Hood
				San Antonio
West Coast	California	Bakersfield	California	San Jose/Sunnyvale/Santa Clara
		El Centro	(cont)	San Luis Obispo/Paso Robles
		Fresno		Santa Ana/Anaheim/Irvine
		Hanford/Corcoran		Stockton
		Los Angeles/Long Beach/Glendale		Visalia/Porterville
		Merced		Yuba City
		Modesto	Hawaii	Honolulu
		Oakland/Fremont/Hayward	Nevada	Reno/Sparks
		Oxnard/Thousand Oaks/Ventura	Oregon	Portland/Vancouver/Beaverton
		Riverside/San Bernardino/Ontario	Washington	Seattle/Bellevue/Everett
		Sacramento/Arden/Arcade/Roseville
		San Diego/Carlsbad/San Marcos
		San Francisco/San Mateo/Redwood City

4

     In fiscal year 2006, Home Building closed 39,232 homes, including first-time, move-up and, in some markets, custom homes, generally ranging in price from $83 thousand to $1.6 million. The average sales price in fiscal year 2006 was $303,850.

     We believe that our business requires in-depth knowledge of local markets in order to acquire land in desirable locations and on favorable terms, to engage subcontractors, to plan neighborhoods according to local demand, to anticipate customer tastes in specific markets and to assess the regulatory environment. Our divisional structure is designed to utilize local market expertise.

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

     We control a substantial amount of land, including lots and land to be developed into lots, through option agreements that we can exercise over specified time periods or, in certain cases, as the land or lots are needed. At March 31, 2006, Home Building owned approximately 108,828 lots and had options to purchase approximately 186,893 lots. In addition, Home Building enters into joint ventures with other builders and developers for land acquisition, development and other activities. For additional discussion of our participation in joint ventures and lot option agreements, see Notes (F), “Commitments and Contingencies,” and (G), “Land Held Under Option Agreements Not Owned and Other Land Deposits,” of the Notes to Consolidated Financial Statements.

     Following the purchase of land and, if necessary, the completion of the entitlement process, we begin marketing homes and constructing model homes. We supervise and control the development of land (except where we buy developed land) and the design and building of our residential neighborhoods. Substantially all of our construction work is performed by subcontractors.

     We market and sell our homes through commissioned employees and independent real estate brokers. We typically conduct home sales from sales offices located in furnished model homes in each neighborhood. Our sales personnel assist prospective homebuyers by providing them with floor plans, price information, tours of the community and model homes and assisting them with the selection of options. As market conditions warrant, we may provide potential homebuyers with one or more of a variety of incentives, including discounts and free upgrades, to be competitive in a particular market. In addition to using model homes, in certain markets we build a limited number of homes in each neighborhood before executing a customer sales contract. These homes enhance our marketing and sales efforts to prospective homebuyers who are relocating to these markets, as well as to independent brokers, who often represent homebuyers requiring a completed home within 60 days. We typically sell a majority of our speculative homes while they are under construction or immediately following completion.

     Our growth strategy for Home Building has been focused primarily on organic growth opportunities through land acquisition and development in existing business units and markets. To a lesser extent, we have also grown the business through the acquisition of other homebuilding companies. In January 2003, we acquired the homebuilding operations of The Jones Company, which builds single-family homes for the first-time and move-up buyer in the St. Louis, Missouri and Indianapolis, Indiana areas.

     Home Building sells its homes under a variety of brand names including several from previous acquisitions. Fox & Jacobs, one of our brand names, primarily markets to first-time buyers. Centex Homes primarily markets its homes to both first-time and move-up buyers. Wayne Homes markets primarily to rural lot owners for construction of a home on their lot. Centex Destination Properties markets to second home/resort home buyers.

5

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

Closings (in units):

	For the Years Ended March 31,
	2006		2005		2004		2003		2002
Mid-Atlantic		7,182		5,823		5,201		4,501		3,877
Southeast		7,235		5,879		5,568		4,851		4,440
Midwest		7,153		6,712		5,801		4,695		3,688
Southwest		10,720		9,158		8,708		8,157		6,910
West Coast		6,942		5,815		5,080		4,223		4,045
		39,232		33,387		30,358		26,427		22,960
Average Sales Price (in 000’s)	$	304	$	270	$	242	$	220	$	214

Sales (Orders) (in units):

	For the Years Ended March 31,
	2006		2005		2004		2003		2002
Mid-Atlantic		6,833		6,483		5,854		5,146		3,936
Southeast		6,345		7,178		6,562		5,249		4,819
Midwest		6,596		6,593		6,273		5,087		3,744
Southwest		11,126		9,977		9,319		8,054		6,725
West Coast		7,130		6,331		5,714		5,132		3,763
		38,030		36,562		33,722		28,668		22,987

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

	As of March 31,
	2006		2005		2004		2003		2002
Mid-Atlantic		3,073		3,461		2,801		2,148		1,503
Southeast		4,116		5,006		3,707		2,713		2,315
Midwest		2,755		3,273		3,392		2,920		2,093
Southwest		4,094		3,688		2,869		2,258		2,361
West Coast		3,349		3,161		2,645		2,011		1,099
		17,387		18,589		15,414		12,050		9,371

     We define backlog units as units that have been sold, as evidenced by a signed contract with the customer, but not closed. Substantially all of the orders in sales backlog as of March 31, 2006 are expected to close during fiscal year 2007.

     For each unit in backlog, we have received a customer deposit, which is refundable under certain circumstances. The backlog units included in the table above are net of cancellations. Cancellations occur for a variety of reasons including: a customer’s inability to obtain financing, customer relocations or other customer financial hardships.

Competition and Other Factors

     The homebuilding industry is highly competitive and fragmented. Traditionally, competition in the industry has occurred at a local level among national, regional and local homebuilders. In recent years, national homebuilders have been able to compete more effectively and increase their share of the national homebuilding market. The top 10 builders in calendar year 2005 accounted for approximately 24% of the total for-sale attached and detached new homes sold in the United States. We compete in each of Home Building’s market areas with numerous other homebuilders, including national, regional and local builders. Home Building’s top four domestic competitors based on revenues for their most recent fiscal year-end are as follows (listed alphabetically): D. R. Horton, Inc., KB Home, Lennar Corporation and Pulte Homes, Inc. Home Building’s operations accounted for an estimated 3% of new homes

6

sold in the United States for the twelve months ended March 31, 2006. Home Building calculates its market share by dividing its new home sales by the total single family new home sales as reported by the census bureau. The main competitive factors affecting Home Building’s operations are location/market, sales price, availability of mortgage financing for customers, construction costs, design and quality of homes, customer service, marketing expertise, availability of land, price of land and reputation. We believe that Home Building competes effectively by building a high quality home, maintaining geographic diversity, responding to the specific demands of each market and managing operations at a local level.

     We conduct targeted market research to identify what features, amenities and options will be attractive to prospective customers and whether we can satisfy their preferences profitably. Customer preferences can vary across geographical regions and even within them, and can change over time in response to changes in personal taste (such as the interest in some markets for housing with high energy efficiency or for housing located near public transportation) and to changes in economic conditions, like interest rates, which can lead customers to accept smaller or attached housing despite a preference for larger or detached housing. We also use market research techniques to quantify housing supply and demand in a particular market and use this information to guide our strategy for meeting customer demand in the market. We believe that our use of market research allows us to respond quickly and efficiently to the economic reality of a market and to our prospective customers’ preferences, tastes and financial capabilities.

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

     The homebuilding industry is subject to extensive regulations. Home Building and its subcontractors must comply with various federal, state and local laws and regulations, including worker health and safety, zoning, building standards, erosion and storm water pollution control, advertising, consumer credit rules and regulations and the extensive and changing federal, state and local laws, regulations and ordinances governing the protection of the environment, including the protection of endangered species and waters of the United States. Home Building is also subject to other rules and regulations in connection with its manufacturing and sales activities, including requirements as to incorporated building materials and building designs. All of these regulatory requirements are applicable to all homebuilding companies, and, to date, compliance with these requirements has not had a material impact on Home Building. We believe that Home Building is in compliance with these requirements in all material respects.

     We purchase materials, services and land from numerous sources, and during the past twelve months, have been able to deal effectively with the challenges we have experienced relating to the supply or availability of materials, services and land. The principal raw materials required for home construction include concrete and wood products. In addition, we use a variety of other building materials, including roofing, gypsum, insulation, plumbing, and electrical components in the homebuilding process. While raw material prices may fluctuate, due to various factors, including demand or supply shortages, we do have a number of fixed-price contracts with subcontractors and material suppliers, which help limit the effect of commodity price increases. We also attempt to maintain efficient operations by utilizing standardized materials available from a variety of sources. Our vendor purchase agreements also allow us to leverage our volume through quantity purchase discounts for the purchasing of a number of product categories. We use many subcontractors in our various markets and are not dependent on any single subcontractor.

FINANCIAL SERVICES

     Our Financial Services’ operations consist primarily of mortgage lending, title agency services and the sale of title insurance and other insurance products, including property and casualty. These activities include mortgage origination, servicing, and other related services for purchasers of homes sold by the Company’s subsidiaries and others.

Prime Mortgage Lending

     We established the predecessor of CTX Mortgage Company, LLC and its related companies to provide mortgage financing for homes built by Home Building. By opening CTX Mortgage Company, LLC offices in Home Building’s housing markets, we have been able to provide mortgage financing for an average of 73% of Home Building’s non-cash unit sales over the past five years and for 75% of them in fiscal year 2006. In 1985, we expanded CTX Mortgage Company, LLC’s operations to include the origination of mortgage loans that are not associated with

7

the sale of homes built by Home Building. Our strategy is to originate loans for sale, rather than for investment. We refer to mortgage financing for homes built by Home Building as Builder loans and to mortgage financing for homes built by others, loans for resale homes and loans for refinance of existing mortgages as Retail loans.

     At March 31, 2006, CTX Mortgage Company, LLC originated loans through its loan officers in 182 offices licensed in 46 states and the District of Columbia. The offices vary in size depending on loan volume.

     The following table shows the unit breakdown of Builder and Retail loans for CTX Mortgage Company, LLC for the five years ended March 31, 2006:

	For the Years Ended March 31,
	2006			2005			2004			2003			2002
Loan Types (originations):
Builder		27,364			22,517			20,865			18,127			15,435
Retail		43,319			44,816			67,481			66,807			64,949
		70,683			67,333			88,346			84,934			80,384
Origination Volume (in millions)	$	15,827.4		$	13,039.0		$	15,116.0		$	13,991.2		$	12,445.5
Percent of Home Building’s Closings Financed (1)		75	%		73	%		74	%		73	%		72	%

(1) Excludes non-financed cash only closings.

     We provide mortgage origination and other mortgage-related services for the Federal Housing Administration, or FHA, the Department of Veterans’ Affairs, or VA, and conventional loans on homes that Home Building or others build and sell, as well as resale homes and refinancing of existing mortgages. Our loans are generally first-lien mortgages secured by one- to four-family residences. A significant portion of the loans qualify for inclusion in programs sponsored by the Government National Mortgage Association, or GNMA, the Federal National Mortgage Association, or FNMA, or the Federal Home Loan Mortgage Corporation, or FHLMC. These loans are known in the industry as “conforming” loans. The remainder of the loans are either pre-approved and individually underwritten by CTX Mortgage Company, LLC or by private investors who subsequently purchase the loans, or are funded by private investors who pay a broker fee to CTX Mortgage Company, LLC for broker services rendered.

     CTX Mortgage Company, LLC and its related companies’ principal sources of income are the sale of mortgage loans, together with all related servicing rights, interest income and other fees. For substantially all mortgage loans originated, we sell our right to service the mortgage loans and retain no residual interests.

     We also participate in joint-venture agreements with third-party homebuilders and other real estate professionals to provide mortgage originations for their customers. As we own majority interests in these joint ventures, they are fully consolidated in CTX Mortgage Company, LLC and its related companies’ financial statements. At March 31, 2006, CTX Mortgage Company, LLC had 19 of these agreements, operating in 19 offices licensed in 10 states.

     In 1999, CTX Mortgage Company, LLC entered into a mortgage loan purchase agreement, as amended, with Harwood Street Funding I, LLC, or HSF-I, that we refer to as the HSF-I Purchase Agreement. HSF-I is a variable interest entity for which we are the primary beneficiary and, beginning July 1, 2003, was consolidated with our Financial Services segment pursuant to the provisions of Financial Accounting Standards Board, or FASB, Interpretation No. 46 “Consolidation of Variable Interest Entities,” as revised, which we refer to as FIN 46. Variable interest entities are entities in which (1) equity investors do not have a controlling financial interest and/or (2) the entity is unable to finance its activities without additional subordinated financial support from other parties. The primary beneficiary of a variable interest entity is the owner or investor that absorbs a majority of the variable interest entity’s expected losses and/or receives a majority of the variable interest entity’s expected residual returns. CTX Mortgage Company, LLC sells substantially all the mortgage loans that it originates to HSF-I in accordance with the HSF-I Purchase Agreement. When HSF-I acquires these loans, it holds them on average approximately 60 days and then resells them into the secondary market. In accordance with the HSF-I Purchase Agreement, CTX Mortgage Company, LLC acts as servicer of the loans owned by HSF-I and arranges for the sale of the mortgage loans into the secondary market. HSF-I purchases mortgage loans, at closing, from CTX Mortgage Company, LLC with the proceeds from its issuance of short-term secured liquidity notes, medium-term debt and subordinated certificates.

8

HSF-I’s debt and subordinated certificates do not have recourse to us, and the consolidation of this debt and subordinated certificates has not changed our debt ratings.

Other Financial Services Operations

     We offer title agent, title underwriting, closing and other settlement services in 22 states under the Commerce Title name, including Commerce Title Company, Commerce Title Agency and Commerce Title Insurance Company. Through Westwood Insurance, including Centex Insurance Agency, a multi-line property and casualty insurance agency, we market homeowners and auto insurance to Home Building and Financial Services customers and customers of approximately 9 other homebuilders in 44 states. Westwood Insurance also provides coverage for some commercial customers.

     Our Technologies Group, under the Adfitech name, provides outsourced mortgage services including quality control, shipping and delivery. Adfitech currently services over 450 clients nationwide.

Competition and Other Factors

     The financial services industry in the United States is highly competitive. CTX Mortgage Company, LLC competes with commercial banks, other prime mortgage lending companies and other financial institutions to supply mortgage financing at attractive rates to Home Building’s customers, as well as to the general public. Competition among industry participants can take many forms, including convenience in obtaining a loan, customer service, marketing and distribution channels, amount and term of the loan, loan origination fees and interest rates. Additional competition may lower the rates we can charge borrowers, thereby potentially reducing gain on future loan sales. Our title and insurance operations compete with other providers of title and insurance products to sell their products to purchasers of our homes, as well as to the general public. Many of these competitors have greater resources than we do.

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

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

CONSTRUCTION SERVICES

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

9

     Historically, Construction Services conducted its operations through its distinct, largely autonomous operating companies. Construction Services’ principal operating companies were Centex Construction Company, Inc., Centex Rodgers, Inc. and Centex-Rooney Construction Co., Inc. In December 2004, Construction Services merged these operating companies into two operating companies, Centex Construction, LLC and Centex Construction, Inc. During fiscal year 2005, Construction Services transitioned to one common organizational structure with one brand, standardized operating policies and procedures with an emphasis on certain geographic markets and project niches in which it has expertise. As of March 31, 2006, Construction Services’ primary offices were located in the metropolitan areas of Dallas, Ft. Lauderdale, Charlotte and Washington, D.C.

     Construction contracts are primarily procured under one of two methods: negotiated (qualifications-based selection) or competitive bid (price-based selection). At March 31, 2006, approximately 94% of the backlog was procured under the negotiated method. The backlog at March 31, 2006 was $2.96 billion compared to $2.00 billion at March 31, 2005. Approximately $1.70 billion of the backlog at March 31, 2006 is projected to be constructed and the related revenues recognized during fiscal year 2007. We define backlog in the Construction Services segment as the uncompleted portion of all signed construction contracts.

     The following table summarizes the total backlog in dollars as a percentage by industry segment and projected revenues in fiscal year 2007 by industry segment as of March 31, 2006:

				% of FY 2007
Industry Segment	% of Backlog			Revenues
Multi-unit Residential (1)		55.1	%		43.7	%
Healthcare		10.9	%		14.2	%
Education		8.3	%		11.6	%
Corporate Office Buildings		6.2	%		8.9	%
Corrections		7.4	%		8.6	%
Other		12.1	%		13.0	%
Total		100.0	%		100.0	%

(1) The multi-unit residential industry segment includes the construction of residences on domestic military bases.

Competition and Other Factors

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

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

     Construction Services’ operations are affected by federal, state and local laws and regulations relating to worker health and safety, as well as environmental laws. Current environmental laws may require Construction Services’ operating subsidiaries to work in concert with project owners to acquire the necessary permits or other authorizations for certain activities, including the construction of projects located in or near wetland areas. Construction Services’ operations are also affected by environmental laws regulating, among other things, erosion and storm water pollution control and the use and disposal of hazardous materials encountered during demolition operations. We believe that Construction Services’ current procedures and practices are consistent with industry standards and, during the past twelve months, compliance with the health and safety laws and environmental laws did not constitute a material burden or expense.

     Construction Services’ operations obtain materials and services from numerous sources. The risk of raw material price fluctuation is primarily transferred to our subcontractors through lump sum contractual arrangements. To the extent that raw material pricing changes create subcontractor performance issues, performance and payment

10

bonds or subcontractor default insurance facilitate mitigation of our risks. During the past twelve months, our Construction Services’ operations were able to deal effectively with challenges they experienced relating to the supply or availability of materials and services.

DISCONTINUED OPERATIONS

Sub-Prime Home Equity Lending

     On March 30, 2006, Centex announced that we signed a definitive agreement to sell Centex Home Equity Company, LLC, or Home Equity, to an unrelated third party. As a result, Home Equity is now reflected as a discontinued operation in our financial statements. However, the sale of Home Equity is subject to certain conditions, including regulatory approvals from state financial services or other regulatory authorities. The purchase price to be received in connection with the sale of Home Equity will consist of payments based on the book value of Home Equity, plus a premium to be calculated in accordance with an agreed upon formula. Home Equity and CTX Mortgage Company, LLC currently have a relationship whereby CTX Mortgage Company, LLC sells certain mortgage loans to Home Equity. This relationship offers CTX Mortgage Company, LLC an outlet for the sale of sub-prime loans and provides Home Equity with an additional source of loan production. The securities purchase agreement for the sale of Home Equity provides that, at the closing of the sale, Home Equity and CTX Mortgage Company, LLC will enter into an alliance agreement for a term of five years from closing. Pursuant to the alliance agreement, CTX Mortgage Company, LLC will provide Home Equity with, among other things, certain access rights to support the continued status of Home Equity as CTX Mortgage Company, LLC’s nationally recognized sub-prime loan partner, and Home Equity will agree to comply with certain service level requirements, including efforts to provide CTX Mortgage Company, LLC with competitive mortgage loan products and pricing.

     We formed the predecessor of Home Equity in fiscal year 1995. Home Equity’s business involves the origination of primarily nonconforming mortgage loans to borrowers whose financing needs are not being met by traditional mortgage lenders for a variety of reasons, including credit histories that may limit a borrower’s access to credit or a borrower’s need for specialized loan products such as cash-out refinance and jumbo loans. Home Equity’s mortgage loans also include loans to borrowers for debt consolidation, home improvement and educational expenses. Substantially all of Home Equity’s mortgage loans are secured by first mortgage liens on one- to four-family residences and have payment schedules ranging from 5 to 30 years.

     At March 31, 2006, Home Equity had 82 offices and was licensed to do business in 47 states. Home Equity originates home equity loans through five major origination sources:

• its retail branches;

• a broker referral network;

• referrals from CTX Mortgage Company, LLC;

• a correspondent mortgage banker network; and

• Home Equity’s direct sales unit that sources lending opportunities from a variety of channels including through the Internet.

     The following table summarizes Home Equity’s origination statistics for the five-year period ended March 31, 2006:

	For the Years Ended March 31,
	2006		2005		2004		2003		2002
Loans		44,969		43,617		36,659		29,448		26,955
Origination Volume (in millions)	$	5,975.6	$	5,276.3	$	3,920.7	$	2,506.2	$	2,092.4

     Home Equity began servicing the loans it originates in fiscal year 1997, and we generally service all loans included in Home Equity’s portfolio. Servicing fees for sub-prime loans are significantly higher than for prime loans, primarily due to the higher costs associated with more frequent contact with customers. Servicing encompasses, among other activities, the following processes: billing, collection of payments, investor reporting, customer assistance, recovery of delinquent payments and instituting foreclosure and liquidation of the underlying collateral. Home Equity’s servicing portfolio also includes loans sold on a whole loan, servicing-retained basis. As of March 31, 2006, Home Equity was servicing a sub-prime loan portfolio of 103,145 loans with a total loan value of approximately $10.55 billion.

11

     Securitizations are accounted for as borrowings; interest is recorded over the life of the loans using the interest, or actuarial, method; the mortgage loans receivable and the securitization debt remain on Home Equity’s balance sheet and the related interest margin is reflected in our income statement. Recourse is limited to the payments received on the underlying mortgage collateral with no recourse to Home Equity or Centex Corporation. As is common in these structures, Home Equity remains liable for customary loan representations. Interest margin is Home Equity’s primary source of operating income. For the year ended March 31, 2006, Home Equity completed two securitizations totaling approximately $1.99 billion in loans.

Competition and Other Factors

     Home Equity competes with commercial banks, other sub-prime lenders and other financial institutions to supply sub-prime financing at attractive rates. Other large financial institutions have gradually expanded their prime and sub-prime lending capabilities, some of whom have greater access to capital at a cost lower than our cost of capital under our credit facilities.

EMPLOYEES

     The following table presents a breakdown of our employees as of March 31, 2006:

Business Segment	Employees
Home Building		9,359
Financial Services		3,535
Construction Services		1,494
Other		1,956
Discontinued Operations		2,200
Total		18,544

     The 1,956 Other employees include 1,807 employees of our home services operations, which provides home pest control services, and corporate employees. The corporate employees are employed by Centex Corporation; all others are employees of our various subsidiaries. The 2,200 Discontinued Operations employees consist of employees of our Home Equity operations.

NYSE AND SEC CERTIFICATIONS

     We submitted our 2005 Annual CEO Certification to the New York Stock Exchange on July 21, 2005. The certification was not qualified in any respect. Additionally, we filed with the Securities and Exchange Commission as exhibits to our Form 10-K for the year ended March 31, 2005, the CEO and CFO certifications required under Section 302 of the Sarbanes-Oxley Act.

AVAILABLE INFORMATION

     Anyone seeking information about our business operations and financial performance can receive copies of the 2006 Annual Report to Stockholders, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports and other documents filed with the Securities and Exchange Commission in Washington, D.C., without charge, by contacting our Corporate Communications office at (214) 981-6901; by writing to Centex Corporation, Investor Relations, P.O. Box 199000, Dallas, Texas 75219 or via email at ir@centex.com. In addition, all filings with the Securities and Exchange Commission, news releases and quarterly earnings announcements, including live audio and replays of recent quarterly earnings web casts, can be accessed free of charge on our web site (http://www.centex.com). We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available on our web site as soon as reasonably practicable after we electronically file the material with, or furnish it to, the Securities and Exchange Commission. To retrieve any of this information, go to http://www.centex.com, select “Investors,” select “Research,” and select “SEC Filings.” Our web site also includes our Corporate Governance Guidelines, The Centex Way (our Code of Business Conduct and Ethics) and the charters for the Audit Committee, the Corporate Governance and Nominating Committee and the Compensation and Management Development Committee of our Board of Directors. Each of these documents is also available in print to any stockholder who requests a copy by addressing a request to Centex Corporation, attention: Corporate Secretary, 2728 N. Harwood, Dallas, Texas 75201. The reference to our web site is merely intended to suggest where additional

12

information may be obtained by investors, and the materials and other information presented on our web site are not incorporated in and should not otherwise be considered part of this Report.

ITEM 1A. RISK FACTORS

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

HOME BUILDING

Deterioration in economic conditions generally or in the market regions where we operate could decrease demand and pricing for new homes and adversely affect our results of operations.

     The residential homebuilding industry is sensitive to changes in regional and national economic conditions such as job growth, housing demand, availability of financing for homebuyers, interest rates and consumer confidence. Adverse changes in any of these conditions on a national level, or in the markets where we operate, could decrease demand and pricing for our homes or cause customers who have entered into purchase contracts for our homes to fail to perform their obligations, which could adversely affect the number of home deliveries we make or reduce the prices we can charge for homes. Adverse changes in these conditions could also result in a decreased value for the land, housing inventory and housing work-in-progress that we own. Depending on the nature and magnitude of these economic factors, they could have a material adverse effect on our business, revenues or earnings.

     In the last few months, a number of homebuilders have reported declines or slower growth rates in the volume of homes sold as a result of higher interest rates and other factors that could signal a downturn in the homebuilding industry. For example, during the second half of fiscal year 2006, we experienced an increase in customer cancellations, which has resulted in either declines in sales orders or less rapid growth in sales of our homes in a number of markets. A significant deterioration of these and other homebuilding economic factors could result in continued and prolonged decreases in demand for new homes. A decline in prices of new homes or in the volume of homes sold by us for any reason could have a material adverse effect on our revenues, earnings and margins.

Increases in interest rates or other adverse developments affecting mortgage credit markets could make it more difficult or costly for customers to purchase our homes.

     Most of our homebuilding customers finance their home purchases through our Financial Services operations or, in some cases, third-party lenders. In general, housing demand is adversely affected by increases in interest rates or by decreases in the availability of mortgage financing as a result of deteriorating customer credit quality or other factors. Interest rates have been at historical lows for several years. Furthermore, many homebuyers have chosen adjustable rate or interest only mortgages or other mortgages that involve initial lower monthly payments. As a result, new homes have been more affordable in recent years. However, interest rates are currently on a modest upward trend, and may continue to increase in future periods. Any future increases in interest rates could cause potential homebuyers to be less willing to purchase our homes or to cancel sales contracts in backlog. In addition, if lenders perceive deterioration in credit quality among home buyers, lenders may increase the qualifications needed for mortgages or adjust their terms to address any increased credit risk. In general, if mortgage rates increase or lenders make it more difficult for prospective buyers to finance home purchases, it could become more difficult or costly for customers to purchase our homes, which would have an adverse affect on our results of operations.

Competition for homebuyers could reduce our deliveries or decrease our profitability.

     The homebuilding industry is highly competitive. We compete in each of our markets with many national, regional and local homebuilders. In recent years, national homebuilders have been able to compete more effectively and increase their share of the national homebuilding market. Increasing levels of competition from other national homebuilders or from regional and local homebuilders in the markets in which we operate could reduce the number of homes we deliver, or cause us to accept reduced margins in order to maintain sales volume.

     We also compete with resales of existing used or foreclosed homes, homes offered by investors and housing speculators and available rental housing. Increased competitive conditions in the residential resale or rental market in the regions where we operate could decrease demand for new homes, cause us to increase our sales incentives or price

13

discounts in order to maintain sales volumes, increase the volatility of the market for new homes or lead to cancellations of sales contracts in backlog, any of which could adversely affect our operating results.

We may not be able to acquire land suitable for residential homebuilding at reasonable prices, which could limit our ability to expand our homebuilding operations and increase our costs.

     Our ability to expand our homebuilding operations depends upon our ability to acquire land suitable for residential building at reasonable prices and in locations where we want to build. Over the past decade, we have experienced an increase in competition for suitable land as a result of land constraints in certain of our markets. As competition for suitable land increases, and as available land is developed, the availability of suitable land at acceptable prices may decline. Any land shortages or any decrease in the supply of suitable land at reasonable prices in certain specific markets could limit our ability to develop new neighborhoods or result in increased land acquisition costs. There can be no assurance that, if we experience increased land acquisition costs, we will be able to pass these costs through to our customers, which could adversely impact our revenues, earnings and margins.

The lag between when we acquire land and when we sell homes in our communities can make our operations susceptible to the effects of rapid changes in market conditions.

     There is often a significant lag time between when we acquire land for development and when we sell homes in neighborhoods we have planned, developed and constructed. The market value of home inventories, undeveloped land and developed home sites can fluctuate significantly during this time period because of changing market conditions. If the market value of home inventories or other property decline during this period, we may need to sell homes or other property at prices that generate lower margins than we anticipated when we acquired the land. In certain situations to the extent sales prices do not exceed the carrying value of the related assets, we may be required to record a write-down of our land or home inventories. In addition, inventory carrying costs for land can be significant and can result in reduced margins or losses in a poorly performing project or market.

Government entities have adopted or may adopt slow or no growth initiatives, which could adversely affect our operations.

     Some municipalities in regions where we operate have approved, and others may approve, slow growth or no growth homebuilding regulations or laws that could negatively impact the availability of land and building opportunities within those localities. Approval of these initiatives could adversely affect our ability to build and sell homes in the affected markets or could require that we satisfy additional administrative and regulatory requirements, which could slow the progress or increase the costs of our homebuilding operations in these markets. Any such delays or costs could have an adverse effect on our revenues and earnings.

Natural disasters and adverse weather conditions could delay deliveries or increase costs to build new homes in affected areas.

     The occurrence of natural disasters or adverse weather conditions in the areas in which we operate can delay new home deliveries, increase costs by damaging inventories of homes and construction materials, reduce the availability of raw materials and skilled labor, and negatively impact the demand for new homes in affected areas. In addition, when natural disasters such as hurricanes, tornadoes, earthquakes, floods and fires affect an area in which we build, or one nearby, there can be a diversion of labor and materials in the area from new home construction to the rebuilding of the existing homes damaged or destroyed in the natural disaster. This can cause delays in construction and delivery of new homes and/or increase our construction costs. Furthermore, if our insurance does not fully cover business interruptions or losses resulting from these events, our earnings, liquidity or capital resources could be adversely affected.

Supply or labor shortages and other risks related to the demand for building materials and skilled labor could delay deliveries and affect our results of operations.

     Our ability to conduct and expand our homebuilding operations is dependent on continued access to building materials and skilled labor. Shortages of building materials or skilled labor could delay deliveries of our homes, which could adversely affect our revenues and earnings. In addition, increased costs or shortages of building materials such as concrete, wood, roofing materials, gypsum, insulation and plumbing and electrical components could cause increases in construction costs and construction delays. Labor disputes or increased costs or shortages of skilled labor, such as carpenters, plumbers and electricians, could also cause increases in costs and delays. We estimate and forecast construction costs as part of our business, and attempt to plan for possible cost increases due to changes in the cost or

14

availability of materials and labor. However, generally we are unable to pass on unanticipated increases in construction costs to those customers who have already entered into sales contracts, as those sales contracts generally fix the price of the home at the time the contract is signed, which may be well in advance of the construction of the home. In general, significant unexpected increases in costs of materials or labor may adversely affect our results of operations.

Compliance with regulatory requirements affecting our business could have substantial costs both in time and money, and some regulations could prohibit or restrict some homebuilding activity.

     We are subject to extensive and complex laws and regulations that affect the land development and homebuilding process, including laws and regulations related to zoning, permitted land uses, levels of density, building design, warranties, storm water and use of open spaces. In addition, we are subject to a variety of laws and regulations concerning safety and the protection of health and the environment. The particular environmental laws that apply to any given neighborhood vary greatly according to the neighborhood site, the site’s environmental conditions and the present and former uses of the site. In some of the markets where we operate, we are required to pay environmental impact fees, use energy-saving construction materials and make commitments to municipalities to provide certain infrastructure such as roads and sewage systems. We and the contractors that we engage to work on our jobsites are also subject to laws and regulations related to workers’ health and safety, wages and hour practices and immigration. We generally are required to obtain permits and approvals from local authorities to commence and complete residential development or home construction. Such permits and approvals may, from time-to-time, be opposed or challenged by local governments, neighboring property owners or other interested parties, adding delays, costs and risks of non-approval to the process. Our obligation to comply with the laws and regulations under which we operate, or the obligation of our subcontractors and other agents to comply with these and other laws and regulations, could result in delays in land development and homebuilding activity, cause us to incur substantial costs and prohibit or restrict land development and construction.

     It is possible that increasingly stringent requirements will be imposed on developers and homebuilders in the future. Although we cannot predict with any certainty either the nature of the requirements or the effect on our business, they could result in time-consuming and expensive compliance programs and in substantial expenditures, which could cause delays and increase our cost of operations.

FINANCIAL SERVICES

General business, economic and market conditions may significantly affect the earnings of our Financial Services operations.

     Our Financial Services operations are sensitive to general business and economic conditions in the United States. These conditions include short-term and long-term interest rates, inflation, fluctuations in both debt and equity capital markets, and the strength of the U.S. economy, as well as the local economies in which we conduct business. If any of these conditions worsen, our Financial Services business could be adversely affected. Also, because Financial Services focuses on providing services to customers who are considering the purchase of a home from Home Building or third parties, reduced home sales will likely also impact Financial Services’ business in the form of reduced home loans, title services and insurance services.

     In addition, our Financial Services business is significantly affected by the fiscal and monetary policies of the federal government and its agencies. We are particularly affected by the policies of the Federal Reserve Board, which regulates the supply of money and credit in the United States. The Federal Reserve Board’s policies influence the size of the mortgage origination market. The Federal Reserve Board’s policies also influence the yield on our interest-earning assets and the cost of our interest-bearing liabilities. Changes in those policies are beyond our control and difficult to predict and can have a material effect on the results of operations of our Financial Services segment.

The mortgage financing industry is highly competitive.

     Our Financial Services business operates in a highly competitive industry that could become even more competitive as a result of economic, legislative, regulatory and technological changes. Competition for mortgage loans comes primarily from large commercial banks, mortgage companies and savings and other financial institutions. We face competition in such areas as mortgage product offerings, rates and fees, and customer service. In addition, technological advances such as developments in e-commerce activities have increased consumers’ accessibility to products and services generally. This has intensified competition among banking as well as nonbanking companies in offering mortgage loans and similar financial products and services.

15

Changes in lending laws could hurt our Financial Services operations.

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

The volatility of our Financial Services operations due to refinancing activity could negatively impact operations.

     A decline in mortgage rates generally increases the demand for home loans as borrowers refinance. An increase in mortgage rates generally results in a decrease in the demand for home loans and a corresponding decrease in the level of refinancing activity. Mortgage rates are currently on a modest upward trend, which could negatively affect our volume of refinanced home loans and our results of operations.

CONSTRUCTION SERVICES

Supply and labor shortages and other risks could increase costs and delay completion.

     Our Construction Services operations could be adversely affected by fluctuating prices and limited supplies of building materials, as well as the cost and availability of labor, particularly trades personnel. These prices and supplies may be further adversely affected by natural disasters and adverse weather conditions. These factors, which are similar to those discussed above in connection with our Home Building operations, could cause increased costs and delays in construction that could have an adverse effect upon our Construction Services operations.

We are subject to regional changes in the demand for commercial construction projects.

     Although national demand for commercial construction is currently relatively stable, individual markets experience greater cyclicality and can be sensitive to overall capital spending trends in the economy, changes in federal and state appropriations for construction projects, financing and capital availability for commercial real estate and competitive pressures on the availability and pricing of construction projects. These factors can result in a reduction in the supply of suitable projects, increased competition and reduced margins on construction contracts.

The timing and funding of awards and other factors could lead to unpredictable operating results.

     Our Construction Services operations are also subject to other risks and uncertainties, including the timing of new awards and the funding of such awards; the length of time over which construction contracts are to be performed; cancellations of, or changes in the scope of, existing contracts; and the ability to meet performance or schedule guarantees and cost overruns.

FACTORS AFFECTING MULTIPLE BUSINESS SEGMENTS

New federal laws that adversely affect liquidity in the secondary mortgage market could hurt our business.

     The Government-sponsored enterprises, principally FNMA and FHLMC, play a significant role in buying home mortgages and packaging them into investment securities that they either sell to investors or hold in their portfolios. Recent federal laws and proposed legislation could have the effect of curtailing the activities of FNMA and FHLMC. These organizations provide liquidity to the secondary mortgage market. Any restriction or curtailment of their activities could affect the ability of our customers to obtain mortgage loans or increase mortgage interest rates, which could reduce demand for our homes and/or the loans that we originate and adversely affect our results of operations.

We could be adversely affected by a change in our credit rating or a disruption in the capital markets.

     Our ability to continue to grow our business and operations in a profitable manner depends to a significant extent upon our ability to access capital on favorable terms. At the present time, our access to capital is enhanced by the fact that our senior debt securities have an investment-grade credit rating from each of the principal credit rating agencies. If we were to lose our investment-grade credit rating for any reason, it would become more difficult and costly for us to access the capital that is required in order to implement our business plans and achieve our growth objectives.

16

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

Reductions in tax benefits could make home ownership more expensive or less attractive.

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

We may incur increased costs related to repairing construction defects in the homes we sell or the buildings we construct.

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

An inability to obtain bonding could limit the number of projects we are able to pursue.

     As is customary in the construction and home building industries, we often are required to provide surety bonds to secure our performance under construction contracts, development agreements and other arrangements. Our ability to obtain surety bonds primarily depends upon our capitalization, working capital, past performance, management expertise and certain external factors, including the overall capacity of the surety market. Surety companies consider such factors in relationship to the amount of our backlog and their underwriting standards, which may change from time to time. Since 2001, the surety industry has undergone significant changes with several companies withdrawing completely from the industry or significantly reducing their bonding commitment. In addition, certain reinsurers of surety risk have limited their participation in this market. Therefore, we could be unable to obtain surety bonds, when required, which could adversely affect our future results of operations and revenues.

DISCONTINUED OPERATIONS

There are uncertainties associated with our planned disposition of Home Equity.

     On March 30, 2006, we announced that we signed a definitive agreement to sell Home Equity to an unrelated third party. As a result, Home Equity is now reflected as a discontinued operation in our financial statements. However, the sale of Home Equity is subject to certain conditions, including obtaining a substantial number of regulatory approvals from state financial services or other regulatory authorities. There can be no assurance that all of these regulatory approvals will be obtained, or that the purchaser will agree to close the purchase of Home Equity in the absence of one or more of these approvals.

     The purchase price to be received in connection with the sale of Home Equity will consist of payments based on the book value of Home Equity, plus a premium to be calculated in accordance with an agreed upon formula. With one exception, the amount of the premium will be determined shortly after closing by agreement of the parties or through determinations by independent third parties. However, one significant component of the purchase price will not be determined until after the second anniversary of the closing of the sale. Accordingly, the amount of the premium to be received in connection with the sale of Home Equity cannot be determined at the present time, and may be less than the estimated amounts we currently expect to receive, as reflected in our public announcements regarding this transaction. In addition, any amount received by us in connection with this transaction could be effectively reduced by any indemnification payments that we may be required to make to the purchaser under the purchase and sale agreement entered into by the parties.

     For additional information regarding the planned sale of Home Equity, please see the Current Reports on Form 8-K filed by us with the SEC on April 4 and May 2, 2006.

17

Loan losses could reduce the profitability of our Home Equity operations.

     Our Home Equity operations include holding residential mortgage loans for investment and establishing an allowance for credit losses on these loans. To a lesser extent, our operations also involve holding properties obtained through foreclosure pending resale and establishing an allowance for losses on these properties. Although the amount of these allowances reflects our judgment as to our present loss exposure on these loans and properties, there can be no assurance that it will be sufficient to cover any losses that may ultimately be incurred. Judgments as to loss exposure are subject to significant uncertainties, and the amount of the loss ultimately incurred may be determined by various factors outside our control.

Changes in lending laws could hurt our Home Equity operations.

     Our discontinued Home Equity operations are particularly affected by laws and regulations related to the extension of credit to individuals whose credit ratings do not qualify them for conventional mortgage financing. Changes in these laws or the way that they are enforced may adversely affect the way that we operate or our ability to profitably originate loans.

FORWARD-LOOKING STATEMENTS

This report includes various forward-looking statements, which are not facts or guarantees of future performance and which are subject to significant risks and uncertainties.

     Certain information included in this Report or in other materials we have filed or will file with the SEC, as well as information included in oral statements or other written statements made or to be made by us, contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, as amended. You can identify these statements by the fact that they do not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other expectations regarding future events. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “may,” “can,” “could,” “might,” “will” and similar expressions identify forward-looking statements, including statements related to expected operating and performing results, planned transactions, planned objectives of management, future development in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future. Such statements include information related to anticipated operating results, financial resources, changes in interest rates, changes in revenues, changes in profitability, interest expense, growth and expansion, anticipated income to be realized by our investment in unconsolidated entities, the ability to acquire land, the ability to gain approvals and to open new communities, the ability to sell homes and properties, the ability to deliver homes from backlog, the ability to secure materials and subcontractors, the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities in the future, the completion of and effects from planned transactions and stock market valuations. From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-K, 10-Q and 8-K, press releases and presentations, on our web site and in other material released to the public.

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

     All forward-looking statements made in this Report are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this Report will increase with the passage of time. We undertake no obligation, and disclaim any duty, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changes in our expectations or otherwise. However, we may make further disclosures regarding future events, trends and uncertainties in our subsequent reports on Forms
10-K, 10-Q and 8-K. The above cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business include factors we believe could cause our actual results to differ materially from expected and historical results. Other factors beyond those listed above, including factors unknown to us and factors known to us which we have not determined to be material, could also adversely affect us. This discussion is provided as permitted by the

18

Private Securities Litigation Reform Act of 1995 and all of our forward-looking statements are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

ITEM 1B. UNRESOLVED STAFF COMMENTS

     None.

ITEM 2. PROPERTIES

     In addition to land held as inventory in connection with our residential and commercial construction activities, we own the following properties:

     Home Building owns property in Phoenix, Arizona; Albemarle, North Carolina; Plant City, Florida; Hesperia, California and Prosper, Texas. These properties consist of office and warehouse space used to support our builder supply business. Home Building also owns smaller parcels of land in rural areas of Ohio, Pennsylvania, Georgia and Florida. Situated on this land are sales offices for its Wayne Homes “on-your-lot” market segment. Home Building also owns a property in Palm Coast, Florida. This property includes a golf course, hotel and restaurant operated as part of Home Building’s destination properties.

     Financial Services owns property in Edmond, Oklahoma. This property consists of two office buildings situated on approximately 12 acres of a 20-acre parcel of land.

     In addition to land we own and use in our operations, we lease office space under operating leases in the markets in which we operate throughout the United States. For additional information on our operating leases, see Note (F), “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements.

     Home Equity, which is reported as a discontinued operation, owns 4.84 acres of land in Lewisville, Texas.

     See “Item 1. Business” for additional information relating to the Company’s properties including land owned or controlled by our Home Building segment.

ITEM 3. LEGAL PROCEEDINGS

     In the normal course of our business, we and/or our subsidiaries are named as defendants in suits filed in various state and federal courts. We believe that none of the litigation matters in which we, or any of our subsidiaries, are involved would have a material adverse effect on our consolidated financial condition or operations.

     In January 2003, we received a request for information from the United States Environmental Protection Agency, the EPA, pursuant to Section 308 of the Clean Water Act seeking information about storm water pollution prevention practices at projects that Centex subsidiaries had completed or were building. Subsequently, the EPA limited its request to Home Building and 30 communities. Home Building has provided the requested information and the United States Department of Justice, which we refer to as the Justice Department, acting on behalf of the EPA, has asserted that some of these and certain other communities (including one of Construction Services’ projects) have violated regulatory requirements applicable to storm water discharges, and that injunctive relief and civil penalties may be warranted. Home Building and Construction Services believe they have defenses to the allegations made by the EPA and are exploring methods of settling this matter in continuing negotiations with representatives of the Justice Department and the EPA. In any settlement, the Justice Department will want Centex to pay civil penalties and sign a consent decree affecting Centex’s storm water pollution prevention practices at construction sites.

     On November 23, 2004, Miami-Dade County, Florida filed suit against Centex-Rooney Construction Co., a wholly-owned subsidiary of Centex Corporation; John J. Kirlin, Inc.; and M. C. Harry and Associates, Inc., in the County’s Circuit Court of the Eleventh Judicial Circuit. Miami-Dade County alleges that, in the course of performing or managing construction work on Concourse F at the Miami International Airport, the defendants caused a jet fuel line rupture on or about July 30, 1987, which resulted in the contamination of soil, groundwater and surface water in and around airport Concourse F. Miami-Dade County seeks damages of approximately $8.0 million for its costs incurred to date and for expected future costs, civil penalties and an order requiring the defendants to address remaining contamination. Centex believes it has substantial defenses to Miami-Dade County’s claims, including waiver and release and statute of limitations defenses. Centex also believes insurance coverage may be available to cover defense costs and any potential damages.

19

     In December 2004, certain present and former employees of Centex Home Equity Company, LLC commenced a collective action lawsuit in the United States District Court for Northern District of Georgia. In this litigation, plaintiffs seek to recover unpaid overtime compensation under the Fair Labor Standards Act. This lawsuit is currently in its preliminary stages, and we intend to vigorously defend against the claims asserted by the plaintiffs. As discussed elsewhere in this report, we have signed a definitive agreement to sell Home Equity to an unrelated third party. If the proposed sale of Home Equity is consummated, we have agreed to indemnify the purchaser against all losses and expenses arising out of this lawsuit in excess of the amount of the reserves therefor established on the books of Home Equity at the time of the closing of the sale transaction.

     We do not believe that the above matters will have a material impact on our consolidated results of operations or financial position.

20

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

     The following is an alphabetical listing of our executive officers as of May 12, 2006, as such term is defined under the rules and regulations of the Securities and Exchange Commission. Officers are generally elected by the Board of Directors at its meeting immediately following our annual stockholders’ meeting, with each officer serving at the pleasure of the Board of Directors until a successor has been elected and qualified. There is no family relationship among any of these officers.

Name	Age		Positions with Centex or Business Experience
David L. Barclay		53	Co-President and Co-Chief Operating Officer (West Operating Region) of Centex Real Estate Corporation; Executive Vice President – West Coast Region of Centex Real Estate Corporation from May 2002 to March 2006; President – Northern California Division of Centex Real Estate Corporation from June 1996 to May 2002
Leldon E. Echols (1)		50	Executive Vice President and Chief Financial Officer of Centex Corporation since June 2000; Partner and employee at Arthur Andersen LLP from December 1978 to May 2000
Timothy R. Eller		57	Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer of Centex Corporation (Chairman of the Board and Chief Executive Officer since April 2004; President and Chief Operating Officer since April 2002); Executive Vice President of Centex Corporation from August 1998 to April 2002; Chairman of the Board of Centex Real Estate Corporation from April 1998 to April 2003, and since April 2006; Chief Executive Officer of Centex Real Estate Corporation from July 1991 to April 2002, and since April 2006; President and Chief Operating Officer of Centex Real Estate Corporation from January 1990 to April 1998
Andrew J. Hannigan		54	Co-President and Co-Chief Operating Officer (East Operating Region) of Centex Real Estate Corporation; Chairman of the Board of Centex Real Estate Corporation from May 2003 to March 2006; Chief Executive Officer of Centex Real Estate Corporation from May 2002 to March 2006; President and Chief Operating Officer from May 1998 to May 2002
Mark D. Kemp		44	Senior Vice President and Controller of Centex Corporation since September 2004; Vice President and Controller of Centex Corporation from December 2002 to September 2004; Partner and employee at Arthur Andersen LLP from December 1983 to August 2002
Robert S. Stewart		52	Senior Vice President – Strategy and Corporate Development of Centex Corporation since April 2005; Senior Vice President – Strategic Planning and Marketing from May 2000 to March 2005; Employee at the Weyerhaeuser Company from March 1977 to May 2000, during which time he held a range of key management positions, including positions in strategic planning
Brian J. Woram		45	Senior Vice President, Chief Legal Officer, General Counsel and Assistant Secretary of Centex Corporation (Secretary from December 2004 to March 2005); Senior Vice President, General Counsel and Assistant Secretary of Centex Real Estate Corporation from September 1998 to December 2004

(1) As previously announced on February 23, 2006, Leldon Echols will leave his position effective June 30, 2006.

21

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Stock Prices and Dividends

	Year Ended March 31, 2006						Year Ended March 31, 2005
	Price						Price
	High		Low		Dividends		High		Low		Dividends
Quarter
First	$	73.11	$	55.10	$	.04	$	54.77	$	43.31	$	.04
Second	$	79.66	$	61.58	$	.04	$	51.96	$	39.94	$	.04
Third	$	76.44	$	58.13	$	.04	$	59.98	$	45.44	$	.04
Fourth	$	79.40	$	61.40	$	.04	$	66.14	$	54.60	$	.04

The principal market for our common stock is the New York Stock Exchange (ticker symbol CTX). The approximate number of record holders of our common stock at May 10, 2006 was 3,020.

The remaining information called for by this item relating to securities authorized for issuance under equity compensation plans is reported in Note (K), “Capital Stock and Employee Benefit Plans,” of the Notes to Consolidated Financial Statements.

Share Repurchases

     We regularly repurchase shares of our common stock pursuant to publicly announced share repurchase programs. The following table details our common stock repurchases for the three months ended March 31, 2006:

	Issuer Purchases of Equity Securities
					Total Number of		Maximum Number of
					Shares Purchased		Shares that May Yet
	Total Number of		Average Price		as Part of Publicly		Be Purchased Under
	Shares Purchased		Paid Per Share		Announced Plan		the Plan
Period
January 1-31		1,500,000	$	75.03		1,500,000		3,500,000
February 1-28		—	$	—		—		3,500,000
March 1-31		1,006,638	$	63.85		1,000,000		2,500,000
Total (1) (2)		2,506,638	$	70.54		2,500,000

(1)

Of the 2,506,638 shares repurchased for the quarter ended March 31, 2006, 6,638 shares represent the delivery to the Company by employees or directors of previously issued shares to satisfy the exercise price of options and/or withholding taxes that arise on the exercise of options or the vesting of restricted stock. These transactions are authorized under the terms of the equity plans under which the options or other equity were awarded; however, these transactions are not considered repurchases pursuant to the Company’s share repurchase program.

(2)

Except as provided in Note (1), all share repurchases were effected in accordance with the safe harbor provisions of Rule 10b-18 of the Securities Exchange Act of 1934.

     On December 7, 2005, the Board of Directors increased our share repurchase authorization by an additional 5,000,000 shares, which we announced on that date. As of December 31, 2005, there remained 5,000,000 shares available on the repurchase authorization. The total number of shares purchased in the third column of the above table represents shares of common stock repurchased pursuant to the December Board of Directors authorization. Purchases are made from time-to-time in the open market or in block purchases or pursuant to share repurchase plans under SEC Rule 10b5-1. The share repurchase authorization has no stated expiration date, and the Board of Directors has authorized all shares repurchased.

     On May 15, 2006, the Company announced that its Board of Directors authorized the repurchase of an additional 12 million shares and that subsequent to March 31, 2006, the Company completed its previous share authorization by purchasing 2.5 million shares in open market transactions.

22

ITEM 6. SELECTED FINANCIAL DATA

Summary of Selected Financial Data (Unaudited) ⁽¹⁾
(Dollars in thousands, except per share data)

	For the Years Ended March 31,
	2006			2005			2004			2003			2002
Revenues	$	14,399,669		$	11,672,885		$	9,756,154		$	8,027,614		$	6,821,203
Earnings from Continuing Operations (2)	$	1,221,021		$	899,542		$	703,350		$	481,067		$	332,194
Net Earnings	$	1,289,313		$	1,011,364		$	827,686		$	555,919		$	382,226
Stockholders’ Equity	$	5,011,658		$	4,280,757		$	3,050,225		$	2,657,846		$	2,116,773
Net Earnings as a Percentage of Average Stockholders’ Equity		27.8	%		27.6	%		29.0	%		23.3	%		20.0	%
Total Assets	$	21,364,999		$	20,011,079		$	16,077,260		$	11,639,707		$	8,996,991
Deferred Income Tax Assets	$	233,908		$	184,778		$	106,395		$	133,993		$	113,905
Total Long-term Debt, Consolidated	$	3,915,027		$	3,160,047		$	2,456,749		$	2,024,953		$	1,605,797
Debt (with Financial Services reflected on the equity method) (3)	$	3,982,193		$	3,107,917		$	2,317,749		$	2,024,953		$	1,605,797
Financial Services’ Debt		2,077,215			1,695,855			1,676,718			204,147			192,673
Total Debt, Consolidated	$	6,059,408		$	4,803,772		$	3,994,467		$	2,229,100		$	1,798,470
Capitalization (with Financial Services reflected on the equity method and excluding lot option minority interest) (3) (4)	$	9,033,042		$	7,429,420		$	5,369,822		$	4,683,755		$	3,724,827
Financial Services Capitalization (4)		2,742,764			2,314,465			2,194,533			585,554			505,001
Lot Option Minority Interest (4)		492,096			415,413			332,668			—			—
Consolidation Eliminations		(664,376	)		(617,248	)		(516,280	)		(379,671	)		(310,353	)
Total Capitalization, Consolidated	$	11,603,526		$	9,542,050		$	7,380,743		$	4,889,638		$	3,919,475
Debt as a Percentage of Capitalization (4)
With Financial Services reflected on the equity method and excluding lot option minority interest (3)		44.1	%		41.8	%		43.2	%		43.2	%		43.1	%
Consolidated		52.2	%		50.3	%		54.1	%		45.6	%		45.9	%
Per Common Share
Earnings from Continuing Operations
Per Share – Basic (2)	$	9.62		$	7.19		$	5.70		$	3.96		$	2.74
Earnings from Continuing Operations
Per Share – Diluted (2)	$	9.20		$	6.79		$	5.44		$	3.82		$	2.66
Net Earnings Per Share – Basic	$	10.16		$	8.08		$	6.70		$	4.57		$	3.16
Net Earnings Per Share – Diluted	$	9.71		$	7.64		$	6.40		$	4.41		$	3.06
Cash Dividends	$	.16		$	.16		$	.10		$	.08		$	.08
Book Value Based on Shares Outstanding at Year End	$	41.04		$	33.51		$	24.87		$	21.84		$	17.30
Average Shares Outstanding
Basic		126,870,887			125,226,596			123,382,068			121,564,084			121,121,576
Diluted		132,749,797			132,397,961			129,392,821			126,116,312			125,058,294
Stock Prices
High	$	79.66		$	66.14		$	58.40		$	29.60		$	31.55
Low	$	55.10		$	39.94		$	26.78		$	19.16		$	14.02

(1)	The selected financial data presented in this table, excluding stock prices for the periods covered by the financial statements included in this Report and all prior periods, have been derived from our audited financial statements and adjusted to reflect our sub-prime home equity lending operations, international homebuilding operations (sold in September 2005), Centex Construction Products, Inc. (spun off in January 2004) and our manufactured housing operations (spun off in June 2003) as discontinued operations.
(2)	Earnings from Continuing Operations are Before Cumulative Effect of a Change in Accounting Principle adopted in fiscal year 2004. For more detailed discussion of the change in accounting principle, see Note (D), “Indebtedness,” of the Notes to Consolidated Financial Statements.
(3)	Represents a supplemental presentation that reflects the Financial Services segment as if accounted for under the equity method. We believe that separate disclosure of the consolidating information is useful because the Financial Services subsidiaries and related companies operate in a distinctly different financial environment that generally requires significantly less equity to support their higher debt levels compared to the operations of our other subsidiaries; the Financial Services subsidiaries and related companies have structured their financing programs substantially on a stand alone basis; and we have limited obligations with respect to the indebtedness of our Financial Services subsidiaries and related companies. Management uses this information in its financial and strategic planning. We also use this presentation to allow investors to compare us to homebuilders that do not have financial services operations.
(4)	Capitalization is composed of Debt, Minority Interest and Stockholders’ Equity. In the calculation of Capitalization, minority interest in fiscal years 2006, 2005 and 2004 excludes $492.1 million, $415.4 million and $332.7 million, respectively, of minority interests recorded in connection with the consolidation of certain entities with which Home Building has lot option agreements. This supplemental presentation is used by management in its financial and strategic planning and allows investors to compare us to other homebuilders, which may not have similar arrangements.

23

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     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 Summary

     The following charts summarize certain key line items of our results of operations by business segment for the three-year period ended March 31, 2006 (dollars in millions):

Revenues

Earnings (Loss) from Continuing Operations
Before Income Taxes and Cumulative Effect of a
Change in Accounting Principle

* Other consists of the financial results of our investment real estate and home services operations, as well as corporate general and administrative expense, interest expense and intersegment eliminations.

Fiscal year 2006 represents our tenth consecutive year of growth in revenues and earnings from continuing operations.

Revenues for the year ended March 31, 2006 increased 23.4% to $14.40 billion as compared to the year ended March 31, 2005. In addition, earnings from continuing operations before income taxes and cumulative effect of a change in accounting principle for the year ended March 31, 2006 increased 35.2% to $1.90 billion as compared to the prior year.

The primary drivers of the growth in our Home Building business are growth in closings, increases in average unit selling prices and leverage of selling, general and administrative expenses. During the year ended March 31, 2006, we experienced improvements in these key areas. Home Building’s operating margin (operating earnings as a percentage of revenues) increased to 15.5% for the year ended March 31, 2006.

24

     In the long-term, the overall demand for housing in the United States is driven by population growth, immigration, household formations and increasing home ownership rates. Short-term growth drivers such as mortgage rates, consumer confidence and employment levels can also impact housing demand. The highly fragmented homebuilding industry is in the early stages of a consolidation phase during which large homebuilders grow faster than the industry as a whole. In 1995, based upon single-family permits issued in the United States, the 10 largest homebuilders represented approximately 7.2% of the housing market. In calendar year 2005 (the most recent data available), the 10 largest homebuilders were producing approximately 24% of the nation’s new housing stock. We believe industry consolidation will continue to be an important growth factor over the next decade or more as large homebuilders realize the benefits of size, such as capital strength, more efficient operations and technological advantages.

     In the past few months, we and other homebuilders have reported declines or slower growth rates in the volume of homes sold, and there have been reports of increased inventory of new and used homes. We attribute the changes in the market to increases in housing inventories as a result of speculative investors becoming net sellers of homes rather than net buyers, a change in consumer confidence and urgency to buy homes, and interest rates that have trended higher throughout the year. Consistent with this trend, during the second half of fiscal year 2006, we have experienced an increase in customer cancellations, which has resulted in either declines or less rapid growth in sales orders (net of cancellations) of our homes in a number of markets. We believe the homebuilding industry is transitioning to a more sustainable level. However, a significant deterioration of these and other homebuilding economic factors could result in continued and prolonged decreases in demand for new homes.

     As of March 31, 2006, we had homebuilding operations in 38 of the 50 largest housing markets in the United States. We have largely completed our geographic diversification plan and are now focused primarily on further penetration in our existing markets.

     Financial Services’ operating results in fiscal year 2006 have been negatively impacted by increases in funding costs and selling, general and administrative expenses offset by increases in interest income and revenues from loan sales to investors. Refinancing activity has remained relatively flat due to an extended period of relatively low mortgage loan rates, which reduced the supply of loans likely to be refinanced. Recent increases in mortgage loan rates have helped to continue this trend. Interest rates may continue to increase in future periods. CTX Mortgage Company, LLC will continue to focus on serving the customers of our Home Building segment and increasing the percentage of prime mortgage loans provided to them. Our prime mortgage lending business is a fee-based business with low capital requirements.

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

     Our Construction Services segment operating earnings increased from the prior year as a result of an increase in active multi-unit residential projects, which have higher profit margins. At March 31, 2006, Construction Services’ backlog was $2.96 billion, an increase of 47.8% over the prior year. Strategically, we will continue to focus on our core geographic and selected industry segments which provide greater opportunity to achieve growth in Construction Services’ revenues and operating earnings.

     On March 30, 2006, we announced that we signed a definitive agreement to sell our sub-prime home equity lending operations to an unrelated third party. As a result, Home Equity is now reflected as a discontinued operation in our financial statements. However, the sale of Home Equity is subject to certain conditions, including regulatory approvals from state financial services or other regulatory authorities. The purchase price to be received in connection with the sale of Home Equity will consist of payments based on the book value of Home Equity, plus a premium to be calculated in accordance with an agreed upon formula. Entering into a definitive agreement to sell Home Equity is consistent with our strategic plan to focus on our domestic home building operations and related ancillary businesses.

     In fiscal year 2006, we repurchased an aggregate of 9.25 million shares of our common stock at a total purchase price of $653.5 million, including commissions paid. We expect to continue to repurchase shares of common stock as and when market conditions are favorable for share repurchases. As of March 31, 2006, our remaining share repurchase authorization totaled 2.5 million shares. On May 15, 2006, we announced that our Board of Directors

25

authorized the repurchase of an additional 12 million shares and that subsequent to March 31, 2006, we completed our previous share authorization by purchasing 2.5 million shares in open market transactions.

FISCAL YEAR 2006 COMPARED TO FISCAL YEAR 2005

HOME BUILDING

     The following summarizes the results of our Home Building operations for the two-year period ended March 31, 2006 (dollars in millions except per unit data and lot information):

	For the Years Ended March 31,
	2006						2005
				Change						Change
Revenues – Housing	$	11,920.6			32.3	%	$	9,007.1			22.4	%
Revenues – Land Sales and Other		351.6			(0.3	%)		352.6			122.7	%
Cost of Sales – Housing		(8,459.0	)		30.4	%		(6,486.7	)		20.1	%
Cost of Sales – Land Sales and Other		(296.9	)		13.6	%		(261.4	)		82.5	%
Selling, General and Administrative Expenses		(1,696.5	)		30.3	%		(1,301.6	)		25.3	%
Earnings from Unconsolidated Entities		86.0			25.0	%		68.8			129.3	%
Operating Earnings	$	1,905.8			38.2	%	$	1,378.8			42.7	%
Operating Earnings as a Percentage of Revenues:
Housing Operations		14.8	%		1.3			13.5	%		1.0
Total Homebuilding Operations		15.5	%		0.8			14.7	%		1.9

	For the Years Ended March 31,
	2006					2005
			Change					Change
Units Closed
Mid-Atlantic		7,182		23.3	%		5,823		12.0	%
Southeast		7,235		23.1	%		5,879		5.6	%
Midwest		7,153		6.6	%		6,712		15.7	%
Southwest		10,720		17.1	%		9,158		5.2	%
West Coast		6,942		19.4	%		5,815		14.5	%
		39,232		17.5	%		33,387		10.0	%
Average Sales Price Per Unit
Mid-Atlantic	$	337,274		15.5	%	$	292,086		5.9	%
Southeast	$	288,751		12.7	%	$	256,246		10.6	%
Midwest	$	221,306		3.7	%	$	213,323		2.8	%
Southwest	$	197,718		16.3	%	$	170,028		9.0	%
West Coast	$	533,949		10.5	%	$	483,391		18.4	%
Total Home Building	$	303,850		12.6	%	$	269,780		11.3	%

     Revenues increased in fiscal year 2006 due to increases in closings and average sales prices, along with a greater mix of homes closed in markets with higher average sales prices. All regions experienced double digit increases in both closings and average sales prices except for the Midwest, which has seen only moderate increases as a result of general economic conditions in that region.

26

     The increase in unit closings is reflective of an increase in average operating neighborhoods and an increase in closings per average neighborhood as outlined in the table below.

	For the Years Ended March 31,
	2006					2005
			Change					Change
Average Operating Neighborhoods (1)		626		6.3	%		589		5.6	%
Closings Per Average Neighborhood		62.7		10.6	%		56.7		4.2	%

(1) We define a neighborhood as an individual active selling location targeted to a specific buyer segment with greater than ten homes remaining to be sold.

     The increase in average operating neighborhoods for the year ended March 31, 2006, is the result of opening 340 new neighborhoods and closing out of 278 neighborhoods.

     Operating margins (consisting of operating earnings as a percentage of revenues) improved to 15.5% for the year ended March 31, 2006 as compared to 14.7% for the year ended March 31, 2005. The increase in operating margins is reflective of an improvement in housing gross margins and a slight improvement in selling, general and administrative leverage, offset to a lesser extent by a decrease in earnings from land sales and other. Increases in average unit selling price and continued focus on controlling direct construction costs contributed to the housing gross margin improvement. National and regional purchasing programs and local cost reduction and efficiency efforts have helped partially offset increasing raw material costs experienced throughout the year.

     Selling, general and administrative expenses include all homebuilding employee compensation and related benefits, selling commissions and marketing and advertising costs. Selling, general and administrative expenses increased for the year ended March 31, 2006 primarily due to increases in employee count to support neighborhood growth and increased incentive compensation reflective of the growth in operating earnings.

     Operating earnings from land sales and other decreased 40.0% to $54.7 million primarily due to lower margins on current year land sales as compared to the prior year. We frequently write-off deposits and pre-acquisition costs as a component of our ongoing land acquisition process and evaluation of potential market opportunities. In fiscal year 2006, we recognized an increase in losses due to the write-off of certain option deposits and pre-acquisition costs, which increase is reflective of the softening of certain markets. Our cost of land sales and other also includes the write-off of development costs for neighborhoods where all or substantially all homes had already been closed.

     The timing and amount of land sales vary from period to period based on several factors, including the location, size, availability and desirability of the land we own in each market. We deploy disciplined capital allocation and management strategies and processes in each of our markets. We also have individual market-focused land acquisition and entitlement resources. The execution of our capital management strategies, combined with the value created by our land acquisition and entitlement teams, result in sales of parcels of land from time to time. In some cases, the purpose of these sales may be to take advantage of an opportunity to realize value that has been created through the entitlement process for parcels on which we are not likely to be able to build homes for some time. These sales may also fund the acquisition of more desirable tracts in a market. Additionally, in certain situations, we may acquire more land than is required to support our planned growth in a particular geographic area. In addition, our resort and second home operations sell land in the normal course of conducting their operations.

27

     The following tables summarize sales orders and backlog units:

	For the Years Ended March 31,
	2006					2005
			Change					Change
Sales Orders (in Units)
Mid-Atlantic		6,833		5.4	%		6,483		10.7	%
Southeast		6,345		(11.6	%)		7,178		9.4	%
Midwest		6,596		—			6,593		5.1	%
Southwest		11,126		11.5	%		9,977		7.1	%
West Coast		7,130		12.6	%		6,331		10.8	%
		38,030		4.0	%		36,562		8.4	%
Sales Per Average Neighborhood		60.8		(2.1	%)		62.1		2.8	%

	As of March 31,
	2006					2005
			Change					Change
Backlog Units
Mid-Atlantic		3,073		(11.2	%)		3,461		23.6	%
Southeast		4,116		(17.8	%)		5,006		35.0	%
Midwest		2,755		(15.8	%)		3,273		(3.5	%)
Southwest		4,094		11.0	%		3,688		28.5	%
West Coast		3,349		5.9	%		3,161		19.5	%
		17,387		(6.5	%)		18,589		20.6	%

     We believe that core demand for our housing products remains strong despite a current transition to more sustainable conditions in those markets that have experienced above trend pricing growth. Sales orders for fiscal year 2006 were up 4.0% as compared to the prior year. Both the Southwest and West Coast regions experienced double digit increases in sales orders in fiscal year 2006, while the Southeast region was down 11.6%. Sales per average neighborhood dropped slightly from prior year due to moderating growth experienced in certain markets. Most of the decline in sales per average neighborhood has been experienced over the last six months, and higher discounts and other sales incentives have increased to sustain sales volumes. Increases in customer cancellations have resulted in either declines or less rapid growth in sales orders (net of cancellations) of our homes in a number of markets. Cancellation rates have increased from 22.1% in the prior year to 25.2% in fiscal year 2006.

     The following table summarizes our land position as of March 31, 2006 and 2005:

	As of March 31,
	2006									2005
	Lots			Lots						Lots			Lots
	Owned			Controlled			Total Lots			Owned			Controlled			Total Lots
Mid-Atlantic		20,036			49,421			69,457			15,828			43,437			59,265
Southeast		27,830			41,011			68,841			21,864			32,983			54,847
Midwest		14,133			18,724			32,857			12,044			24,315			36,359
Southwest		27,832			40,390			68,222			32,213			37,330			69,543
West Coast		18,997			37,347			56,344			14,996			30,285			45,281
		108,828			186,893			295,721			96,945			168,350			265,295
Change		12.3	%		11.0	%		11.5	%		25.1	%		45.9	%		37.6	%

     Our total land position increased 11.5% in fiscal year 2006 as compared to a 37.6% increase in the prior year. The decrease in our land position growth rate in fiscal year 2006 is reflective of current housing market conditions and the transitioning of certain markets to normalized conditions. Our total land position owned or controlled under option agreements at March 31, 2006 will provide land for approximately 99% of closings for fiscal year 2007, 89% of closings for fiscal year 2008, and 71% of closings for fiscal year 2009 based on our current closing projections.

28

Included in our total land position are approximately 21,412 lots controlled through joint venture arrangements. We have completed our due diligence on 78,144 lots that we control (including certain of such lots controlled through joint ventures).

FINANCIAL SERVICES

     The Financial Services segment is primarily engaged in the residential mortgage lending business, as well as other financial services that are in large part related to the residential mortgage market. Its operations include mortgage lending and other related services for purchasers of homes sold by our Home Building operations and other homebuilders, title agency services and the sale of title insurance and other insurance products, including property and casualty.

     The following summarizes Financial Services’ results for the two-year period ended March 31, 2006 (dollars in millions):

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

     The revenues and operating earnings of CTX Mortgage Company, LLC and its related companies are derived primarily from the sale of mortgage loans, together with all related servicing rights, title and other various insurance coverages, interest income and other fees. Net origination fees, mortgage servicing rights, and other revenues derived from the origination of mortgage loans are deferred and recognized when the related loan is sold to a third-party purchaser. Interest revenues on residential mortgage loans receivable are recognized using the interest (actuarial) method. Other revenues, including fees for title insurance and other services performed in connection with mortgage lending activities, are recognized as earned.

     In the normal course of its activities, CTX Mortgage Company, LLC and its related companies carry inventories of loans pending sale to third-party investors and earn an interest margin, which we define as the difference between interest revenue on mortgage loans held for sale and interest expense on debt used to fund the mortgage loans.

     Our business strategy of selling prime loans reduces our capital investment and related risks, provides substantial liquidity and is an efficient process given the size and liquidity of the prime mortgage loan secondary capital markets. CTX Mortgage Company, LLC originates mortgage loans and sells them to HSF-I and investors. HSF-I is a variable interest entity for which we are the primary beneficiary and is consolidated with our Financial Services segment. HSF-I’s debt and subordinated certificates do not have recourse to us. We do not guarantee the payment of any debt or subordinated certificates of HSF-I or are not liable for credit losses relating to securitized residential mortgage loans sold to HSF-I.

     Revenues for the year ended March 31, 2006 increased over the prior year due to increases in interest income, loan sales to investors, and title and insurance fees. Loan funding costs also increased as a result of higher short-term interest rates. This increase in funding costs was the primary factor contributing to the decrease in interest margin for the year ended March 31, 2006. The increase in selling, general and administrative expenses in the year ended March 31, 2006 is related to additions to our branch network and sales management infrastructure. The increase in interest expense resulted in our decrease in operating margin for the year ended March 31, 2006.

29

     The following table quantifies: (1) the volume of loan sales to investors (third parties), and (2) the gains recorded on those sales and related derivative activity, known collectively as, gain on sale of mortgage loans, which is recorded as revenues for the years ended March 31, 2006 and 2005 (dollars in millions):

	For the Years Ended March 31,
	2006					2005
			Change					Change
Loan Sales to Investors	$	11,845.5		27.0	%	$	9,328.6		(28.9	%)
Gain on Sale of Mortgage Loans	$	164.8		16.3	%	$	141.7		(42.4	%)

     Loan sales to investors increased due to an increase in the number of loans originated and an increase in average loan size. Average loan size increased 15.7% and 13.2% for the years ended March 31, 2006 and 2005, respectively.

     The table below provides a comparative analysis of mortgage loan originations and applications for the years ended March 31, 2006 and 2005. CTX Mortgage Company, LLC tracks loan applications until such time as the loan application is canceled. Application data presented below includes loan applications received, which resulted in originations in the period and applications for loans scheduled to close in subsequent periods. Applications canceled were 19,513 and 16,488 for the years ended March 31, 2006 and 2005, respectively.

	For the Years Ended March 31,
	2006					2005
			Change					Change
Origination Volume (in millions)	$	15,827.4		21.4	%	$	13,039.0		(13.7	%)
Number of Loans Originated
Builder		27,364		21.5	%		22,517		7.9	%
Retail		43,319		(3.3	%)		44,816		(33.6	%)
		70,683		5.0	%		67,333		(23.8	%)
Number of Loan Applications
Builder		27,765		12.7	%		24,631		2.5	%
Retail		38,521		(3.3	%)		39,848		(39.2	%)
		66,286		2.8	%		64,479		(28.0	%)
Average Loan Size	$	223,900		15.7	%	$	193,600		13.2	%

     Builder originations for the year ended March 31, 2006 increased as a result of an increase in Home Building’s closings and our continued focus on serving this customer base. For the year ended March 31, 2006, CTX Mortgage Company, LLC originated 75% of the non-cash unit closings of Home Building’s customers, versus 73% for the prior year. Origination volume increased as a result of an increase in Builder loans originated and an increase in average loan size.

     CTX Mortgage Company, LLC’s operations are influenced by borrowers’ perceptions of and reactions to interest rates. Refinancing activity accounted for 20% and 21% of originations in the years ended March 31, 2006 and 2005, respectively. Any significant increase in mortgage interest rates above current prevailing levels could affect the ability or willingness of prospective homebuyers to finance home purchases and/or curtail mortgage refinance activity.

30

CONSTRUCTION SERVICES

     The following summarizes Construction Services’ results for the two-year period ended March 31, 2006 (dollars in millions):

	For the Years Ended March 31,
	2006					2005
			Change					Change
Revenues	$	1,606.6		(7.6	%)	$	1,738.6		8.9	%
Operating Earnings	$	26.8		14.0	%	$	23.5		43.3	%
New Contracts Executed	$	2,562.8		28.6	%	$	1,992.9		9.3	%

	As of March 31,
	2006					2005
			Change					Change
Backlog of Uncompleted Contracts	$	2,957.2		47.8	%	$	2,001.3		14.6	%

     Construction Services’ revenues are impacted by the nature and size of construction projects, the stage of completion and the construction schedule as defined by project owners. Revenues for the year ended March 31, 2006 decreased as compared to the prior year primarily due to a higher concentration of projects with extended construction periods. The increase in operating earnings for the year ended March 31, 2006 is primarily the result of improved job profit margins. In fiscal year 2006, there has been an increase in active multi-unit residential projects, which have higher profit margins while at the same time lower margin jobs have completed and dropped out of the mix of business. As of March 31, 2006, we had 254 active projects which represent a 4.5% increase over the prior year. The increase in new contracts executed for the year ended March 31, 2006 and in backlog of uncompleted contracts was primarily due to the execution of contracts for multi-unit residential projects for which the construction periods range from three to five years. Construction Services defines backlog as the uncompleted portion of all signed contracts. Construction Services’ multi-unit residential backlog of $1.63 billion includes $277.7 million of vertical construction projects for our Home Building business segment.

     Construction Services has also been awarded work that is pending execution of a signed contract. At March 31, 2006 and 2005, such work, which is not included in backlog, was approximately $2.20 billion and $2.61 billion, respectively. There is no assurance that this awarded work will result in future revenues.

OTHER

     Our Other segment includes our home services operations, investment real estate operations, as well as corporate general and administrative expense and interest expense.

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

	For the Years Ended March 31,
	2006						2005
				Change						Change
Operating Loss from Home Services Operations	$	(7.5	)		(52.5	%)	$	(15.8	)		587.0	%
Operating Earnings from Investment Real Estate Operations		1.7			(92.1	%)		21.4			(52.2	%)
Corporate General and Administrative Expenses		(100.1	)		20.7	%		(82.9	)		(21.5	%)
Interest Expense		(12.1	)		(37.3	%)		(19.3	)		(51.1	%)
Operating Loss	$	(118.0	)		22.2	%	$	(96.6	)		(5.8	%)

     Our home services revenues increased 19.2% to $109.2 million in fiscal year 2006. This increase in revenues is the result of an expanded customer base. We had 305,000 pest defense customers as of March 31, 2006 as compared to 265,000 in the prior year. The decrease in our home services division’s operating loss for the year ended

31

March 31, 2006 is primarily due to the prior year’s results including a $10.0 million write-down of notes receivable. In addition, marketing expenses increased in fiscal year 2006 as a result of expansion and growth of our home services operations, which increased home services’ operating loss.

     The decrease in our investment real estate operations’ operating earnings is primarily related to a reduction in sales of real estate and commercial property over the past two years. We have liquidated substantially all of this portfolio and are not investing additional capital in investment real estate operations.

     Corporate general and administrative expenses represent corporate employee compensation and other corporate costs such as investor communications, insurance, rent and professional services. The increase in corporate general and administrative expenses in fiscal year 2006 is primarily related to professional fees associated with various strategic initiatives, increases in performance-based compensation related costs as a result of increases in our earnings and returns and increases in insurance related costs.

     For further information on interest expense, see Note (A), “Significant Accounting Policies,” of the Notes to Consolidated Financial Statements. Total interest incurred was $305.2 million and $225.6 million for the years ended March 31, 2006 and 2005, respectively. The increase in total interest incurred is primarily related to an increase in average debt outstanding as compared to the prior year.

     Our effective tax rate remained relatively unchanged at 36% for the years ended March 31, 2006 and 2005, which is less than the combined federal statutory and state rate of 38.2% due to benefits associated with the new federal deduction for qualified domestic production activities and a $28.1 million payment in September 2005 from the U.S. Treasury, offset by a reduction in net operating loss carryforward benefits. The $28.1 million payment is effectively a tax refund and represents a payment received on a judgment against the U.S. government for revoking tax benefits we had previously claimed in connection with our acquisition and operation of a savings and loan association in the late 1980s and early 1990s.

DISCONTINUED OPERATIONS

     In September 2005, we sold our international homebuilding operations, which had previously been included in the Home Building segment. As a result of the sale, international homebuilding’s operations have been reclassified to discontinued operations in the Statements of Consolidated Earnings, and any assets and liabilities related to these discontinued operations have been presented separately on the Consolidated Balance Sheets. All prior period information has been reclassified to be consistent with the March 31, 2006 presentation.

     On March 30, 2006 we announced that we signed a definitive agreement to sell our sub-prime home equity lending operations to an unrelated third party. As a result, Home Equity is now reflected as a discontinued operation in our financial statements. However, the sale of Home Equity is subject to certain conditions, including regulatory approvals from state financial services or other regulatory authorities. The purchase price to be received in connection with the sale of Home Equity will consist of payments based on the book value of Home Equity, plus a premium to be calculated in accordance with an agreed upon formula.

     For additional information on our discontinued operations, see Note (P), “Discontinued Operations,” of the Notes to Consolidated Financial Statements.

International Home Building

     Discontinued operations for international home building operations are as follows (dollars in millions):

	For the Years Ended March 31,
	2006		2005
Revenues	$	224.4	$	501.3
Operating Earnings	$	15.2	$	66.6
Pre-tax Gain on Sale	$	6.5	$	—

     The net loss on the sale of our international homebuilding operations was $9.2 million. Estimated income taxes of $15.7 million associated with the disposition include income taxes on the repatriation of foreign earnings, which we had previously considered permanently reinvested.

32

Sub-Prime Home Equity Lending

     The following summarizes the results of our sub-prime home equity lending operations for the two-year period ended March 31, 2006 (dollars in millions):

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

     The revenues of Home Equity increased primarily as a result of continued growth in the portfolio of residential mortgage loans held for investment and as a result of whole loan sales to third parties. Our portfolio growth translated into more interest income, our largest component of revenue. Home Equity recorded $87.7 million and $42.3 million in net revenue and operating earnings related to the whole loan sales for the years ended March 31, 2006 and 2005, respectively. Whole loan sales have the effect of increasing current revenues but decreasing future interest margin that would have been recognized had the loans been securitized or retained as inventory. Home Equity’s strategy is to originate loans for investment with the intent to securitize. However, a program of whole loan sales is a component of Home Equity’s diversification of funding sources. Whole loan sales vary from period to period based upon market conditions and Home Equity’s funding requirements.

     Cost of sales is comprised of interest expense, which increased in fiscal year 2006 as a result of increases in our average debt outstanding and increases in interest rates as compared to the prior year.

     Operating expenses for the year ended March 31, 2006 increased primarily as a result of Home Equity’s continued growth. The increase in loan production volume, the expansion of branch offices and the increase in the average number of employees led to a corresponding increase in salaries and related costs, rent expense and group insurance costs.

     The loan loss varies from year to year based upon several factors. For a more detailed discussion of our accounting policy and methodology for establishing the provision for losses, see “Critical Accounting Estimates-Discontinued Operations, Valuation of Residential Mortgage Loans Held for Investment.”

     In the second quarter of fiscal year 2006 and in October 2005, hurricanes Katrina, Rita and Wilma impacted certain of our operations. These hurricanes damaged certain collateral underlying Home Equity’s mortgage loans held for investment. Losses associated with the impact of the hurricanes were not material to our results of operations or financial condition.

     The increase in operating earnings for the year ended March 31, 2006 is primarily attributable to the growth in our portfolio which translated into an increase in interest income, as well as an increase in whole loan sale net revenues. In the current year, interest margin decreased primarily as a result of higher borrowing costs, as well as increased competitive industry conditions.

     Average interest earning assets and liabilities for the year ended March 31, 2006 increased primarily as a result of continued growth in our portfolio of residential mortgage loans held for investment.

33

     The following table provides a comparative analysis of mortgage loan originations and applications for the two-year period ended March 31, 2006. Home Equity defines an application as when an application form has been completed and the applicant has authorized Home Equity to run a credit report.

	For the Years Ended March 31,
	2006					2005
			Change					Change
Origination Volume (in millions)	$	5,975.6		13.3	%	$	5,276.3		34.6	%
Number of Loans Originated		44,969		3.1	%		43,617		19.0	%
Number of Loan Applications		449,337		12.0	%		401,302		17.7	%
Average Loan Size	$	132,900		9.8	%	$	121,000		13.2	%

     The increase in origination volume was due to an increase in the average loan size and an increase in the number of loan originations.

     The following summarizes the portfolio of mortgage loans serviced by Home Equity as of March 31, 2006 and 2005:

	For the Years Ended March 31,
	2006					2005
			Change					Change
Servicing Portfolio:
Number of Loans
Portfolio Accounting Method		71,218		(15.2	%)		83,972		10.2	%
Serviced for Others		31,927		94.3	%		16,431		51.3	%
Total		103,145		2.7	%		100,403		15.3	%
Dollars in billions
Portfolio Accounting Method	$	6.87		(13.1	%)	$	7.91		21.7	%
Serviced for Others		3.68		162.9	%		1.40		118.8	%
Total	$	10.55		13.3	%	$	9.31		30.4	%

     Home Equity periodically securitizes mortgage loans in order to provide long-term funding for its mortgage operations and to reduce its interest rate exposure on fixed rate loans.

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

     Another component of Home Equity’s servicing portfolio includes loans sold on a “whole loan basis” that Home Equity continues to service and securitizations accounted for as gains on sale in accordance with FASB SFAS No. 125, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” where from October 1997 through March 2000, an estimate of the entire gain resulting from the sale was included in earnings during the period in which the securitization transaction occurred. These loans are included in the serviced for others category in the above table. Unlike the portfolio accounting method, our balance sheet does not reflect the mortgage loans receivable or the offsetting debt resulting from these securitizations. However, under the gain on sale method, Home Equity’s retained residual interest in, as well as the servicing rights to, the securitized loans are reflected on the balance sheet. Home Equity carries mortgage securitization residual interest, or MSRI, at fair value on the balance sheet.

     The structure of securitizations has no effect on the ultimate amount of profit and cash flow recognized over the life of the mortgages. However, the structure does affect the timing of profit recognition. Under both structures, recourse on the securitized debt is limited to the payments received on the underlying mortgage collateral with no

34

recourse to Home Equity or Centex Corporation. As is common in these structures, Home Equity remains liable for customary loan representations.

     The primary risks in Home Equity’s operations are consistent with those of the financial services industry and include credit risk associated with its loans, liquidity risk related to funding its loans and interest rate risk prior to securitization of the loans. In addition, it is also subject to prepayment risks (principal reductions in excess of contractually scheduled reductions) associated with loans securitized prior to April 2000.

FISCAL YEAR 2005 COMPARED TO FISCAL YEAR 2004

HOME BUILDING

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

	For the Years Ended March 31,
	2005						2004
				Change						Change
Revenues – Housing	$	9,007.1			22.4	%	$	7,360.7			26.5	%
Revenues – Land Sales and Other		352.6			122.7	%		158.3			52.2	%
Cost of Sales – Housing		(6,486.7	)		20.1	%		(5,401.1	)		23.8	%
Cost of Sales – Land Sales and Other		(261.4	)		82.5	%		(143.2	)		56.7	%
Selling, General and Administrative Expenses		(1,301.6	)		25.3	%		(1,038.8	)		22.3	%
Earnings from Unconsolidated Entities		68.8			129.3	%		30.0			154.2	%
Operating Earnings	$	1,378.8			42.7	%	$	965.9			53.0	%
Operating Earnings as a Percentage of Revenues		14.7	%		1.9			12.8	%		2.1

	For the Years Ended March 31,
	2005					2004
			Change					Change
Units Closed		33,387		10.0	%		30,358		14.9	%
Average Unit Sales Price	$	269,780		11.3	%	$	242,465		10.1	%
Operating Earnings Per Unit	$	41,298		29.8	%	$	31,816		33.2	%
Average Operating Neighborhoods		589		5.6	%		558		7.5	%
Closings Per Average Neighborhood		56.7		4.2	%		54.4		6.9	%

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

     The following summarizes changes in performance indicators for the year ended March 31, 2005 as compared to fiscal year 2004.

     For the year ended March 31, 2005, we opened 336 neighborhoods and closed out of 293 neighborhoods, driving our average operating neighborhoods to 589, a 5.6% increase over fiscal year 2004.

     Higher sales rates contributed to our growth in closings per average neighborhood. Sales per average neighborhood were 62.1 for the year ended March 31, 2005, a 2.8% increase over fiscal year 2004. This sales rate increase could be attributed to our continued focus on market research, enhanced sales and marketing activities and activity-based sales management. Sales orders increased in each of our geographic regions in fiscal year 2005, and sales growth rates were particularly strong in the Mid-Atlantic and West Coast regions, which achieved increases over fiscal year 2004 of 10.7% and 10.8%, respectively. For all regions, sales orders totaled 36,562 units for the year ended March 31, 2005, an increase of 8.4% versus fiscal year 2004. The increase in sales per average neighborhood, as well

35

as the increase in average operating neighborhoods, resulted in an increase of home closing volume of 10.0% to 33,387 homes for the year ended March 31, 2005, as compared to fiscal year 2004.

     Housing market conditions in fiscal year 2005, combined with our geographic, product and segment diversification strategies, continued to drive higher average selling prices. For the year ended March 31, 2005, average selling prices were up 11.3% to $269,780 as compared to fiscal year 2004. The increase was primarily due to strong demand in the Southeast and West Coast regions resulting in pricing power, as well as a greater mix of homes closed in the West Coast region. California experienced the largest average sales price increase among the states in which we operate as average prices rose to $514,081, a $68,619 increase over fiscal year 2004.

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

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

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

FINANCIAL SERVICES

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

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

     CTX Mortgage Company, LLC originates mortgage loans and sells them to HSF-I and investors. HSF-I is a variable interest entity for which we are the primary beneficiary and, as of July 1, 2003, it was consolidated with our Financial Services segment. The consolidation of HSF-I resulted in an increase in our residential mortgage loans held for sale with a corresponding increase in our debt. In addition, interest income and interest expense of HSF-I subsequent to June 30, 2003 are reflected in our financial statements.

36

     The following table quantifies: (1) the volume of loan sales to investors (third parties), and (2) the gains recorded on those sales and related derivative activity, collectively, gain on sale of mortgage loans, which was recorded as revenues for the years ended March 31, 2005 and 2004 (dollars in millions):

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

     The decreases in loan sales and gain on sale of mortgage loans were the result of a decrease in the volume of loans originated and sold to investors and an increase in the origination of less profitable adjustable rate mortgages, or ARMs. ARMs as a percentage of total originations were 48% and 23% for the years ended March 31, 2005 and 2004, respectively.

     Consistent with decreases in loan sales and gain on sale of mortgage loans, revenues for the year ended March 31, 2005, which include revenues from our title and insurance operations, have also decreased. Decreases in gain on sale of mortgage loans and revenues from our title and insurance operations were slightly offset by increases in our fees received in connection with brokering of loans. The table below provides a comparative analysis of mortgage loan originations and applications for the years ended March 31, 2005 and 2004. CTX Mortgage Company, LLC tracks loan applications until such time as the loan application is canceled. Applications canceled were 16,488 and 20,590 for the years ended March 31, 2005 and 2004, respectively.

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

     The decrease in loan originations was primarily the result of a significant decrease in refinancing activity, partially offset by an increase in Builder originations, which resulted from an increase in Home Building’s closings and our continued focus on serving this customer base. For the year ended March 31, 2005, CTX Mortgage Company, LLC originated 73% of the non-cash unit closings of Home Building’s customers, versus 74% for fiscal year 2004.

     CTX Mortgage Company, LLC’s operations are influenced by borrowers’ perceptions of and reactions to interest rates. Refinancing activity accounted for 21% and 39% of originations in the years ended March 31, 2005 and 2004, respectively. Refinancing activity declined due to an extended period of relatively low mortgage loan rates, which reduced the supply of loans likely to be refinanced.

37

CONSTRUCTION SERVICES

     The following summarizes Construction Services’ results for the two-year period ended March 31, 2005 (dollars in millions):

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

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

     Revenues and operating earnings for the year ended March 31, 2005 increased as compared to fiscal year 2004. Revenue increases were due to an increase in the number of active projects and an increase in average contract size. As of March 31, 2005, we had 243 active projects, which represented a 14.1% increase over fiscal year 2004. The increase in new contracts executed and backlog of uncompleted contracts was primarily due to the execution of contracts for multi-unit residential projects.

OTHER

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

	For the Years Ended March 31,
	2005						2004
				Change						Change
Operating Loss from Home Services Operations	$	(15.8	)		587.0	%	$	(2.3	)		(76.0	%)
Operating Earnings from Investment Real Estate Operations		21.4			(52.2	%)		44.8			31.8	%
Corporate General and Administrative Expenses		(82.9	)		(21.5	%)		(105.6	)		73.4	%
Interest Expense		(19.3	)		(51.1	%)		(39.5	)		(34.5	%)
Operating Loss	$	(96.6	)		(5.8	%)	$	(102.6	)		6.0	%

     The increase in our home services division’s operating loss in the year ended March 31, 2005 was primarily due to an increase in marketing expenses resulting from expansion and growth of our home services operations in the homebuilder customer market, coupled with incremental commissions paid on new sales growth. In addition, in the fourth quarter of fiscal year 2005, we took a charge of $10.0 million to notes receivable received in connection with the sale of our security monitoring center in fiscal year 2004. The fluctuations in our investment real estate division’s operating earnings were primarily related to the timing of property sales.

     The decrease in corporate general and administrative expenses in fiscal year 2005 was primarily related to $16 million in incremental executive compensation costs recorded in fiscal year 2004 for the retirement of an executive officer.

     Total interest incurred was $225.6 million and $176.5 million for the years ended March 31, 2005 and 2004, respectively. See Note (A), “Significant Accounting Policies,” of the Notes to Consolidated Financial Statements for further information on interest costs. The increase in total interest costs is primarily related to an increase in average debt outstanding for the year ended March 31, 2005 as compared to fiscal year 2004.

38

     Our effective tax rate related to continuing operations increased to approximately 36% in the year ended March 31, 2005 from 33% in fiscal year 2004, primarily due to the reduction in the availability of tax benefits related to the Company’s net operating loss carryforwards in fiscal year 2005 as compared to fiscal year 2004. See Note (J), “Income Taxes,” of the Notes to Consolidated Financial Statements for further information on income taxes.

DISCONTINUED OPERATIONS

     In June 2003, we spun off tax-free to our stockholders substantially all of our manufactured housing operations, and in January 2004, we spun off tax-free to our stockholders our entire equity interest in Construction Products. As a result of the spin-offs, the earnings from these operations for fiscal year 2004 and all periods prior to the spin-offs have been reclassified to discontinued operations in the Statements of Consolidated Earnings.

     For the year ended March 31, 2004, discontinued operations had revenues of $1.07 billion, and operating earnings of $153.5 million.

International Home Building

     Our international homebuilding operations involved the purchase and development of land or lots and the construction and sale of a range of products from small single-family units to executive houses and apartments in the United Kingdom. The following summarizes the results of our international homebuilding operations for the year ended March 31, 2005 (dollars in millions):

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

     In February 2004, we acquired Centex Development Company, L.P. and subsidiaries, or the Partnership, through merger transactions. Prior to the merger, we accounted for our investment in the Partnership on the equity method of accounting. For the year ended March 31, 2004, we recorded $25.3 million in earnings under the equity method of accounting related to the international homebuilding operations of the Partnership. These earnings for fiscal 2004 are not comparative to operating earnings presented above as operating earnings exclude interest expense and taxes.

Sub-Prime Home Equity Lending

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

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

39

     The revenues of Home Equity increased primarily as a result of continued growth in our portfolio of residential mortgage loans held for investment and as a result of a program of whole loan sales to third parties. Our portfolio growth translated into more interest income, our largest component of revenue. Home Equity recorded approximately $42.3 million in net revenue and operating earnings related to the whole loan sales for the year ended March 31, 2005.

     Cost of sales increased in fiscal year 2005 commensurate with increases in our average debt outstanding and increases in interest rates since fiscal year 2004.

     Operating expenses for the year ended March 31, 2005 increased as a result of Home Equity’s continued growth. The increase in loan production volume, the expansion of branch offices and the increase in the number of employees led to a corresponding increase in salaries and related costs, rent expense, group insurance costs and advertising expenditures.

     The increase in the loan loss provision for the year ended March 31, 2005 occurred primarily because of the increase in residential mortgage loans held for investment. For a more detailed discussion of our accounting policy and methodology for establishing the provision for losses, see “Critical Accounting Estimates-Valuation of Residential Mortgage Loans Held for Investment.” Changes in the allowance for losses are included in Note (P), “Discontinued Operations,” of the Notes to Consolidated Financial Statements.

     The increase in operating earnings for the year ended March 31, 2005 was primarily attributable to the increase in interest margin, which we define as the difference between interest revenue on mortgage loans held for sale or investment and interest expense on debt used to fund the mortgage loans. Interest margin for the year ended March 31, 2005 increased primarily as a result of an increase in the portfolio of mortgage loans held for investment. In fiscal year 2005, interest margin as a percentage of revenues decreased primarily as a result of an increasing interest rate environment, as well as increased competitive industry conditions. Whole loan sale transactions also contributed to the increase in operating earnings for the year ended March 31, 2005.

     Average interest earning assets and liabilities for the year ended March 31, 2005 increased primarily due to an increase in the volume of loan originations and an increase in average loan size (see table below).

     The following table provides a comparative analysis of mortgage loan originations and applications for the two-year period ended March 31, 2005:

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

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

40

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

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

     For the year ended March 31, 2005, Home Equity’s whole loan sales on a servicing-retained basis totaled $920.4 million. No such sales occurred during fiscal year 2004.

FINANCIAL CONDITION AND LIQUIDITY

     The consolidating net cash used in or provided by the operating, investing and financing activities for the years ended March 31, 2006, 2005 and 2004 is summarized below (dollars in thousands). See “Statements of Consolidated Cash Flows with Consolidating Details” for the detail supporting this summary.

	For the Years Ended March 31,
	2006			2005			2004
Net Cash (Used in) Provided by
Centex*
Operating Activities	$	(667,292	)	$	(506,007	)	$	(311,250	)
Investing Activities		77,133			(50,816	)		(62,830	)
Financing Activities		138,041			891,926			92,881
Effect of Exchange Rate on Cash		(1,479	)		(5,385	)		692
		(453,597	)		329,718			(280,507	)
Financial Services
Operating Activities		(156,762	)		150,201			1,090,135
Investing Activities		941,047			(1,526,148	)		(1,931,321	)
Financing Activities		(785,319	)		1,369,956			844,373
		(1,034	)		(5,991	)		3,187
Centex Corporation and Subsidiaries
Operating Activities		(933,139	)		(368,077	)		711,196
Investing Activities		1,054,518			(1,613,693	)		(1,925,962	)
Financing Activities		(574,531	)		2,310,882			936,754
Effect of Exchange Rate on Cash		(1,479	)		(5,385	)		692
Net (Decrease) Increase in Cash	$	(454,631	)	$	323,727		$	(277,320	)

* “Centex” represents a supplemental presentation that reflects the Financial Services segment as if accounted for under the equity method. We believe that separate disclosure of the consolidating information is useful because the Financial Services subsidiaries and related companies operate in a distinctly different financial environment that generally requires significantly less equity to support their higher debt levels compared to the operations of our other subsidiaries; the Financial Services subsidiaries and related companies have structured their financing programs substantially on a stand alone basis; and Centex has limited obligations with respect to the indebtedness of our Financial Services subsidiaries and related companies. Management uses this information in its financial and strategic planning. We also use this presentation to allow investors to compare us to homebuilders that do not have financial services operations.

     In accordance with the provisions of SFAS No. 95, “Statement of Cash Flows,” the Statements of Consolidating Cash Flows have not been restated for discontinued operations. As a result, all international homebuilding cash flows are included with the Centex cash flows and all Home Equity cash flows are included with the Financial Services cash flows.

41

     We generally fund our Centex operating and other short-term liquidity needs through cash provided by operations, borrowings from commercial paper and other short-term credit arrangements, and the issuance of senior debt. Centex’s operating cash is derived primarily through home and land sales from our Home Building segment and general contracting fees obtained through our Construction Services segment. During fiscal year 2006, cash was primarily used in Centex’s operating activities to finance increases in Home Building inventories relating to the increased level of sales and resulting units under construction during the year, and for the acquisition of land held for development. The funds provided by Centex’s financing activities were primarily from debt issued to fund the increased homebuilding activity and share repurchases.

     We generally fund our Financial Services’ operating and other short-term liquidity needs through Home Equity’s securitizations, committed credit facilities, proceeds from the sale of mortgage loans to HSF-I and investors and cash flows from operations. Financial Services’ operating cash is derived primarily through sales of mortgage loans, interest income on mortgage loans held by Home Equity for investment and origination and servicing fees. Effective July 1, 2003, Financial Services consolidated $2.48 billion of HSF-I’s residential mortgage loans held for sale. The initial consolidation of HSF-I was not reflected in the Statements of Consolidated Cash Flows, as it was a non-cash transaction. As these mortgage loans were sold in the secondary market in fiscal year 2004, an inflow of cash from operating activities occurred. For additional discussion on the consolidation of HSF-I in June 2003, see Note (D), “Indebtedness,” of the Notes to Consolidated Financial Statements. Financial Services’ cash provided by investing activities in fiscal year 2006 was primarily from a reduction in Home Equity’s residential mortgage loans held for investment. Home Equity originates residential mortgage loans with the intent to securitize; however, whole loan sales do occur periodically. During fiscal years 2005 and 2004, cash was primarily used in Financial Services’ investing activities to finance increases in Home Equity’s residential mortgage loans held for investment. Financial Services’ cash used in financing activities in fiscal year 2006 was primarily from the repayment of debt from the liquidation of Home Equity’s residential mortgage loans held for investment. The funds provided by Financial Services’ financing activities in fiscal years 2005 and 2004 were primarily from new debt used to fund the increased residential mortgage loan activity.

     Our future cash requirements for contractual obligations, excluding discontinued operations, as of March 31, 2006 (in thousands) are illustrated in the following table:

	Payments Due by Period
	Less Than		1 – 3		3 – 5		More Than
	1 Year		Years		Years		5 Years		Total
Centex
Long-term Debt (1)	$	514,264	$	1,199,112	$	1,224,967	$	2,046,344	$	4,984,687
Capital Leases		3,079		5,516		4,939		4,577		18,111
Operating Leases		53,281		95,842		68,825		41,031		258,979
Purchase Obligations		26,576		26,879		7,765		—		61,220
		597,200		1,327,349		1,306,496		2,091,952		5,322,997
Financial Services
Long-term Debt (2)		2,898		5,787		61,449		—		70,134
Operating Leases		13,386		14,441		4,629		3,230		35,686
		16,284		20,228		66,078		3,230		105,820
	$	613,484	$	1,347,577	$	1,372,574	$	2,095,182	$	5,428,817

(1)	The amount of debt subject to a variable interest rate is $279.3 million, of which $258.0 million was based on the U.S. 3 month Libor rate of 5.00% at March 31, 2006 and $21.3 million was based on the U.S. 1 month Libor rate of 4.83% at March 31, 2006.
(2)	The amount of debt subject to a variable interest rate is $60.0 million. The basis of the rate is U.S. 1 month Libor which was 4.83% at March 31, 2006.

     As outlined above, our primary contractual obligations are principal and interest payments under long-term debt agreements and lease payments under operating leases. The long-term debt obligations include principal and interest payments for variable interest entities consolidated pursuant to the provisions of FIN 46. Variable interest entities’ debt does not have recourse to us, and the consolidation of this debt has not changed our debt ratings. We do not guarantee the payment of any variable interest entities’ debt. Purchase obligations primarily represent joint funding obligations, open purchase orders and specific performance agreements of our Home Building segment that in essence may require us to purchase land contingent upon the land seller meeting certain obligations.

42

     Our contractual obligations will be funded in the ordinary course of business through our operating cash flows and through our credit facilities. Centex Corporation currently has an investment-grade credit rating from each of the principal credit rating agencies. Our ability to finance our activities on favorable terms is dependent to a significant extent on whether we are able to maintain our investment-grade credit ratings. We attempt to manage our debt levels in order to maintain investment-grade ratings. If, however, our debt ratings were downgraded, we would not have access to the commercial paper markets and might need to draw on our existing committed backup facility.

     Our existing credit facilities and available capacity as of March 31, 2006 are summarized below (dollars in thousands):

	Existing Credit		Available
	Facilities		Capacity
Centex
Multi-Bank Revolving Credit Facility
Revolving Credit	$	1,000,000	$	875,000
Letters of Credit		500,000		111,680
		1,500,000		986,680	(1) (2)
Unsecured Credit Facilities		350,000		350,000	(3)
		1,850,000		1,336,680
Financial Services
Secured Credit Facilities		940,000		560,023	(4)
Harwood Street Funding I, LLC Facility		3,000,000		1,244,000
		3,940,000		1,804,023
Discontinued Operations
Mortgage Servicer Advance Facility		100,000		17,653	(5)
Harwood Street Funding II, LLC Facility		4,000,000		2,917,134	(6)
		4,100,000		2,934,787
	$	9,890,000	$	6,075,490	(7)

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

     Mortgage loans held for sale are primarily funded by CTX Mortgage Company, LLC’s sale of mortgage loans to HSF-I. HSF-I acquires mortgage loans from CTX Mortgage Company, LLC, holds them on average approximately 60 days and then resells them into the secondary market. HSF-I obtains the funds needed to purchase eligible mortgage loans from CTX Mortgage Company, LLC by issuing (1) short-term secured liquidity notes, (2)

43

medium-term debt and (3) subordinated certificates. As of March 31, 2006, HSF-I had outstanding (1) short-term secured liquidity notes rated A1+ by Standard & Poor’s, or S&P, and P-1 by Moody’s Investors Service, or Moody’s, and (2) subordinated certificates maturing in September 2009, extendable for up to five years, rated BBB by S&P and Baa2 by Moody’s. The purposes of this arrangement are to allow CTX Mortgage Company, LLC to reduce funding costs associated with its originations, to improve its liquidity and to eliminate credit risks associated with mortgage warehousing. HSF-I is consolidated pursuant to the provisions of FIN 46; accordingly, the debt, interest income and interest expense of HSF-I are reflected in the financial statements of Financial Services.

     Under debt covenants contained in our multi-bank revolving credit facility, we are required to maintain certain leverage and interest coverage ratios and a minimum tangible net worth. At March 31, 2006, we were in compliance with all of these covenants.

     As of March 31, 2006, our short-term debt was $2.14 billion, of which $2.02 billion was applicable to Financial Services. Certain of Centex’s short-term borrowings vary on a seasonal basis and are generally financed at prevailing market interest rates under our commercial paper program.

     Our outstanding debt (in thousands), including variable interest entities’ debt consolidated pursuant to FIN 46 and excluding debt of discontinued operations, as of March 31, 2006 was as follows (due dates are presented in fiscal years):

Centex
Short-term Debt:
Short-term Note Payable	$	127,166
Senior Debt:
Medium-term Note Programs, weighted-average 6.01%, due through 2008		358,000
Senior Notes, weighted-average 5.79%, due through 2016		3,208,762
Other Indebtedness, weighted-average 9.17%, due through 2015		188,346
Subordinated Debt:
Subordinated Debentures, 8.75%, due in 2007		99,919
		3,982,193
Financial Services
Short-term Debt:
Short-term Notes Payable		324,986
Harwood Street Funding I, LLC Secured Liquidity Notes		1,692,229
Harwood Street Funding I, LLC Variable Rate Subordinated Extendable Certificates, weighted-average 6.83%, due through 2010		60,000
		2,077,215
	$	6,059,408

     In fiscal year 2006, we repurchased an aggregate of 9.25 million shares of our common stock at a total purchase price of $653.5 million, including commissions paid. We expect to continue to repurchase shares of common stock as and when market conditions are favorable for share repurchases. As of March 31, 2006, our remaining share repurchase authorization totaled 2.5 million shares. On May 15, 2006, we announced that our Board of Directors authorized the repurchase of an additional 12 million shares and that subsequent to March 31, 2006, we completed our previous share authorization by purchasing 2.5 million shares in open market transactions. This increased share repurchase authorization will allow us to continue to execute a balanced strategy of investing in our homebuilding business to position us for future growth and return capital to our stockholders through share repurchases.

CERTAIN OFF-BALANCE SHEET OBLIGATIONS

     The following is a summary of certain off-balance sheet arrangements and other obligations and their possible effects on our liquidity and capital resources.

Joint Ventures

     We conduct a portion of our land acquisition, development and other activities through our participation in joint ventures in which we hold less than a majority interest. These land related activities typically require substantial capital, and partnering with other 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.

44

     A summary of our Home Building joint ventures is presented below (dollars in thousands):

	As of March 31,
	2006		2005
Number of Joint Ventures		52		41
Investment in Joint Ventures	$	307,779	$	160,871
Total Joint Venture Debt	$	1,053,201	$	426,335
Centex’s Share of Joint Venture Debt:
Based on Centex’s Ownership Percentage	$	388,428	$	160,061
Based on Limited Debt Recourse Provisions:
Limited Maintenance Guarantee (1) (2)	$	228,603	$	132,078
Repayment Guarantee (2) (3)		8,136		7,751
Total Limited Debt Recourse	$	236,739	$	139,829

(1)	We have guaranteed that certain of the joint ventures will maintain a specified loan to value ratio. We could be requested to contribute additional capital to these joint ventures to the extent the loan to value ratio falls below the specified ratio. We have not been requested to perform under a limited maintenance guarantee, and we do not anticipate that any capital contributions will be made in future periods under these guarantees.
(2)	These amounts represent our maximum exposure based on the joint ventures’ debt at each respective date.
(3)	We have guaranteed repayment of a portion of certain joint venture debt limited to our ownership percentage of the joint venture or a percentage thereof.

     Debt agreements for joint ventures vary by lender in terms of structure and level of recourse. For certain of the joint ventures we are also liable on a contingent basis, through other guarantees, letters of credit or other arrangements, with respect to a portion of the construction debt. Certain joint venture agreements require us to guarantee the completion of a project or phase if the joint venture does not perform the required development. To the extent development costs exceed amounts available under the joint venture’s credit facility, we would be liable for incremental costs to complete development. Additionally, we have agreed to indemnify the construction lender for certain environmental liabilities with respect to the project for most joint ventures, and most guarantee arrangements require that we are liable for our proportionate share of the outstanding debt if the joint venture files for voluntary bankruptcy. We have not been requested to perform under any of these guarantees, and we do not anticipate that any capital contributions will be made in future periods related to such arrangements.

     We also have investments in joint ventures related to our Construction Services and Other segments totaling $2,605 and $3,073 as of March 31, 2006 and 2005, respectively.

CRITICAL ACCOUNTING ESTIMATES

     Some of our critical accounting policies require the use of judgment in their application or require estimates of inherently uncertain matters. Our accounting policies are in compliance with generally accepted accounting principles; however, a change in the facts and circumstances of the underlying transactions could significantly change the application of the accounting policies and the resulting financial statement impact. Listed below are those policies that we believe are critical and require the use of complex judgment in their application. Our critical accounting estimates have been discussed with the members of the Audit Committee.

Impairment of Long-Lived Assets

     Housing projects, land held for development and sale (including direct construction costs, capitalized interest and real estate taxes) and property, plant and equipment are assessed for recoverability in accordance with the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” or SFAS No. 144. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. These evaluations for impairment are significantly impacted by estimates of revenues, costs and expenses and other factors. If long-lived assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the

45

assets. No significant impairments of long-lived assets were recorded in fiscal years 2006, 2005 or 2004. See additional information on land write-offs under Inventory Valuation discussion below.

Goodwill

     Goodwill represents the excess of purchase price over net assets of businesses acquired. See Note (C), “Goodwill,” of the Notes to Consolidated Financial Statements for a summary of the changes in goodwill by segment. Goodwill is subject to at least an annual assessment for impairment (conducted as of January 1), at the reporting unit level, by applying a fair value-based test. If the carrying amount exceeds the fair value, an impairment has occurred. We continually evaluate whether events and circumstances have occurred that indicate the remaining balance of goodwill may not be recoverable. Fair value is estimated using a discounted cash flow or market valuation approach. Such evaluations for impairment are significantly impacted by estimates of future revenues, costs and expenses and other factors. If the goodwill is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the goodwill exceeds the fair value. We had no impairment of goodwill in fiscal years 2006, 2005 or 2004.

Inventory Valuation

     Housing projects are stated at the lower of cost (including direct construction costs, capitalized interest and real estate taxes) or fair value less cost to sell.

     Home construction costs are accumulated on a specific identification basis. Under the specific identification basis, costs and expenses include all applicable land acquisition, land development and specific construction costs (including direct and indirect costs) of each home paid to third parties. Land acquisition, land development and home construction costs do not include employee related compensation and benefit costs. The specific construction and allocated land costs of each home are included in direct construction. Direct construction also includes amounts paid through the closing date of the home for construction materials and subcontractor costs, plus an accrual for estimated costs incurred but not yet paid, based on an analysis of budgeted construction costs. Any changes to the estimated total development costs identified subsequent to the initial home closings in a project are generally allocated to the remaining homes in the project. Land acquisition and land development costs are included in land under development. Land acquisition and development costs are estimated based on the total costs expected in a project.

     Land held for development and sale primarily consists of deposits for land purchases, related acquisition costs and land that will not begin development in the next two years. To the extent we determine that we will not purchase a parcel of land, the deposit and related acquisition costs are charged to cost of sales. During the year ended March 31, 2006, $37.6 million of land was written off. Included in the cost of land sales and other were write-offs of option deposits and pre-acquisition costs that were classified as land held for development and sale and the write-off of development costs for neighborhoods where all or substantially all homes had already been closed.

Land Held Under Option Agreements Not Owned

     In order to ensure the future availability of land for homebuilding, we enter into land option purchase agreements with unaffiliated third parties. Under the option agreements, we pay a stated deposit 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 us nor obligate us to purchase the land. Land option deposits related to these options are also reclassified to land held under option agreements not owned. To the extent we do not exercise our option to purchase such land, the amount of the lot option deposit, any letters of credit, as well as development costs incurred to date, represent our maximum exposure to loss, except in certain circumstances, which would not be material.

     We have evaluated those entities with which we entered into land option agreements in accordance with the provisions of FIN 46. The provisions of FIN 46 require us to consolidate the financial results of a variable interest entity if we are the primary beneficiary of the variable interest entity. Variable interest entities are entities in which (1) equity investors do not have a controlling financial interest and/or (2) the entity is unable to finance its activities without additional subordinated financial support from other parties. The primary beneficiary of a variable interest entity is the owner or investor that absorbs a majority of the variable interest entity’s expected losses and/or receives a majority of the variable interest entity’s expected residual returns.

     We determine if we are the primary beneficiary of variable interest entities based upon analysis of the variability of the expected gains and losses of the variable interest entity. Expected gains and losses of the variable interest entity are highly dependent upon management’s estimates of the variability and probabilities of future land

46

prices, the probabilities of expected cash flows and entitlement risks related to the underlying land, among other factors. Based on this evaluation, if we are the primary beneficiary of those entities with which we have entered into land option agreements, the variable interest entity is consolidated. For purposes of consolidation, to the extent financial statements or other information is available, we consolidate the assets and liabilities of the variable interest entity. If financial statements for the variable interest entity are not available, we record the remaining purchase price of land in the Consolidated Balance Sheets under the caption, land held under option agreements not owned, with a corresponding increase in minority interests. See Note (G), “Land Held Under Option Agreements Not Owned and Other Land Deposits,” of the Notes to Consolidated Financial Statements for further discussion on the results of our analysis of land option agreements.

      In addition to land held under option agreements recorded pursuant to the provisions of FIN 46, to the extent our land option deposit exceeds certain thresholds, we recognize the option arrangement by recording land at the total option purchase price and related obligation in accrued liabilities.

Warranty Accruals

     Home Building offers a ten-year limited warranty for most homes constructed and sold in the United States. The warranty covers defects in materials or workmanship in the first two years 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’s 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. Although we consider the warranty accruals reflected in our consolidated balance sheet to be adequate, there can be no assurance that this accrual will prove to be sufficient over time to cover ultimate losses.

Loan Origination Reserve

     CTX Mortgage Company, LLC has established a liability for anticipated losses associated with loans originated based upon, among other factors, historical loss rates and current trends in loan originations. This liability includes losses associated with certain borrower payment defaults, credit quality issues, or misrepresentation and reflects management’s judgment of the loss exposure at the end of the reporting period.

     Although we consider the loan origination reserve reflected in our consolidated balance sheet at March 31, 2006 to be adequate, there can be no assurance that this reserve will prove to be sufficient over time to cover ultimate losses in connection with our loan originations. This reserve may prove to be inadequate due to unanticipated adverse changes in the economy or discrete events adversely affecting specific customers or industries.

Insurance Accruals

     We have certain deductible limits under our workers’ compensation, automobile and general liability insurance policies for which reserves are actuarially determined based on claims filed and an estimate of claims incurred but not yet reported. Projection of losses concerning these liabilities is subject to a high degree of variability due to factors such as claim settlement patterns, litigation trends and legal interpretations, among others. We periodically assess the adequacy of our insurance accruals and adjust the amounts as necessary. Although we consider the insurance accruals reflected in our consolidated balance sheet to be adequate, there can be no assurance that this accrual will prove to be sufficient over time to cover ultimate losses.

CRITICAL ACCOUNTING ESTIMATES – DISCONTINUED OPERATIONS

     The following critical accounting estimates relate to our sub-prime home equity lending operations. As previously discussed, we entered into a definitive agreement on March 30, 2006 to sell Home Equity.

Valuation of Residential Mortgage Loans Held for Investment

     Home Equity originates and purchases loans in accordance with standard underwriting criteria, which are primarily intended to assess the creditworthiness of the mortgagee, the value of the mortgaged property and the adequacy of the property as collateral for the home equity loan.

47

     Home Equity establishes an allowance for losses when it believes a loss has occurred. When Home Equity determines that a residential mortgage loan held for investment is partially or fully uncollectible, the estimated loss is charged against the allowance for losses. Recoveries on losses previously charged to the allowance are credited to the allowance at the time the recovery is collected. We evaluate the allowance on an aggregate basis considering, among other things, the relationship of the allowance to the amount of residential mortgage loans held for investment and historical credit losses. The allowance reflects our judgment of the present loss exposure at the end of the reporting period. A range of expected credit losses is estimated using historical losses, static pool loss curves and delinquency modeling. These tools take into consideration historical information regarding delinquency and loss severity experience and apply that information to the portfolio at each reporting date.

     Although we consider the allowance for losses on residential mortgage loans held for investment to be adequate, there can be no assurance that this allowance will prove to be sufficient over time to cover ultimate losses. This allowance may prove to be insufficient due to unanticipated adverse changes in the economy or discrete events adversely affecting specific customers or industries.

Mortgage Securitization Residual Interest

     Home Equity uses mortgage securitizations to finance its mortgage loan portfolio. For securitizations prior to April 2000, which Home Equity accounted for as sales, Home Equity retained a MSRI. The MSRI represents the present value of Home Equity’s right to receive, over the life of the securitization, the excess of the weighted-average coupon on the loans securitized over the interest rates on the securities sold, a normal servicing fee, a trustee fee and an insurance fee, where applicable, net of the credit losses relating to the loans securitized. Home Equity estimates the fair value of MSRI through the application of discounted cash flow analysis. Such analysis requires the use of various assumptions, the most significant of which are anticipated prepayments (principal reductions in excess of contractually scheduled reductions), estimated future credit losses and the discount rate applied to future cash flows. In developing our assumptions, we consider a variety of factors, many of which are interrelated. These factors include historical performance, origination channels, characteristics of borrowers, such as credit quality and loan-to-value relationships, and market factors that influence competition. If changes in assumptions regarding anticipated prepayments, discount rates or credit losses are necessary, the MSRI fair value is adjusted accordingly.

     As of March 31, 2006, our total MSRI was $56.8 million, which consists of $54.9 million remaining on loans securitized from October 1997 to March 2000 accounted for as gain on sale and $1.9 million related to loans sold to a government sponsored enterprise that we continue to service.

RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2004, the FASB issued a revision to SFAS No. 123 entitled “Share-Based Payment,” or SFAS 123R. Share-based payments are transactions in which an enterprise receives employee services in exchange for (1) equity instruments of the enterprise or (2) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123R requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees, but expresses no preference for a type of valuation model. SFAS 123R supersedes APB No. 25 and is effective for annual periods beginning after June 15, 2005. We adopted SFAS 123R effective January 1, 2006, and it did not have a material impact on our results of operations or financial position.

     In December 2004, the FASB issued Staff Position 109-1, or FSP 109-1, Application of FASB Statement No. 109, which clarified that the tax deduction on qualified production activities provided by the American Jobs Creation Act of 2004 should be accounted for as a special deduction and will reduce tax expense in the period or periods during which the amounts are deductible on the tax return. The new tax deduction for qualified production activities was effective for our fiscal year ended March 31, 2006. For further information, see Note (J), “Income Taxes,” of the Notes to Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risks related to fluctuations in interest rates on our direct debt obligations and on mortgage loans receivable. The following analysis provides a framework to understand our sensitivity to hypothetical changes in interest rates as of March 31, 2006.

48

Centex

     We use both short-term and long-term debt in our financing strategy. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument but not our earnings or cash flows. Conversely, for variable-rate debt, changes in interest rates generally do not impact the fair market value of the debt instrument but do affect our future earnings and cash flows. We do not have an obligation to prepay any of our fixed-rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on the fixed-rate debt until we refinance such debt.

     As of March 31, 2006, short-term debt was $2.14 billion, of which $2.02 billion was applicable to Financial Services. The majority of Financial Services’ debt is collateralized by residential mortgage loans including mortgage loans held by HSF-I. We borrow on a short-term basis in the commercial paper market under a $900 million commercial paper program supported by a revolving credit facility with a term expiring in fiscal year 2011, all of which bear interest at prevailing market rates. The weighted-average interest rate on short-term borrowings outstanding at March 31, 2006 was 4.88%.

     The maturities of Centex’s long-term debt, including debt of variable interest entities consolidated pursuant to FIN 46, outstanding at March 31, 2006 were as follows:

	Maturities through March 31,
	2007			2008			2009			2010			2011			Thereafter			Total			Fair Value
Centex (1)
Fixed-Rate Debt	$	204,465		$	438,340		$	208,650		$	225,073		$	700,066		$	1,799,100		$	3,575,694		$	3,566,902
Average Interest Rate		7.99	%		5.94	%		6.31	%		5.80	%		6.45	%		5.79	%		6.10	%
Variable-Rate Debt	$	88,000		$	191,333		$	—		$	—		$	—		$	—		$	279,333		$	280,481
Average Interest Rate		6.56	%		5.02	%		—			—			—			—			5.51	%

(1) We define Centex as a supplemental presentation that reflects the Financial Services segment as if accounted for under the equity method.

     The maturities of Centex’s long-term debt outstanding at March 31, 2005 were as follows:

	Maturities through March 31,
	2006			2007			2008			2009			2010			Thereafter			Total			Fair Value
Centex (1)
Fixed-Rate Debt	$	301,814		$	203,872		$	336,505		$	1,246		$	226,264		$	1,710,013		$	2,779,714		$	2,876,580
Average Interest Rate		8.94	%		8.01	%		4.84	%		7.78	%		5.81	%		6.29	%		6.49	%
Variable-Rate Hedged Debt (2)	$	25,000		$	—		$	—		$	—		$	—		$	—		$	25,000		$	25,130
Average Interest Rate		7.99	%		—			—			—			—			—			7.99	%
Variable-Rate Debt	$	15,000		$	88,000		$	192,333		$	—		$	—		$	—		$	295,333		$	298,153
Average Interest Rate		4.52	%		4.75	%		3.09	%		—			—			—			3.66	%

(1)	We define Centex as a supplemental presentation that reflects the Financial Services segment as if accounted for under the equity method.
(2)	These variable-rate notes in effect are fixed-rate instruments as a result of a hedge using interest rate swaps.

Financial Services

     Financial Services, through CTX Mortgage Company, LLC, enters into interest rate lock commitments, or IRLCs with its customers under which CTX Mortgage Company, LLC agrees to make mortgage loans at agreed upon rates within a period of time, generally from 1 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. Subsequent changes in the fair value of the IRLCs are recorded as an adjustment to earnings. To hedge the interest rate risk related to its IRLCs, CTX Mortgage Company, LLC executes mandatory forward trade commitments, or forward trade commitments. These forward trade commitments are not designated as hedges, and their fair value is recorded on the balance sheet in other assets or accrued liabilities. Subsequent changes in the fair value of these forward trade commitments are recorded as an adjustment to earnings.

     Financial Services originates and sells conforming and nonconforming “A” mortgages. CTX Mortgage Company, LLC sells substantially all the mortgage loans it originates to HSF-I at or near the date on which the loans were funded. CTX Mortgage Company, LLC also executes forward trade commitments to hedge the interest rate risk related to its portfolio of mortgage loans held for sale, including mortgage loans held by HSF-I. These forward trade commitments have been designated as fair value hedges. Accordingly, changes in the fair value of the forward trade

49

commitments and the mortgage loans, for which the hedge relationship is deemed effective, are recorded as an adjustment to earnings. To the extent the hedge is effective, gains or losses in the value of the hedged loans due to interest rate movement will be offset by an equal and opposite gain or loss in the value of the forward trade commitment. This will result in no impact to earnings. To the extent the hedge contains some ineffectiveness, the ineffectiveness is recognized immediately in earnings.

     Due to the high degree of liquidity in the “A” mortgage market and the frequency of loan sales, the use of forward sales is an effective economic hedge against changes in market value of both IRLCs and mortgage loans held for sale that result from changes in interest rates.

     The estimated maturities of Financial Services’ long-term debt outstanding at March 31, 2006 were as follows:

	Maturities through March 31,
	2007		2008		2009		2010			2011		Thereafter		Total			Fair Value
Financial Services (1) Variable-Rate Debt	$	—	$	—	$	—	$	60,000		$	—	$	—	$	60,000		$	60,093
Average Interest Rate		—		—		—		6.83	%		—		—		6.83	%

(1) We define Financial Services as a supplemental presentation that reflects Centex Financial Services, its subsidiaries and related companies.

     The estimated maturities of Financial Services’ long-term debt outstanding at March 31, 2005 were as follows:

	Maturities through March 31,
	2006		2007		2008		2009		2010			Thereafter		Total			Fair Value
Financial Services (1) Variable-Rate Debt	$	—	$	—	$	—	$	—	$	60,000		$	—	$	60,000		$	60,000
Average Interest Rate		—		—		—		—		4.87	%		—		4.87	%

(1) We define Financial Services as a supplemental presentation that reflects Centex Financial Services, its subsidiaries and related companies.

Discontinued Operations

     Home Equity uses interest rate swaps to hedge the market risk associated with the anticipated issuance of fixed-rate securitization debt used to finance sub-prime mortgages. Home Equity will generally hold mortgages in anticipation of securitization for up to 120 days. Home Equity also uses interest rate swaps that in effect converted $2.29 billion of its variable-rate debt outstanding into fixed-rate debt.

50

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Information

	Page
Consolidated Revenues and Operating Earnings by Line of Business		52
Statements of Consolidated Earnings		53
Consolidated Balance Sheets with Consolidating Details		54
Statements of Consolidated Cash Flows with Consolidating Details		56
Statements of Consolidated Stockholders’ Equity		58
Notes to Consolidated Financial Statements		60
Management’s Report on Internal Control Over Financial Reporting		91
Reports of Independent Registered Public Accounting Firm		92
Quarterly Results		94

51

Centex Corporation and Subsidiaries

Consolidated Revenues and Operating Earnings by Line of Business

(Dollars in thousands)

	For the Years Ended March 31,
	2006			2005			2004			2003			2002
Revenues
Home Building	$	12,272,203		$	9,359,741		$	7,519,039		$	5,922,724		$	4,972,172
		85	%		80	%		77	%		74	%		73	%
Financial Services		462,223			421,653			521,148			453,924			397,169
		3	%		4	%		5	%		5	%		6	%
Construction Services		1,606,609			1,738,603			1,596,335			1,517,851			1,296,024
		11	%		15	%		17	%		19	%		19	%
Other (1)		58,634			152,888			119,632			133,115			155,838
		1	%		1	%		1	%		2	%		2	%
	$	14,399,669		$	11,672,885		$	9,756,154		$	8,027,614		$	6,821,203
		100	%		100	%		100	%		100	%		100	%
Business Segment
Operating Earnings (2)
Home Building	$	1,905,812		$	1,378,818		$	965,872		$	631,327		$	474,297
		95	%		92	%		81	%		79	%		73	%
Financial Services		84,465			95,972			165,778			114,676			89,651
		4	%		6	%		14	%		14	%		14	%
Construction Services		26,838			23,524			16,413			30,718			36,225
		1	%		2	%		1	%		4	%		5	%
Other (1)		(9,400	)		5,566			42,458			23,703			51,426
		—			—			4	%		3	%		8	%
		2,007,715			1,503,880			1,190,521			800,424			651,599
		100	%		100	%		100	%		100	%		100	%
Corporate General and Administrative		100,155			82,877			105,529			60,289			50,189
Interest Expense		12,067			19,348			39,534			60,326			58,576
Earnings from Continuing Operations Before Income Taxes and Cumulative Effect of a Change in Accounting Principle	$	1,895,493		$	1,401,655		$	1,045,458		$	679,809		$	542,834

Applicable segment operating expenses have been deducted from business segment operating earnings.

(1)	Other Revenues and Other Business Segment Operating Earnings include intersegment eliminations.
(2)	Business Segment Operating Earnings include earnings from unconsolidated entities and exclude corporate general and administrative expense and interest expense.

52

Centex Corporation and Subsidiaries

Statements of Consolidated Earnings

(Dollars in thousands, except per share data)

	For the Years Ended March 31,
	2006		2005		2004
Revenues
Home Building	$	12,272,203	$	9,359,741	$	7,519,039
Financial Services		462,223		421,653		521,148
Construction Services		1,606,609		1,738,603		1,596,335
Other, including Intersegment Eliminations		58,634		152,888		119,632
		14,399,669		11,672,885		9,756,154
Costs and Expenses
Home Building		10,452,389		8,049,709		6,583,118
Financial Services		377,758		325,681		355,370
Construction Services		1,580,270		1,717,025		1,582,036
Other, including Intersegment Eliminations		68,034		147,322		91,689
Corporate General and Administrative		100,155		82,877		105,529
Interest Expense		12,067		19,348		39,534
		12,590,673		10,341,962		8,757,276
Earnings from Unconsolidated Entities		86,497		70,732		46,580
Earnings from Continuing Operations Before Income Taxes and Cumulative Effect of a Change in Accounting Principle		1,895,493		1,401,655		1,045,458
Income Taxes		674,472		502,113		342,108
Earnings from Continuing Operations Before Cumulative Effect of a Change in Accounting Principle		1,221,021		899,542		703,350
Earnings from Discontinued Operations, net of Tax Provision of $71,617, $60,292 and $15,926		68,292		111,822		137,596
Earnings Before Cumulative Effect of a Change in Accounting Principle		1,289,313		1,011,364		840,946
Cumulative Effect of a Change in Accounting Principle, net of Tax Benefit of $0, $0 and $8,303		—		—		(13,260	)
Net Earnings	$	1,289,313	$	1,011,364	$	827,686
Basic Earnings Per Share
Continuing Operations	$	9.62	$	7.19	$	5.70
Discontinued Operations		0.54		0.89		1.11
Cumulative Effect of a Change in Accounting Principle		—		—		(0.11	)
	$	10.16	$	8.08	$	6.70
Diluted Earnings Per Share
Continuing Operations	$	9.20	$	6.79	$	5.44
Discontinued Operations		0.51		0.85		1.06
Cumulative Effect of a Change in Accounting Principle		—		—		(0.10	)
	$	9.71	$	7.64	$	6.40
Average Shares Outstanding
Basic		126,870,887		125,226,596		123,382,068
Dilutive Securities:
Options		5,420,789		6,725,838		5,754,689
Other		458,121		445,527		256,064
Diluted		132,749,797		132,397,961		129,392,821
Cash Dividends Per Share	$	.16	$	.16	$	.10

See Notes to Consolidated Financial Statements.

53

Centex Corporation and Subsidiaries

Consolidated Balance Sheets with Consolidating Details

(Dollars in thousands)

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

See Notes to Consolidated Financial Statements.

54

Centex Corporation and Subsidiaries
Consolidated Balance Sheets with Consolidating Details
(Dollars in thousands)

Centex*						Financial Services
March 31,						March 31,
2006			2005			2006			2005
$	36,711		$	490,308		$	10,457		$	11,628
	70,824			53,339			64,653			34,896
	—			—			2,129,538			1,775,324
	361,393			302,035			—			—
	298,912			292,630			43,874			42,042
	8,433,994			6,234,005			—			—
	394,438			205,190			—			—
	817,881			456,917			—			—
	5,361			27,133			6,254			6,306
	310,384			163,944			—			—
	655,266			572,290			—			—
	160,611			116,487			22,146			24,443
	217,446			161,055			16,462			23,723
	206,998			204,800			11,737			11,737
	212,617			172,100			22,146			21,661
	—			677,260			7,510,162			8,502,116
$	12,182,836		$	10,129,493		$	9,837,429		$	10,453,876
$	977,608		$	569,100		$	15,228		$	20,509
	1,680,090			1,381,488			86,754			85,984
	3,982,193			3,107,917			—			—
	—			—			2,077,215			1,695,855
	—			—			(9,110	)		(44,958	)
	—			334,072			7,001,793			8,077,876
	531,287			456,159			1,173			1,362
	—			—			—			—
	34,132			33,327			1			1
	580,010			407,995			275,467			275,467
	—			(197	)		—			—
	5,251,325			3,982,306			380,206			333,568
	(862,439	)		(213,801	)		—			—
	8,630			71,127			8,702			8,212
	5,011,658			4,280,757			664,376			617,248
$	12,182,836		$	10,129,493		$	9,837,429		$	10,453,876

* In the supplemental data presented above, “Centex” represents the consolidation of all subsidiaries other than those included in Financial Services as described in Note (A), “Significant Accounting Policies.” Transactions between Centex and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets.

55

Centex Corporation and Subsidiaries

Statements of Consolidated Cash Flows with Consolidating Details

(Dollars in thousands)

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

See Notes to Consolidated Financial Statements.

(1)	Amount includes cash and cash equivalents of discontinued operations of $650 and $8,216 as of March 31, 2005 and 2004, respectively.
(2)	Amount includes cash and cash equivalents of discontinued operations of $787 and $650 as of March 31, 2006 and 2005, respectively.

56

Centex Corporation and Subsidiaries
Statements of Consolidated Cash Flows with Consolidating Details
(Dollars in thousands)

Centex *									Financial Services
For the Years Ended March 31,									For the Years Ended March 31,
2006			2005			2004			2006			2005			2004
$	1,289,313		$	1,011,364		$	827,686		$	119,385		$	126,078		$	132,845
	—			—			—			—			—			13,260
	48,081			40,444			60,426			14,988			17,815			17,351
	68,743			49,100			30,349			—			—			—
	—			—			—			94,319			98,801			79,503
	(55,196	)		(67,223	)		8,076			(72,503	)		60,686			9,727
	17,995			34,197			(50,518	)		—			—			—
	(46,638	)		(77,078	)		(58,345	)		—			—			—
	(126	)		(215	)		(8,051	)		(189	)		(173	)		(201	)
	(17,485	)		(2,899	)		(42,091	)		(17,317	)		(64,586	)		(88,595	)
	(88,073	)		(101,871	)		(54,366	)		(59	)		(19,504	)		(13,442	)
	—			—			—			(354,214	)		44,281			927,151
	(2,447,399	)		(1,928,261	)		(1,203,547	)		—			—			—
	(1,420	)		45,203			958			52			2,634			(494	)
	622,375			509,793			208,755			13,828			(64,676	)		(12,022	)
	(51,364	)		(28,561	)		(33,886	)		9,100			12,695			16,474
	—			—			—			35,848			(60,619	)		8,578
	(6,098	)		10,000			3,304			—			(3,231	)		—
	(667,292	)		(506,007	)		(311,250	)		(156,762	)		150,201			1,090,135
	24,937			(15,426	)		12,897			237			(324	)		334
	—			—			—			952,449			(1,515,072	)		(1,934,832	)
	(372,937	)		(223,857	)		(60,226	)		—			—			—
	218,544			181,099			110,055			—			—			—
	(36,338	)		36,729			(68,189	)		—			—			—
	(80,595	)		(23,294	)		(38,935	)		(11,639	)		(20,019	)		(14,823	)
	327,415			—			—			—			9,267			—
	(3,893	)		(6,067	)		(18,432	)		—			—			18,000
	77,133			(50,816	)		(62,830	)		941,047			(1,526,148	)		(1,931,321	)
	119,296			7,870			(25,257	)		645,244			363,360			(1,058,211	)
	972,028			1,034,509			404,998			—			—			—
	(343,322	)		(217,324	)		(164,073	)		—			—			—
	—			—			—			2,008,372			3,764,701			5,334,407
	—			—			—			(3,366,188	)		(2,709,105	)		(3,432,323	)
	58,971			87,797			58,599			—			—			—
	(648,638	)		(979	)		(167,785	)		—			—			—
	(20,294	)		(19,947	)		(13,601	)		(72,747	)		(49,000	)		500
	138,041			891,926			92,881			(785,319	)		1,369,956			844,373
	(1,479	)		(5,385	)		692			—			—			—
	(453,597	)		329,718			(280,507	)		(1,034	)		(5,991	)		3,187
	490,308			160,590			441,097			12,278			18,269			15,082
$	36,711		$	490,308		$	160,590		$	11,244		$	12,278		$	18,269

* In the supplemental data presented above, “Centex” represents the consolidation of all subsidiaries other than those included in Financial Services as described in Note (A), “Significant Accounting Policies.” Transactions between Centex and Financial Services have been eliminated from the Centex Corporation and Subsidiaries statements of cash flows.

57

Centex Corporation and Subsidiaries

Statements of Consolidated Stockholders’ Equity

(in thousands)

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

See Notes to Consolidated Financial Statements.

58

Centex Corporation and Subsidiaries
Statements of Consolidated Stockholders’ Equity
(in thousands)

						Accumulated
			Treasury			Other
Retained			Stock			Comprehensive
Earnings			at Cost			Income (Loss)			Total
$	2,597,078		$	(45,037	)	$	(5,991	)	$	2,657,846
	—			—			—			—
	—			—			—			30,349
	—			—			—			90,370
	(13,601	)		—			—			(13,601	)
	(420,274	)		—			—			(420,274	)
	—			(167,785	)		—			(167,785	)
	—			—			—			2,100
	827,686			—			—			827,686
	—			—			5,706			5,706
	—			—			36,864			36,864
	—			—			964			964
										871,220
	2,990,889			(212,822	)		37,543			3,050,225
	—			—			—			—
	—			—			—			49,100
	—			—			—			159,171
	(19,947	)		—			—			(19,947	)
	—			(979	)		—			(2,740	)
	1,011,364			—			—			1,011,364
	—			—			24,615			24,615
	—			—			8,969			8,969
										1,044,948
	3,982,306			(213,801	)		71,127			4,280,757
	—			—			—			—
	—			—			—			68,743
	—			—			—			116,433
	(20,294	)		—			—			(20,294	)
	—			(653,490	)		—			(653,490	)
	—			4,852			—			(7,307	)
	1,289,313			—			—			1,289,313
	—			—			263			263
	—			—			(62,760	)		(62,760	)
										1,226,816
$	5,251,325		$	(862,439	)	$	8,630		$	5,011,658

59

Centex Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

(A) SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

     The consolidated financial statements include the accounts of Centex Corporation and all subsidiaries, partnerships 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), “Indebtedness” and Note (G), “Land Held Under Option Agreements Not Owned and Other Land Deposits.” All significant intercompany balances and transactions have been eliminated.

     Balance sheet and cash flow data is presented in the following categories:

• Centex Corporation and Subsidiaries. This represents the consolidation of Centex, Financial Services and all of their consolidated subsidiaries, related companies and certain variable interest entities. The effects of transactions among related companies within the consolidated group have been eliminated.

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

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

     At March 31, 2006, certain operations have been classified as discontinued. Associated results of operations and financial position are separately reported for all periods presented. For additional information, refer to Note (P), “Discontinued Operations.” Information in these Notes to Consolidated Financial Statements, unless otherwise noted, do not include the accounts of discontinued operations.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

     Revenues from Home Building projects are recognized when homes are sold, profit is determinable, title passes to the buyer, and there are no significant outstanding obligations on the part of the buyer or seller. Revenues from land sales are recognized when payments of at least 20% of the total purchase price are received, the Company has no continuing obligations related to such land sold and the collection of any remaining receivables is reasonably assured.

     Net origination fees, mortgage servicing rights, and other revenues derived from the origination of mortgage loans are deferred and recognized when the related loan is sold to a third-party purchaser. Other revenues, including fees for title insurance and other services performed in connection with mortgage lending activities, are recognized as earned.

     Interest revenues on residential mortgage loans receivable are recognized as revenue using the interest (actuarial) method. Revenue accruals are suspended, except for revenue accruals related to insured mortgage loans, when the residential mortgage loan becomes contractually delinquent for 90 days or more. The accrual is resumed when the residential mortgage loan becomes less than 90 days contractually delinquent. At March 31, 2006 and 2005, residential mortgage loans, on which revenue was not being accrued, were approximately $19.0 million and $25.0 million, respectively.

     Long-term construction contract revenues are recognized on the percentage-of-completion method based on the costs incurred relative to total estimated costs. Full provision is made for any anticipated losses. Billings for long-term construction contracts are rendered monthly, including the amount of retainage withheld by the customer until contract completion. As a general contractor, the Company withholds similar retainages from each subcontractor.

60

Retainages of $101.1 million and $95.7 million included in construction contracts receivable and $98.6 million and $102.0 million included in accounts payable at March 31, 2006 and 2005, respectively, are generally receivable and payable within one year.

     Claims related to long-term construction contracts are recognized as revenue only after management has determined that the collection is probable and the amount can be reliably estimated. There are no claims included in revenues for the fiscal years ended March 31, 2006 and 2005 and 2004 (“fiscal year 2006,” “fiscal year 2005” and “fiscal year 2004”).

     For the Company’s home services operations, revenue is recognized at the time the services are rendered. For the Company’s investment real estate operations, property sales are recognized when a buyer has made an adequate cash down payment, all significant risks and rewards of ownership have been relinquished and title has transferred to the buyer. Sales revenues related to contractually obligated improvements of our investment real estate operations are deferred until such improvements have been completed.

Earnings Per Share

     Basic earnings per share are computed based on the weighted-average number of shares of common stock, par value $.25 per share (“Common Stock”), outstanding, including vested shares of restricted stock and vested deferred stock units under the long-term incentive plan. Diluted earnings per share are computed based upon the basic weighted-average number of shares plus the dilution of the stock options, unvested shares of restricted stock and unvested deferred stock units under the long-term incentive plan. Earnings per share calculations for all periods presented have been restated to give retroactive application to the March 12, 2004 two-for-one stock split effected in the form of a 100 percent stock dividend to Company stockholders of record on February 29, 2004.

     The following table provides information on anti-dilutive options excluded from the computation of diluted earnings per share for the fiscal years ended March 31, 2006 and 2005 and 2004 (shares reflected in thousands).

	For the Years Ended March 31,
	2006		2005		2004
Average outstanding shares		1,515		1,160		1,089
Average option exercise price		57.37		45.23		35.49

Cash and Cash Equivalents

     Cash equivalents represent highly liquid investments with an original maturity of three months or less when purchased.

Restricted Cash

     Restricted cash primarily consists of: (1) cash restricted pursuant to insurance related regulatory and other requirements, (2) required cash balances for Harwood Street Funding I, LLC (“HSF-I”), (3) other structured finance arrangements, and (4) customer deposits that are temporarily restricted in accordance with regulatory requirements.

Residential Mortgage Loans

     Residential mortgage loans held for sale represent mortgage loans originated by CTX Mortgage Company, LLC, which have been sold to and currently held by HSF-I or which will be sold to third parties. The carrying value of loans designated as hedged is adjusted for changes in the fair value to the extent the hedge is deemed effective. Unhedged loans or loans hedged ineffectively are stated at the lower of cost or market. Market is determined by forward sale commitments, current investor yield requirements and current market conditions. Substantially all of the mortgage loans are delivered to third-party purchasers within three months after origination. These loans are subject to hedge instruments during the time they are held in inventory. Substantially all of the mortgage loans are pledged as collateral for secured financings.

     CTX Mortgage Company, LLC has established a liability for anticipated losses associated with loans originated based upon, among other factors, historical loss rates and current trends in loan originations. This liability

61

includes losses associated with certain borrower payment defaults, credit quality issues, or misrepresentation and reflects management’s judgment of the loss exposure at the end of the reporting period.

     Although CTX Mortgage Company, LLC considers the loan origination reserve reflected in the Consolidated Balance Sheets at March 31, 2006 to be adequate, there can be no assurance that this reserve will prove to be sufficient over time to cover ultimate losses. This reserve may prove to be inadequate due to unanticipated adverse changes in the economy or discrete events adversely affecting specific customers or industries.

Trade Accounts and Notes Receivable

     Trade accounts receivable primarily consist of accrued interest, closed unfunded home sales receivables, insurance claims receivable and trade sales related to the Company’s Financial Services and Home Building segments and are net of an allowance for doubtful accounts. Notes receivable at March 31, 2006 are collectible primarily over five years with $29.4 million being due within one year. The weighted-average interest rate on notes receivable at March 31, 2006 was 4.5%.

Inventory, Capitalization and Segment Expenses

     Housing projects are stated at the lower of cost (including direct construction costs, capitalized interest and real estate taxes) or fair value less cost to sell. The relief of capitalized costs is included in the Home Building costs and expenses in the Statements of Consolidated Earnings when related revenues are recognized. A summary of Housing Projects is provided below:

	As of March 31,
	2006		2005
Direct Construction	$	3,218,138	$	2,246,301
Land Under Development		5,215,856		3,987,704
Housing Projects	$	8,433,994	$	6,234,005

     Home construction costs are accumulated on a specific identification basis. Under the specific identification basis, costs and expenses include all applicable land acquisition, land development and specific construction costs (including direct and indirect costs) of each home paid to third parties. Land acquisition, land development and home construction costs do not include employee related compensation and benefit costs. The specific construction and allocated land costs of each home are included in direct construction. Direct construction also includes amounts paid through the closing date of the home for construction materials and subcontractor costs, plus an accrual for estimated costs incurred but not yet paid, based on an analysis of budgeted construction costs. Any changes to the estimated total development costs identified subsequent to the initial home closings in a project are generally allocated to the remaining homes in the project. Land acquisition and land development costs are included in land under development. Land acquisition and development costs are estimated based on the total costs expected in a project.

     Land held for development and sale primarily consists of deposits for land purchases, related acquisition costs, and land that will not begin development in the next two years. To the extent the Company determines that it will not purchase a parcel of land, the deposit and related acquisition costs are charged to cost of sales. During the year ended March 31, 2006, $37.6 million of land was written-off. Included in the cost of land sales and other were write-offs of option deposits and pre-acquisition costs that were classified as land held for development and sale and the write-off of development costs for neighborhoods where all or substantially all homes had already been closed.

     General operating expenses associated with each segment of business are expensed when incurred and are included in the appropriate business segment.

Land Held Under Option Agreements Not Owned

     In order to ensure the future availability of land for homebuilding, the Company enters into lot option purchase agreements with unaffiliated third parties. Under the option agreements, the Company pays a stated deposit 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 obligate the Company to purchase the land. Land option deposits related to these options are also reclassified to land held under option agreements not owned. To

62

the extent we do not exercise our option to purchase such land, the amount of the land option deposit, any letters of credit, as well as development costs incurred to date, represent our maximum exposure to loss except in certain circumstances, which would not be material.

     The Company has evaluated those entities with which the Company entered into land option agreements in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities,” as revised (“FIN 46”). The provisions of FIN 46 require the Company to consolidate the financial results of a variable interest entity if the Company is the primary beneficiary of the variable interest entity. Variable interest entities are entities in which (1) equity investors do not have a controlling financial interest and/or (2) the entity is unable to finance its activities without additional subordinated financial support from other parties. The primary beneficiary of a variable interest entity is the owner or investor that absorbs a majority of the variable interest entity’s expected losses and/or receives a majority of the variable interest entity’s expected residual returns.

     The Company determines if it is the primary beneficiary of variable interest entities based upon analysis of the variability of the expected gains and losses of the variable interest entity. Expected gains and losses of the variable interest entity are highly dependent on management’s estimates of the variability and probabilities of future land prices, the probabilities of expected cash flows and the entitlement risks related to the underlying land, among other factors. Based on this evaluation, if the Company is the primary beneficiary of those entities with which we have entered into land option agreements, the variable interest entity is consolidated. For purposes of consolidation, to the extent financial statements are available, the Company consolidates the assets and liabilities of the variable interest entity. If financial statements for the variable interest entity are not available, the Company records the remaining purchase price of land in the Consolidated Balance Sheets under the caption, land held under option agreements not owned, with a corresponding increase in minority interests.

     In addition to land held under option agreements recorded pursuant to the provisions of FIN 46, to the extent the Company’s land option deposit exceeds certain thresholds, the Company recognizes the option arrangement by recording land at the total option purchase price and related obligation in accrued liabilities.

Investments in Joint Ventures

     The Company is a participant in certain joint ventures with interests ranging from 15.3% to 67.0%. Investments in joint ventures in which the Company’s interest exceeds 50% have been consolidated. The equity method of accounting is used for joint ventures over which the Company has significant influence but not control; generally this represents partnership equity or common stock ownership interests of at least 20% and not more than 50%. In determining whether the Company has control over its joint ventures, the Company also considers Emerging Issues Task Force (“EITF”) Issue No. 04-5 “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” (“EITF 04-5”). EITF 04-5 creates a framework for evaluating whether a general partner or a group of general partners controls a limited partnership whereby the presumption of general partner control would be overcome only when the limited partners have certain specific rights as outlined in EITF 04-5.

     The Company defers recognition of intercompany profits and losses until realized in a third party transaction. For the years ended March 31, 2006, 2005 and 2004, our home building operations deferred $26.9 million, $23.5 million and $11.5 million, respectively, related to profits associated with the Company’s land purchases from joint ventures.

     Prior to March 2004, the Company maintained an investment in Centex Development Company, L.P. and subsidiaries (the “Partnership”), accounted for under the equity method of accounting. In February 2004, we acquired the Partnership through merger. Subsequent to the merger, we have consolidated the Partnership. See Note (E), “Merger of 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. and Subsidiaries,” for additional information regarding the Partnership.

     The earnings or losses of the Company’s investment in the Partnership and joint ventures are included in the appropriate business segment.

63

Property and Equipment, net

     Property and equipment is carried at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful life of the asset. Depreciable lives for Buildings and Improvements typically range from 20 to 40 years; depreciable lives for Machinery, Equipment and Other typically range from two to ten years. Major renewals and improvements are capitalized and depreciated. Leasehold improvements are depreciated over the shorter of the estimated useful life or the life of the respective lease. Repairs and maintenance are expensed as incurred. Costs and accumulated depreciation applicable to assets retired or sold are eliminated from the accounts and any resulting gains or losses are recognized at such time.

Impairment of Long-Lived Assets

     The Company assesses housing projects, land held for development and sale and property and equipment for recoverability in accordance with the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. These evaluations for impairment are significantly impacted by estimates of revenues, costs and expenses and other factors. If long-lived assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No significant impairments of long-lived assets were recorded in fiscal years 2006, 2005 or 2004. See Note (A), “Significant Accounting Policies,” under the caption, “Inventory, Capitalization and Segment Expenses” for a discussion of inventory related write-offs.

Goodwill

     Goodwill represents the excess of purchase price over net assets of businesses acquired. Goodwill is subject to at least an annual assessment for impairment (conducted as of January 1), at the reporting unit level, by applying a fair value-based test. If the carrying amount exceeds the fair value, an impairment has occurred. We continually evaluate whether events and circumstances have occurred that indicate the remaining balance of goodwill may not be recoverable. Fair value is estimated using a discounted cash flow or market valuation approach. Such evaluations for impairment are significantly impacted by estimates of future revenues, costs and expenses and other factors. If the goodwill is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the goodwill exceeds the fair value. The Company had no impairment of goodwill in fiscal years 2006, 2005 or 2004. See further discussion of goodwill at Note (C), “Goodwill.”

Deferred Charges and Other

     Deferred charges and other are primarily composed of prepaid expenses, deposits, financing costs, investments, acquisition intangibles, and interest rate lock commitments.

Advertising Costs

     Advertising costs are expensed as incurred. Advertising costs for fiscal years 2006, 2005 and 2004 were $115.2 million, $86.5 million and $71.0 million, respectively.

Off-Balance Sheet Obligations

     The Company enters into various “off-balance-sheet” transactions in the normal course of business in order to facilitate homebuilding activities. Further discussion regarding these transactions can be found in Note (F), “Commitments and Contingencies.”

Insurance Accruals

     We have certain deductible limits under our workers’ compensation, automobile and general liability insurance policies for which reserves are actuarially determined based on claims filed and an estimate of claims incurred but not yet reported. Projection of losses concerning these liabilities is subject to a high degree of variability due to factors such as claim settlement patterns, litigation trends and legal interpretations, among others. The Company periodically assesses the adequacy of its insurance accruals and adjusts the amounts as necessary. Although we consider the insurance accruals reflected in our consolidated balance sheet to be adequate, there can be no

64

assurance that this accrual will prove to be sufficient over time to cover ultimate losses. Expenses associated with insurance claims up to our deductible limits were $73.6 million, $51.3 million and $41.7 million for fiscal years 2006, 2005 and 2004, respectively. As of March 31, 2006 and 2005, accrued insurance included in accrued liabilities in the accompanying Consolidated Balance Sheets was $166.0 million and $117.8 million, respectively.

Stock-Based Employee Compensation Arrangements

     On April 1, 2003, the Company adopted the fair value measurement provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), under which the Company recognizes compensation expense of a stock option award to an employee over the vesting period based on the fair value of the award on the grant date. The fair value method has been applied to awards granted or modified on or after April 1, 2003 (the prospective method). Awards granted prior to such date continued to be accounted for in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”), and related interpretations, until the modification of those awards described in the following paragraph.

     On January 30, 2004, the Company modified all of its outstanding stock options and stock units in order to keep the holders in the same economic position as before the spin-off of Centex Construction Products, Inc. (“Construction Products”). This adjustment was a modification, which resulted in a reduction of the option exercise price and an increase in the number of shares covered by the options or stock units under the provisions of SFAS No. 123 and, accordingly, compensation expense of $12.2 million was expensed over the remaining vesting periods. The $12.2 million in compensation expense represented the unamortized grant date Black-Scholes fair value of unvested options as of January 30, 2004. Subsequent to January 30, 2004, the Company has no outstanding options or other stock rights accounted for under the provisions of APB No. 25. In December 2004, the FASB issued a revision to SFAS No. 123.

     Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R) entitled “Share-Based Payment,” (“SFAS 123R”) using the modified-prospective transition method. Accordingly, prior periods have not been restated. The adoption of SFAS 123R was not significant and had no effect on basic and diluted earnings per share for the three months ended March 31, 2006.

     Prior to the adoption of SFAS 123R, the Company presented all tax benefits related to deductions resulting from the exercise of stock options as operating activities in the Consolidated Statements of Cash Flows. SFAS 123R requires that cash flows resulting from tax benefits related to tax deductions in excess of the compensation expense recognized for those options (excess tax benefits) be classified as financing cash flows. As a result, the Company classified $18.8 million of excess tax benefits as financing cash inflows for the three months ended March 31, 2006.

     The following information represents the Company’s annual grants of stock-based compensation to employees or directors (in thousands):

		Number of
Month/		Shares		Fair Value
Year of Grant	Grant Type	Granted		of Grant
May 2003	Stock Options		3,141.3	$	35,145.6
May 2004	Stock Options		1,820.2	$	31,344.4
May 2005	Stock Options		1,716.2	$	39,301.2
May 2003	Stock Units		867.4	$	27,615.3
May 2004	Stock Units		601.0	$	27,190.8
May 2005	Stock Units		556.6	$	31,926.9
May/July 2003	Restricted Stock		124.9	$	4,439.1
May/July 2004	Restricted Stock		80.9	$	3,633.7
May/July 2005	Restricted Stock		249.4	$	14,551.1

     Stock units and restricted stock are recognized as compensation expense over the vesting period based on the fair market value of the Company’s stock on the date of grant. The fair value of stock options granted is calculated under the Black-Scholes option-pricing model, and is recognized as compensation over the vesting period.

65

     The following pro forma information reflects the Company’s net earnings and earnings per share as if compensation cost for all stock option plans and other equity-based compensation programs had been determined based upon the fair value at the date of grant for awards outstanding in fiscal years 2006, 2005 and 2004, consistent with the provisions of SFAS No. 123.

	For the Years Ended March 31,
	2006			2005			2004
Net Earnings — as Reported	$	1,289,313		$	1,011,364		$	827,686
Stock-Based Employee Compensation Included in Reported Net Income, net of Related Tax Effects		44,683			31,902			19,727
Total Stock-Based Employee Compensation Expense Determined Under Fair Value Based Method, net of Related Tax Effects		(44,683	)		(31,902	)		(31,580	)
Pro Forma Net Earnings	$	1,289,313		$	1,011,364		$	815,833
Earnings Per Share:
Basic — as Reported	$	10.16		$	8.08		$	6.70
Basic — Pro Forma	$	10.16		$	8.08		$	6.61
Diluted — as Reported	$	9.71		$	7.64		$	6.40
Diluted — Pro Forma	$	9.71		$	7.64		$	6.29

Income Taxes

     The Company accounts for income taxes on the deferral method whereby deferred tax assets and liabilities are recognized for the consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

Interest Expense

     Interest expense relating to 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. Interest expense related to segments other than Financial Services and Home Building is included as a separate line item on the Statements of Consolidated Earnings.

	For the Years Ended March 31,
	2006			2005			2004
Total Interest Incurred	$	305,217		$	225,613		$	176,456
Less — Interest Capitalized		(227,246	)		(174,116	)		(114,997	)
Financial Services Interest Expense		(65,904	)		(32,149	)		(21,925	)
Interest Expense, net	$	12,067		$	19,348		$	39,534
Capitalized Interest Relieved to Home Building’s Costs and Expenses	$	169,887		$	131,937		$	89,144

Statements of Consolidated Cash Flows — Supplemental Disclosures

     In accordance with the provisions of SFAS No. 95, “Statement of Cash Flows,” the Statements of Consolidating Cash Flows have not been restated for discontinued operations. For further information on Home Equity and the sale of our international homebuilding operations, see Note (P), “Discontinued Operations.” As a result, all international homebuilding cash flows are included with the Centex cash flows and all Home Equity cash flows are included with the Financial Services cash flows.

66

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

	For the Years Ended March 31,
	2006		2005		2004
Cash Paid for Interest	$	656,525	$	460,012	$	362,167
Net Cash Paid for Taxes	$	772,153	$	366,411	$	356,853

     In September 2005, the Company sold its international homebuilding operations to an unrelated third party. The sales price was based on international homebuilding operations’ net assets as defined in the sale and purchase agreement. In December 2005, the sales price was adjusted based upon the international homebuilding operations’ net asset value, as defined as of the closing date. Total cash proceeds received in the sale were $318.7 million. Net proceeds received on the disposition of the international homebuilding operations may be adjusted based upon the filing of its statutory tax return. Additionally, the Company has indemnified the purchaser for certain contingencies. The Company does not believe such contingencies would be material to the Company’s results of operations or financial position. The net loss on sale of these operations is summarized below:

Sales Proceeds	$	318,717
Assets Sold		(632,956	)
Liabilities Assumed by Buyer		118,951
Long-term Debt Assumed by Buyer		153,434
Cumulative Foreign Currency Gain		48,354
Pre-tax Gain on Sale		6,500
Income Tax Expense		(15,660	)
Net Loss on Sale	$	(9,160	)

     Effective July 1, 2003, the Company consolidated HSF-I pursuant to the provisions of FIN 46, as discussed in Note (D), “Indebtedness.” As of July 1, 2003, the cumulative effect of a change in accounting principle recorded was $13.3 million, net of tax. As of July 1, 2003, assets and liabilities consolidated were as follows:

Cash and Cash Equivalents	$	18,000
Residential Mortgage Loans Held for Sale		2,443,428
Other Assets		(36,100	)
Accounts Payable		20,910
Financial Services Debt		(2,459,498	)
Cumulative Effect of a Change in Accounting Principle	$	(13,260	)

     As explained in Note (G), “Land Held Under Option Agreements not Owned and Other Land Deposits” pursuant to the provisions of FIN 46, as of March 31, 2006 and 2005, the Company consolidated $653.3 million and $415.4 million, respectively, of lot option agreements and recorded $89.1 million and $41.5 million, respectively, of deposits related to these options as land held under option agreements not owned. In addition, the Company recorded $75.5 million as of March 31, 2006, of lot option agreements for which the Company’s deposits exceeded certain thresholds.

Recent Accounting Pronouncements

     In December 2004, the FASB issued a revision to SFAS No. 123, SFAS 123R. Share-based payments are transactions in which an enterprise receives employee services in exchange for (1) equity instruments of the enterprise or (2) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123R requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees, but expresses no preference for a type of valuation model. SFAS 123R supersedes APB No. 25 and is effective for annual periods beginning after June 15, 2005. The Company adopted SFAS 123R effective January 1, 2006, and it did not have a material impact on the Company’s results of operations or financial position.

67

     In December 2004, the FASB issued Staff Position 109-1 (“FSP 109-1”), Application of FASB Statement No. 109, which clarified that the tax deduction on qualified production activities provided by the American Jobs Creation Act of 2004 should be accounted for as a special deduction and will reduce tax expense in the period or periods during which the amounts are deductible on the tax return. The new tax deduction for qualified production activities was effective for the Company’s fiscal year ended March 31, 2006. For further information on this deduction, see Note (J), “Income Taxes.”

Reclassifications

     Certain prior year balances have been reclassified to conform to the fiscal year 2006 presentation, including reclassification of distribution of earnings from joint ventures to cash flows from operating activities and reclassifications of discontinued operations.

(B) PROPERTY AND EQUIPMENT

     Property and equipment cost by major category and accumulated depreciation are summarized below:

	March 31,
	2006			2005
Land, Buildings and Improvements	$	120,279		$	87,432
Machinery, Equipment and Other		242,519			225,261
		362,798			312,693
Accumulated Depreciation and Amortization		(180,041	)		(171,763	)
	$	182,757		$	140,930

     The Company had depreciation and amortization expense related to property and equipment of $44.6 million, $40.9 million, and $40.4 million for fiscal years 2006, 2005, and 2004, respectively.

(C) GOODWILL

     A summary of changes in goodwill by segment for the years ended March 31, 2006 and 2005 are presented below:

	Home			Financial			Construction
	Building			Services			Services		Other			Total
Balance as of March 31, 2004	$	123,011		$	16,602		$	1,007	$	78,042		$	218,662
Goodwill Acquired		—			—			—		4,402			4,402
Goodwill Disposed		—			(4,865	)		—		—			(4,865	)
Other		(1,510	)		—			—		(152	)		(1,662	)
Balance as of March 31, 2005		121,501			11,737			1,007		82,292			216,537
Goodwill Acquired		—			—			—		2,198			2,198
Balance as of March 31, 2006	$	121,501		$	11,737		$	1,007	$	84,490		$	218,735

     Goodwill for the Other segment at March 31, 2006 and 2005 is related to the Company’s home services operations.

68

(D) INDEBTEDNESS

     A summary of the balances of short-term and long-term debt (debt instruments with original maturities greater than one year) and weighted-average interest rates at March 31 is presented below. Due dates are presented in fiscal years. Centex, in this note, refers to the consolidation of all subsidiaries and certain debt of variable interest entities other than those included in Financial Services.

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

     Centex’s short-term debt as of March 31, 2006 consisted of commercial paper of $125.0 million and land and land related acquisition notes of $2.2 million. Centex’s short-term debt as of March 31, 2005 consisted of $7.9 million in land acquisition notes. Other indebtedness includes $161.2 million of debt at a weighted-average rate of approximately 9.73% held by variable interest entities, for which the Company has determined it is the primary beneficiary and which has been consolidated pursuant to FIN 46. Variable interest entities’ debt does not have recourse to the Company, and the consolidation of this debt has not changed the Company’s debt ratings. The Company does not guarantee the payment of any variable interest entities’ debt.

69

     The weighted-average interest rates for short-term and long-term debt during the years ended March 31, 2006, 2005, and 2004 were:

	For the Years Ended March 31,
	2006			2005			2004
Short-term Debt
Centex		4.23	%		2.05	%		1.26	%
Financial Services		4.04	%		1.95	%		1.25	%
Long-term Debt:
Centex
Medium-term Note Programs (1)		5.54	%		5.41	%		5.30	%
Senior Notes		5.90	%		6.47	%		6.87	%
Other Indebtedness		5.44	%		5.22	%		3.62	%
Subordinated Debentures		8.56	%		8.06	%		8.06	%
Financial Services
Harwood Street Funding I, LLC Variable-Rate Subordinated Extendable Certificates		5.85	%		3.58	%		2.56	%

(1) Interest rates include the effects of an interest rate swap agreement.

     Maturities of Centex’s and Financial Services’ long-term debt during the next five years ending March 31 are:

			Financial
	Centex		Services		Total
2007	$	292,465	$	—	$	292,465
2008		629,673		—		629,673
2009		208,650		—		208,650
2010		225,073		60,000		285,073
2011		700,066		—		700,066
Thereafter		1,799,100		—		1,799,100
	$	3,855,027	$	60,000	$	3,915,027

     Under Centex Corporation’s bank credit facilities, the Company is required to maintain certain leverage and interest coverage ratios and a minimum tangible net worth. At March 31, 2006, the Company was in compliance with all of these covenants.

70

Credit Facilities

     The Company’s existing credit facilities and available borrowing capacity as of March 31, 2006 are summarized below:

	Existing Credit		Available
	Facilities		Capacity
Centex
Multi-Bank Revolving Credit Facility
Revolving Credit	$	1,000,000	$	875,000
Letters of Credit		500,000		111,680
		1,500,000		986,680	(1) (2)
Unsecured Credit Facilities		350,000		350,000	(3)
		1,850,000		1,336,680
Financial Services
Secured Credit Facilities		940,000		560,023	(4)
Harwood Street Funding I, LLC Facility		3,000,000		1,244,000
		3,940,000		1,804,023
Discontinued Operations
Mortgage Servicer Advance Facility		100,000		17,653	(5)
Harwood Street Funding II, LLC Facility		4,000,000		2,917,134	(6)
		4,100,000		2,934,787
	$	9,890,000	$	6,075,490	(7)

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

CTX Mortgage Company, LLC and Harwood Street Funding I, LLC

     Mortgage loans held for sale are primarily funded by CTX Mortgage Company, LLC’s sale of substantially all the mortgage loans it originates to HSF-I, pursuant to a mortgage loan purchase agreement, as amended (the “HSF-I Purchase Agreement”). Under the terms of the HSF-I Purchase Agreement, CTX Mortgage Company, LLC

71

may elect to sell to HSF-I, and HSF-I is obligated to purchase from CTX Mortgage Company, LLC, mortgage loans that satisfy certain eligibility criteria and portfolio requirements. HSF-I’s commitment to purchase eligible mortgage loans continues in effect until the occurrence of certain termination events described in the HSF-I Purchase Agreement. At March 31, 2006, the maximum amount of mortgage loans that HSF-I is allowed to carry in its inventory under the HSF-I Purchase Agreement is $3.0 billion. When HSF-I acquires mortgage loans, it typically holds them on average approximately 60 days and then resells them into the secondary market. In accordance with the HSF-I Purchase Agreement, CTX Mortgage Company, LLC acts as servicer of the loans owned by HSF-I and arranges for the sale of the eligible mortgage loans into the secondary market. HSF-I obtains the funds needed to purchase eligible mortgage loans from CTX Mortgage Company, LLC by issuing (1) short-term secured liquidity notes, (2) medium-term debt and (3) subordinated certificates. As of March 31, 2006, HSF-I had outstanding (1) short-term secured liquidity notes rated A1+ by Standard & Poor’s, or S&P, and P-1 by Moody’s Investors Service, or Moody’s and (2) subordinated certificates maturing in September 2009, extendable for up to five years, rated BBB by S&P and Baa2 by Moody’s. The purposes of this arrangement are to allow CTX Mortgage Company, LLC to reduce funding costs associated with its originations, to improve its liquidity and to eliminate credit risks associated with mortgage warehousing.

     In January 2003, the FASB issued FIN 46, which modified the accounting for certain entities in which (1) equity investors do not have a controlling financial interest and/or (2) the entity is unable to finance its activities without additional subordinated financial support from other parties. Pursuant to FIN 46, HSF-I is a variable interest entity for which the Company is the primary beneficiary. Accordingly, HSF-I was consolidated in the Company’s financial statements beginning July 1, 2003. Prior to the implementation of FIN 46, HSF-I was not consolidated in the Company’s financial statements. As a result of the consolidation of HSF-I, the Company recorded a cumulative effect of a change in accounting principle of $13.3 million, net of tax, in the quarter ended September 30, 2003. The consolidation of HSF-I resulted in an increase in the Company’s residential mortgage loans held for sale with a corresponding increase in the Company’s debt. In addition, interest income and interest expense of HSF-I subsequent to June 30, 2003, are reflected in the Company’s financial statements. Because HSF-I is a consolidated entity as of July 1, 2003, all transactions between the Company and HSF-I subsequent to June 30, 2003 have been eliminated in consolidation.

     HSF-I has entered into a swap arrangement with a bank (the “Harwood Swap”) under which the bank has agreed to make certain payments to HSF-I and HSF-I has agreed to make certain payments to the bank, the net effect of which is that the bank has agreed to bear certain interest rate risks, non-credit related market risks and prepayment risks related to the mortgage loans held by HSF-I. The purpose of this arrangement is to provide credit enhancement to HSF-I by permitting it to hedge these risks with a counterparty having a short-term credit rating of A1+ from S&P and P-1 from Moody’s. However, the Company effectively bears all interest rate risks, non-credit related market risks and prepayment risks that are the subject of the Harwood Swap because Centex has entered into a separate swap arrangement with the bank pursuant to which Centex has agreed to pay to the bank all amounts that the bank is required to pay to HSF-I pursuant to the Harwood Swap plus a monthly fee equal to a percentage of the notional amount of the Harwood Swap. Additionally, the bank is required to pay to Centex all amounts that the bank receives from HSF-I pursuant to the Harwood Swap. Financial Services executes the forward sales of CTX Mortgage Company, LLC’s mortgage loans to hedge the risk of reductions in value of mortgages sold to HSF-I or maintained under secured financing agreements. This offsets the majority of the Company’s risk as the counterparty to the swap supporting the payment requirements of HSF-I. See additional discussion of interest rate risks in Note (L), “Derivatives and Hedging.” The Company is also required to reimburse the bank for certain expenses, costs and damages that it may incur.

     HSF-I’s debt and subordinated certificates do not have recourse to the Company, and the consolidation of this debt and subordinated certificates has not changed the Company’s debt ratings. The Company does not guarantee the payment of any debt or subordinated certificates of HSF-I and is not liable for credit losses relating to securitized residential mortgage loans sold to HSF-I. However, the Company retains certain risks related to the portfolio of mortgage loans held by HSF-I. In particular, CTX Mortgage Company, LLC makes representations and warranties to HSF-I to the effect that each mortgage loan sold to HSF-I satisfies the eligibility criteria and portfolio requirements discussed above. CTX Mortgage Company, LLC may be required to repurchase mortgage loans sold to HSF-I if such mortgage loans are determined to be ineligible loans or there occur certain other breaches of representations and warranties of CTX Mortgage Company, LLC, as seller or servicer. CTX Mortgage Company, LLC’s obligations as servicer, including its obligation as servicer to repurchase such loans, are guaranteed by Centex Corporation. CTX Mortgage Company, LLC records a liability for its estimated losses for these obligations and such amount is included in its loan origination reserve. CTX Mortgage Company, LLC and its related companies sold $11.8 billion and $9.33 billion of mortgage loans to investors during the years ended March 31, 2006 and 2005, respectively. CTX Mortgage Company, LLC and its related companies recognized gains on sales of mortgage loans and related derivative activity

72

of $164.8 million, $141.7 million and $245.9 million for the years ended March 31, 2006, 2005 and 2004, respectively.

     In the event Financial Services is unable to finance its inventory of loans through HSF-I, it would draw on other existing credit facilities. In addition, Financial Services would need to make other customary financing arrangements to fund its mortgage loan origination activities. Although the Company believes that Financial Services could arrange for alternative financing that is common for non-investment grade 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.

(E) MERGER OF 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES

     Prior to February 2004, the common stock of 3333 Holding Corporation (“Holding”) and warrants to purchase limited partnership interests in Centex Development Company, L.P. (“the Partnership”) were traded in tandem with our common stock. The Company held an ownership interest in the Partnership, which was reported on the equity method of accounting.

     On February 29, 2004, the Company completed the acquisition of Holding and the Partnership through a series of transactions, which included mergers with the Company’s subsidiaries. These transactions terminated the tandem trading relationship between the Company’s common stock and the common stock of Holding, as well as the stockholder warrants of the Partnership. For their interests in the securities of Holding and the Partnership, the Company’s stockholders of record on February 29, 2004 received an amount equal to $0.02 per share of the Company’s common stock, totaling approximately $1.2 million, which was paid on March 10, 2004. Operations of Holding and the Partnership have been consolidated in the Company’s results of operations subsequent to March 1, 2004.

(F) COMMITMENTS AND CONTINGENCIES

     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, and partnering with other 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.

     A summary of the Company’s Home Building joint ventures is presented below:

	As of March 31,
	2006		2005
Number of Joint Ventures		52		41
Investment in Joint Ventures	$	307,779	$	160,871
Total Joint Venture Debt	$	1,053,201	$	426,335
Centex’s Share of Joint Venture Debt:
Based on Centex’s Ownership Percentage	$	388,428	$	160,061
Based on Limited Debt Recourse Provisions:
Limited Maintenance Guarantee (1) (2)	$	228,603	$	132,078
Repayment Guarantee (2) (3)		8,136		7,751
Total Limited Debt Recourse	$	236,739	$	139,829

(1)	The Company has guaranteed that certain of the joint ventures will maintain a specified loan to value ratio. The Company could be requested to contribute additional capital to these joint ventures to the extent the loan to value ratio falls below the specified ratio. The Company has not been requested to perform under a limited maintenance guarantee, and it does not anticipate that any capital contributions will be made in future periods under these guarantees.
(2)	These amounts represent the Company’s maximum exposure based on the joint ventures’ debt at each respective date.
(3)	The Company has guaranteed repayment of a portion of certain joint venture debt limited to its ownership percentage of the joint venture or a percentage thereof.

73

     Debt agreements for joint ventures vary by lender in terms of structure and level of recourse. For certain of the joint ventures the Company is also liable on a contingent basis, through other guarantees, letters of credit or other arrangements, with respect to a portion of the construction debt. 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 development. To the extent development costs exceed amounts available under the joint venture’s credit facility, the Company would be liable for incremental costs to complete development. Additionally, the Company has agreed to indemnify the construction lender for certain environmental liabilities with respect to the project for most joint ventures, and most guarantee arrangements require that the Company is liable for its proportionate share of the outstanding debt if the joint venture files for voluntary bankruptcy. The Company has not been requested to perform under any of these guarantees, and it does not anticipate that any capital contributions will be made in future periods related to such arrangements.

     The Company also has investments in joint ventures related to its Construction Services and Other segments totaling $2,605 and $3,073 as of March 31, 2006 and 2005, respectively.

     In the normal course of business, the Company issues letters of credit and surety bonds pursuant to certain performance related obligations, as security for certain land option purchase agreements of the Home Building segment and under various insurance programs. The Company does not believe that any outstanding letters of credit or bonds will be drawn upon.

     A summary of the Company’s outstanding letters of credit and surety bonds as of March 31, 2006 is presented below (dollars in millions):

	Letters of Credit		Surety Bonds
Home Building	$	258.5	$	1,342.0	(1)
Financial Services		0.7		9.9
Construction Services		37.3		4,391.2	(2)
Other		92.2		0.1
Discontinued Operations		—		7.5
	$	388.7	$	5,750.7

(1)	The Company estimates that $731.4 million of work remains to be performed on these projects.
(2)	The Company estimates that $2,256.4 million of work remains to be performed on these projects.

     In the normal course of its business, the Company issues certain representations, warranties and guarantees related to its home sales, land sales, building sales, commercial construction and mortgage loan originations. The Company believes that it has established the necessary accruals for these representations, warranties and guarantees. See further discussion on our warranty liability below.

     Home Building offers a ten-year limited warranty for most homes constructed and sold in the United States. The warranty covers defects in materials or workmanship in the first two years of the customer’s ownership of the home and certain designated components or structural elements of the home in the third through tenth years. Prior to April 1, 2004, Home Building’s warranties for non-structural defects in materials or workmanship covered the first year. 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’s 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.

74

     Changes in Home Building’s contractual warranty liability at March 31 are as follows:

	As of March 31,
	2006			2005
Balance at Beginning of Period	$	34,961		$	16,683
Warranties Issued		53,036			49,348
Settlements Made		(40,173	)		(31,070	)
Change in Liability of Pre-Existing Warranties, Including Expirations		(625	)		—
Balance at End of Period	$	47,199		$	34,961

     CTX Mortgage Company, LLC has established a liability for anticipated losses associated with loans originated. Changes in CTX Mortgage Company, LLC’s mortgage loan origination reserve at March 31 are as follows:

	As of March 31,
	2006			2005
Balance at Beginning of Period	$	18,803		$	25,045
Provisions for Losses		2,618			557
Settlements		(2,921	)		(6,799	)
Balance at End of Period	$	18,500		$	18,803

     In January 2003, the Company received a request for information from the United States Environmental Protection Agency (“EPA”) pursuant to Section 308 of the Clean Water Act seeking information about storm water pollution prevention practices at projects that Centex subsidiaries had completed or were building. Subsequently, the EPA limited its request to Home Building and 30 communities. Home Building has provided the requested information and the United States Department of Justice (the “Justice Department”), acting on behalf of the EPA, has asserted that some of these and certain other communities (including one of Construction Services’ projects) have violated regulatory requirements applicable to storm water discharges, and that injunctive relief and civil penalties may be warranted. Home Building and Construction Services believe they have defenses to the allegations made by the EPA and are exploring methods of settling this matter. In any settlement, the Justice Department will want Centex to pay civil penalties and sign a consent decree affecting Centex’s storm water pollution prevention practices at construction sites.

     On November 23, 2004, Miami-Dade County, Florida filed suit against Centex-Rooney Construction Co., a wholly-owned subsidiary of Centex Corporation; John J. Kirlin, Inc.; and M. C. Harry and Associates, Inc., in the County’s Circuit Court of the Eleventh Judicial Circuit. Miami-Dade County alleges that, in the course of performing or managing construction work on Concourse F at the Miami International Airport, the defendants caused a jet fuel line rupture on or about July 30, 1987, which resulted in the contamination of soil, groundwater and surface water in and around airport Concourse F. Miami-Dade County seeks damages of approximately $8.0 million for its costs incurred to date and for expected future costs, civil penalties and an order requiring the defendants to address remaining contamination. Centex believes it has substantial defenses to Miami-Dade County’s claims, including waiver and release and statute of limitations defenses. Centex also believes insurance coverage may be available to cover defense costs and any potential damages.

     In December 2004, certain present and former employees of Centex Home Equity Company, LLC commenced a collective action lawsuit in the United States District Court for Northern District of Georgia. In this litigation, plaintiffs seek to recover unpaid overtime compensation under the Fair Labor Standards Act. This lawsuit is currently in its preliminary stages, and the Company intends to vigorously defend against the claims asserted by the plaintiffs. As discussed elsewhere in this report, the Company has signed a definitive agreement to sell Home Equity to an unrelated third party. If the proposed sale of Home Equity is consummated, the Company has agreed to indemnify the purchaser against all losses and expenses arising out of this lawsuit in excess of the amount of the reserves therefor established on the books of Home Equity at the time of the closing of the sale transaction.

     The Company does not believe that the above matters will have a material impact on the Company’s consolidated results of operations or financial position.

75

     In the normal course of its business, the Company and/or its subsidiaries are named as defendants in certain suits filed in various state and federal courts. Management believes that none of the litigation matters in which the Company or any subsidiary is involved would have a material adverse effect on the consolidated financial condition or operations of the Company.

     The Company leases certain office facilities and other equipment under operating leases. Future minimum payments under the noncancelable leases are as follows: 2007 — $66.7 million; 2008 - - $59.7 million; 2009 — $50.6 million; 2010 — $42.8 million; 2011 — $30.7 million and thereafter - $44.3 million.

     Rental expense for the years ended March 31, 2006, 2005 and 2004 was $76.3 million, $49.6 million and $46.7 million, respectively.

(G) LAND HELD UNDER OPTION AGREEMENTS NOT OWNED AND OTHER LAND DEPOSITS

     In order to ensure the future availability of land for homebuilding, the Company enters into land option purchase agreements. Under the option agreements, the Company pays a stated deposit 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 obligate the Company to purchase the land, and expire at various dates through the year 2015.

     The Company has determined that in accordance with the provisions of FIN 46, it is the primary beneficiary of certain land option agreements at March 31, 2006. As a result, the Company recorded $653.3 million and $415.4 million of land as inventory under the caption land held under option agreements not owned, with a corresponding increase to minority interests as of March 31, 2006 and 2005, respectively. The following table summarizes the Company’s investment in land option agreements and their total purchase price/dollars in millions:

	As of March 31,		As of March 31,
	2006		2005
Cash Deposits included in:
Land Held for Development and Sale	$	246.2	$	141.9
Land Held Under Option Agreements Not Owned		89.1		41.5
Total Cash Deposits in Inventory		335.3		183.4
Letters of Credit		29.0		40.4
Total Invested through Deposits or Secured with Letters of Credit	$	364.3	$	223.8
Total Purchase Price of Land Option Agreements	$	9,930.2	$	7,340.5

     In addition, the Company recorded $75.5 million as of March 31, 2006, of lot option agreements for which the Company’s deposits exceeded certain thresholds.

(H) COMPREHENSIVE INCOME

     Comprehensive income is summarized below:

	For the Years Ended March 31,
	2006			2005		2004
Net Earnings	$	1,289,313		$	1,011,364	$	827,686
Other Comprehensive Income (Loss), net of Tax:
Unrealized Gain on Hedging Instruments		263			24,615		5,706
Foreign Currency Translation Adjustments		(14,406	)		8,969		36,864
Foreign Currency Gain Reclassified to Net Earnings		(48,354	)		—		—
Other		—			—		964
Comprehensive Income	$	1,226,816		$	1,044,948	$	871,220

     The unrealized gain on hedging instruments represents the deferral in other comprehensive income (loss) of the unrealized gain on interest rate swap agreements designated as cash flow hedges. The accounting for interest rate swaps and other derivative financial instruments in place as of March 31, 2006 is discussed in detail in Note (L), “Derivatives and Hedging.” Unrealized gain on hedging instruments also includes other comprehensive loss of $4,370

76

related to terminated hedges executed in connection with the anticipated issuance of fixed-rate debt. This other comprehensive loss will be recognized in earnings over the remaining term of the respective fixed-rate debt. Accumulated other comprehensive income associated with Home Equity as of the date of disposition will be reclassified into earnings. The foreign currency translation adjustments were reclassified to earnings from discontinued operations in connection with the sale of the Company’s international homebuilding operations. Other consists of the unrealized gain on investments, which represents mark to market adjustments to securities available for sale by the Company.

     The components of accumulated other comprehensive income are as follows:

	As of March 31, 2006
	Before Tax						Net-of-Tax
	Amount			Tax Expense			Amount
Unrealized Gain on Hedging Instruments	$	14,060		$	(5,358	)	$	8,702
Foreign Currency Translation Adjustments		(72	)		—			(72	)
Accumulated Other Comprehensive Income	$	13,988		$	(5,358	)	$	8,630

(I) BUSINESS SEGMENTS

     As of March 31, 2006, the Company operated in three principal business segments: Home Building, Financial Services and Construction Services. These segments operate in the United States, and their markets are nationwide. Revenues from any one customer are not significant to the Company.

     For the year ended March 31, 2006, intersegment revenues and cost of sales are included in the results of operations for the individual segments but have been eliminated in consolidation. Intersegment eliminations include the elimination of Construction Services’ revenues earned and costs and expenses incurred on multi-unit residential vertical construction with our Home Building business segment. For the years ended March 31, 2005 and 2004, intersegment revenues and cost of sales were nominal.

     In June 2003, we consummated the tax-free spin-offs to our stockholders of substantially all of our manufactured housing operations, which had previously been included in the Other segment. In January 2004, we spun off tax-free to our stockholders our entire ownership interest in Construction Products, our former construction products subsidiary, which had previously been reported as a separate business segment. All Construction Products’ operations are reflected as a discontinued operation and are not included in the segment information below.

Home Building

     Home Building’s operations currently involve the purchase and development of land or lots and the construction and sale of detached and attached single-family homes (including resort and second home properties and lots) and land or lots.

     In September 2005, the Company sold all of its international homebuilding operations, which had previously been included in the Home Building segment, to a third party for cash. In December 2005, the sales price was adjusted based upon international homebuilding operations’ net asset value as defined in the sale and purchase agreement as of the closing date. Cash proceeds received upon the sale were $318.7 million, which resulted in a net loss on the disposition of $9.2 million after taxes. As a result of the sale, the operating results of the international homebuilding operations for the years ended March 31, 2006, 2005 and 2004 have been reclassified to discontinued operations in the Statements of Consolidated Earnings and all related assets and liabilities have been disclosed separately on the consolidated balance sheets. See Note (P), “Discontinued Operations,” for additional information.

Financial Services

     Financial Services’ operations consist primarily of mortgage lending, title agency services and the sale of title insurance and other insurance products. These activities include mortgage origination and other related services for homes sold by the Company’s subsidiaries and others. Financial Services’ revenues include interest income of $104.1 million, $81.7 million and $69.4 million in fiscal years 2006, 2005 and 2004, respectively. Substantially all of the Company’s interest income in each year is earned by the Financial Services segment. Financial Services’ cost of sales is comprised of interest expense related to debt issued to fund its home financing activities.

77

     On March 30, 2006, the Company announced that it signed a definitive agreement to sell Centex Home Equity Company, LLC and its related companies (“Home Equity”) to an unrelated third party. As a result, Home Equity is now reflected as a discontinued operation in our financial statements. However, the sale of Home Equity is subject to certain conditions, including regulatory approvals from state financial services or other regulatory authorities. The purchase price to be received in connection with the sale of Home Equity will consist of payments based on the book value of Home Equity, plus a premium to be calculated in accordance with an agreed upon formula.

Construction Services

     Construction Services’ operations involve the construction of buildings for both private and government interests including educational institutions, hospitals, military housing, correctional institutions, airport facilities, office buildings, hotels and resorts and sports facilities. As this segment generates positive cash flow, intercompany interest income (credited at the prime rate in effect) of $9.7 million, $6.8 million and $4.9 million for fiscal years 2006, 2005 and 2004, respectively, is included in management’s evaluation of this segment. However, the intercompany interest income is eliminated in consolidation and excluded from the tables presented below.

Other

     The Company’s Other segment includes corporate general and administrative expenses and interest expense. Also included in the Other segment are the Company’s home services operations and investment real estate operations, which are not material for purposes of segment reporting. In June 2003, the Company spun off tax-free substantially all of its manufactured housing operations, which had previously been included in the Other segment. All manufactured housing operations are reflected as a discontinued operation and not included in the segment information below.

     The following are included in Other in the tables below (dollars in millions):

	For the Years Ended March 31,
	2006			2005			2004
Operating Loss from Home Services Operations	$	(7.5	)	$	(15.8	)	$	(2.3	)
Operating Earnings from Investment Real Estate Operations		1.7			21.4			44.8
Corporate General and Administrative Expense		(100.1	)		(82.9	)		(105.6	)
Interest Expense		(12.1	)		(19.3	)		(39.5	)
	$	(118.0	)	$	(96.6	)	$	(102.6	)

	For the Year Ended March 31, 2006
	(Dollars in millions)
	Home			Financial			Construction						Intersegment
	Building			Services			Services			Other			Eliminations			Total
Revenues	$	12,272.2		$	462.3		$	1,606.6		$	117.4		$	(58.8	)	$	14,399.7
Cost of Sales		(8,755.9	)		(65.9	)		(1,498.1	)		(58.9	)		55.2			(10,323.6	)
Selling, General and Administrative Expenses		(1,696.5	)		(311.9	)		(82.2	)		(176.5	)		—			(2,267.1	)
Earnings from Unconsolidated Entities		86.0			—			0.5			—			—			86.5
Earnings (Loss) from Continuing Operations Before Income Tax	$	1,905.8		$	84.5		$	26.8		$	(118.0	)	$	(3.6	)	$	1,895.5
Segment Assets	$	10,818.2		$	2,327.3		$	392.6		$	316.7					$	13,854.8
Capital Expenditures	$	91.3		$	8.1		$	1.0		$	4.0					$	104.4
Depreciation and Amortization	$	32.4		$	7.4		$	1.9		$	13.8					$	55.5

78

     Depreciation and amortization and capital expenditures for discontinued operations were $7.6 million and $6.8 million for the fiscal year ended March 31, 2006, respectively.

	For the Year Ended March 31, 2005
	(Dollars in millions)
	Home			Financial			Construction
	Building			Services			Services			Other			Total
Revenues	$	9,359.7		$	421.7		$	1,738.6		$	152.9		$	11,672.9
Cost of Sales		(6,748.1	)		(32.2	)		(1,646.9	)		(79.2	)		(8,506.4	)
Selling, General and Administrative Expenses		(1,301.6	)		(293.5	)		(70.1	)		(170.3	)		(1,835.5	)
Earnings from Unconsolidated Entities		68.8			—			1.9			—			70.7
Earnings (Loss) from Continuing Operations Before Income Tax	$	1,378.8		$	96.0		$	23.5		$	(96.6	)	$	1,401.7
Segment Assets	$	7,771.3		$	1,951.8		$	340.6		$	768.0		$	10,831.7
Capital Expenditures	$	32.7		$	8.1		$	1.6		$	4.0		$	46.4
Depreciation and Amortization	$	26.0		$	10.8		$	1.9		$	12.6		$	51.3

     Depreciation and amortization and capital expenditures for discontinued operations were $7.0 million and $15.6 million for the fiscal year ended March 31, 2005, respectively.

	For the Year Ended March 31, 2004
	(Dollars in millions)
	Home			Financial			Construction
	Building			Services			Services			Other			Total
Revenues	$	7,519.0		$	521.2		$	1,596.3		$	119.7		$	9,756.2
Cost of Sales		(5,544.3	)		(21.9	)		(1,521.9	)		(37.8	)		(7,125.9	)
Selling, General and Administrative Expenses		(1,038.8	)		(333.5	)		(60.1	)		(199.0	)		(1,631.4	)
Earnings from Unconsolidated Entities		30.0			—			2.1			14.5			46.6
Earnings (Loss) from Continuing Operations Before Income Tax	$	965.9		$	165.8		$	16.4		$	(102.6	)	$	1,045.5
Segment Assets	$	5,633.4		$	2,014.7		$	341.5		$	455.5		$	8,445.1
Capital Expenditures	$	33.4		$	10.6		$	2.0		$	4.0		$	50.0
Depreciation and Amortization	$	24.2		$	12.0		$	1.9		$	6.1		$	44.2

     Depreciation and amortization and capital expenditures for discontinued operations were $33.6 million and $6.1 million for the fiscal year ended March 31, 2004, respectively.

79

     The reconciliation of segment assets to consolidated total assets at the end of each year, in millions of dollars, is as follows:

	For the Years Ended March 31,
	2006		2005		2004
Segment Assets	$	13,854.8	$	10,831.7	$	8,445.1
Assets from Discontinued Operations		7,510.2		9,179.4		7,632.2
Total Consolidated Assets	$	21,365.0	$	20,011.1	$	16,077.3

(J) INCOME TAXES

     The provision for income taxes includes the following components:

	For the Years Ended March 31,
	2006			2005			2004
Current Provision
Federal	$	622,895		$	493,351		$	277,252
State		98,949			81,674			43,084
		721,844			575,025			320,336
Deferred Provision (Benefit)
Federal		(35,390	)		(48,985	)		(2,836	)
State		(11,982	)		(23,927	)		24,608
		(47,372	)		(72,912	)		21,772
Provision for Income Taxes	$	674,472		$	502,113		$	342,108

     The difference between income taxes computed at the federal statutory rate of 35% and the actual amounts were as follows:

	For the Years Ended March 31,
	2006			2005			2004
Earnings from Continuing Operations Before Income Taxes and Cumulative Effect of a Change in Accounting Principle	$	1,895,493		$	1,401,655		$	1,045,458
Income Taxes at Statutory Rate	$	663,423		$	490,579		$	365,910
Increases (Decreases) in Tax Resulting from — State Income Taxes, net		56,025			37,063			40,393
Qualified Production Activities Deduction		(17,990	)		—			—
U.S. Government Tax Refund		(28,101	)		—			—
Change in Valuation Allowance		—			(39,278	)		(54,353	)
Other		1,115			13,749			(9,842	)
Provision for Income Taxes	$	674,472		$	502,113		$	342,108
Effective Tax Rate		36	%		36	%		33	%

80

     Components of deferred income taxes are as follows:

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

(K) CAPITAL STOCK AND EMPLOYEE BENEFIT PLANS

Stock Split

     On March 12, 2004, the Company completed a two-for-one stock split in the form of a 100 percent stock dividend to Company stockholders of record on February 29, 2004. All prior period stock prices, dividends and earnings per share have been restated to give retroactive application to the stock split.

Stockholder Rights Plan

     On October 2, 1996, the Board of Directors of the Company (the “Board”) adopted a new stockholder rights plan (“Plan”) to replace the original rights plan, which expired on October 1, 1996. In connection with the Plan, the Board authorized and declared a dividend of one right (“Right”) for each share of Common Stock of the Company to all stockholders of record at the close of business on October 15, 1996. After giving effect to the Company’s two-for-one stock splits effective March 2, 1998 and March 12, 2004, and the April 2002 amendment to the Plan increasing the exercise price, each Right entitles its holder to purchase one one-hundredth of a share of a new series of preferred stock designated Junior Participating Preferred Stock, Series D, at an exercise price of $105.00. The Rights will become exercisable upon the earlier of ten days after the first public announcement that a person or group has acquired beneficial ownership of 15% or more of the Common Stock or ten business days after a person or group announces an offer, the consummation of which would result in such person or group beneficially owning 15% or more of the Common Stock (even if no purchases actually occur), unless such time periods are deferred by appropriate Board action. The Plan excludes FMR Corp. from causing the rights to become exercisable until such time as FMR Corp., together with certain affiliated and associated persons, collectively own 20% or more of the Common Stock.

     If any person or group acquires beneficial ownership of 15% or more (or 20% or more in the case of FMR Corp.) of the Common Stock, the Rights will entitle a holder (other than such person or any member of such group) to buy, at the exercise price, a number of additional shares of Common Stock having a market value of twice the exercise price of each Right. Alternatively, if a person or group has acquired 15% or more (or 20% or more in the case of FMR Corp.) of the Common Stock, but less than 50% of the Common Stock, the Company may at its option exchange each Right of a holder (other than such person or any member of such group) for one share of Common Stock. If the Company is involved in a merger or other business combination at any time after a person or group has acquired beneficial ownership of 15% or more (or 20% or more in the case of FMR Corp.) of the common stock or if, after reaching such 15% threshold, the Company were to sell 50% or more of its assets or earning power, the Rights will entitle a holder to buy, at the exercise price, a number of shares of common stock of the acquiring Company having a market value of twice the exercise price of each Right. In general, the Rights are redeemable at $.01 per Right until 15 days after the Rights become exercisable as described above. Unless earlier redeemed, the Rights will expire on October 12, 2006.

81

Stock Options

     Stock options granted under the Amended and Restated Centex Corporation 2003 Equity Incentive Plan (the “2003 Plan”), the Amended and Restated Centex Corporation 2001 Stock Plan (the “2001 Plan”) and the Tenth Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan (the “1998 Plan”) may not be granted at less than fair market value. The 1998 Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the grant of nonqualified stock options to employees of the Company and its affiliates, other than officers and directors of the Company. The exercise price of any option granted under the 1998 Plan must be paid in cash upon exercise (including pursuant to a cashless exercise), or by means of tendering previously owned shares of common stock or shares issued pursuant to a grant (including pursuant to a net exercise).

     The Company records proceeds from the exercise of stock options as additions to Common Stock and capital in excess of par value. The federal tax benefit, if any, is considered additional capital in excess of par value. On April 1, 2003, the Company adopted the fair value measurement provisions of SFAS No. 123 under which the Company recognizes compensation expense of a stock-based award to an employee on a straight-line basis over the vesting period based on the fair value of the award on the grant date. The fair value method has been applied to awards granted or modified after April 1, 2003 (the prospective method), whereas awards granted prior to such date continued to be accounted for in accordance with APB No. 25, and related interpretations. In general, under APB No. 25, no expense was recognized related to the Company’s stock options because the stock options are granted at or above fair market value.

     Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R) entitled “Share-Based Payment,” (“SFAS 123R”) using the modified-prospective transition method. Accordingly, prior periods have not been restated. The adoption of SFAS 123R was not significant and had no effect on basic and diluted earnings per share for the three months ended March 31, 2006.

     A summary of the activity of the stock option plans as of March 31, 2006, and changes during the year then ended is presented below:

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

82

     A summary of the activity of the stock option plans for the years ended March 31, 2005 and 2004 is presented below:

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

     The total intrinsic value of options exercised during the years ended March 31, 2006, 2005 and 2004 was $163.0 million, $192.2 million and $92.1 million, respectively.

     A summary of the status of the Company’s nonvested shares as of March 31, 2006, and changes during the year ended March 31, 2006 is presented below:

	As of March 31, 2006
				Weighted-
				Average
				Grant-Date
Nonvested Shares	Shares			Fair Value
Nonvested at March 31, 2005		874,516		$	37.72
Granted		806,007			57.66
Vested		(783,717	)		39.61
Forfeited		(40,996	)		46.99
Nonvested at March 31, 2006		855,810			51.52

     As of March 31, 2006, there was $80.4 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 1.6 years. The total fair value of shares vested during the years ended March 31, 2006, 2005 and 2004 was $68.7 million, $49.1 million and $30.3 million, respectively.

83

     At March 31, 2003, the Company was following the disclosure-only provisions of SFAS No. 123. Accordingly, no compensation cost had been recognized for the stock options. As noted above, effective April 1, 2003, the Company adopted the fair value measurement provisions of SFAS No. 123. On January 30, 2004, the Company modified all of its stock options and stock units outstanding, in order to keep the holders in the same economic position as before the spin-off of Construction Products. The modification resulted in a reduction of the exercise price and an increase in the number of shares. This adjustment is a modification under the provisions of SFAS No. 123 and accordingly, compensation expense of $12.2 million will be expensed over the remaining vesting periods. The $12.2 million in compensation expense represents the unamortized grant date Black-Scholes fair value of unvested options as of January 30, 2004. Subsequent to January 30, 2004, the Company has no outstanding options or other stock rights accounted for under the provisions of APB No. 25. Had compensation cost for the Company’s stock option plans been determined based on the fair value at the grant date for all awards in fiscal 2004 and 2003, the Company’s net earnings and earnings per share would have been reduced to the pro forma amounts detailed in Note (A), “Significant Accounting Policies.”

     The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	For the Years Ended March 31,
	2006			2005			2004
Expected Volatility		41.8	%		44.2	%		42.5	%
Risk-Free Interest Rate		3.8	%		3.7	%		2.1	%
Dividend Yield		0.3	%		0.4	%		0.2	%
Expected Life (Years)		4.7			4.0			4.0

     The following table summarizes information about equity compensation plans, other than tax qualified plans, as of March 31, 2006:

								(c)
								Number of securities
			(a)					remaining available for
			Number of securities		(b)			future issuance under
			to be issued upon		Weighted-average			equity compensation
			exercise of		exercise price of			plans [excluding
			outstanding options,		outstanding options,			securities reflected in
Plan Category	Plan		warrants and rights		warrants and rights			column (a)]
Equity Compensation Plans		1987		3,081,087	$	6.55			—
Approved by Stockholders		2001		2,005,075	$	34.05			668,592
		2003		1,870,677	$	52.13			3,366,718
Equity Compensation Plans		1998		5,404,217	$	19.94			—
not Approved by Stockholders		Long Term Incentive Plan		1,663,345	$	—			123,379
Total				14,024,401	$	28.49	(1)		4,158,689

(1) Weighted-average exercise price excludes any items with an exercise price of $0.

     See the discussion of the 1987 Plan, 1998 Plan, 2001 Plan and 2003 Plan above. The Company also grants stock units, which are converted into shares of Centex Common Stock at payout, to certain employees under its Long Term Incentive Plan. Pursuant to the Long Term Incentive Plan, participants may receive awards of deferred stock units representing the right to receive an equal number of shares of Centex Common Stock at the time the award is paid. Awards vest over a three-year period or upon a change in control, as defined in such Plan, and are generally paid upon the earlier of seven years or retirement, although the Compensation Committee is permitted to make an early payout at its discretion. The Company also issues restricted stock under the 2001 Plan and issues stock awards, restricted stock, stock units and performance awards under the 2003 Plan. At March 31, 2006, there were 459,035 shares of restricted stock outstanding.

84

Employee Benefit Plans

     Benefits are provided to eligible employees of the Company and certain subsidiaries under the Company’s profit sharing plans. The plans operate on a calendar year. The aggregate cost of these plans to the Company was $38.8 million in fiscal year 2006, $34.9 million in fiscal year 2005 and $32.6 million in fiscal year 2004.

(L) DERIVATIVES AND HEDGING

     The Company is exposed to the risk of interest rate fluctuations on its debt and other obligations. As part of its strategy to manage the risks that are subject to changes in interest rates, Home Equity has entered into various interest rate swap agreements, designated as cash flow hedges. Financial Services, through CTX Mortgage Company, LLC, enters into mandatory forward trade commitments (“forward trade commitments”) designated as fair value hedges to hedge the interest rate risk related to its portfolio of mortgage loans held for sale. In addition, CTX Mortgage Company, LLC enters into other derivatives not designated as hedges. The following discussion summarizes our derivatives used to manage the risk of interest rate fluctuations.

Cash Flow Hedges

     Home Equity has interest rate swap agreements that, in effect, fix the variable interest rates on a portion of its outstanding debt. Home Equity also uses interest rate swaps to hedge the market risk associated with the anticipated issuance of fixed-rate securitization debt used to finance sub-prime mortgages. These interest rate swap agreements are designated as cash flow hedges. The following table summarizes the interest rate swap agreements in place as of March 31, 2006 (dollars in thousands except as indicated).

			Fixed				Accumulated Other
	Notional Value		Interest			Termination	Comprehensive
	(in millions)		Rate			Date	Income (Loss)
Home Equity
Interest rate swaps	$	240.0		5.1	% (1)	Through January 2013	$	736
Interest rate swaps	$	2,048.3		3.7	% (1)	Through March 2009		12,336
							$	13,072

(1) Weighted average fixed interest rates.

     Interest rate swap agreements are recorded at their fair value in assets of discontinued operations in the Consolidated Balance Sheets. To the extent the hedging relationship is effective, gains or losses in the fair value of the derivative are deferred as a component of stockholders’ equity through other comprehensive income (loss). Fluctuations in the fair value of the ineffective portion of the derivative are reflected in the current period earnings, although such amounts were insignificant for the year ended March 31, 2006. Accumulated other comprehensive income associated with Home Equity as of the date of disposition will be reclassified into earnings.

     Amounts to be received or paid under the swap agreements are recognized as changes in interest incurred on the related debt instruments.

Fair Value Hedges

     Financial Services, through CTX Mortgage Company, LLC, enters into certain forward trade commitments designated as fair value hedges to hedge the interest rate risk related to its portfolio of mortgage loans held for sale, including mortgage loans held by HSF-I. Accordingly, changes in the fair value of the forward trade commitments and the mortgage loans, for which the hedge relationship is deemed effective, are recorded as an adjustment to earnings. To the extent the hedge is effective, gains or losses in the value of the hedged loans due to interest rate movement will be offset by an equal and opposite gain or loss in the value of the forward trade commitment. This will result in net zero impact to earnings. To the extent the hedge contains some ineffectiveness, the ineffectiveness is recognized immediately in earnings. The amount of hedge ineffectiveness included in earnings was a gain of approximately $20.9 million and $19.9 million for the years ended March 31, 2006 and 2005, respectively.

85

Other Derivatives

     Financial Services, through CTX Mortgage Company, LLC, enters into interest rate lock commitments (“IRLCs”) with its customers under which CTX Mortgage Company, LLC agrees to make mortgage loans at agreed upon rates within a period of time, generally from 1 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 does not include future cash flows related to the associated servicing of the loan or the value of any internally-developed intangible assets. Subsequent changes in the fair value of the IRLCs are recorded as an adjustment to earnings.

     To offset the interest rate risk related to its IRLCs, CTX Mortgage Company, LLC executes forward trade commitments. Certain forward trade commitments are not designated as hedges and are derivative instruments. Their initial fair value is recorded on the balance sheet in other assets or accrued liabilities. Subsequent changes in the fair value of these forward trade commitments are recorded as an adjustment to earnings.

     The net change in the estimated fair value of other derivatives resulted in a gain of approximately $1.0 million and $3.7 million for the years ended March 31, 2006 and 2005, respectively.

(M) RELATED PARTY TRANSACTIONS

     The following related party transactions with Centex Development Company, L.P. (the “Partnership”) for fiscal year 2004 include only related party transactions and amounts through February 29, 2004, the date of acquisition of the Partnership. Related party transactions and amounts occurring after the Partnership’s consolidation are not included in the amounts below as the related party amounts have been eliminated in consolidation.

     Centex Homes purchased land from the Partnership during fiscal year 2004 totaling $19.0 million. Centex Homes also entered into agreements to reimburse the Partnership for certain costs and fees incurred by the Partnership in the purchase and ownership of these tracts of land. During the year ended March 31, 2004, Centex Homes paid $1.9 million to the Partnership in fees and reimbursements pursuant to these agreements.

     Construction Services has historically executed construction contracts with the Partnership. At February 29, 2004, a $10.0 million contract for the construction of an office building had been executed with the Partnership and was outstanding, and was completed prior to March 31, 2004. During the eleven months ended February 29, 2004, the Partnership paid $7.4 million to Construction Services pursuant to these contracts.

(N) FAIR VALUE OF FINANCIAL INSTRUMENTS

     Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments,” requires companies to disclose the estimated fair value of their financial instrument assets and liabilities. The estimated fair values shown below have been determined using current quoted market prices where available and, where necessary, estimates based on present value methodology suitable for each category of financial instruments. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. All assets and liabilities that are not considered financial instruments have been valued using historical cost accounting.

86

     The consolidated carrying values of cash and cash equivalents, restricted cash, mortgage securitization residual interest, other receivables, accounts payable and accrued liabilities and short-term debt approximate their fair values. The carrying values and estimated fair values of other financial assets and liabilities were as follows:

	March 31,
	2006					2005
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Financial Assets
Residential Mortgage Loans Held for Sale	$	2,129,538	$	2,132,286	(1)	$	1,775,324	$	1,775,946	(1)
Financial Liabilities
Centex Long-term Debt	$	3,855,027	$	3,847,383	(2)	$	3,100,047	$	3,199,863	(2)
Financial Services Long-term Debt	$	60,000	$	60,093	(2)	$	60,000	$	60,000	(2)

(1)	Fair values are based on quoted market prices for similar instruments.
(2)	Fair values are based on a present value discounted cash flow with the discount rate approximating current market for similar instruments.

(O) OFF-BALANCE SHEET OBLIGATIONS

     The Company enters into various “off-balance sheet” transactions in the normal course of business in order to facilitate certain homebuilding activities. Further discussion regarding these transactions can be found above in Note (F), “Commitments and Contingencies.”

(P) DISCONTINUED OPERATIONS

     In June 2003, the Company spun off tax-free substantially all of its manufactured housing operations, which had previously been included in the Other segment. As a result of the spin-off, the manufactured housing operations’ earnings for all periods prior to the spin-off have been reclassified to discontinued operations in the Statements of Consolidated Earnings.

     In January 2004, the Company spun off tax-free its entire ownership interest in Construction Products, which had previously been reported as a separate business segment. As a result of the spin-off, Construction Products’ earnings for all periods prior to the spin-off have been reclassified to discontinued operations in the Statements of Consolidated Earnings. In connection with the tax-free distribution of our interests in Construction Products, we recognized as a component of discontinued operations, a tax benefit of $33.5 million. The tax benefit is a result of the reversal of a deferred tax liability for the difference between the financial carrying amount of our investment in Construction Products and the respective tax basis, which was no longer required given the tax-free nature of the distribution.

     In September 2005, we sold our international homebuilding operations, which had previously been included in the Home Building segment. As a result of the sale, international homebuilding’s operations have been reclassified to discontinued operations in the Statements of Consolidated Earnings, and any assets and liabilities related to these discontinued operations have been presented separately on the Consolidated Balance Sheets. All prior period information has been reclassified to be consistent with the March 31, 2006 presentation.

     On March 30, 2006, the Company announced that it signed a definitive agreement to sell Home Equity to an unrelated third party. As a result, Home Equity is now reflected as a discontinued operation in our financial statements. However, the sale of Home Equity is subject to certain conditions, including regulatory approvals from state financial services or other regulatory authorities. The purchase price to be received in connection with the sale of Home Equity will consist of payments based on the book value of Home Equity, plus a premium to be calculated in accordance with an agreed upon formula.

87

     Summarized financial information for entities included in discontinued operations is set forth below:

	As of March 31,
	2006 (1)		2005 (2)
Assets
Cash and Cash Equivalents	$	787	$	650
Restricted Cash		277,114		289,554
Loans Held for Investment		6,867,658		7,914,426
Receivables		153,517		159,937
Inventories		—		633,185
Property and Equipment, net		17,740		21,375
Deferred Income Taxes		74,156		(7,043	)
Goodwill		—		36,626
Mortgage Securitization Residual Interest		56,831		69,636
Deferred Charges and Other, net		62,359		61,030
	$	7,510,162	$	9,179,376
Liabilities
Accounts Payable and Accrued Liabilities	$	70,434	$	247,611
Notes Payable		1,095,905		832,021
Long-term Debt		5,835,454		7,332,316
	$	7,001,793	$	8,411,948

	For the Years Ended March 31,
	2006 (2)			2005 (2)			2004 (3)
Revenues	$	1,065,441		$	1,186,810		$	1,069,145
Costs and Expenses		(926,207	)		(1,014,778	)		(960,965	)
Earnings from Unconsolidated Entities		675			82			45,342
Earnings Before Income Taxes		139,909			172,114			153,522
Provision for Income Taxes		(71,617	)		(60,292	)		(15,926	)
	$	68,292		$	111,822		$	137,596

(1)	Includes Home Equity only.
(2)	Includes Home Equity and International Home Building.
(3)	Includes Home Equity, International Home Building, Construction Products and Manufactured Homes.

Significant Accounting Policies Related to Discontinued Operations

Residential Mortgage Loans Held for Investment

     Residential mortgage loans held for investment represent mortgage loans originated by Home Equity, which are securitized and recorded as secured borrowings in the financial statements using the portfolio method. These mortgage loans are stated at cost less an allowance for losses. Residential mortgage loans held for investment, including real estate owned, consisted of the following:

	March 31,
	2006			2005
Residential Mortgage Loans Held for Investment	$	6,967,034		$	7,999,728
Allowance for Losses on Residential Mortgage Loans Held for Investment		(99,376	)		(85,302	)
Residential Mortgage Loans Held for Investment, net of Allowance for Losses	$	6,867,658		$	7,914,426

     Home Equity establishes an allowance for losses by recording a provision for losses when it believes a loss has occurred. When Home Equity determines that a residential mortgage loan held for investment is partially or fully

88

uncollectible, the estimated loss is charged against the allowance for losses. Recoveries on losses previously charged to the allowance are credited to the allowance at the time the recovery is collected.

     Changes in the allowance for losses on residential mortgage loans held for investment were as follows:

	For the Years Ended March 31,
	2006			2005			2004
Balance at Beginning of Period	$	85,302		$	56,358		$	28,384
Provision for Losses		94,319			98,801			79,503
Losses Sustained, net of Recoveries of $1,499, $1,226 and $204		(80,245	)		(69,857	)		(51,529	)
Balance at End of Period	$	99,376		$	85,302		$	56,358
Allowance as a Percentage of Gross Loans Held for Investment		1.4	%		1.1	%		0.9	%
Allowance as a Percentage of 90+ Days Contractual Delinquency		41.0	%		44.2	%		36.4	%
90+ Days Contractual Delinquency (based on months)
Total Dollars Delinquent	$	242,241		$	192,835		$	154,868
% Delinquent		3.5	%		2.4	%		2.4	%

     Home Equity believes that the allowance for losses is adequate to provide for credit losses in the existing residential mortgage loans held for investment, which include real estate owned. Home Equity evaluates the allowance on an aggregate basis considering, among other things, the relationship of the allowance to the amount of residential mortgage loans held for investment and historical credit losses. The allowance reflects Home Equity’s judgment of the present loss exposure at the end of the reporting period. A range of expected credit losses is estimated using historical losses, static pool loss curves and delinquency modeling. These tools take into consideration historical information regarding delinquency and loss severity experience and apply that information to the portfolio at each reporting date.

Mortgage Securitization Residual Interest

     Home Equity uses mortgage securitizations to finance its mortgage loan portfolio. For securitizations accounted for as sales, Home Equity retained a residual interest (the “Mortgage Securitization Residual Interest” or “MSRI”). The MSRI represents the present value of Home Equity’s right to receive, over the life of the securitization, the excess of the weighted-average coupon on the loans securitized over the interest rates on the securities sold, a normal servicing fee, a trustee fee and an insurance fee, where applicable, net of the credit losses relating to the loans securitized.

     Changes in Home Equity’s MSRI were as follows:

	For the Years Ended March 31,
	2006			2005			2004
Beginning Balance	$	69,636		$	87,796		$	106,373
Cash Received		(14,498	)		(8,433	)		(11,256	)
Accretion and Other, Net		1,693			(9,727	)		(7,321	)
Ending Balance	$	56,831		$	69,636		$	87,796

     The Company classifies MSRI as trading securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and accordingly, carries MSRI at fair value on the Company’s balance sheet.

     Home Equity estimates the fair value of MSRI through the application of discounted cash flow analysis. Such analysis requires the use of various assumptions, the most significant of which are estimated future credit losses and the discount rate applied to future cash flows. At March 31, 2006, Home Equity used the following assumptions in monitoring the fair value of the MSRI: cumulative credit losses of 6.12% to 8.61% and a discount rate of 15.0% simple interest. At March 31, 2006, the expected weighted-average life of Home Equity’s MSRI balance was 0.75

89

years, with individual transactions ranging from 0.42 years to 1.33 years. As a result of the mature nature of the MSRI, anticipated prepayments (principal reductions in excess of contractually scheduled reductions) do not have a significant impact on the determination of fair value. Home Equity monitors the fair value of MSRI and the reasonableness of the underlying assumptions in light of current market conditions.

(Q) SUBSEQUENT EVENTS (UNAUDITED)

     On May 5, 2006, the Company issued $500 million aggregate principal amount of senior notes with an interest rate of 6.50%, maturing in fiscal year 2017.

     In May 2006, the Company granted approximately 1.2 million options, 65,450 shares of restricted stock and 366,154 stock units to employees.

     On May 15, 2006, the Company announced that its Board of Directors authorized the repurchase of an additional 12 million shares and that subsequent to March 31, 2006, the Company completed its previous share authorization by purchasing 2.5 million shares in open market transactions.

     On May 16, 2006, Home Equity issued $973.5 million of Asset-Backed Certificates with maturities through fiscal year 2037.

90

Management’s Report on Internal Control Over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2006 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of March 31, 2006.

     Our management’s assessment of the effectiveness of internal control over financial reporting as of March 31, 2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

91

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CENTEX CORPORATION AND SUBSIDIARIES

     We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Centex Corporation and subsidiaries (Centex Corporation) maintained effective internal control over financial reporting as of March 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Centex Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

     A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     In our opinion, management’s assessment that Centex Corporation maintained effective internal control over financial reporting as of March 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Centex Corporation maintained, in all material respects, effective internal control over financial reporting as of March 31, 2006, based on the COSO criteria.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2006 consolidated financial statements of Centex Corporation and subsidiaries and our report dated May 19, 2006 expressed an unqualified opinion thereon.

Dallas, Texas

May 19, 2006

92

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CENTEX CORPORATION AND SUBSIDIARIES:

     We have audited the accompanying consolidated balance sheets of Centex Corporation and subsidiaries (Centex Corporation) as of March 31, 2006 and 2005, and the related consolidated statements of earnings, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Centex Corporation and subsidiaries at March 31, 2006 and 2005, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2006, in conformity with U.S. generally accepted accounting principles.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Centex Corporation’s internal control over financial reporting as of March 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 19, 2006 expressed an unqualified opinion thereon.

     As discussed in Note (A) to the consolidated financial statements, in fiscal year 2004 the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standard No. 123, “Accounting for Stock Issued to Employees,” utilizing the prospective method of adoption as permitted by Statement of Financial Accounting Standard No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.” Also, as discussed in Note (A) to the consolidated financial statements, in fiscal year 2004, the Company adopted Financial Accounting Standard Board Interpretation No. 46, “Consolidation of Variable Interest Entities” as revised.

     Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The supplemental balance sheet and cash flow data of Centex Corporation and Financial Services and the supplemental revenue and earnings data by line of business are presented for purposes of additional analysis and are not a required part of the basic consolidated financial statements. Such information has been subjected to the auditing procedures applied in our audits of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.

Dallas, Texas

May 19, 2006

93

Quarterly Results (Unaudited) ⁽¹⁾

(Dollars in thousands, except per share data)

	For the Quarters Ended 2006 and 2005
	Q1		Q2		Q3		Q4
2006
Revenues	$	2,899,910	$	3,424,380	$	3,525,145	$	4,550,234
Earnings from Continuing Operations	$	210,839	$	321,199	$	313,212	$	375,771
Earnings from Discontinued Operations, net of Taxes		22,831		13,331		16,132		15,998
Net Earnings	$	233,670	$	334,530	$	329,344	$	391,769
Earnings from Continuing Operations Per Share
Basic	$	1.64	$	2.50	$	2.47	$	3.04
Diluted	$	1.57	$	2.39	$	2.37	$	2.92
Net Earnings Per Share
Basic	$	1.82	$	2.60	$	2.60	$	3.17
Diluted	$	1.74	$	2.49	$	2.49	$	3.04
Average Shares Outstanding
Basic		128,672,028		128,565,026		126,572,663		123,622,796
Diluted		134,584,442		134,526,936		132,077,763		128,732,705
2005
Revenues	$	2,501,827	$	2,713,194	$	2,824,351	$	3,633,513
Earnings from Continuing Operations	$	155,812	$	183,703	$	225,952	$	334,075
Earnings from Discontinued Operations, net of Taxes		21,421		26,909		27,819		35,673
Net Earnings	$	177,233	$	210,612	$	253,771	$	369,748
Earnings from Continuing Operations Per Share
Basic	$	1.26	$	1.48	$	1.80	$	2.61
Diluted	$	1.19	$	1.40	$	1.69	$	2.49
Net Earnings Per Share
Basic	$	1.43	$	1.70	$	2.02	$	2.89
Diluted	$	1.35	$	1.61	$	1.91	$	2.75
Average Shares Outstanding
Basic		123,573,221		124,036,791		125,593,379		127,739,654
Diluted		130,926,818		130,981,144		132,547,190		134,248,349

(1) The quarterly results presented in this table for the periods covered by the financial statements included in this Report and all prior periods have been adjusted to reflect our sub-prime home equity lending operations and international homebuilding operations (sold in September 2005) as discontinued operations.

94

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

     An evaluation has been performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2006. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of March 31, 2006, to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There has been no change in our internal controls over financial reporting during the quarter ended March 31, 2006 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

     For management’s and independent registered public accounting firm’s reports on internal controls over financial reporting, see the financial statements and supplementary data to this Report.

ITEM 9B. OTHER INFORMATION

     Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Except for the information relating to the executive officers of the Company in Item 4A of Part I of this Report and that is incorporated herein by reference, the information called for by Items 10, 11, 12 and 13 is incorporated herein by reference to the information included and referenced under the following captions in the Company’s Proxy Statement for the July 13, 2006 Annual Meeting of Stockholders:

Item	Caption in the 2006 Proxy Statement
10	Election of Directors and Related Matters
10	Other Matters — Section 16(a) Beneficial Ownership Reporting Compliance
11	Executive Compensation
12	Stock Ownership
12	Executive Compensation — Equity Compensation Plans
13	Certain Transactions

     The policies comprising Centex’s code of conduct are set forth in the Company’s code of ethics manual, The Centex Way: A Guide to Decision-Making on Business Conduct Issues. These policies satisfy the SEC’s requirements for a “code of ethics,” and apply to all directors, officers and employees. The code of ethics manual is published on the corporate governance section of the Company’s website at http://www.centex.com. The Board will not permit any waiver of any ethics policy for any director or executive officer.

95

ITEM 11. EXECUTIVE COMPENSATION

     See Item 10 above.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     See Item 10 above.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See Item 10 above.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information called for by Item 14 is incorporated herein by reference to the information included and referenced under the caption “Appointment of Independent Auditors” in the Company’s Proxy Statement for the July 13, 2006 Annual Meeting of Stockholders.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     The following documents are filed as part of this Report:

1.	Financial Statements
	The consolidated balance sheets of Centex Corporation and subsidiaries as of March 31, 2006 and 2005, and the related consolidated statements of earnings, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2006, together with the accompanying Notes to Consolidated Financial Statements and the Reports of Independent Registered Public Accounting Firm of this Report.
2.	Schedules
	Schedules are omitted because they are not applicable or not required or the information required to be set forth therein is included in the consolidated financial statements referenced above in section (a) (1) of this Item 15.
3.	Exhibits
	The information on exhibits required by this Item 15 is set forth in the Index to Exhibits of this Report.

96

INDEX TO EXHIBITS

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
3.1	Restated Articles of Incorporation of Centex Corporation (“Centex”), as amended	Exhibit 3.1 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004
3.2	Amended and Restated By-laws of Centex dated October 11, 2005	Exhibit 3.1 to Centex’s Current Report on Form 8-K dated October 7, 2005
4.1	Specimen Centex common stock certificate (with Rights Agreement legend)	Exhibit 4.1 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004
4.2	Rights Agreement, dated as of October 2, 1996, between Centex and ChaseMellon Shareholder Services, L.L.C., as rights agent	Exhibit 4 to Centex’s Registration Statement on Form 8-A (File No. 1-6776) filed on October 8, 1996 (the “1996 Form 8-A”)
4.3	Amendment No. 1 to Rights Agreement, dated as of February 18, 1999, between Centex and ChaseMellon Shareholder Services, L.L.C., as rights agent	Exhibit 4.2 to Amendment No. 1 to the 1996 Form 8-A, filed on February 22, 1999
4.4	Amendment No. 2 to Rights Agreement, dated as of April 29, 2002, between Centex and Mellon Investor Services L.L.C. (f/k/a ChaseMellon Shareholder Services, L.L.C.), as rights agent	Exhibit 4.3 to Amendment No. 2 to the 1996 Form 8-A, filed on May 2, 2002
4.5	Indenture, dated October 1, 1998, between Centex and JPMorgan Chase Bank, N.A. (formerly Chase Bank of Texas, National Association)	Exhibit 4.1 to Centex’s Current Report on Form 8-K dated October 21, 1998
4.6	Indenture, dated March 12, 1987, between Centex and JPMorgan Chase Bank, N.A. (formerly Texas Commerce Bank National Association)	Exhibit 4.5 to Amendment No. 1 to Centex’s Registration Statement on Form S-3 (File No. 333-72893), filed on May 14, 1999

97

]

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
4.7	Any instrument with respect to long-term debt, where the securities authorized thereunder do not exceed 10% of the total assets of Centex and its subsidiaries, has not been filed; these instruments relate to (a) long-term senior and subordinated debt of Centex issued pursuant to supplements to the indentures filed as exhibits 4.5 and 4.6, which supplements have also been filed with the SEC as exhibits to various Centex registration statements or to reports incorporated by reference in such registration statements, (b) long-term debt issued pursuant to pooling and servicing agreements or similar agreements in connection with certain asset securitizations involving certain subsidiaries of Centex, which agreements have been filed with the SEC as exhibits to various registration statements of CHEC Funding, LLC or to reports incorporated by reference in such registration statements, (c) long-term debt issued pursuant to indentures or other agreements in connection with certain asset securitizations involving certain subsidiaries of Centex in private transactions and (d) other long-term debt of Centex; Centex agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request
10.1	Centex Corporation Amended and Restated 1987 Stock Option Plan*	Filed herewith
10.2	Tenth Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan (“1998 Stock Option Plan”)*	Filed herewith
10.2a	Form of stock option agreement for 1998 Stock Option Plan*	Exhibit 10.2a to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005
10.3	Amended and Restated Centex Corporation 2001 Stock Plan (“2001 Stock Plan”)*	Filed herewith
10.3a	Form of stock option agreement for 2001 Stock Plan*	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated May 16, 2006
10.3b	Form of restricted stock agreement for 2001 Stock Plan*	Exhibit 10.3b to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004
10.4	Amended and Restated Centex Corporation Long Term Incentive Plan (“LTIP”)*	Filed herewith
10.4a	Form of award agreement for LTIP*	Exhibit 10.3 to Centex’s Current Report on Form 8-K dated May 16, 2006
10.5	Centex Corporation 2003 Annual Incentive Compensation Plan	Exhibit 10.13 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
10.5a	Form of award agreement for incentive compensation*	Exhibit 10.5 to Centex’s Current Report on Form 8-K dated May 16, 2006
10.6	Amended and Restated Centex Corporation 2003 Equity Incentive Plan (“2003 Equity Incentive Plan”)*	Filed herewith

98

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
10.6a	Form of stock option agreement for 2003 Equity Incentive Plan*	Filed herewith
10.6b	Form of stock unit agreement for 2003 Equity Incentive Plan*	Filed herewith
10.6c	Form of restricted stock agreement for 2003 Equity Incentive Plan*	Exhibit 10.2 to Centex’s Current Report on Form 8-K dated May 16, 2006
10.7	Amended and Restated Supplemental Executive Retirement Plan of Centex Corporation*	Exhibit 10.8 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2003
10.8	Centex Corporation Deferred Compensation Plan*	Exhibit 4 to Centex’s Registration Statement on Form S-8 (File No. 333-37956) filed on May 26, 2000
10.9	Amended and Restated Centex Corporation Executive Deferred Compensation Plan (“Executive Deferred Compensation Plan”)*	Filed herewith
10.9a	Form of deferred compensation agreement for Executive Deferred Compensation Plan*	Exhibit 10.4 to Centex’s Current Report on Form 8-K dated May 16, 2006
10.10	Centex Corporation Salary Continuation Plan*	Exhibit 10.10 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004
10.11	Centex Comprehensive Medical Plan*	Exhibit 10.11 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005
10.12	Consulting Agreement, dated as of March 31, 2002, between Centex and David W. Quinn*	Exhibit 10.11 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004
10.13	Termination Agreement, dated as of March 31, 2004, between Centex and David W. Quinn*	Exhibit 10.12 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004
10.14	Agreement, dated as of February 23, 2006, between Centex and Leldon E. Echols*	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated February 24, 2006
10.15	Distribution Agreement between Centex, Cavco Industries L.L.C. and Cavco Industries, Inc.	Exhibit 10.15 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
10.16	Amendment No. 1 to Distribution Agreement between Centex, Cavco Industries L.L.C. and Cavco Industries, Inc.	Exhibit 10.19 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
10.17	Administrative Services Agreement between Centex Service Company and Cavco Industries, Inc.	Exhibit 10.16 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
10.18	Tax Sharing Agreement between Centex and affiliates and Cavco Industries, Inc.	Exhibit 10.17 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
10.19	Agreement to Assign Trademark Rights and Limited Consent to Use Centex Trademarks between Centex and Cavco Industries, Inc.	Exhibit 10.18 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
10.20	Amended and Restated Distribution Agreement, dated as of November 4, 2003, between Centex and Centex Construction Products, Inc.	Exhibit 99.1 to Amendment No. 3 to Centex’s Schedule 13D filed on November 5, 2003
10.21	Amended and Restated Agreement and Plan of Merger, dated as of November 4, 2003, among Centex, ARG Merger Corporation and Centex Construction Products, Inc.	Exhibit 99.2 to Amendment No. 3 to Centex’s Schedule 13D filed on November 5, 2003

99

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
10.22	Credit Agreement, dated July 1, 2005 among Centex, Bank of America, N.A., as Administrative Agent, and the lenders named therein	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated July 1, 2005
10.23	Securities Purchase Agreement, dated as of March 30, 2006, among Centex Home Equity Company, LLC, Centex Financial Services, LLC and FIF HE Holdings, LLC	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated April 4, 2006
10.24	Outside Director Compensation Plan*	Exhibit 10.6 to Centex’s Current Report on Form 8-K dated May 16, 2006
10.25	Form of Director Indemnification Agreement*	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated February 14, 2006
10.26	Form of Change of Control Agreement*	Exhibit 10.2 to Centex’s Current Report on Form 8-K dated February 14, 2006
12.1	Computation of Ratio of Earnings to Fixed Charges	Filed herewith
21	List of Subsidiaries of Centex	Filed herewith
23	Consent of Independent Registered Public Accounting Firm	Filed herewith
24.1	Powers of Attorney	Filed herewith
31.1	Certification of the Chief Executive Officer of Centex pursuant to Rule 13a—14(a) promulgated under the Securities Exchange Act of 1934	Filed herewith
31.2	Certification of the Chief Financial Officer of Centex pursuant to Rule 13a—14(a) promulgated under the Securities Exchange Act of 1934	Filed herewith
32.1	Certification of the Chief Executive Officer of Centex pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.2	Certification of the Chief Financial Officer of Centex pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

* Management contract or compensatory plan or arrangement

100

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

		CENTEX CORPORATION
		Registrant
May 19, 2006	By:	/s/ TIMOTHY R. ELLER
		Timothy R. Eller, Chairman of the Board and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

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

* Pursuant to authority granted by powers of attorney, copies of which are filed herewith.

101

EX-10.1

Exhibit 10.1

CENTEX CORPORATION

AMENDED AND RESTATED 1987 STOCK OPTION PLAN

(Last Amended on April 1, 2006)

1. Purpose

     The purpose of this Plan is to assist Centex Corporation, a Nevada corporation, in attracting and retaining as officers and key employees of the Company and its Affiliates, and as non-employee directors of the Company, individuals of training, experience and ability and to furnish additional incentive to such individuals by encouraging them to become owners of Shares of the Company’s capital stock, by granting to such individuals Incentive Options, Nonqualified Options, Restricted Stock, or any combination of the foregoing.

2. Definitions

     Unless the context otherwise requires, the following words as used herein shall have the following meanings:

     “Act” — The Securities Exchange Act of 1934, as amended.

     “Affiliates” — Any corporation or other entity which is a direct or indirect parent or subsidiary (including, without limitation, partnerships and limited liability companies) of the Company.

     “Agreement” — The written agreement between the Company and the Optionee evidencing the Option granted by the Company and the understanding of the parties with respect thereto.

     “Board” — The Board of Directors of the Company as the same may be constituted from time to time.

     “Code” — The Internal Revenue Code of 1986, as amended from time to time.

     “Committee” — The Committee provided for in Section 3 of this Plan, as such Committee may be constituted from time to time.

     “Company” — Centex Corporation, a Nevada corporation.

     “Fair Market Value” — If a Share is traded on one or more established market or exchanges, the closing price of the Share in the primary market or exchange on which the Share is traded, and if the Share is not so traded or the Share does not trade on the relevant date, the value determined in good faith by the Board. For purposes of valuing Shares to be made subject to Incentive Options, the Fair Market Value of stock shall be determined without regard to any restriction other than one which, by its terms, will never lapse.

     “Incentive Option” — Stock Options that are intended to satisfy the requirements of Section 422 of the Code and Section 16 of this Plan.

     “Non-employee Director” — An individual who satisfies the requirements of Rule 16b-3 promulgated under the Act.

     “Nonqualified Options” — Stock Options which do not satisfy the requirements of Section 422 of the Code.

     “Option” — An option to purchase one or more Shares of the Company granted under and pursuant to the Plan. Such Option may be either an Incentive Option or a Nonqualified Option.

     “Optionee” — An individual who has been granted an Option under this Plan and who has executed a written option Agreement with the Company.

     “Plan” — This Centex Corporation 1987 Stock Option Plan.

     “Permitted Transferees” — (i) members of the Optionee’s immediate family, (ii) one or more trusts for the benefit of such members of the Optionee’s immediate family, (iii) partnerships in which such immediate family members are the only partners and (iv) limited liability companies in which such immediate family members are the only members.

     “Restricted Stock” — Shares issued pursuant to Section 19 of the Plan.

     “Senior Management” — Members of the senior management group of the Company and its Affiliates, such senior managers to be identified by the Chairman and Vice Chairman of the Board of the Company.

     “Share” — A share of the Company’s present twenty-five cents ($0.25) par value common stock and any share or shares of capital stock or other securities of the Company hereafter issued or issuable upon, in respect of or in substitution or in exchange for each present share. Such Shares may be unissued or reacquired Shares, as the Board, in its sole and absolute discretion, shall from time to time determine.

3. Administration

     The Plan shall be administered by a committee (the “Committee”) comprised of two or more Non-employee Directors appointed by the Board from time to time. The Committee shall (a) select the eligible employees or directors who are to receive Options or awards of Restricted Stock under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of Options or awards of Restricted Stock, (c) interpret the Plan, and (d) make all other determinations necessary or advisable for the administration of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons.

4. Shares Subject to Plan

     (a) A maximum of 7,065,139 Shares shall be subject to grants of Options and awards of Restricted Stock under the Plan; provided that such maximum shall be increased or decreased as provided below in Section 12.

2

     (b) At any time and from time to time after the Plan takes effect, the Committee, pursuant to the provisions herein set forth, may grant Options and award Restricted Stock until the maximum number of Shares shall be exhausted or the Plan shall be sooner terminated; provided, however, that no Option shall be granted and no Restricted Stock shall be awarded after May 19, 2001.

     (c) Should any Option expire or be cancelled without being fully exercised, or should any Restricted Stock previously awarded be reacquired by the Company, the number of Shares with respect to which such Option shall not have been exercised prior to its expiration or cancellation and the number of Shares of such Restricted Stock so reacquired may again be optioned or awarded pursuant to the provisions hereof.

     (d) Any Shares withheld pursuant to subsection 18(c) shall not be available after such withholding for being optioned or awarded pursuant to the provisions hereof.

5. Eligibility

     Eligibility for the receipt of the grant of Options under the Plan shall be confined to (a) a limited number of persons who are employed by the Company, or one or more of its Affiliates and who are officers of or who, in the opinion of the Committee, hold other key positions in or for the Company or one or more of its Affiliates and (b) directors of the Company, including directors who are not employees of the Company or its Affiliates; provided that only employees of the Company or its Affiliates shall be eligible for the grant of Incentive Options. In addition, an individual who becomes a director of the Company, but who is not at the time he becomes a director also an employee of the Company, shall not be eligible for a grant of Options or an award of Restricted Stock, and shall not be eligible for the grant of an option, stock allocation, or stock appreciation right under any other plan of the Company or its affiliates (within the meaning of Rule 12b-2 promulgated under the Act) until the Board expressly declares such person eligible by resolution. In no event may an Option be granted to an individual who is not an employee of the Company or an Affiliate or a director of the Company.

6. Granting of Options

     (a) From time to time while the Plan is in effect, the Committee may in its absolute discretion, select from among the persons eligible to receive a grant of Options under the Plan (including persons who have already received such grants of Options) such one or more of them as in the opinion of the Committee should be granted Options. The Committee shall thereupon, likewise in its absolute discretion, determine the number of Shares to be allotted for option to each person so selected; provided, however, that the total number of Shares subject to Options granted to any one person, including directors of the Company, when aggregated with the number of Shares of Restricted Stock awarded to such person, shall not exceed 706,513 Shares.

     (b) Each person so selected shall be offered an Option to purchase the number of Shares so allotted to him, upon such terms and conditions, consistent with the provisions of the Plan, as the Committee may specify. Each such person shall have a reasonable period of time, to be fixed by the Committee, within which to accept or reject the proffered Option. Failure to accept within the period so fixed may be treated as a rejection.

3

     (c) Each person who accepts an Option offered to him shall enter into an Agreement with the Company, in such form as the Committee may prescribe, setting forth the terms and conditions of the Option, whereupon such person shall become a participant in the Plan. In the event an individual is granted both one or more Incentive Options and one or more Nonqualified Options, such grants shall be evidenced by separate Agreements, one each for the Incentive Option grants and one each for the Nonqualified Options grants. The date which the Committee specifies to be the grant date of an Option to an individual shall constitute the date on which the Option covered by such Agreement is granted. In no event, however, shall an Optionee gain any rights in addition to those specified by the Committee in its grant, regardless of the time that may pass between the grant of the Option and the actual signing of the Agreement by the Company and the Optionee.

7. Option Price

     The option price for each Share covered by each Incentive Option shall not be less than the greater of (a) the par value of each such Share or (b) the Fair Market Value of the Share at the time such Option is granted, except as provided hereinafter. The option price for each Share covered by each Nonqualified Option shall not be less than the greater of (a) the par value of each such Share or (b) 85% of the Fair Market Value of the Share at the time the Option is granted; provided, however, that the number of Shares covered by Nonqualified Options granted under this Plan that have an option price less than the Fair Market Value of a Share at the time the respective Option is granted shall not exceed 10% of the total number of Shares authorized to be issued under this Plan. If the Company or an Affiliate agrees to substitute a new Option under the Plan for an old Option, or to assume an old Option, by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, or liquidation (any of such events being referred to herein as a “Corporate Transaction”), the option price of the Shares covered by each such new Option or assumed Option may be other than the Fair Market Value of the stock at the time the Option is granted as determined by reference to a formula, established at the time of the Corporate Transaction, which will give effect to such substitution or assumption; provided, however, in no event shall —

     (a) the excess of the aggregate Fair Market Value of the Share subject to the Option immediately after the substitution or assumption over the aggregate option price of such Shares be more than the excess of the aggregate Fair Market Value of all Shares subject to the Option immediately prior to the substitution or assumption over the aggregate option price of such Shares

     (b) in the case of an Incentive Option, the new Option or the assumption of the old Option give the Optionee additional benefits which he would not have under the old Option; or

     (c) the ratio of the option price to the Fair Market Value of the stock subject to the Option immediately after the substitution or assumption be more favorable to the Optionee than the ratio of the option price to the Fair Market Value of the stock subject to the old Option immediately prior such substitution or assumption, on a Share by Share basis.

     Notwithstanding the above, the provisions of this Section 7 with respect to the Option price in the event of a Corporate Transaction shall, in case of an Incentive Option, be subject to the requirements of Section 424(a) of the Code and the Treasury regulations and revenue rulings promulgated thereunder. In the case of an Incentive Option, in the event of a conflict between the

4

terms of this Section 7 and the above cited statute, regulations, and rulings, or in the event of an omission in this Section 7 of a provision required by said laws, the latter shall control in all respects and are hereby incorporated herein by reference as if set out at length.

8. Option Period

     (a) Each Option shall run for such period of time as the Committee may specify, but in no event for longer than ten (10) years from the date when the Option is granted, including the period of time provided in subsections (i) and (ii) of this subsection (a); and subject to such limits, and the further condition that, unless designated otherwise by the Committee, no Incentive Option shall become exercisable prior to one year from the date of its grant,

     (i) Except as provided below in this subsection (i) and in paragraph 8.(b) below, all rights to exercise an Option shall terminate within three months after the date the Optionee ceases to be an employee of at least one of the employers in the group of employers consisting of the Company and its Affiliates, or after the date the Optionee ceases to be a director of the Company, whichever may occur later, for any reason other than death, except that, (x) in the case of a Nonqualified Option which is held by an Optionee who is, on the date of cessation referred to in this clause, an officer or director of the Company (within the meanings thereof under Section 16b) of the Act), all rights to exercise such Option shall terminate within seven months after the date the Optionee ceases to be an employee of at least one of the employers in the group of employers consisting of the Company and its Affiliates, or, if later, after the date the Optionee ceases to be a director of the Company, for any reason other than death; and, except that, (y) the Committee, in its discretion, may provide in new Option grants or amend outstanding Options to provide an extended period of time during which an Optionee can exercise a Nonqualified Option to the maximum permissible period for which such Optionee’s Option would have been exercisable in the absence of the Optionee’s ceasing to be an employee of the Company and its Affiliates or ceasing to be a director of the Company; and, except that (z) in case the employment of the Optionee is terminated for cause, the Option shall thereafter be null and void for all purposes.

     (ii) If the Optionee ceases to be employed by at least one of the employers in the group of employers consisting of the Company and its Affiliates, or ceases to be a director of the Company, whichever may occur later, by reason of his death, all rights to exercise such Option shall terminate fifteen (15) months thereafter.

     (iii) If an Option is granted with a term shorter than ten (10) years, the Committee may extend the term of the Option, but for not more than ten (10) years from the date when the Option was originally granted.

     (b) Attached hereto are resolutions adopted by the Committee, relating to vesting and exercise, which shall apply only to Options granted prior to April 1, 2006.

9. Options Not Transferable

     No Option or interest therein shall be transferable by the person to whom it is granted otherwise than by will or by the applicable laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide in the Agreement relating to the

5

grant of an Option that the Optionee may transfer such Option, without consideration, to members of the Optionee’s immediate family or to one or more trusts for the benefit of such immediate family members or partnerships in which such immediate family members are the only partners. For purposes of this Section 9, “immediate family” shall mean the Optionee’s spouse, parents, children (including adopted children) and grandchildren.

     Further, notwithstanding the foregoing, the Committee may, in its sole discretion, provide in each of those Agreements relating to the grant of an Option whose term will expire in 2000, 2001, 2003, 2004, 2005, 2006 or 2007 that a Director or Senior Management Optionee may transfer such Option to one or more Permitted Transferees with or without consideration to the Optionee provided that the following conditions are satisfied with respect to such transfer: (i) such transfer is made pursuant to the program that the Company has created to facilitate the reduction of its stock option overhang and is accomplished on or before March 5, 2000; (ii) the Permitted Transferee exercises the Option not more than 30 days following such transfer; (iii) all fees and expenses charged by accounting firms, law firms and all other third party consultants in connection with such transfer are paid by the Optionee, and such fees and expenses are not otherwise paid or reimbursed by the Company or any of its Affiliates; (iv) the Permitted Transferee agrees to be bound by all of the terms of the Agreement, except that once transferred by the Optionee to such Permitted Transferee, the Option may not be subsequently transferred except back to the Optionee; (v) if the consideration tendered by the Permitted Transferee for the Option is a term obligation, the principal amount under such term obligation will be due in full no later than the fifth anniversary of the Option’s expiration date; and (vi) the Permitted Transferee agrees to inform the Company’s Stock Plan Administrator upon (a) the sale or other transfer of the shares underlying the Option and (b) any other event or action taken by the Permitted Transferee with respect to the Option, the shares underlying the Option or the consideration for the Option, where such event or action will give rise to a recognizable event for the Company.

10. Exercise of Options

     (a) During the lifetime of an Optionee only he or his guardian or legal representative or transferee may exercise an Option granted to him. In the event of his death, any then exercisable portion of his Option may, within fifteen (15) months thereafter, or earlier date of termination of the Option, be exercised in whole or in part by any person empowered to do so under the deceased Optionee’s will or under the applicable laws of descent and distribution.

     (b) At any time, and from time to time, during the period when any Option, or a portion thereof, is exercisable, such Option, or portion thereof, may be exercised in whole or in part; provided, however, that the Committee may require any Option which is partially exercised to be so exercised with respect to at least a stated minimum number of Shares.

     (c) The option price of the Shares for which an Option is exercised must be paid prior to issuance of the Shares. Such purchase price shall be payable (i) in cash, certified or cashiers’ check, or wire transfer; (ii) at the option of the holder of such Option, in Stock theretofore owned by such holder by either actual delivery of shares or by attestation, or through the withholding by the Company from the Shares otherwise issuable pursuant to the Option of an appropriate number of Shares; (iii) by a combination of cash and such delivery of withholding of Stock; or (iv) delivery of a properly executed exercise notice together with irrevocable instructions to a

6

broker satisfactory to the Company to promptly deliver to the Company the amount of sale or loan proceeds required to pay the exercise price and applicable withholding taxes. For purposes of determining the amount, if any, of the purchase price satisfied by payment in Stock, such Stock shall be valued at its Fair Market Value on the date of exercise. Any Stock delivered in satisfaction of all or a portion of the purchase price shall be appropriately endorsed for transfer and assignment to the Company. No holder of an Option shall be, or have any of the rights or privileges of, a shareholder of the Company in respect of any Shares unless and until certificates representing such Shares shall have been delivered by the Company to such holder or such holder’s interest in such Shares shall have been evidenced by an entry on the Company’s books and records.

     (d) No Shares shall be issued until full payment therefor has been made, and an Optionee shall have none of the rights of a stockholder until Shares are issued to him.

     (e) Nothing herein or in any Agreement executed or Option granted hereunder shall require the Company to issue any Shares upon exercise of an Option if such issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, or any other applicable statute or regulation, as then in effect. Upon the exercise of an Option or portion or part thereof, the Optionee shall give to the Company satisfactory evidence that he is acquiring such Shares for the purpose of investment only and not with a view to their distribution; provided, however, if or to the extent that the Shares subject to the Option shall be included in a registration statement filed by the Company, or one of its Affiliates, such investment representation shall be abrogated.

11. Delivery of Stock Certificates

     As promptly as may be practicable after an Option, or a portion or part thereof, has been exercised as hereinabove provided, the Company shall make delivery of one or more certificates for the appropriate number of Shares. In the event that an Optionee exercises both an Incentive Option, or a portion thereof, and a Nonqualified Option, or a portion thereof, separate stock certificates shall be issued, one for the Shares subject to the Incentive Option and one for the Shares subject to the Nonqualified Option.

12. Changes in Company’s Shares and Certain Corporate Transactions

     (a) In the event of any subdivision or consolidation of outstanding Shares of the Company, declaration of a dividend payable in Shares of the Company or other stock split, then (i) the maximum number of Shares then available for option or award as Restricted Stock under the Plan, (ii) the number of Shares of the Company covered by outstanding Options and awards of Restricted Stock, and (iii) the option price in respect of outstanding Options, and (iv) the total Options and shares of Restricted Stock that may be awarded to any one person shall each be proportionately adjusted by the Board as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Corporation, any consolidation or merger of the Corporation with another corporation or entity, the adoption by the Corporation of any plan of exchange affecting Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Board shall make appropriate adjustments to (i) the maximum number of Shares then available for option or award as Restricted Stock under the Plan, (ii) the number of Shares of the Company covered by outstanding Options and awards of Restricted Stock, and (iii) the option

7

price in respect of outstanding Options, and (iv) the total Options and shares of Restricted Stock that may be awarded to any one person to reflect such transaction; provided that such adjustments under (ii) and (iii) shall only be such as are necessary to maintain the proportionate interest of the holders of the Options and awards of Restricted Stock and preserve, without increasing, the value of such Options and awards of Restricted Stock. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board shall be authorized (x) to assume under the Plan previously issued compensatory awards, or to substitute new Awards for previously issued compensatory awards, including Awards, as part of such adjustment or (y) to cancel Awards that are Options or SARs and give the Participants who are the holders of such Awards notice and opportunity to exercise for 30 days prior to such cancellation. Section 7 of the Plan shall not apply to any transaction covered in this Section 12 (a).

     Except as is otherwise expressly provided herein, the issue by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or option price of Shares then subject to outstanding Options granted under the Plan. Furthermore, the presence of outstanding Options granted under the Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities or preferred or preference stock which would rank above the Shares subject to outstanding Options granted under the Plan; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise.

     (b) Notwithstanding anything to the contrary above, a dissolution or liquidation of the Company, a merger (other than a merger effecting a reincorporation of the Company in another state) or consolidation in which the Company is not the surviving corporation (or survives only as a subsidiary of another corporation in a transaction in which the stockholders of the parent of the Company and their proportionate interests therein immediately after the transaction are not substantially identical to the stockholders of the Company and their proportionate interests therein immediately prior to the transaction), a transaction in which another corporation becomes the owner of 50% or more of the total combined voting power of all classes of stock of the Company, or a change in control (as specified below), shall cause every Option then outstanding to become exercisable in full, subject to the limitation on the aggregate Fair Market Value of Shares that may become first exercisable during any calendar year set forth in Section 16, immediately prior to such dissolution, liquidation, merger, consolidation, transaction, or change in control, to the extent not theretofore exercised, without regard to the determination as to the periods and installments of exercisability contained in the Agreements if (and only if) such Options have not at that time expired or been terminated. For purposes of this paragraph, a change in control shall be deemed to have taken place if: (i) a third person, including a “group” as defined in Section 13(d)(3) of the Act, becomes the beneficial owner of Shares of the Company having 50% or more of the total number of votes that may be cast for the election of directors of the Company; or (ii) as a result of, or in connection with, a contested election for

8

directors, the persons who were directors of the Company immediately before such election shall cease to constitute a majority of the Board. Notwithstanding the foregoing provisions of this paragraph, in the event of any such dissolution, merger, consolidation, transaction, or change in control, the Board may completely satisfy all obligations of the Company and its Affiliates with respect to any Option outstanding on the date of such event by delivering to the Optionee cash in an amount equal to the difference between the aggregate exercise price for Shares under the Option and the Fair Market Value of such Shares on the date of such event, such payment to be made within a reasonable time after such event.

13. Effective Date

     The Plan shall be effective on May 20, 1987, the date of its adoption by the Board, but shall be submitted to the stockholders of the Company for ratification at the next regular or special meeting thereof to be held within twelve (12) months after the Board shall have adopted the Plan. If at such a meeting of the stockholders of the Company a quorum is present, the Plan shall be presented for ratification, and unless at such a meeting the Plan is ratified by the affirmative vote of a majority of the outstanding $0.25 par value common stock of the Company, then and in such event, the Plan and all Options granted under the Plan and all awards of Restricted Stock under the Plan shall become null and void and of no further force or effect.

14. Amendment, Suspension or Termination

     (a) Subject to the other terms and condition of this Plan and the limitations set forth in subsection 14(b) below, the Board may at any time amend, suspend or terminate the Plan; provided, however, that after the stockholders have ratified the Plan, the Board may not, without approval of the stockholders of the Company, amend the Plan so as to:

     (i) Increase the maximum number of Shares subject thereto, as specified above in Sections 4(a) and 12; or

     (ii) Increase the proportionate number of Shares which may be purchased pursuant to Option by any one person or awarded as Restricted Stock to any one person, as specified above in Section 6(a) or below in Section 19(a).

     (b) Neither the Board nor the Committee may amend the Plan or any Agreement to reduce the option price of an outstanding Option or modify, impair or cancel any existing Option without the consent of the holder thereof.

15. Requirements of Law

     Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue Shares under any Option if the issuance thereof would constitute a violation by the Optionee or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange; and as a condition of any sale or issuance of Shares under Option the Company may require such agreements or undertakings, if any, as the Company may deem necessary or advisable to assure compliance with any such law or regulation.

9

16. Incentive Stock Options

     The Committee, in its discretion, may designate any Option granted under the Plan as an Incentive Option intended to qualify under Section 422 of the Code. Any provision of the Plan to the contrary notwithstanding, (i) no Incentive Option shall be granted to any person who, at the time such Incentive Option is granted, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any Affiliate unless the purchase price under such Incentive Option is at least 110 percent of the Fair Market Value of the Shares subject to an Incentive Option at the date of its grant and such Incentive Option is not exercisable after the expiration of five years from the date of its grant, and (ii) the aggregate Fair Market Value of the Shares subject to such Incentive Option and the aggregate Fair Market Value of the shares of stock of any Affiliate (or a predecessor of the Company or an Affiliate) subject to any other incentive stock option (within the meaning of Section 422 of the Code) of the Company and its Affiliates (or a predecessor corporation of any such corporation), that may become first exercisable in any calendar year, shall not (with respect to any Optionee) exceed $100,000, determined as of the date the Incentive Option is granted. For purposes of this Section 16, “predecessor corporation” means a corporation that was a party to a transaction described in Section 424(a) of the Code (or which would be so described if a substitution or assumption under such section had been effected) with the Company, or a corporation which, at the time the new incentive stock option (within the meaning of Section 422 of the Code) is granted, is an Affiliate of the Company or a predecessor corporation of any such corporations.

17. Modification of Options

     Subject to the terms and conditions of and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Options granted under the Plan, or accept the surrender of Options outstanding hereunder (to the extent not theretofore exercised) and authorize the granting of new Options hereunder in substitution therefor (to the extent not theretofore exercised). Notwithstanding the foregoing provisions of this Section 17, no modification of an Option granted hereunder shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option theretofore granted hereunder to such Optionee under the Plan, except as may be necessary, with respect to Incentive Options, to satisfy the requirements of Section 422 of the Code.

18. Agreement Provisions

     (a) Each Agreement shall contain such provisions (including, without limitation, restrictions or the removal of restrictions upon the exercise of the Option and the transfer of shares thereby acquired) as the Committee shall deem advisable. Each Agreement shall identify the Option evidenced thereby as an Incentive Option or Nonqualified Option, as the case may be. Incentive Options and Nonqualified Options may not both be covered by a single Agreement. Each such Agreement relating to Incentive Options granted hereunder shall contain such limitations and restrictions upon the exercise of the Incentive Option as shall be necessary for the Incentive Option to which such Agreement related to constitute an incentive stock option, as defined in Section 422 of the Code.

     (b) The Plan shall be annexed to each Agreement and each Agreement shall recite that it is subject to the Plan and that the Plan shall govern where there is any inconsistency between the Plan and the Agreement.

10

     (c) Each Agreement shall contain an agreement and covenant by the Optionee, in such form as the Committee may require in its discretion, that he consents to and will take whatever affirmative actions are required, in the opinion of the Board or Committee, to enable the Company or appropriate Affiliate to satisfy its Federal income tax and FICA withholding obligations. An Agreement may contain such provisions as the Committee deems appropriate to enable the Company or its Affiliates to satisfy such withholding obligations, including provisions permitting the Company, on exercise of an Option, to withhold Shares otherwise issuable to the Optionee exercising the Option to satisfy the applicable withholding obligations.

     (d) Each Agreement relating to an Incentive Option shall contain a covenant by the Optionee immediately to notify the Company in writing of any disqualifying disposition (within the meaning of section 421(b) of the Code) of an Incentive Option.

19. Restricted Stock

     (a) Shares of Restricted Stock may be awarded by the Committee to such individuals as are eligible for grants of Options, as the Committee may determine at any time and from time to time before the termination of the Plan. The total number of Shares of Restricted Stock awarded to any one person, including directors of the Company, when aggregated with the number of Shares subject to Options in favor of such person, shall not exceed shall not exceed 706,513 Shares.

     (b) A Share of Restricted Stock is a Share that does not irrevocably vest in the holder or that may not be sold, exchanged, pledged, transferred, assigned or otherwise encumbered or disposed of until the terms and conditions set by the Committee at the time of the award of the Restricted Stock have been satisfied. A Share of Restricted Stock shall be subject to a minimum three-year vesting period and shall contain such other restrictions, terms and conditions as the Committee may establish, which may include, without limitation, the rendition of services to the Company or its Affiliates for a specified time or the achievement of specific goals. The Committee may, when it deems it appropriate, require the recipient of an award of Restricted Stock to enter into an agreement with the Company evidencing the understanding of the parties with respect to such award.

     If an individual receives Shares of Restricted Stock, whether or not escrowed as provided below, the individual shall be the record owner of such Shares and shall have all the rights of a stockholder with respect to such Shares (unless the escrow agreement, if any, specifically provides otherwise), including the right to vote and the right to receive dividends or other distributions made or paid with respect to such Shares. Any certificate or certificates representing Shares of Restricted Stock shall bear a legend similar to the following:

     The shares represented by this certificate have been issued pursuant to the terms of the Centex Corporation 1987 Stock Option Plan and may not be sold, pledged, transferred, assigned or otherwise encumbered in any manner except as set forth in the terms of such award dated ____, 19  .

     In order to enforce the restrictions, terms and conditions that may be applicable to an individual’s Shares of Restricted Stock, the Committee may require the individual, upon the receipt of a certificate or certificates representing such Shares, or at any time thereafter, to deposit such certificate or certificates, together with stock powers and other instruments of

11

transfer, appropriately endorsed in blank, with the Company or an escrow agent designated by the Company under an escrow agreement in such form as shall be determined by the Committee.

     After the satisfaction of the terms and conditions set by the Committee at the time of an award of Restricted Stock to an individual, which award is not subject to a non-lapse feature, a new certificate, without the legend set forth above, for the number of Shares that are no longer subject to such restrictions, terms and conditions shall be delivered to the individual.

     If an individual to whom Restricted Stock has been awarded dies after satisfaction of the terms and conditions for the payment of all or a portion of the award but prior to the actual payment of all or such portion thereof, such payment shall be made to the individual’s beneficiary or beneficiaries at the time and in the same manner that such payment would have been made to the individual.

     The Committee may cancel all or any portion of any outstanding restrictions prior to the expiration of such restrictions with respect to any or all of the Shares of Restricted Stock awarded to an individual hereunder only upon the individual’s death, disability or retirement on or after the earlier of (i) age 65 or (ii) for Shares of Restricted Stock awarded prior to April 1, 2006, such time as the sum of the individual’s age and years of service equals 70, provided such individual is at least 55. With respect to the occurrence of any event specified in the last paragraph of Section 12, the restrictions, if any, applicable to any outstanding Shares awarded as Restricted Stock shall lapse immediately prior to the occurrence of the event.

     (c) Subject to the provisions of subsection 19(b) above, if an individual to whom Restricted Stock has been awarded ceases to be employed by at least one of the employers in the group of employers consisting of the Company and its Affiliates, or ceases to be a director of the Company, whichever may occur later, for any reason prior to the satisfaction of any terms and conditions of an award, any Restricted Stock remaining subject to restrictions shall thereupon be forfeited by the individual and transferred to, and reacquired by, the Company or an Affiliate at no cost to the Company or the Affiliate. In such event, the individual, or in the event of his death, his personal representative, shall forthwith deliver to the Secretary of the Company the certificates for the Shares of Restricted Stock remaining subject to such restrictions, accompanied by such instruments of transfer, if any, as may reasonably be required by the Secretary of the Company.

     (d) In case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation and in which there is a reclassification or change (including a change to the right to receive cash or other property) of the Shares (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination, but including any change in such shares into two or more classes or series of shares), the Committee may provide that payment of Restricted Stock shall take the form of the kind and amount of shares of stock and other securities (including those of any new direct or indirect parent of the Company), property, cash or any combination thereof receivable upon such reclassification, change, consolidation or merger.

20. General

     (a) The proceeds received by the Company from the sale of Shares pursuant to Options shall be used for general corporate purposes.

12

     (b) Nothing contained in the Plan, or in any Agreement, shall confer upon any Optionee or recipient of Restricted Stock the right to continue in the employ of the Company or any Affiliate, or interfere in any way with the rights of the Company or any Affiliate to terminate his employment at any time.

     (c) Neither the members of the Board nor any member of the Committee shall be liable for any act, omission, or determination taken or made in good faith with respect to the Plan or any Option or Restricted Stock granted under it; and the members of the Board and the Committee shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including counsel fees) arising therefrom to the full extent permitted by law and under any directors and officers liability or similar insurance coverage that may be in effect from time to time.

     (d) As partial consideration for the granting of each Option or award of Restricted Stock hereunder, the Optionee or recipient shall agree with the Company that he will keep confidential all information and knowledge which he has relating to the manner and amount of his participation in the Plan; provided, however, that such information may be disclosed as required by law or given in confidence to the individual’s spouse, tax or financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. In the event any breach of this promise comes to the attention of the Committee, it shall take into consideration such breach, in determining whether to grant any future Option or award any future Restricted Stock to such individual, as a factor militating against the advisability of granting any such future Option or awarding any such future Restricted Stock to such individual.

     (e) Participation in the Plan shall not preclude an individual from eligibility in any other stock option plan of the Company or any Affiliate or any old age benefit, insurance, pension, profit sharing, retirement, bonus, or other extra compensation plans which the Company or any Affiliate has adopted, or may, at any time, adopt for the benefit of its employees or directors.

     (f) Any payment of cash or any issuance or transfer of Shares to the Optionee, or to his legal representative, heir, legatee, or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Board or Committee may require any Optionee, legal representative, heir, legatee, or distributee, as a condition precedent to such payment, to execute a release and receipt therefor in such form as it shall determine.

     (g) Neither the Committee nor the Board nor the Company guarantees the Shares from loss or depreciation.

     (h) All expenses incident to the administration, termination, or protection of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Company or its Affiliates.

     (i) Records of the Company and its Affiliates regarding an individual’s period of employment, termination of employment and the reason therefor, leaves of absence, re-employment, tenure as a director and other matters shall be conclusive for all purposes hereunder, unless determined by the Board or Committee to be incorrect.

13

     (j) The Company and its Affiliates shall, upon request or as may be specifically required hereunder, furnish or cause to be furnished, all of the information or documentation which is necessary or required by the Board or Committee to perform its duties and functions under the Plan.

     (k) The Company assumes no obligation or responsibility to an Optionee or recipient of Restricted Stock or his personal representatives, heirs, legatees, or distributees for any act of, or failure to act on the part of, the Board or Committee.

     (l) Any action required of the Company shall be by resolution of its Board or by a person authorized to act by resolution of the Board. Any action required of the Committee shall be by resolution of the Committee or by a person authorized to act by resolution of the Committee.

     (m) If any provision of this Plan or any Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan or the Agreement, as the case may be, but such provision shall be fully severable and the Plan or the Agreement, as the case may be, shall be construed and enforced as if the illegal or invalid provision had never been included herein or therein.

     (n) Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company, an Optionee or a recipient of Restricted Stock may change, at any time and from time to time, by written notice to the other, the address which it or he had theretofore specified for receiving notices. Until changed in accordance herewith, the Company and each Optionee and recipient of Restricted Stock shall specify as its and his address for receiving notices the address set forth in the Agreement pertaining to the shares of Stock to which such notice relates.

     (o) Any person entitled to notice hereunder may waive such notice.

     (p) The Plan shall be binding upon the Optionee or recipient of Restricted Stock, his heirs, legatees, and legal representatives, upon the Company, its successors, and assigns, and upon the Board and Committee, and their successors.

     (q) The titles and headings of Sections and paragraphs are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

     (r) All questions arising with respect to the provisions of the Plan shall be determined by application of the laws of the State of Nevada except to the extent Nevada law is preempted by federal law. The obligation of the Company to sell and deliver Shares hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Shares.

14

     (s) Words used in the masculine shall apply to the feminine where applicable, and wherever the context of this Plan dictates, the plural shall be read as the singular and the singular as the plural.

21. Withholding Taxes

     Federal, state, or local law may require the withholding of taxes applicable to gains resulting from the exercise of Nonqualified Options granted hereunder. Unless otherwise prohibited by the Committee, each participant may satisfy any such withholding tax obligation by electing (i) to tender a cash payment to the Company, (ii) to authorize the Company to withhold from the shares of stock of the Company otherwise issuable to the participant as a result of the exercise of the Nonqualified Option a number of shares having a fair market value, as of the date the withholding tax obligation arises, equal to the withholding obligations, or, at the election of the participant, up to the maximum of taxes due (the “Share Withholding Alternative”), (iii) to deliver to the Company previously acquired shares of common stock of the Company having a fair market value, as of the date the withholding tax obligation arises, equal to the amount to be withheld, or at the election of the participant, up to the maximum of taxes due, or (iv) any combination of the foregoing, provided the combination permits the payment of all withholding taxes attributable to the exercise of the Nonqualified Option. A Participant’s election to pay the withholding tax obligation must be made in writing delivered to the Company before the time of exercise, or simultaneously with the exercise, of such Participant’s Nonqualified Option. A valid and binding written election of the Share Withholding Alternative shall be irrevocable. A participant’s failure to elect a withholding alternative prior to the time such election is required to be made shall be deemed to be an election to pay the withholding tax by tendering a cash payment to the Company. For purposes of this Section 21, the fair market value of the shares used to pay withholding taxes is the mean between the highest and lowest price quoted on the New York Stock Exchange for one share of common stock of the Company on the Tax Date. Also, as used in this Section 21, “Tax Date” shall mean the date on which a withholding tax obligation arises in connection with an exercise of a nonqualified stock option, which date shall be presumed to be the date of exercise, unless shares subject to a substantial risk of forfeiture (as defined in section 83(c)(1) or (c)(3) of the Code) are issuable on exercise of the option and the participant does not make a timely election under section 83(b) of the Code with respect thereto, in which case the Tax Date for such shares is the date on which the substantial risk of forfeiture lapses. Fractional shares remaining after payment of the withholding taxes shall be paid to the participant in cash.

15

Resolution related to stock options adopted by the Compensation and Management Development Committee of the Board of Directors of Centex Corporation on May 13, 2004.

     RESOLVED, that all non-qualified options held by Full Time Employees to acquire common stock of Centex Corporation awarded under any of the stock plans listed below, whether awarded before or after May 13, 2004, shall be subject to the following from and after May 13, 2004:

1.	If an optionee shall voluntarily terminate employment and at such time he or she is age 55 or older, has at least 10 Years of Service and the sum of age and Years of Service equals at least 70, then all non-qualified options held by him or her shall immediately vest upon the termination of employment (“Vested Retirement”).
2.	All rights to exercise such vested options will terminate 12 months following the date of such Vested Retirement. However, to the extent that an option agreement provides a longer time to exercise following voluntary termination of employment, then such agreement will control.
3.	As used herein: “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week; and “Years of Service” means an optionee’s years of employment with Centex Corporation or any of its Affiliates. An optionee shall be credited with a Year of Service on each anniversary of the date on which he or she was first employed by Centex Corporation or its Affiliate, provided that the optionee continues to be employed by such employer on such anniversary date.
4.	The stock plans covered are:

• Centex Corporation Amended and Restated 1987 Stock Option Plan

• Seventh Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan

• Amended and Restated Centex Corporation 2001 Stock Plan

• Amended and Restated Centex Corporation 2003 Equity Incentive Plan

     FURTHER RESOLVED, that the appropriate officers of the Corporation are hereby directed to take all steps that they deem necessary or appropriate to communicate the substance of the foregoing resolution to option holders who are affected and, where they deem necessary, to document the substance of this resolution by way of amendments to the stock plans and to existing option agreements.

16

EX-10.2

Exhibit 10.2

TENTH AMENDED AND RESTATED

1998 CENTEX CORPORATION

EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN

(Last Amended on April 1, 2006)

1. Purpose of the Plan.

     This 1998 Centex Corporation Employee Non-Qualified Stock Option Plan (the “Plan”) is intended as an employment incentive to retain in the employ of Centex Corporation (the “Company”), and any Affiliate (including any entity that becomes an Affiliate), persons of training, experience and ability, to attract new employees whose services are considered valuable, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company. For purposes of the Plan, “Affiliate” shall mean any direct or indirect subsidiary or parent of the Company and any partnership, joint venture, limited liability company or other business venture or entity in which the Company owns at least 50% of the ownership interest in such entity, as determined by the Committee in its sole and absolute discretion (such determination by the Committee to be conclusively established by the grant of options by the Committee to an officer or employee of such an entity). It is further intended each option granted pursuant to the Plan (herein, an “Option”) shall constitute non-qualified stock options within the meaning of Section 83 of the Code.

2. Administration of the Plan.

     The Board of Directors shall appoint and maintain a Compensation and Stock Option Committee (hereinafter called the “Committee”) of the Board of Directors to administer the Plan. Subject to the terms and conditions of the Plan, the Committee shall have full power and authority to designate persons to whom Options will be granted, to determine the terms and provisions of respective option agreements (which need not be identical), and to interpret the provisions and supervise the administration of the Plan. The Committee shall have the authority, exercisable in its sole discretion, to grant Options containing such terms and conditions, consistent with the provisions of the Plan, as the Committee shall determine.

3. Designation of Participants.

     The persons eligible for participation in the Plan as recipients of Options shall include all employees of the Company or of any Affiliate, including employees of any entity that becomes an Affiliate after the date that the Plan is adopted, other than any of the following persons (herein, an “Ineligible Person”):

     (a) any person who is an executive officer, as defined by Rule 3b-7 promulgated under the Securities Exchange Act of 1934, as amended, or director of the Company;

     (b) any “officer” of the Company as defined by Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended; or

     (c) any “covered employee” of the Company as defined by Section 162(m)(3) of the Internal Revenue Code.

     Each Option granted hereunder shall be evidenced by an agreement between the Company and the Optionee, which shall contain such terms and conditions as the Committee shall determine in its sole and absolute discretion. Any person who has been granted an Option hereunder (herein, an “Optionee”) may be granted an additional Option or Options, if the Committee shall so determine. Participation in the Plan shall not preclude an Optionee from participating in any other stock option, benefit, bonus, or other compensation plan which the Company or any Affiliate has adopted, or may, from time to time, adopt for the benefit of its employees.

4. Stock Reserved for the Plan.

     Subject to any adjustment provided in Paragraph 9 hereof, a total of 5,500,000 shares of common stock, $0.25 par value, of the Company (the “Stock”) shall be subject to the Plan. As of March 31, 2006, the number of shares available for Option issuance is 96,552. The shares of Stock subject to the Plan shall consist of unissued shares or previously issued shares reacquired and held by the Company, or any Affiliate, and such amount of shares shall be and hereby is reserved for delivery under the Plan. Any of such shares which may remain unsold and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option expire or be canceled prior to its exercise or relinquishment in full, the shares theretofore subject to such Option may again be subjected to an Option under the Plan. If the purchase price or tax withholding is permitted to be satisfied by the tender or withholding of shares of Stock to the Company (by either actual delivery or attestation), the number of shares of Stock tendered or withheld shall be eligible for reissuance under the Plan.

5. Purchase Price.

     (a) The purchase price of each share placed under option pursuant to the Plan (a “Share”) shall be determined by the Committee, but in no event shall be less than 100% of the Fair Market Value of such Share on the date the Option is granted. If an Option is granted as part of an Optionee’s compensation package at the commencement of an Optionee’s employment by the Company or an Affiliate, the Option shall be deemed to have been granted on the date of commencement of such Optionee’s employment by the Company or any Affiliate (the “Commencement Date”) and the purchase price of a Share shall be equal to the Fair Market Value of such Share on the Commencement Date, so long as such Option is not granted more than ninety (90) days following the Commencement Date.

     (b) “Fair Market Value” of a share of Stock means, as of a particular date, the closing price per share of Stock reported on the consolidated transaction reporting system for the New York Stock Exchange, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported.

6. Option Period.

     The Options granted under the Plan shall be for any term set by the Committee, but not more than ten (10) years from the date of granting of each Option. All rights to exercise an Option shall

2

terminate within three (3) months after the date the Optionee ceases to be an employee of the Company or any Affiliate, except that

     (a) the Committee, in its discretion, may provide in new option grants or amend outstanding Options to provide an extended period of time during which an Optionee can exercise an Option up to the maximum permissible period which such Optionee’s Option would have been exercisable in the absence of the Optionee ceasing to be an employee of the Company or an Affiliate;

     (b) if an Optionee ceases to be employed by the Company or an Affiliate by reason of such Optionee’s death, all rights to exercise such Option shall terminate fifteen (15) months after such death; and

     (c) if the Optionee is terminated for cause, as determined by the Committee in its sole and absolute discretion, any Option granted to such Optionee hereunder shall terminate on the date of such termination.

     (d) Attached hereto are resolutions adopted by the Compensation and Management Development Committee of the Board of Directors of the Company, now the “Committee”, relating to vesting and exercise, which shall apply only to Options granted prior to April 1, 2006.

7. Exercise of Options.

     (a) Any Option granted hereunder shall be exercisable from time to time under the terms specified in the Plan, by the Committee, or in the agreement relating to the grant of such Option.

     (b) Each exercise of an Option or a portion of an Option shall be evidenced by a notice in writing by or on behalf of the Optionee to the Company, stating the number of shares with respect to which the Option is being exercised.

     (c) Options may be exercised solely by the Optionee or a Permitted Transferee (hereafter defined).

     (d) The purchase price of the Shares for which an Option is exercised must be paid prior to issuance of the Shares. Such purchase price shall be payable (i) in cash, certified or cashiers’ check, or wire transfer, (ii) at the option of the holder of such Option, in Stock theretofore owned by such holder by either actual delivery of shares or by attestation, or through the withholding by the Company from the Shares otherwise issuable pursuant to the Option of an appropriate number of Shares, (iii) by a combination of cash and such delivery or withholding of Stock; or (iv) by delivery of a properly executed exercise notice together with irrevocable instructions to a broker satisfactory to the Company to promptly deliver to the Company the amount of sale or loan proceeds required to pay the exercise price and applicable withholding taxes. For purposes of determining the amount, if any, of the purchase price satisfied by payment in Stock, such Stock shall be valued at its Fair Market Value on the date of exercise. Any Stock delivered in satisfaction of all or a portion of the purchase price shall be appropriately endorsed for transfer and assignment to the Company. No holder of an Option shall be, or have any of the rights or privileges of, a shareholder of the Company in respect of any Shares unless and until certificates representing such Shares shall have been delivered by the

3

Company to such holder or such holder’s interest in such shares shall have been evidenced by an entry on the Company’s books and records.

     (e) If any law or regulation requires the Company to take any action with respect to the Shares specified in such notice, the time for delivery thereof, which would otherwise be as promptly as possible, shall be postponed for the period of time necessary to take such action.

8. Assignability.

     Unless otherwise permitted by the Committee, no Option or interest therein shall be transferable by the Optionee otherwise than by will or by the applicable laws of descent and distribution. Any person to whom an Option is transferred in accordance with this Section 8 is referred to herein as a “Permitted Transferee”.

9. Adjustments.

     (a) In the event of any subdivision or consolidation of outstanding Stock of the Company, declaration of a dividend payable in shares of Stock of the Company or other stock split, then (i) the number of Shares reserved under this Plan, (ii) the number of Shares covered by outstanding Options, and (iii) the purchase price per share in respect of such Options shall each be proportionately adjusted by the Board as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting shares of Stock of the Company or any distribution to holders of shares of Stock of the Company of securities or property (other than normal cash dividends or dividends payable in shares of Stock of the Company), the Board shall make appropriate adjustments to (i) the number of Shares reserved under this Plan, (ii) the number of Shares covered by outstanding Options, and (iii) the purchase price per share in respect of such Options to reflect such transaction; provided that such adjustments under (ii) and (iii) shall only be such as are necessary to maintain the proportionate interest of the holders of the Options and preserve, without increasing, the value of such Options. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board shall be authorized (x) to assume under the Plan previously issued compensatory options, or to substitute new Options for previously issued compensatory Options as part of such adjustment or (y) to cancel Options and give the Participants who are the holders of such Options notice and opportunity to exercise for 30 days prior to such cancellation.

     (b) Except as is otherwise expressly provided herein, the issue by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or purchase price of Shares. Furthermore, the presence of outstanding Options granted under the Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities or preferred or preference stock (whether or not such issue is prior to, on a party with or junior to the Stock); (iv) the dissolution or liquidation of the

4

Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise.

     (c) Notwithstanding anything to the contrary above, a dissolution or liquidation of the Company, a merger (other than a merger effecting a reincorporation of the Company in another state) or consolidation in which the Company is not the surviving corporation (or survives only as a subsidiary of another corporation in a transaction in which the stockholders of the parent of the Company and their proportionate interests therein immediately after the transaction are not substantially identical to the stockholders of the Company and their proportionate interests therein immediately prior to the transaction), a transaction in which another corporation becomes the owner of 50% or more of the total combined voting power of all classes of stock of the Company, or a change in control (as specified below), shall cause every Option then outstanding to become exercisable in full immediately prior to such dissolution, liquidation, merger, consolidation, transaction, or change in control, to the extent not theretofore exercised, without regard to the determination as to the periods and installments of exercisability contained in the Agreements if (and only if) such Options have not at that time expired or been terminated. For purposes of this paragraph, a change in control shall be deemed to have taken place if: a third person, including a “group” as defined in Section 13(d)(3) of the Act, becomes the beneficial owner of shares of the Company having fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; or as a result of, or in connection with, a contested election for directors, the persons who were directors of the Company immediately before such election shall cease to constitute a majority of the Board. Notwithstanding the foregoing provisions of this paragraph:

     (i) an event, transaction, or corporate action shall not have the effect of accelerating the exercisability of Options if: (A) persons who were the directors of the Company and persons who were the executive officers of the Company as of six months prior to such event immediately after such event constitute a majority of the directors and constitute a majority of executive officers, respectively, for, and own in the aggregate at least ten percent of the voting securities or equity interests of, the Company or the surviving or resulting corporation or the parent of such surviving or resulting corporation; and (B) if the Company is not the surviving or resulting corporation, such surviving or resulting corporation or parent of such surviving or resulting corporation substitutes substantially identical options for any outstanding Options; and

     (ii) in the event of any dissolution, merger, consolidation, transaction, or change in control, the Board may completely satisfy and extinguish all obligations of the Company and its Affiliates with respect to any Option outstanding on the date of such event by delivering to the Optionee cash in an amount equal to the difference between the aggregate purchase price for Shares under the Option and the Fair Market Value of such Shares on the date of such event, such payment to be made within a reasonable time after such event.

10. Tax Withholding.

     The Company shall have the right to deduct applicable taxes from any Option and withhold, at the time of delivery of Shares under the Plan, an appropriate number of Shares for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding

5

to be satisfied by the transfer to the Company of Stock theretofore owned by the holder of the Option with respect to which withholding is required. If Shares or Stock are used to satisfy tax withholding, such Shares or Stock shall be valued based on the Fair Market Value when the tax withholding is required to be made.

11. Effective Date of Plan.

     The effective date of the Plan shall be February 19, 1998. No Option shall be granted pursuant to the Plan after May 13, 2005.

12. Amendment, Modification, Suspension or Termination.

     The Board may amend, modify, suspend or terminate the Plan at any time for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that no amendment, modification, suspension or termination shall be made (i) that would impair the rights of any Optionee under any Option previously granted to such Optionee without such Optionee’s written consent, (ii) prior to approval by the Company’s shareholders if such approval is then required thereby, or (iii) that would reduce the purchase price of any outstanding Option, other than as provided by Section 9(a)(ii).

13. Requirements of Law.

     (a) The Plan, and the granting and exercise of Options hereunder, and the obligation of the Company to sell and deliver shares under such Options, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

     (b) Nothing herein or in any Agreement executed or Option granted hereunder shall require the Company to deliver any Shares upon exercise of an Option if such delivery would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, or any other applicable statute or regulation, as then in effect. Upon the exercise of an Option or portion or part thereof, the Optionee may be required to give to the Company satisfactory evidence that he is acquiring such Shares for the purpose of investment only and not with a view to their distribution; provided, however, if or to the extent that the Shares subject to the Option shall be included in a registration statement filed by the Company, or one of its Affiliates, such investment representation shall be abrogated.

14. Miscellaneous.

     (a) Nothing contained in the Plan shall confer upon any Optionee the right to continue in the employ of the Company or any Affiliate, or interfere in any way with the rights of the Company or any Affiliate to terminate his employment at any time.

     (b) Any payment of cash or any delivery of Shares to the Optionee, or to an Optionee’s Permitted Transferee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such person with respect to the Option being exercised (or portion thereof). The Committee may require any Optionee, or Permitted Transferee, as a condition

6

precedent to such payment or delivery, to execute a release and receipt therefor in such form as it shall determine.

     (c) Neither the Committee nor the Company guarantees the Shares from loss or depreciation.

     (d) Records of the Company and its Affiliates regarding an individual’s period of employment, termination of employment and the reason therefor, leaves of absence, re-employment and other matters shall be conclusive for all purposes hereunder, unless determined by the Committee to be incorrect in its sole and absolute discretion.

     (e) The Company assumes no obligation or responsibility to an Optionee or any Permitted Transferee for any act of, or failure to act on the part of, the Committee.

     (f) If any provision of the Plan is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan, but such provision shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein.

     (g) The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

     (h) All questions arising with respect to the provisions of the Plan shall be determined by application of the laws of the State of Nevada except to the extent Nevada law is preempted by federal law. The obligation of the Company to sell and deliver Shares hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Shares.

     Words used in the masculine shall apply to the feminine where applicable, and wherever the context of the Plan dictates, the plural shall be read as the singular and the singular as the plural.

7

Resolution related to stock options adopted by the Compensation and Management Development Committee of the Board of Directors of Centex Corporation on May 13, 2004.

     RESOLVED, that all non-qualified options held by Full Time Employees to acquire common stock of Centex Corporation awarded under any of the stock plans listed below, whether awarded before or after May 13, 2004, shall be subject to the following from and after May 13, 2004:

1.	If an optionee shall voluntarily terminate employment and at such time he or she is age 55 or older, has at least 10 Years of Service and the sum of age and Years of Service equals at least 70, then all non-qualified options held by him or her shall immediately vest upon the termination of employment (“Vested Retirement”).
2.	All rights to exercise such vested options will terminate 12 months following the date of such Vested Retirement. However, to the extent that an option agreement provides a longer time to exercise following voluntary termination of employment, then such agreement will control.
3.	As used herein: “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week; and “Years of Service” means an optionee’s years of employment with Centex Corporation or any of its Affiliates. An optionee shall be credited with a Year of Service on each anniversary of the date on which he or she was first employed by Centex Corporation or its Affiliate, provided that the optionee continues to be employed by such employer on such anniversary date.
4.	The stock plans covered are:

• Centex Corporation Amended and Restated 1987 Stock Option Plan

• Seventh Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan

• Amended and Restated Centex Corporation 2001 Stock Plan

• Amended and Restated Centex Corporation 2003 Equity Incentive Plan

     FURTHER RESOLVED, that the appropriate officers of the Corporation are hereby directed to take all steps that they deem necessary or appropriate to communicate the substance of the foregoing resolution to option holders who are affected and, where they deem necessary, to document the substance of this resolution by way of amendments to the stock plans and to existing option agreements.

8

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED

CENTEX CORPORATION 2001 STOCK PLAN

(Last Amended on April 1, 2006)

1. Purpose

     The purpose of the Plan is to assist the Company in attracting and retaining as officers and key employees of the Company and its Affiliates, and as Directors of the Company, individuals of training, experience and ability, and to furnish additional incentive to such individuals by encouraging them to become owners of Shares, by granting to such individuals Options or Restricted Stock.

2. Definitions

     Unless the context otherwise requires, the following words as used herein shall have the following meanings:

     “Affiliate” — Any corporation or other entity that is a direct or indirect parent or subsidiary (including, without limitation, partnerships and limited liability companies) of the Company.

     “Agreement” — The written agreement, whether delivered on paper or by electronic medium, between the Company and the Optionee or holder of Restricted Stock evidencing the Option or Restricted Stock granted by the Company, which shall be in such form and contain such provisions as the Committee may prescribe.

     “Board” — The Board of Directors of the Company, as the same may be constituted from time to time.

     “Code” — The Internal Revenue Code of 1986, as amended from time to time.

     “Committee” — The Compensation and Stock Option Committee of the Board, composed solely of two or more Directors who are appointed by the Board from time to time and who satisfy the requirements of Rule 16b-3(b)(3) promulgated under the Securities Exchange Act of 1934, or any successor provision.

     “Company” — Centex Corporation, a Nevada corporation.

     “Director” — An individual who is a member of the Board.

     “Disability” — Total and permanent disability as set forth in Section 22(e)(3) of the Code, or any successor provision.

     “Employer” — The Company and any Affiliate.

1 

     “Fair Market Value” — The closing price per Share reported on the consolidated transaction reporting system for the New York Stock Exchange as of a particular date or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was reported.

     “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week.

     “Option” — A nonqualified option to purchase one or more Shares granted under and pursuant to the Plan. A nonqualified option does not satisfy the requirements of Section 422 of the Code, or any successor provision.

     “Optionee” — An individual who has been granted an Option under the Plan.

     “Participant” — An individual who has been granted Restricted Stock or an Option under the Plan.

     “Plan” — This Centex Corporation 2001 Stock Plan.

     “Restricted Stock” — Shares issued pursuant to Section 17 of the Plan.

     “Retirement” — The Participant’s voluntary termination of employment from the Employer including, where the context indicates, Vested Retirement with respect to Options or Restricted Stock granted prior to April 1, 2006.

     “Share” — A share of the Company’s present twenty-five cents ($0.25) par value common stock and any share or shares of capital stock or other securities of the Company hereafter issued or issuable upon, in respect of or in substitution or in exchange for each present share. Such Shares may be unissued or reacquired Shares, as the Board, in its sole and absolute discretion, shall from time to time determine.

     “Vested Retirement” — The voluntary termination of all employment of an Optionee or a Participant (excluding a Non-employee Director) who is a Full Time Employee from the Employer at any time after he or she (1) is age 55 or older, (2) has at least 10 Years of Service and (3) the combination of age and Years of Service equal at least 70. Calculation of eligibility for Vested Retirement shall be based on whole years of age and Years of Service on the date as of which the calculation is being made. Any partial years shall be disregarded. In no event will the Plan’s Vested Retirement provisions apply to Options or Restricted Stock granted on or after April 1, 2006.

     “Years of Service” — The Optionee’s or Participant’s years of employment with an Employer. An Optionee or Participant shall be credited with a Year of Service on each anniversary of the date on which he or she was first employed with an Employer, provided that the Optionee or Participant continues to be employed by an Employer on such anniversary date.

2

3. Administration

     Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of this Plan. The Committee may, in its discretion, provide for the extension of the exercisability of an Option, accelerate the vesting or exercisability of an Option or Restricted Stock award, eliminate or make less restrictive any restrictions applicable to an Option or Restricted Stock award, waive any restriction or other provision of this Plan or an Option or Restricted Stock award or otherwise amend or modify an Option or Restricted Stock award in any manner that is either (i) not adverse to the Optionee or holder of Restricted Stock to whom such Option or Restricted Stock was granted or (ii) consented to by the Optionee or holder of Restricted Stock. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any award in the manner and to the extent the Committee deems necessary or desirable to further the Plan purposes. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned.

4. Shares Subject to Plan

     (a) A maximum of 3,888,482 Shares shall be subject to grants of Options or awards of Restricted Stock under the Plan; provided, however, that of such number of Shares, no more than 350,000 Shares shall be subject to awards of Restricted Stock; and provided further, that such maximum shall be increased or decreased as provided in Section 12 hereof. The Shares subject to the Plan shall consist of unissued Shares or previously issued Shares reacquired and held by the Company or any Affiliate.

     (b) At any time and from time to time after the Plan takes effect, the Committee, pursuant to the provisions herein set forth, may grant Options and award Restricted Stock until the maximum number of Shares shall be exhausted or the Plan shall be sooner terminated.

     (c) If any Option expires or is canceled without being fully exercised or is settled in cash, or if any Restricted Stock previously awarded is reacquired by the Company, the number of Shares with respect to which such Option shall not have been exercised prior to its expiration or cancellation and the number of Shares of such Restricted Stock so reacquired may again be optioned or awarded pursuant to the provisions hereof.

     (d) If the option price or any applicable tax withholding obligation payable upon exercise of an Option is satisfied by the tender or withholding of Shares to or by the Company (by either actual delivery or attestation), the number of Shares so tendered or withheld shall be eligible for reissuance under the Plan.

3

5. Eligibility

     Eligibility for receipt of a grant of Options under the Plan shall be confined to (a) a limited number of persons who are employed by the Company or an Affiliate and hold key positions in and for the Company or an Affiliate and (b) Directors.

6. Granting of Options

     (a) From time to time while the Plan is in effect, the Committee may in its absolute discretion select from among the persons eligible to receive a grant of Options under the Plan (including persons who have already received such grants of Options) such one or more of them as in the opinion of the Committee should be granted Options. The Committee shall thereupon, likewise in its absolute discretion, determine the number of Shares to be allotted for option to each person so selected.

     (b) Each person so selected shall be granted an Option to purchase the number of Shares so allotted to him, upon such terms and conditions, consistent with the provisions of the Plan, as the Committee may specify.

     (c) Each Option granted under the Plan shall be evidenced by an Agreement setting forth the terms and conditions of the Option. The date that the Committee specifies to be the grant date of an Option to an individual shall constitute the date on which the Option covered by such Agreement is granted. In no event, however, shall an Optionee gain any rights in addition to those specified by the Committee in its grant, regardless of the time that may pass between the grant of the Option and the actual execution of the Agreement by the Company and the Optionee.

     (d) No person may be granted Options under this Plan for more than 250,000 Shares in any one-year period.

7. Option Price

     The option price for each Share covered by each Option shall not be less than 100% of the Fair Market Value of the Share at the time the Option is granted. Notwithstanding the foregoing, if there occurs any transaction of a type described in Section 12(a), (b) or (c) hereof, the option price of the Shares subject to each existing Option adjusted pursuant to such provisions or any new Option or assumed option issued pursuant to such provisions may be different than the Fair Market Value of the Shares at the time the Option is granted; provided, however, in no event shall –

     (a) the excess of the aggregate Fair Market Value of the Shares subject to the Option immediately after the transaction over the aggregate option price of such Shares be more than the excess of the aggregate Fair Market Value of all shares subject to the other option immediately prior to the transaction over the aggregate option price of shares subject to the other option; and

4

     (b) the ratio of the option price to the Fair Market Value of the Shares subject to the Option immediately after the transaction be more favorable to the Optionee than the ratio of the option price to the Fair Market Value of the shares subject to the other option immediately prior to such transaction, determined on a share-by-share basis.

8. Option Period

     Each Option shall run for such period of time as the Committee may specify, but in no event for longer than seven (7) years from the date when the Option is granted, including the period of time provided in the subsections of this Section 8; and subject to the following limits:

     (a) Except as provided below in this subsection (a) or in subsection (f), all rights to exercise an Option shall terminate within four (4) months after the date the Optionee ceases to be an employee of the Company or an Affiliate, or after the date the Optionee ceases to be a Director, whichever may occur later, for any reason other than death or Disability (but in no event later than the end of the original period of the Option); except that (i) in the case of an Optionee who is a Director and, on the date the Optionee ceases to be a Director (and if also an employee ceases to be an employee), has (A) at least ten (10) years of service as a Director, all Shares subject to such Option will vest on such date and all rights to exercise such Option shall terminate three (3) years after the date the Optionee ceases to be a Director (but in no event later than the end of the original period of the Option), or (B) less than ten (10) years of service as a Director, all Shares subject to such Option will continue to vest in accordance with its terms for a period of three (3) years following such date, and all rights to exercise such Option shall terminate three (3) years after such date; and (ii) if the Optionee’s employment or service as a Director is terminated for cause, the entire Option, including both exercisable and unexercisable Shares, shall immediately terminate and thereafter be null and void for all purposes.

     (b) In the case of an Optionee who satisfies the test for Vested Retirement, Options granted prior to April 1, 2006 and held by such Optionee will automatically vest upon Vested Retirement.

     (c) If the Optionee ceases to be employed by the Company and its Affiliates, or ceases to be a Director, whichever may occur later, by reason of his death, all rights to exercise any Option held by such Optionee shall terminate fifteen (15) months after his death (but in no event later than the end of the original period of the Option).

     (d) If the employment of the Optionee with the Company or any of its Affiliates shall terminate as a result of a Disability, he may, within six (6) months following such date (but in no event later than the end of the original period of the Option), exercise any Option held by such Optionee, in each case, to the extent he was entitled to exercise such Option on the date of termination of employment. To the extent that the Shares covered by his Option were unexercisable as of such termination of employment, the Option shall terminate. If the Optionee does not exercise such Option (which he was entitled to exercise as of such termination) within the time specified herein, the Option shall thereupon terminate.

5

     (e) If an Option is granted with a term shorter than seven (7) years, the Committee may extend the term of the Option, but for not more than seven (7) years from the date when the Option was originally granted.

     (f) Notwithstanding the foregoing, if an Option granted prior to April 1, 2006 is held by an Optionee who retires and satisfies the test for Vested Retirement, then all rights to exercise any and all Options will terminate 12 months following the date of the Vested Retirement. To the extent that an Agreement provides for a longer time to exercise, then such Agreement will control.

9. Options Not Transferable

     Unless otherwise determined by the Committee and provided in the Agreement, no Option or interest therein shall be transferable by an Optionee otherwise than by will or by the applicable laws of descent and distribution. The Committee may prescribe and include in an Agreement any applicable restrictions or conditions on transfer of Options. Any attempted assignment in violation of this Section 9 shall be null and void.

10. Exercise of Options

     (a) During the lifetime of an Optionee, only he or his guardian or legal representative or transferee may exercise an Option granted to him. In the event of his death, any then exercisable portion of his Option may, within fifteen (15) months thereafter or earlier date of termination of the original period of Option, be exercised in whole or in part by any person empowered to do so under the deceased Optionee’s will or under the applicable laws of descent and distribution.

     (b) At any time, and from time to time, during the period when any Option, or a portion thereof, is exercisable, such Option, or portion thereof, may be exercised in whole or in part; provided, however, that the Committee may require in the Agreement that any Option which is partially exercised be so exercised with respect to at least a stated minimum number of Shares.

     (c) Each exercise of an Option or portion or part thereof shall be evidenced by a notice in writing by or on behalf of the Optionee to the Company. The purchase price of the Shares for which an Option is exercised must be paid prior to issuance of the Shares. The Exercise price of an Option must be paid by cash, certified or cashiers’ check, wire transfer, delivery (either actually or by attestation) of whole Shares owned by the Optionee, or through the withholding by the Company from the Shares otherwise issuable pursuant to the Option of an appropriate number of Shares, or any combination of the aforementioned methods of payment, prior to issuance of the Shares. For purposes of determining the amount, if any, of the option price satisfied by delivery or withholding of Shares, such Shares shall be valued at their Fair Market Value on the date of exercise. Any Shares actually delivered in satisfaction of all or a portion of the option price shall be appropriately endorsed for transfer and assignment to the Company.

6

     (d) No Shares shall be issued until full payment therefor has been made, and an Optionee shall have none of the rights of a stockholder until Shares are issued to him.

     (e) Nothing herein or in any Agreement evidencing an Option granted hereunder shall require the Company to issue any Shares upon exercise of an Option if such issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, or any other applicable statute or regulation, as then in effect. Upon the exercise of an Option or portion or part thereof, the Optionee shall give to the Company satisfactory evidence that he is acquiring such Shares for the purpose of investment only and not with a view to their distribution; provided, however, if or to the extent that the Shares subject to the Option shall be included in a registration statement filed by the Company or an Affiliate, such investment representation shall not be required.

11. Delivery of Shares Upon Exercise

     As promptly as may be practicable after an Option, or a portion or part thereof, has been exercised as hereinabove provided, the Company shall make delivery of the Shares acquired upon exercise of such Option to the Optionee or shall cause such Optionee’s interest in such Shares to be evidenced by an entry on the Company’s books and records.

12. Changes in Company’s Shares and Certain Corporate Transactions

     (a) If at any time while the Plan is in effect there shall occur any subdivision or consolidation of outstanding Shares, declaration of a dividend payable in Shares or other stock split, then, and in each such event, the Committee shall make proportionate adjustments to:

     (i) the maximum number of Shares then subject to being optioned or awarded as Restricted Stock under the Plan, to the end that the same proportion of the Company’s issued and outstanding Shares shall continue to be subject to being so optioned and awarded;

     (ii) the number of Shares and the option price per Share thereof then subject to purchase pursuant to each Option previously granted, to the end that the same proportion of the Company’s issued and outstanding Shares shall remain subject to purchase at the same aggregate option price;

     (iii) the number of Shares of Restricted Stock previously awarded under the Plan, to the end that each award represents the same proportion of the Company’s issued and outstanding Shares; and

     (iv) the number of Shares subject to Options that may be granted to any person in any one-year period pursuant to the limitation set forth in Section 6(d), to the end that each such limitation represents the same proportion of the Company’s issued and outstanding Shares.

7

     (b) If at any time while the Plan is in effect there shall occur any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Shares or any distribution to holders of Shares of securities or property (other than normal cash dividends or dividends payable in Shares), the Committee may make proportionate adjustments to:

     (i) the number of Shares and the option price per Share thereof then subject to purchase pursuant to each Option previously granted;

     (ii) the number of Shares of Restricted Stock previously awarded under the Plan;

     (iii) the number of Shares subject to Options that may be granted to any person in any one-year period pursuant to the limitation set forth in Section 6(d); and

     (iv) the maximum number of Shares then subject to being optioned or awarded as Restricted Stock under the Plan;

     in each case, in order to reflect the transaction and (in the case of clauses (i) and (ii) above) to the end of maintaining the proportionate interest of the holders of Options and Shares of Restricted Stock; provided, however, that such adjustments shall only be made to the extent necessary to preserve, without exceeding, the value of such Options and Shares of Restricted Stock.

     (c) In the event of a merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee shall be authorized to issue or assume new Options or Shares of Restricted Stock as it determines is appropriate in substitution for, or to reflect the assumption of, any other option, restricted stock grant or other award, whether or not awarded under this Plan.

     (d) Except as is otherwise expressly provided herein, the issuance by the Company of shares of its capital stock of any class or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or option price of Shares then subject to outstanding Options granted under the Plan. Furthermore, the presence of outstanding Options granted under the Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issuance by the Company of debt securities or preferred or preference stock that would rank above the Shares subject to outstanding Options or Shares of Restricted Stock granted under the Plan; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise.

8

     (e) Notwithstanding anything to the contrary above, a dissolution or liquidation of the Company, a merger (other than a merger effecting a reincorporation of the Company in another state) or consolidation in which the Company is not the surviving corporation (or survives only as a subsidiary of another corporation in a transaction in which the stockholders of the parent of the Company and their proportionate interests therein immediately after the transaction are not substantially identical to the stockholders of the Company and their proportionate interests therein immediately prior to the transaction) or a change in control (as specified below) shall cause every Option then outstanding to become exercisable in full and shall cause every restriction with respect to any Shares of Restricted Stock to terminate immediately prior to such dissolution, liquidation, merger, consolidation or change in control, to the extent not theretofore exercisable or free of restrictions, without regard to the determination as to the periods and installments of exercisability or termination of restrictions contained in the Agreements if, and only if, such Options have not at that time theretofore expired or been terminated or such Shares of Restricted Stock have not at that time theretofore been cancelled or forfeited. For purposes of this Section 12(c), a change in control shall be deemed to have taken place if (i) a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of Shares of the Company having 50% or more of the total number of votes that may be cast for the election of directors of the Company or (ii) as a result of, or in connection with, a contested election for directors, the persons who were directors of the Company immediately before such election shall cease to constitute a majority of the Board. Notwithstanding the foregoing provisions of this paragraph, in the event of any such dissolution, merger, consolidation or change in control, the Board may completely satisfy all obligations of the Company and its Affiliates with respect to any Options or Shares of Restricted Stock outstanding on the date of such event and cancel such Options or Shares of Restricted Stock by (A) in the case of Options, delivering to the Optionee cash in an amount equal to the difference between the aggregate option price for Shares under the Options and the Fair Market Value of such Shares on the date of such event and (B) in the case of Shares of Restricted Stock, delivering to the holder of such Shares cash in an amount equal to the Fair Market Value of such Shares on the date of such event, which payment shall in either case be made within a reasonable time after such event.

     (f) As of March 31, 2006 the number of shares available for issuance of Options or awards of Restricted Stock is 668,592, and there shall be no more awards of Restricted Stock.

13. Effective Date

     The Plan shall be effective on May 17, 2001, the date of its adoption by the Board, but shall be submitted to the stockholders of the Company for approval at the next regular or special meeting thereof to be held within twelve (12) months after the Board shall have adopted the Plan. If, at such a meeting of the stockholders of the Company, the Plan is not approved by the affirmative vote of a majority of the $0.25 par value common stock of the Company present and entitled to vote at such meeting, then, and in such event, the Plan and all Options granted under the Plan and all awards of Restricted Stock under the Plan shall become null and void and of no further force or effect.

9

14. Amendment, Suspension or Termination of the Plan

     The Board may amend, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (a) no amendment or alteration that would adversely affect the rights of any holder under any award previously granted to such person shall be made without the consent of such person and (b) after the stockholders of the Company have ratified the Plan, no amendment or alteration that would increase the maximum number of Shares subject to the Plan (as provided in Section 4(a)) or decrease the option price of an Option below 100% of the Fair Market Value as of the date such Option was granted (as provided in Section 7) may be made without obtaining approval of the stockholders.

15. Requirements of Law

     Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue Shares under any Option if the issuance thereof would constitute a violation by the Optionee or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange. As a condition of any sale or issuance of Shares under an Option, the Company may require such agreements or undertakings, if any, as the Company may deem necessary or advisable to ensure compliance with any such law or regulation.

16. Modification of Options

     Except as provided in Section 12, notwithstanding any other provision of this Plan to the contrary, (i) after an Option has been awarded, the price at which Shares may be purchased upon exercise of such Option shall not be amended and (ii) no Option shall be granted in exchange for a previously granted Option if the option price of such previously granted Option is greater than the option price of such replacement Option. Notwithstanding the foregoing provisions of this Section 16, no modification or cancellation of an Option granted hereunder shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option theretofore granted hereunder to such Optionee under the Plan.

17. Restricted Stock

     (a) Subject to the terms and conditions of, and within the limitations of, the Plan, Shares of Restricted Stock may be awarded by the Committee to such individuals as are eligible for grants of Options, as the Committee may determine at any time and from time to time before the termination of the Plan. Each award of Restricted Stock shall be evidenced by an Agreement setting forth the terms and conditions of the award.

     (b) A Share of Restricted Stock is a Share that does not irrevocably vest in the holder or that may not be sold, exchanged, pledged, transferred, assigned or otherwise encumbered or disposed of until the terms and conditions set by the Committee at the time of the award of the Restricted Stock have been satisfied. A Share of Restricted Stock shall be subject to such other restrictions, terms and conditions as the Committee may establish, which

10

may include, without limitation, the rendition of services to the Company or its Affiliates for a specified time or the achievement of specific goals.

     (c) If an individual receives Shares of Restricted Stock, whether or not escrowed as provided below, the individual shall be the record owner of such Shares and shall have all the rights of a stockholder with respect to such Shares (unless the escrow agreement, if any, specifically provides otherwise), including the right to vote and the right to receive dividends or other distributions made or paid with respect to such Shares. Any certificate or certificates representing Shares of Restricted Stock may bear a legend similar to the following:

     The shares represented by this certificate have been issued pursuant to the terms of the Centex Corporation 2001 Stock Plan and may not be sold, pledged, transferred, assigned or otherwise encumbered in any manner except as set forth in the terms of such award dated ______, 20______.

     (d) In order to enforce the restrictions, terms and conditions that may be applicable to an individual’s Shares of Restricted Stock, the Committee may require the individual, upon the receipt of a certificate or certificates representing such Shares, or at any time thereafter, to deposit such certificate or certificates, together with stock powers and other instruments of transfer, appropriately endorsed in blank, with the Company or an escrow agent designated by the Company under an escrow agreement in such form as shall be determined by the Committee.

     (e) After the satisfaction of the terms and conditions set by the Committee at the time of an award of Restricted Stock to an individual, if the original certificate was legended, a new certificate, without the legend set forth above, for the number of Shares that are no longer subject to such restrictions, terms and conditions shall be delivered to the individual, either by delivery of a physical certificate or an electronic transfer to a broker.

     (f) The Committee may cancel all or any portion of any outstanding restrictions prior to the expiration of such restrictions with respect to any or all of the Shares of Restricted Stock awarded to an individual hereunder on such terms as the Committee may deem appropriate.

     (g) Subject to the other provisions of this Section 17, including paragraph (i) below, and unless otherwise determined by the Committee, if an individual to whom Restricted Stock has been awarded ceases to be employed by the Company or an Affiliate, or ceases to be a director of the Company, whichever may occur later, for any reason prior to the satisfaction of any terms and conditions of an award, any Restricted Stock remaining subject to restrictions shall thereupon be forfeited by the individual and transferred to, and reacquired by, the Company or an Affiliate at no cost to the Company or the Affiliate. In such event, the individual, or in the event of his death, his personal representative, shall forthwith deliver to the Secretary of the Company the certificates for the Shares of Restricted Stock remaining subject to such restrictions, accompanied by such instruments of transfer, if any, as may reasonably be required by the Secretary of the Company.

11

     (h) The Committee may determine that an award of Restricted Stock will be subject to restriction until one or more performance goals established by the Committee have been achieved. With respect to such an award, the restrictions shall lapse and the award shall vest only upon achievement of the attainment of one or more pre-established, objective performance goals established by the Committee prior to the earlier to occur of (x) 90 days after the commencement of the period of service to which the performance goal relates and (y) the lapse of 25% of the period of service (as established in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A performance goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. Such a performance goal may be based on one or more business criteria that apply to the individual, one or more business units of the Company, or the Company as a whole, and may include one or more of the following: operating income, operating margin, earnings before interest, taxes, depreciation and amortization (EBITDA), pre-tax income, net income, net earnings per share, net earnings per share growth, return on beginning stockholder’s equity, return on average net assets, total shareholder return relative to other companies in Centex Corporation’s industry group, debt/capitalization ratio and customer satisfaction. Unless otherwise stated, such a performance goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to performance goals, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation §1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of performance goals, the Committee must certify in writing that applicable performance goals and any of the material terms thereof were, in fact, satisfied. No individual may be granted Restricted Stock awards subject to performance goals designed to comply with Section 162(m) of the Code having a value of more than $6,000,000 in any given one-year period.

     (i) The restrictions set forth in an Agreement relative to Restricted Stock granted prior to April 1, 2006 will terminate immediately if the Participant retires and at the time of Retirement he or she qualifies for Vested Retirement under the Plan.

18. Tax Withholding

     The Company shall have the right to take whatever affirmative actions are required, in the opinion of the Committee, to enable the Company or appropriate Affiliate to satisfy any applicable payroll tax withholding requirements in connection with the exercise of Options granted or Restricted Stock awarded under the Plan. Without limiting the generality of the foregoing provision, the Company shall have the right to (a) withhold cash from a same-day-sale exercise of an Option, (b) deduct applicable taxes from any Option or Restricted Stock award by withholding, at the time of delivery and/or vesting of Shares under the Plan, an appropriate number of Shares for payment of taxes required by law, (c) permit its withholding obligations to be satisfied by the transfer to the Company of Shares theretofore owned by the holder of the Option or recipient of Restricted Stock with respect to which withholding is required, in which case such Shares shall be valued based on the Fair Market Value thereof

12

when the tax withholding is required to be made, or (d) take such other action as may be necessary in the opinion of the Company to satisfy all applicable tax withholding obligations.

19. General

     (a) The proceeds received by the Company from the sale of Shares pursuant to Options shall be used for general corporate purposes.

     (b) Nothing contained in the Plan or in any Agreement shall confer upon any Optionee or recipient of Restricted Stock the right to continue in the employ of the Company or any Affiliate or interfere in any way with the rights of the Company or any Affiliate to terminate such Optionee’s or recipient’s employment at any time.

     (c) Neither the members of the Board nor any member of the Committee shall be liable for any act, omission or determination taken or made in good faith with respect to the Plan or any Option or award of Restricted Stock granted under it, and the members of the Board and the Committee shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including counsel fees) arising therefrom to the full extent permitted by law and under any directors and officers liability or similar insurance coverage that may be in effect from time to time.

     (d) As partial consideration for the granting of each Option or award of Restricted Stock hereunder, the Optionee or recipient shall agree with the Company that he will keep confidential all information and knowledge that he has relating to the manner and amount of his participation in the Plan; provided, however, that such information may be disclosed as required by law or given in confidence to the individual’s spouse, tax or financial advisors or to a financial institution to the extent that such information is necessary to secure a loan.

     (e) Participation in the Plan shall not preclude an individual from eligibility in any other stock option plan of the Company or any Affiliate or any old-age benefit, insurance, pension, profit sharing, retirement, bonus or other extra compensation plans that the Company or any Affiliate has adopted or may, at any time, adopt for the benefit of its employees or directors.

     (f) Any payment of cash or any issuance or transfer of Shares to the Optionee or to his legal representative, heir, legatee or distributee in accordance with the provisions hereof shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Board or Committee may require any Optionee or recipient of an award of Restricted Stock, legal representative, heir, legatee or distributee, as a condition precedent to such payment, to execute a release and receipt therefor in such form as it shall determine.

     (g) Neither the Committee, the Board nor the Company guarantees the Shares from loss or depreciation.

     (h) All expenses incident to the administration of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Company or its Affiliates.

13

     (i) Records of the Company and its Affiliates regarding an individual’s period of employment, termination of employment and the reason therefor, leaves of absence, reemployment, tenure as a Director and other matters shall be conclusive for all purposes hereunder, unless determined by the Board or Committee to be incorrect.

     (j) The Company and its Affiliates shall, upon request or as may be specifically required hereunder, furnish or cause to be furnished all of the information or documentation that is necessary or required by the Board or Committee to perform their duties and functions under the Plan.

     (k) The Company assumes no obligation or responsibility to an Optionee or recipient of Restricted Stock, or to such Optionee’s or recipient’s personal representatives, heirs, legatees or distributees, for any act of, or failure to act on the part of, the Board or Committee.

     (l) Any action required of the Company shall be by resolution of the Board or by a person authorized to act by resolution of the Board. Any action required of the Committee shall be by resolution of the Committee or by a person authorized to act by resolution of the Committee.

     (m) If any provision of the Plan or any Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan or the Agreement, as the case may be, but such provision shall be fully severable and the Plan or the Agreement, as the case may be, shall be construed and enforced as if the illegal or invalid provision had never been included herein or therein.

     (n) Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith. The Company, an Optionee or a recipient of Restricted Stock may change, at any time and from time to time, by written notice to the other, the address that it, he or she had theretofore specified for receiving notices. Until changed in accordance herewith, the Company and each Optionee and recipient of Restricted Stock shall specify as its and his address for receiving notices the address set forth in the Agreement pertaining to the shares of Stock to which such notice relates or otherwise provided to the other in accordance with the Company’s policies for maintaining such information.

     (o) Any person entitled to notice hereunder may waive such notice.

     (p) The Plan shall be binding upon the Optionee or recipient of Restricted Stock, his heirs, legatees and legal representatives, upon the Company, its successors and assigns, and upon the Board and Committee and their successors.

14

     (q) The titles and headings of Sections and paragraphs are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

     (r) All questions arising with respect to the provisions of the Plan shall be determined by application of the laws of the State of Nevada, except to the extent Nevada law is preempted by federal law. The obligation of the Company to sell and deliver Shares hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale or delivery of such Shares.

     (s) Words used in the masculine shall apply to the feminine where applicable, and wherever the context of the Plan dictates, the plural shall be read as the singular and the singular as the plural.

     (t) Transactions related to the Plan, including but not limited to the delivery and acceptance of any Agreement and the exercise of any Option, whether in whole or in part, may be evidenced by either signed documentation or on-line transactions through the Corporate Stock Benefit Services web site of the Company’s designated broker, UBS PaineWebber Inc., or the successor thereof.

     (u) If any provision of this Plan has the effect of increasing the number of shares available for Awards hereunder by adding back shares and such provision constitutes a “formula” under the formula plan rules of the New York Stock Exchange, Inc. (“NYSE”) (including Section 303A.08 of the NYSE’s Listed Company Manual), then the portion of such provision that constitutes a “formula” shall be operative only until, and shall cease to be effective on, the date that is 10 years after July 19, 2003 or, if later, the date of the most recent shareholder approval of the Plan.

15

EX-10.4

Exhibit 10.4

AMENDED AND RESTATED

CENTEX CORPORATION LONG TERM INCENTIVE PLAN

Effective October 1, 2001

(Last Amended on April 1, 2006)

1. Objectives

     The Centex Corporation Long Term Incentive Plan (the “Plan”) is designed to retain selected employees of Centex Corporation and all subsidiaries, partnerships and affiliates of Centex Corporation with regard to which Centex Corporation owns, directly or indirectly, at least 80% of the ownership interest therein, and reward them for making significant contributions to the success of Centex Corporation. These objectives are to be accomplished by making awards under the Plan and thereby providing participants with a financial interest in the growth and performance of Centex Corporation. The Plan shall not constitute a “qualified plan” subject to the limitations of Section 401(a) of the Internal Revenue Code of 1986, as amended, nor shall it constitute a “funded plan” for purposes of such requirements. This Plan shall be exempt from the participation and vesting requirements of Part 2 of Title I of ERISA, the funding requirements of Part 3 of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the fiduciary requirements of Part 4 of Title I of ERISA by reason of the exclusions afforded to plans which are unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of highly compensated employees.

2. Definitions

     As used herein, the terms set forth below shall have the following respective meanings:

     “Act” means the Securities Exchange Act of 1934, as amended.

     “Administrator” means the Compensation and Management Development Committee of the Board.

     “Affiliate” means any direct or indirect subsidiary or parent of Centex Corporation and any partnership, joint venture, limited liability company or other business venture or entity in which Centex Corporation owns directly or indirectly at least 80% of the ownership interest in such entity, as determined by the Administrator in its sole and absolute discretion (such determination by the Administrator to be conclusively established by the grant of an Award by the Administrator to an officer or employee of such an entity).

     “Award” means an award of Deferred Stock granted to a Participant pursuant to any applicable terms, conditions and limitations as the Administrator may establish in order to fulfill the objectives of the Plan.

     “Award Agreement” means a written agreement between Centex Corporation and a Participant that sets forth the terms, conditions and limitations applicable to an Award.

1

     “Beneficiary” means such person or persons, or the trustee of an inter vivos trust for the benefit of natural persons, designated by the Participant in a written election filed with the Administrator as entitled to receive the Participant’s Award(s) in the event of the Participant’s death, or if no such election shall have been so filed, or if no designated Beneficiary survives the Participant or can be located by the Administrator, the person or persons entitled thereto under the last will of such deceased Participant, or if such decedent left no will, to the legal heirs of such decedent determined in accordance with the laws of intestate succession of the state of the decedent’s domicile.

     “Board” means the Board of Directors of Centex Corporation as the same may be constituted from time to time.

     “Centex Corporation” means Centex Corporation, a Nevada corporation, or any successor thereto.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company” means each of Centex Corporation and every Affiliate.

     “Deferred Stock” means a right to receive at Payout the number of Shares covered by an Award, subject to the terms of this Plan and the Award Agreement. Deferred Stock does not represent any actual legal or beneficial interest in Centex Corporation.

     “Disability” means a disability that entitles the Participant to benefits under the long-term disability plan sponsored by the Company which covers the Participant.

     “Employment” means employment with a Company.

     “Expiration Date” means, as to an Award, that date which is seven years past the Grant Date of such Award or such other period as the Administrator may determine.

     “Fair Market Value” means the closing price per Share as of a particular date reported on the consolidated transaction reporting system for the New York Stock Exchange or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was reported.

     “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week.

     “Grant Date” means the date an Award is made to a Participant hereunder, which will be April 1 of the year in which such Award is made, or any other date selected by the Administrator.

     “Participant” means an employee of a Company to whom an Award has been made under this Plan.

     “Payout” means the distribution of vested Deferred Stock under the Plan.

2

     “Payout Date” means the date an Award becomes payable pursuant to Section 8.

     “Plan” means this Centex Corporation Long Term Incentive Plan, as set forth herein and as may be amended from time to time.

     “Share” means a share of Centex Corporation’s present twenty-five cents ($0.25) par value common stock and any share or shares of capital stock or other securities of Centex Corporation hereafter issued or issuable upon, in respect of or in substitution or in exchange for each present share. Such Shares may be unissued or reacquired Shares, as the Board, in its sole and absolute discretion, shall from time to time determine.

     “Termination Date” means the last date on which the Participant is carried on a Company’s payroll as an employee.

     “Vested Retirement” means the voluntary termination by a Participant who is a Full Time Employee of all Employment at any time after the Participant is age 55 or older, completes at least 10 Years of Service and the sum of age and Years of Service with one or more Companies equals at least 70. In no event will the Plan’s Vested Retirement provisions apply to Awards made on or after April 1, 2006.

     “Years of Service” means the Participant’s years of employment with a Company. A Participant shall be credited with a Year of Service on each anniversary of the date on which he or she was first employed with a Company, provided that the Participant continues to be employed by a Company on such anniversary date.

3. Eligibility

     Only highly compensated employees of a Company are eligible for Awards under this Plan, as determined in the sole discretion of the Administrator. The Administrator shall select the Participants in the Plan from time to time as evidenced by the grant of Awards under the Plan.

4. Plan Administration

     The Plan shall be administered by the Administrator, which shall have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or appropriate in its sole discretion. The Administrator shall determine all terms and conditions of the Awards. The Administrator may, in its discretion, accelerate the vesting or Payout of an Award, eliminate or make less restrictive any restrictions contained in an Award Agreement, waive any restriction or other provision of this Plan or an Award Agreement or otherwise amend or modify an Award in any manner that is either (i) not materially adverse to the Participant holding the Award or (ii) consented to by such Participant. The Administrator may delegate to one or more employees of Centex Corporation the performance of non-discretionary functions under this Plan, including distributions of Payouts.

3

5. Awards

     (a) The granting of Awards under this Plan shall be entirely discretionary, and nothing in this Plan shall be deemed to give any employee of a Company any right to participate in this Plan or to be granted an Award.

     (b) Awards shall be granted to Participants at such times, and subject to paragraph 5(d) below, in such amounts as the Administrator, in its sole and absolute discretion, shall determine. No credit for cash dividends on Deferred Stock will be allowed (or accrued) prior to Payout.

     (c) The term of an Award shall run from the Grant Date to the Expiration Date, subject to early Payout as described in Section 8 below or forfeiture as described in Section 7 below.

     (d) The maximum number of Shares that may be awarded under this Plan, subject to Section 13 below, is 1,097,612. As of March 31, 2006 a total of 123,379 shares are available to be awarded.

     (e) If an Award is forfeited, the number of Shares with respect to which such Award shall not have been exercised prior to its forfeiture may again be awarded pursuant to the provisions hereof.

6. Vesting of Awards

     (a) Unless different terms are set by the Administrator, an Award shall be immediately 25% vested on its Grant Date and shall become vested in cumulative 25% increments on each of the first through third anniversaries of such Grant Date, so that on the third anniversary of the Grant Date the Award will be 100% vested; provided, however, that the Participant must be in continuous Employment from the Grant Date through the date of the applicable anniversary in order for the Award to vest.

     (b) A Participant’s Award shall be fully vested, irrespective of the limitations set forth in subparagraph (a) above, in the event of (i) a change in control, as provided for in Section 13 below, provided that the Participant has been in continuous Employment from the Grant Date until the date of such change in control or (ii) for Awards granted prior to April 1, 2006, Vested Retirement of the Participant.

7. Forfeiture of Awards

     If a Participant’s Employment is terminated other than through Vested Retirement with respect to Awards granted prior to April 1, 2006, the Participant shall forfeit his or her Award(s) with respect to any portion that is not vested as of such Participant’s Termination Date.

8. Payouts of Awards

     Payouts will occur as follows:

4

     (a) Automatic Payout on Expiration Date. To the extent that a Participant’s Award has vested, such Award shall have an automatic Payout on the Expiration Date of such Award.

     (b) Early Payouts. In addition to automatic Payout on the Expiration Date, there may be an early Payout of the vested portion of an Award as follows:

     (i) Termination of Employment (whether voluntary or involuntary). The vested portion of each Award shall have an automatic Payout on the Participant’s Termination Date.

     (ii) Death. If a Participant dies prior to the Expiration Date, such Participant’s Award, to the extent vested, shall have an automatic Payout as of the date of the Participant’s death and be made to the Participant’s Beneficiary.

     (iii) Disability. Prior to the Expiration Date, an Award, with the approval of the Administrator, shall both be fully vested and have an automatic Payout on the date the Participant satisfies the definition of Disability.

     (iv) Early Payout Request. At or subsequent to the time an Award is made, a Participant may elect, in the form and manner prescribed by the Administrator in its sole discretion, that the Payout Date for such Award shall be when each portion of the Award vests pursuant to paragraph 6(a). Thereafter, such election of timing of distribution for an Award may be revoked and a new election substituted therefor during any subsequent calendar year at such times as designated by the Administrator in its sole discretion; provided, however, that such new election (i) shall only be effective with respect to distributions during a calendar year subsequent to the calendar year during which the new election is made and (ii) the new distribution date shall not exceed the applicable Expiration Date with respect to the amounts to be distributed.

9. Form of Payout

     As soon as practicable following a determination that Payout of a Participant’s Award shall be made as described in Section 8, but not later than five business days after the required Payout Date, Centex Corporation shall make a Payout to the Participant. Payouts shall be made in Shares except that no fractional shares will be issued and in lieu thereof cash will be paid to the Participant.

10. Delivery of Share Certificates

     As promptly as may be administratively practicable following a Payout, Centex Corporation shall make delivery of one or more Share certificates, and, at the election of the Participant, either by delivery of a physical certificate or an electronic transfer to a broker, for the appropriate number of Shares.

5

11. Tax Withholding

     Centex Corporation shall deduct applicable taxes with respect to any Award or Payout and withhold, at the time of Award or Payout, as appropriate, a number of Shares, based on the Fair Market Value on such date, for payment of taxes required by law.

12. Non-Assignability

     Unless otherwise determined by the Administrator, no Award or Payout or any other benefit under this Plan shall be assignable or otherwise transferable except to a Beneficiary or by will, the laws of descent and distribution or a domestic relations order. The Administrator may prescribe other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Section 12 shall be null and void.

13. Changes in Shares and Certain Corporate Transactions

     (a) In the event of any subdivision or consolidation of outstanding Shares, declaration of a dividend payable in Shares or other stock split, then (i) the number of Shares available for Awards under this Plan, and (ii) the number of Shares covered by outstanding Awards, shall each be proportionately adjusted by the Board as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Centex Corporation, any consolidation or merger of the Centex Corporation with another corporation or entity, the adoption by the Centex Corporation of any plan of exchange affecting Shares or any distribution to holders of Shares of securities or property (other than normal cash dividends or dividends payable in Shares), the Board shall make appropriate adjustments to (i) the number of Shares available for Awards under this Plan, and (ii) the number of Shares covered by outstanding Deferred Awards, to reflect such transaction; provided that such adjustment under (ii) shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without increasing, the value of such Awards.

     Except as is otherwise expressly provided herein, the issuance by Centex Corporation of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of Centex Corporation convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares then subject to outstanding Awards granted under the Plan. Furthermore, the presence of outstanding Awards granted under the Plan shall not affect in any manner the right or power of Centex Corporation to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in Centex Corporation’s capital structure or its business, including the issuance of capital stock; (ii) any merger or consolidation of Centex Corporation; (iii) any issuance by Centex Corporation of debt securities or preferred or preference stock which would rank above the Shares subject to outstanding Awards granted under the Plan; (iv) the dissolution or liquidation of Centex Corporation; (v) any sale, transfer or assignment of all or any part of the assets or business of Centex Corporation; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise.

6

     (b) Notwithstanding anything to the contrary above, a dissolution or liquidation of Centex Corporation, a merger (other than a merger effecting a reincorporation of Centex Corporation in another state) or consolidation in which Centex Corporation is not the surviving corporation (or survives only as a subsidiary of another corporation in a transaction in which the stockholders of the parent of Centex Corporation and their proportionate interests therein immediately after the transaction are not substantially identical to the stockholders of Centex Corporation and their proportionate interests therein immediately prior to the transaction), a transaction in which another corporation becomes the owner of 50% or more of the total combined voting power of all classes of stock of Centex Corporation, or a change in control (as specified below), shall cause every Award then outstanding to become fully vested immediately prior to such dissolution, liquidation, merger, consolidation, transaction, or change in control, to the extent not theretofore exercised, without regard to the determination as to the periods and installments of vesting contained in the Agreements if (and only if) such Awards have not at that time expired or been terminated. For purposes of this Section 13, a change in control shall be deemed to have taken place if:

     (i) a third person, including a “Group” as defined in Section 13(d)(3) of the Act, becomes the beneficial owner of Shares of Centex Corporation having 50% or more of total number of votes that may be cast for the election of directors of Centex Corporation; or

     (ii) as a result of, or in connection with, a contested election for directors, persons who were directors of Centex Corporation immediately before such election shall cease to constitute a majority of the Board.

     Notwithstanding the foregoing provisions of this paragraph, in the event of any such dissolution, merger, consolidation, transaction or change in control, the Board may completely satisfy all obligations of Centex Corporation and its Affiliates with respect to any Award outstanding on the date of such event by delivering to the Participant cash in an amount equal to the Fair Market Value of such Shares on the date of such event, such payment to be made within reasonable time after such event.

14. Plan Year

     The Plan, as amended and restated, shall be effective as of October 1, 2001 and will continue in effect until the Administrator terminates the same. The Plan year will be April 1 through March 31 while this Plan is in effect.

15. Requirements of Law

     Notwithstanding anything herein to the contrary, Centex Corporation shall not be required to issue Shares under any Award if the issuance thereof would constitute a violation by the Participant or Centex Corporation of any provisions of any law or regulation of any governmental authority or any national securities exchange; and as a condition of any issuance of Shares under any Award, Centex Corporation may require such agreements or undertakings, if any, as Centex Corporation may deem necessary or advisable to ensure compliance with any such law or regulation.

7

16. Amendment, Suspension or Termination

     The Board may amend, suspend or terminate the Plan at any time for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that no amendment, suspension or termination shall be made that would impair the rights of any Participant as to a vested Award previously granted to such Participant without his or her written consent.

17. Unfunded Plan

     This Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants representing Awards, any such accounts shall be used merely as a bookkeeping convenience. Centex Corporation shall not be required to segregate any assets that may at any time be represented by Awards, nor shall this Plan be construed as providing for such segregation, nor shall Centex Corporation, the Board or the Administrator (or any delegate thereof) be deemed to be a trustee of any Awards to be granted under this Plan. Any liability or obligation of Centex Corporation to any Participant with respect to a grant of Awards under this Plan shall be based solely upon any contractual obligations that may be created under this Plan, and no such liability or obligation of Centex Corporation shall be deemed to be secured by any pledge or other encumbrance on any property of Centex Corporation. None of Centex Corporation or any other Company, the Board or the Administrator (or any delegate thereof) shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.

     Notwithstanding the foregoing, upon the occurrence of a change in control, as described in Section 13(b), each Company whose employees are Participants shall, as soon as possible, but in no event longer than 15 days following the change in control, make an irrevocable contribution to a trust established by Centex Corporation in an amount sufficient to fully pay the entire benefit to which each Participant employed by such Company would be entitled pursuant to the terms of this Plan as of the date on which such change in control occurs. In its sole discretion, Centex Corporation may establish such a trust at any time prior to a change in control and may make contributions to such trust in Shares or in cash which would be used to acquire Shares to transfer to Participant. Any such trust shall be designed to assist Centex Corporation in satisfying its obligations under this Plan; but it shall remain subject to the claims of its creditors.

18. No Employment Guaranteed

     No provision of this Plan or any Award Agreement hereunder shall confer any right upon any employee to continued employment with a Company.

19. No Stockholder Rights

     A Participant shall have no rights as a holder of Shares with respect to Awards granted hereunder. In particular, no Award shall entitle a Participant to be considered a holder of Shares or to have any rights to dividends or other distributions made to holders of Shares prior to the Payout of such Award.

8

20. Governing Law

     This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Act or other securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Texas, without reference to any conflicts of law principles thereof that would require the application of the laws of another jurisdiction.

21. Indemnification

     Neither the members of the Board, any member of the Compensation and Management Development Committee, acting in the capacity of Administrator, nor any delegates of the Administrator, shall be liable for any act, omission or determination taken or made in good faith with respect to the Plan or any Award granted under it, and the members of the Board and the Compensation and Stock Option Committee (or its delegate) shall be entitled to indemnification and reimbursement by Centex Corporation in respect of any claim, loss, damage or expense (including counsel fees) arising therefrom to the full extent permitted by law and under any directors and officers liability or similar insurance coverage that may be in effect from time to time.

22. Release

     Any issuance or transfer of Shares to a Participant or to his legal representative, heir, legatee or distributee in accordance with the provisions hereof shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Board or Administrator may require any Participant or legal representative, heir, legatee or distributee, as a condition precedent to such payment, to execute a release and receipt therefor in such form as it shall determine.

9

EX-10.6

Exhibit 10.6

AMENDED AND RESTATED

CENTEX CORPORATION 2003 EQUITY INCENTIVE PLAN

(Last Amended on April 1, 2006)

1. Plan

     The Centex Corporation 2003 Equity Incentive Plan (the “Plan”) was adopted by the Corporation to reward certain key Employees of the Corporation and its Affiliates and Non-employee Directors of the Corporation by providing for certain cash benefits and by enabling them to acquire shares of Common Stock of the Corporation.

2. Objectives

     The purpose of this Centex Corporation 2003 Equity Incentive Plan is to further the interests of the Corporation and its shareholders by providing incentives in the form of Awards to key Employees and Non-employee Directors who can contribute materially to the success and profitability of the Corporation and its Affiliates. Such Awards will recognize and reward outstanding performances and individual contributions and give Participants in the Plan an interest in the Corporation parallel to that of the shareholders, thus enhancing the proprietary and personal interest of such Participants in the Corporation’s continued success and progress. This Plan will also enable the Corporation and its Affiliates to attract and retain such Employees and Non-employee Directors.

3. Definitions

     As used herein, the terms set forth below shall have the following respective meanings:

     “Affiliate” means a Subsidiary or Joint Venture.

     “Authorized Officer” means the Chief Executive Officer of the Corporation (or any other senior officer of the Corporation to whom he or she shall delegate the authority to execute any Award Agreement, where applicable).

     “Award” means an Employee Award or a Director Award.

     “Award Agreement” means a written agreement setting forth the terms, conditions and limitations applicable to an Award, to the extent the Committee determines such agreement is necessary.

     “Board” means the Board of Directors of the Corporation.

     “Black-Scholes Value” means the formula given by the option pricing model of such name used to calculate the theoretical fair value of a stock option at any given time.

     “Change in Control” unless otherwise defined by the Committee, means a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended,

1

whether or not the Corporation is then subject to such reporting requirement; provided, that, without limitation, such a change in control shall be deemed to have occurred if:

     (i) a third person, including a “Group” as defined in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner of Common Stock having fifty (50) percent or more of total number of votes that may be cast for the election of Directors; or

     (ii) as a result of, or in connection with, a contested election for Directors, persons who were Directors immediately before such election shall cease to constitute a majority of the Board.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Committee” means the independent Compensation Committee of the Board as is designated by the Board to administer the Plan.

     “Common Stock” means Centex Corporation common stock, par value $.25 per share.

     “Corporation” means Centex Corporation, a Nevada corporation, or any successor thereto.

     “Director” means an individual who is a member of the Board.

     “Director Award” means any Option, Stock Award or Performance Award granted, whether singly, in combination or in tandem, to a Participant who is a Non-employee Director pursuant to such applicable terms, conditions and limitations (including treatment as a Performance Award) as the Committee may establish in order to fulfill the objectives of the Plan.

     “Disability” means a disability that renders the Participant unable to engage in any occupation in accordance with the terms of the Long Term Disability Plan of Centex Corporation.

     “Dividend Equivalents” means, with respect to Stock Units or shares of Restricted Stock that are to be issued at the end of the Restriction Period, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to stockholders of record during the Restriction Period on a like number of shares of Common Stock.

     “Employee” means an employee of the Corporation or any of its Affiliates.

     “Employee Award” means any Option, Stock Award, or Performance Award granted, whether singly, in combination or in tandem, to a Participant who is an Employee pursuant to such applicable terms, conditions and limitations (including treatment as a Performance Award) as the Committee may establish in order to fulfill the objectives of the Plan.

     “Employee Director” means an individual serving as a member of the Board who is an Employee of the Corporation or any of its Affiliates.

     “Employer” means the Corporation and any Subsidiary or Joint Venture.

2

     “Equity Award” means any Option, Stock Award, or Performance Award (other than a Performance Award denominated in cash) granted to a Participant under the Plan.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” of a share of Common Stock means, as of a particular date, (i) (A) if Common Stock is listed on a national securities exchange, the mean between the highest and lowest sales price per share of such Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the next succeeding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on the exchange at the time of exercise, (B) if Common Stock is not so listed but is quoted on the NASDAQ National Market, the mean between the highest and lowest sales price per share of Common Stock reported by the NASDAQ National Market on that date, or, if there shall have been no such sale so reported on that date, on the next succeeding date on which such a sale was so reported or, at the discretion of the Committee, the price prevailing on the NASDAQ National Market at the time of exercise, (C) if Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the next succeeding date on which such quotations shall be available, as reported by the NASDAQ Stock Market, or, if not reported by the NASDAQ Stock Market, by the National Quotation Bureau Incorporated or (D) if Common Stock is not publicly traded, the most recent value determined by an independent appraiser appointed by the Corporation for such purpose, or (ii) if applicable, the price per share as determined in accordance with the procedures of a third party administrator retained by the Corporation to administer the Plan.

     “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week.

     “Grant Date” means the date an Award is granted to a Participant pursuant to the Plan. The Grant Date for a substituted award is the Grant Date of the original award.

     “Grant Price” means the price at which a Participant may exercise his or her right to receive cash or Common Stock, as applicable, under the terms of an Award.

     “Joint Venture” means any joint venture, partnership, limited liability company or other non-corporate entity in which the Corporation has at least 50% ownership, voting, capital or profit interests (in whatever form).

     “Non-employee Director” means an individual serving as a member of the Board who is not an Employee of the Corporation or any of its Affiliates.

     “Option” means a right to purchase a specified number of shares of Common Stock at a specified Grant Price, which is not intended to comply with the requirements set forth in Section 422 of the Code.

     “Participant” means an Employee or Non-employee Director to whom an Award has been granted under this Plan.

3

     “Performance Award” means an Award made pursuant to this Plan that is subject to the attainment in the future of one or more Performance Goals.

     “Performance Goal” means a standard established by the Committee, to determine in whole or in part whether a Qualified Performance Award shall be earned.

     “Qualified Performance Award” means a Performance Award made to a Participant who is an Employee that is intended to qualify as qualified performance-based compensation under Section 162(m) of the Code, as described in Section 8(a)(iii)(B) of the Plan.

     “Restricted Stock” means Common Stock that is restricted or subject to forfeiture provisions.

     “Restriction Period” means a period of time beginning as of the Grant Date of an Award of Restricted Stock and ending as of the date upon which the Common Stock subject to such Award is no longer restricted or subject to forfeiture provisions.

     “Retirement” means the Participant’s voluntary termination of employment from the Employer, and where the context indicates, includes Vested Retirement.

     “Stock Award” means an Award in the form of shares of Common Stock or Stock Units, including an award of Restricted Stock.

     “Stock Unit” means a unit equal to one share of Common Stock (as determined by the Committee) granted to either an Employee or a Non-employee Director.

     “Subsidiary” means any corporation of which the Corporation directly or indirectly owns shares representing 50% or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the stockholders of such corporation.

     “Vested Retirement” means the voluntary termination of all employment by a Participant (excluding a Non-employee Director) who is a Full Time Employee from the Employer at any time after the Participant is age 55 or older, has at least 10 Years of Service and the sum of age and Years of Service equals at least 70. Calculation of eligibility for Vested Retirement shall be based on whole years of age and Years of Service on the date as of which the calculation is being made. Any partial years shall be disregarded.

     “Years of Service” means the Participant’s years of employment with an Employer. A Participant shall be credited with a Year of Service on each anniversary of the date on which he or she was first employed with an Employer, provided that the Participant continues to be employed by an Employer on such anniversary date.

4. Eligibility

     (a) Employees. Employees eligible for the grant of Employee Awards under this Plan are those Employee Directors and Employees who hold positions of responsibility and whose performance, in the judgment of the Committee, can have a significant effect on the success of the Corporation and its Affiliates.

4

     (b) Directors. Members of the Board eligible for the grant of Director Awards under this Plan are those who are Non-employee Directors.

5. Common Stock Available for Awards

     Subject to the provisions of paragraph 15 hereof, no Award shall be granted if it shall result in the aggregate number of shares of Common Stock issued under the Plan plus the number of shares of Common Stock covered by or subject to Awards then outstanding (after giving effect to the grant of the Award in question) to exceed 6,665,970 shares. No more than 2,221,990 shares of Common Stock shall be available for Stock Awards, other than Options or Performance Awards. The number of shares of Common Stock that are the subject of Awards under this Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the shares covered by an Award are not issued to a Participant or are exchanged for Awards that do not involve Common Stock, shall again immediately become available for Awards hereunder. If the Grant Price or other purchase price of any Option or other Award granted under the Plan is satisfied by tendering shares of Common Stock to the Corporation by either actual delivery or by attestation, or by withholding shares of Common Stock, or if the tax withholding obligation resulting from the settlement of any such Option or other Award is satisfied by tendering or withholding shares of Common Stock, only the number of shares of Common Stock issued net of the shares of Common Stock tendered or withheld shall be deemed delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan. Shares of Common Stock delivered under the Plan in settlement, assumption or substitution of outstanding awards or obligations to grant future awards under the plans or arrangements of another entity shall not reduce the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that such settlement, assumption or substitution is a result of the Corporation or an Affiliate acquiring another entity or an interest in another entity. The Committee may from time to time adopt and observe such procedures concerning the counting of shares against the Plan maximum as it may deem appropriate. The Board and the appropriate officers of the Corporation shall from time to time take whatever actions are necessary to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards.

6. Administration

     (a) This Plan shall be administered by the Committee except as otherwise provided herein.

     (b) Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Corporation and in keeping with the objectives of this Plan. The Committee may, in its discretion, provide for the extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions applicable to an Award, waive any restriction or other provision of this Plan (insofar as such provision relates to Awards) or an Award or

5

otherwise amend or modify an Award in any manner that is either (i) not adverse to the Participant to whom such Award was granted or (ii) consented to by such Participant. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the Plan purposes. Any decision of the Committee, with respect to Awards, in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned.

     (c) No member of the Committee or officer of the Corporation to whom the Committee has delegated authority in accordance with the provisions of paragraph 7 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Corporation in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.

7. Delegation of Authority

     Following the authorization of a pool of cash or shares of Common Stock to be available for Awards, the Committee may authorize the Chief Executive Officer of the Corporation or a committee consisting solely of members of the Board to grant individual Employee Awards from such pool pursuant to such conditions or limitations as the Committee may establish. The Committee may also delegate to the Chief Executive Officer and to other executive officers of the Corporation its administrative duties under this Plan (excluding its granting authority) pursuant to such conditions or limitations as the Committee may establish. The Committee may engage or authorize the engagement of a third party administrator to carry out administrative functions under the Plan.

8. Awards

     (a) The Committee shall determine the type or types of Awards to be made under this Plan and shall designate from time to time the Participants who are to be the recipients of such Awards. Each Award may, in the discretion of the Committee, be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion and, if required by the Committee, shall be signed by the Participant to whom the Award is granted and by an Authorized Officer for and on behalf of the Corporation. Awards may consist of those listed in this paragraph 8(a) and may be granted singly, in combination or in tandem. Awards may also be granted in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan or any other plan of the Corporation or any of its Affiliates, including the plan of any acquired entity. An Award may provide for the grant or issuance of additional, replacement or alternative Awards upon the occurrence of specified events. All or part of an Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Corporation and its Affiliates, achievement of specific business objectives, increases in specified indices, attainment of specified growth rates and other comparable measurements of performance.

     (i) Option. An Employee Award or Director Award may be in the form of an Option. The Grant Price of an Option shall be not less than the Fair Market Value of the Common Stock subject to such Option on the Grant Date. Notwithstanding anything contrary contained in this Plan including Sections 8(a)(i)(A) and (B), in no event shall the

6

term of the Option extend more than ten (10) years after the Grant Date. Options may not include provisions that “reload” the option upon exercise. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded to Participants pursuant to this Plan, including the Grant Price, the term of the Options, the number of shares subject to the Option and the date or dates upon which they become exercisable, shall be determined by the Committee.

     (A) Except as is otherwise provided in the Award Agreement and subject to Committee discretion as provided in Section 6(b):

     (1) all rights to exercise an Option shall terminate within four (4) months after the date the Participant ceases to be an Employee, or ceases to be a Director, whichever may occur later, for any reason other than death or Disability (but in no event later than the end of the original period of the Option).

     (2) In the event of a Participant’s death, an Option will terminate fifteen (15) months thereafter.

     (3) In the event of a Participant’s Disability and resulting termination of employment, an Option will terminate six (6) months after such Participant’s employment termination date.

     (4) In the event the employment of the Participant is terminated for cause (as determined by the Committee), all Options whether or not vested shall terminate immediately.

     (5) All unvested Options are cancelled upon termination of employment; except that all non-qualified options granted prior to April 1, 2006 shall immediately vest upon Vested Retirement.

     (B) However, if an Option is held by a Director who, on the date he or she ceases to be a Director (and, if also an Employee, ceases to be an Employee), has at least ten (10) years of service as a Director, then all Common Stock subject to such Option will vest on the date the Director ceases to be a Director, and all rights to exercise such Option will terminate three (3) years thereafter (but in no event later than the original period of the Option). Also, if an Option is held by a Director who, on the date he or she ceases to be a Director (and, if also an Employee, ceases to be an Employee), has less than ten (10) years of service as a Director, then all Common Stock subject to such Option will continue to vest in accordance with its terms for a period of three (3) years following such date, and all rights to exercise such Option will terminate three (3) years after such date (but in no event later than the original period of the Option). If Options are awarded in the final two (2) years of the term of a Director who is approaching age 70, or an Employee Director who is at least age 55 with at least ten (10) years of service and his or her age plus years of service equal at least 70, the outside exercise date is the one provided in the Option or seven (7) years from the grant date, whichever occurs earlier. This

7

paragraph 8(a)(i)(B) shall not apply to a Participant who is terminated for cause (as determined by the Committee).

     (C) However, if an Option granted prior to April 1, 2006 is held by a Participant who retires and satisfies the test for Vested Retirement, then all rights to exercise any and all Options will terminate twelve (12) months following the date of the Vested Retirement. To the extent that such Award provides a longer term to exercise, such Award will control.

     (D) Attached hereto are resolutions adopted by the Committee, pertaining to vesting and exercise, which shall apply only to Options granted prior to April 1, 2006. The provisions of section 8(a)(i)(A)(5) and 8(a)(i)(C) above are intended to incorporate such resolutions. To the extent of any conflict between the terms of such resolutions and this Plan, the resolutions will control.

     (ii) Stock Award. An Employee Award or Director Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted to Participants pursuant to this Plan shall be determined by the Committee; provided that any Stock Award which is not a Performance Award shall have a minimum Restriction Period of three years from the Grant Date, provided that (A) the Committee may provide for earlier vesting upon a termination of employment by reason of death, Disability or Retirement, (B) such three-year minimum Restriction Period shall not apply to a Stock Award that is granted in lieu of salary or bonus, (C) vesting of a Stock Award may occur incrementally over the three-year minimum Restricted Period and (D) the restrictions set forth in a Stock Award will terminate immediately if the Participant retires prior to the date on which the restrictions would otherwise terminate and at Retirement he or she is age 65 or older or, if not yet age 65, as to Stock Awards granted prior to April 1, 2006, the Participant satisfies the test for vested Retirement.

     (iii) Performance Award. Without limiting the type or number of Employee Awards or Director Awards that may be made under the other provisions of this Plan, an Employee Award or Director Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to any Performance Awards granted to Participants pursuant to this Plan shall be determined by the Committee; provided that any Stock Award which is a Performance Award shall have a minimum Restriction Period of one year from the Grant Date, provided that the Committee may provide for earlier vesting upon a termination of employment by reason of death, Disability or Retirement. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant.

     (A) Nonqualified Performance Awards. Performance Awards granted to Employees or Directors that are not intended to qualify as qualified performance-based compensation under Section 162(m) of the Code shall be based on achievement of such goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine.

     (B) Qualified Performance Awards. Performance Awards granted to Employees under the Plan that are intended to qualify as qualified performance-

8

based compensation under Section 162(m) of the Code shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals established by the Committee prior to the earlier to occur of (x) 90 days after the commencement of the period of service to which the Performance Goal relates and (y) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to the Employee, one or more business units or divisions of the Corporation or the applicable sector, or the Corporation as a whole, and if so desired by the Committee, by comparison with a peer group of companies. A Performance Goal may include one or more of the following: (a) earnings, either in the aggregate or on a per-share basis, reflecting such dilution of shares as the Committee deems appropriate, including operating earnings, pre-tax earnings, earnings before interest and taxes, and earnings before interest, taxes, depreciation and amortization; (b) gross or net revenue; (c) operating or net cash flow; (d) financial return ratios (e.g., return or net return on one or more of the following: assets, net assets, equity, invested capital, revenue); (e) margins, including net, operating or pre-tax margins; (f) total shareholder return; (g) financial ratios (e.g., debt to capitalization or debt to equity); (h) growth in financial measures or ratios (e.g., revenue, earnings, cash flow, stockholders’ equity, margins); or (i) customer satisfaction, based on specified objective goals, or a customer survey sponsored by the Corporation or one or more business units or divisions of the Corporation.

     (C) Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals and Qualified Performance Awards, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation §1.162-27(e)(2)(i), as to grants to those Employees whose compensation is, or is likely to be, subject to Section 162(m) of the Code, and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Qualified Performance Awards made pursuant to this Plan shall be determined by the Committee.

     (b) Notwithstanding anything to the contrary contained in this Plan, the following limitations shall apply to any Employee Awards made hereunder:

9

     (i) no Participant may be granted, during any fiscal year, Employee Awards consisting of Options (including Options that are granted as Performance Awards) that are exercisable for more than 1,110,995 shares of Common Stock;

     (ii) no Participant may be granted, during any fiscal year, Employee Awards consisting of Stock Awards (including Stock Awards that are granted as Performance Awards) covering or relating to more than 555,497 shares of Common Stock (the limitation set forth in this clause (ii), together with the limitation set forth in clause (i) above and (c)(i) and (ii) below, being hereinafter collectively referred to as the “Stock Based Awards Limitations”); and

     (iii) no Participant may be granted Employee Awards under this Plan consisting of cash (including Awards that are granted as Performance Awards) in respect of any fiscal year having a value determined on the Grant Date in excess of an amount equal to 2% of the consolidated net income of the Corporation and its subsidiaries for such fiscal year plus the Black-Scholes Value, determined as of the Option Grant Date, of Options on 219,977 shares of Common Stock determined as if such Options had an Option Grant Date on the effective date of the Employee Award.

     (c) Notwithstanding anything to the contrary contained in this Plan the following limitations shall apply to any Director Awards made hereunder:

     (A) no Participant may be granted, during any fiscal year, Director Awards consisting of Options (including Options that are granted as Performance Awards) that are exercisable for more than 53,327 shares of Common Stock and

     (B) no Participant may be granted, during any fiscal year, Director Awards consisting of Stock Awards (including Stock Awards that are granted as Performance Awards) covering or relating to more than 33,330 shares of Common Stock.

9. Change in Control

     Notwithstanding the provisions of paragraph 8 hereof, unless otherwise expressly provided in the applicable Award Agreement, or as otherwise specified in the terms of an Equity Award, in the event of a Change in Control during a Participant’s employment (or service as a Non-employee Director) with the Corporation or one of its Affiliates, each Equity Award granted under this Plan to the Participant shall become immediately vested and fully exercisable, with performance-based equity awards vested at target level (regardless of the otherwise applicable vesting or exercise schedules or Performance Goals provided for under the Award Agreement or the terms of the Equity Award).

10. Payment of Awards

     (a) General. Payment made to a Participant pursuant to an Award may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee shall determine, including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. If such payment is made in the form of Restricted Stock, the

10

Committee shall specify whether the underlying shares are to be issued at the beginning or end of the Restriction Period. In the event that shares of Restricted Stock are to be issued at the beginning of the Restriction Period, the certificates evidencing such shares (to the extent that such shares are so evidenced) shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. In the event that shares of Restricted Stock are to be issued at the end of the Restricted Period, the right to receive such shares shall be evidenced by book entry registration or in such other manner as the Committee may determine.

     (b) Deferral. With the approval of the Committee, amounts payable in respect of Awards may be deferred and paid either in the form of installments or as a lump-sum payment. The Committee may permit selected Participants to elect to defer payments of some or all types of Awards or any other compensation otherwise payable by the Corporation in accordance with procedures established by the Committee and may provide that such deferred compensation may be payable in shares of Common Stock. Any deferred payment pursuant to an Award, whether elected by the Participant or specified by the Award Agreement or the terms of the Award or by the Committee, may be forfeited if and to the extent that the Award Agreement or the terms of the Award so provide.

     (c) Dividends, Earnings and Interest. Rights to dividends or Dividend Equivalents may be extended to and made part of any Stock Award, subject to such terms, conditions and restrictions as the Committee may establish. The Committee may also establish rules and procedures for the crediting of interest or other earnings on deferred cash payments and Dividend Equivalents for Stock Awards.

     (d) Substitution of Awards. Subject to paragraphs 13 and 15, at the discretion of the Committee, a Participant who is an Employee may be offered an election to substitute an Employee Award for another Employee Award or Employee Awards of the same or different type.

11. Option Exercise

     Following exercise the Grant Price shall be paid in full in cash at the time of delivery of the stock or, if permitted by the Committee and elected by the optionee, the optionee may purchase such shares by means of tendering Common Stock owned by the optionee, or having the Corporation withhold from the shares otherwise issuable pursuant to the Option an appropriate number of shares of Common Stock, valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee shall determine acceptable methods for Participants to tender Common Stock or have Common Stock withheld in payment of the Grant Price. The Committee may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award. The Committee may adopt additional rules and procedures regarding the exercise of Options from time to time, provided that such rules and procedures are not inconsistent with the provisions of this paragraph.

     An optionee desiring to pay the Grant Price of an Option by tendering Common Stock using the method of attestation may, subject to any such conditions and in compliance with any such procedures as the Committee may adopt, do so by attesting to the ownership of Common Stock of the requisite value in which case the Corporation shall issue or otherwise deliver to the optionee upon such exercise a number of shares of Common Stock subject to the Option equal to

11

the result obtained by dividing (a) the excess of the aggregate Fair Market Value of the shares of Common Stock subject to the Option for which the Option (or portion thereof) is being exercised over the Grant Price payable in respect of such exercise by (b) the Fair Market Value per share of Common Stock subject to the Option, and the optionee may retain the shares of Common Stock the ownership of which is attested.

     If an optionee desires to pay the Grant Price of an Option by having the Corporation withhold from the shares otherwise issuable pursuant to the Option shares of Common Stock of the requisite value, then, subject to any conditions and in compliance with any procedures as the Committee may adopt, the Corporation shall issue or otherwise deliver to the optionee upon such exercise a number of shares of Common Stock subject to the Option equal to the result obtained by dividing (a) the excess of the aggregate Fair Market Value of the shares of Common Stock subject to the Option for which the Option (or portion thereof) is being exercised over the Grant Price payable in respect of such exercise by (b) the Fair Market Value per share of Common Stock subject to the Option.

12. Taxes

     The Corporation or its designated third party administrator shall have the right to deduct applicable taxes from any Employee Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Corporation to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by the transfer to the Corporation of shares of Common Stock theretofore owned by the holder of the Employee Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made. The Committee may provide for loans, on either a short term or demand basis, from the Corporation to a Participant who is an Employee to permit the payment of taxes required by law.

13. Amendment, Modification, Suspension or Termination of the Plan

     The Board may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall be effective prior to its approval by the stockholders of the Corporation to the extent such approval is required by applicable legal requirements or the requirements of the securities exchange on which the Corporation’s stock is listed. Notwithstanding anything herein to the contrary, without the prior approval of the Corporation’s stockholders, Options issued under the Plan will not be repriced, replaced, or regranted through cancellation or by decreasing the exercise price of a previously granted Option.

14. Assignability

     Unless otherwise determined by the Committee and provided in the Award Agreement or the terms of the Award or to a family limited partnership, trust or similar entity pre-approved by

12

the Committee, no Award or any other benefit under this Plan shall be assignable or otherwise transferable except by will, beneficiary designation or the laws of descent and distribution. In the event that a beneficiary designation conflicts with an assignment by will, the beneficiary designation will prevail. The Committee may prescribe and include in applicable Award Agreements or the terms of the Award other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this paragraph 14 shall be null and void.

15. Adjustments

     (a) The existence of outstanding Awards shall not affect in any manner the right or power of the Corporation or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Corporation or its business or any merger or consolidation of the Corporation, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the existing Common Stock) or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.

     (b) In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of shares of Common Stock reserved under this Plan, (ii) the number of shares of Common Stock covered by outstanding Awards, (iii) the Grant Price or other price in respect of such Awards, (iv) the appropriate Fair Market Value and other price determinations for such Awards, and (v) the Stock Based Awards Limitations shall each be proportionately adjusted by the Board as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Corporation, any consolidation or merger of the Corporation with another corporation or entity, the adoption by the Corporation of any plan of exchange affecting Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Board may make appropriate adjustments to (i) the number of shares of Common Stock reserved under this Plan, (ii) the number of shares of Common Stock covered by Awards, (iii) the Grant Price or other price in respect of such Awards, (iv) the appropriate Fair Market Value and other price determinations for such Awards, and (v) the Stock Based Awards Limitations to reflect such transaction; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without increasing, the value of such Awards. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board shall be authorized (x) to assume under the Plan previously issued compensatory awards, or to substitute new Awards for previously issued compensatory awards, including Awards, as part of such adjustment or (y) to cancel Awards that are Options and give the Participants who are the holders of such Awards notice and opportunity to exercise for 30 days prior to such cancellation.

16. Restrictions

     No Common Stock or other form of payment shall be issued with respect to any Award unless the Corporation shall be satisfied based on the advice of its counsel that such issuance will

13

be in compliance with applicable federal and state securities laws. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.

17. Unfunded Plan

     This Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants under this Plan, any such accounts shall be used merely as a bookkeeping convenience, including bookkeeping accounts established by a third party administrator retained by the Corporation to administer the Plan. The Corporation shall not be required to segregate any assets for purposes of this Plan or Awards hereunder, nor shall the Corporation, the Board or the Committee be deemed to be a trustee of any benefit to be granted under this Plan. Any liability or obligation of the Corporation to any Participant with respect to an Award under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement or the terms of the Award, and no such liability or obligation of the Corporation shall be deemed to be secured by any pledge or other encumbrance on any property of the Corporation. Neither the Corporation nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.

18. Right to Employment

     Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Corporation to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Corporation.

19. Successors

     All obligations of the Corporation under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Corporation, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Corporation.

20. Governing Law

     This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Texas.

21. Effectiveness

     The Plan will be submitted to the stockholders of the Corporation for approval at the 2003 annual meeting of shareholders and, if approved, will become retroactively effective as of April 1, 2003.

14

22. NYSE Limitations

     If any provision of this Plan has the effect of increasing the number of shares available for Awards hereunder by adding back shares and such provision constitutes a “formula” under the formula plan rules of the New York Stock Exchange, Inc. (“NYSE”) (including Section 303A.08 of the NYSE’s Listed Company Manual), then the portion of such provision that constitutes a “formula” shall be operative only until, and shall cease to be effective on, the date that is 10 years after July 17, 2003 or, if later, the date of the most recent shareholder approval of the Plan.

15

Resolution related to stock options adopted by the Compensation and Management Development Committee of the Board of Directors of Centex Corporation on May 13, 2004.

     RESOLVED, that all non-qualified options held by Full Time Employees to acquire common stock of Centex Corporation awarded under any of the stock plans listed below, whether awarded before or after May 13, 2004, shall be subject to the following from and after May 13, 2004:

1.	If an optionee shall voluntarily terminate employment and at such time he or she is age 55 or older, has at least 10 Years of Service and the sum of age and Years of Service equals at least 70, then all non-qualified options held by him or her shall immediately vest upon the termination of employment (“Vested Retirement”).
2.	All rights to exercise such vested options will terminate 12 months following the date of such Vested Retirement. However, to the extent that an option agreement provides a longer time to exercise following voluntary termination of employment, then such agreement will control.
3.	As used herein: “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week; and “Years of Service” means an optionee’s years of employment with Centex Corporation or any of its Affiliates. An optionee shall be credited with a Year of Service on each anniversary of the date on which he or she was first employed by Centex Corporation or its Affiliate, provided that the optionee continues to be employed by such employer on such anniversary date.
4.	The stock plans covered are:

• Centex Corporation Amended and Restated 1987 Stock Option Plan

• Seventh Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan

• Amended and Restated Centex Corporation 2001 Stock Plan

• Amended and Restated Centex Corporation 2003 Equity Incentive Plan

     FURTHER RESOLVED, that the appropriate officers of the Corporation are hereby directed to take all steps that they deem necessary or appropriate to communicate the substance of the foregoing resolution to option holders who are affected and, where they deem necessary, to document the substance of this resolution by way of amendments to the stock plans and to existing option agreements.

16

EX-10.6(A)

Exhibit 10.6(a)

Employee Stock Options
2003 Plan

Dear _____:

     Effective May _____, 2006 you have been granted a Non-qualified Option to purchase up to _____ shares of the common stock, par value $.25 per share, of Centex Corporation (the “Company”) for $_____ per share (the “Option”). This Option is granted under the Centex Corporation Amended and Restated 2003 Equity Incentive Plan (as such plan may be amended from time to time, the “Plan”). A copy of the Plan is available to you upon request to the Law Department during the term of this Option. This Option will terminate upon the close of business on May ___, 2013, unless earlier terminated as described herein or in the Plan.

     This Award will vest at the rate of 33 1/3% per year on each of March 31, 2007, March 31, 2008, and March 31, 2009.

     If for any reason you cease to be an employee of at least one of the employers in the group of employers consisting of the Company and its Affiliates (i) this Option will immediately terminate as to any unvested portion on the date of such cessation and (ii) any portion of this Option vested but not exercised by you on or before such date of cessation may be exercised after such date only as provided in the Plan.

     The Company may cancel and revoke this Option and/or replace it with a revised option at any time if the Company determines, in its good faith judgment, that this Option was granted to you in error or that this Option contains an error. In the event of such determination by the Company, and written notice thereof to you at your business or home address, all of your rights and all of the Company’s obligations as to any unvested portion of this Option shall immediately terminate. If the Company replaces this Option with a revised option, then you will have all of the benefits conferred under the revised option, effective at such time as the new option goes into effect.

     This Option is subject to the Plan, and the Plan will govern where there is any inconsistency between the Plan and this Option. The provisions of the Plan are also provisions of this Option, and all terms, provisions and definitions set forth in the Plan are incorporated in this Option and made a part of this Option for all purposes. Capitalized terms used but not defined in this Option will have the meanings assigned to such terms in the Plan. This Option has been signed in duplicate by Centex Corporation and delivered to you, and (when you sign below) has been accepted by you effective as of May ___, 2006.

ACCEPTED	CENTEX CORPORATION
as of May ___, 2006
[Name]	[Name]
	[Title]

EX-10.6(B)

Exhibit 10.6(b)

Employee Stock Units
2003 Plan

Dear _________:

     You have been granted an Award as of May _________, 2006 of _________ Stock Units of Centex Corporation (the “Company”) under the Amended and Restated Centex Corporation 2003 Equity Incentive Plan (as such plan may be amended from time to time, the “Plan”). The Stock Units awarded hereby will each be converted to a share of the common stock of the Company (“Share”) following vesting, provided you have delivered a notice of conversion to the Committee, in the form prescribed by it. Following conversion, such Shares will be freely transferable. A copy of the Plan is available to you upon request to the Law Department.

     This Award will vest at the rate of 33 1/3% per year on each of March 31, 2007, March 31, 2008, and March 31, 2009. The amounts and dates are shown below:

_________ shares on 03/31/2007 _________ shares on 03/31/2008 _________ shares on 03/31/2009

     All Stock Units not then terminated will vest in full on March 31, 2009, unless earlier vested as described in the Plan or this Award. The date on which a Stock Unit vests is called the “Vesting Date”. Vested units not yet converted by you will automatically convert into Shares and become freely transferable on May _________, 2013.

     You will forfeit all unvested Stock Units if you cease for any reason to be an employee of at least one of the employers in the group of employers consisting of the Company and its Affiliates. However, the restrictions set forth in the Plan and this Award will terminate immediately and all Stock Units covered by this Award will immediately vest in the event of your death or permanent disability. Whether you have suffered a permanent disability will be determined by the Committee, in its sole and absolute discretion. In the event of your death, the person or persons to whom the Stock Units have been validly transferred pursuant to will or the laws of descent and distribution will have all rights to the Stock Units.

     The Company may cancel and revoke this Award and/or replace it with a revised award at any time if the Company determines, in its good faith judgment, that this Award was granted in error or that this Award contains an error. In the event of such determination by the Company, and written notice thereof to you at your business or home address, all of your rights and all of the Company’s obligations as to any unvested portion of this Award shall immediately terminate. If the Company replaces this Award with a revised award, then you will have all of the benefits conferred under the revised award, effective as of such time as the revised award goes into effect.

     This Award is subject to the Plan, and the Plan will govern where there is any inconsistency between the Plan and this Award. The provisions of the Plan are also provisions of this Award, and all terms, provisions and definitions set forth in the Plan are incorporated in this Award and made a part of this Award for all purposes. Capitalized terms used but not defined in this Award will have the meanings assigned to such terms in the Plan. This Award has been signed in duplicate by the Company and delivered to you, and (when you sign below) has been accepted by you effective as of May _________, 2006.

ACCEPTED	CENTEX CORPORATION
as of May _________, 2006
[Name]	[Name]
	[Title]

EX-10.9

Exhibit 10.9

CENTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective as of April 1, 2003, and

Amended and Restatement Effective as of April 1, 2006

CENTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN

Effective as of April 1, 2003

Table of Contents

			Page
ARTICLE I. NATURE OF PLAN				1
ARTICLE II. DEFINITIONS AND CONSTRUCTION				2
	2.1	Definitions		2
	2.2	Word Usage		5
ARTICLE III. ELIGIBILITY TO PARTICIPATE				6
	3.1	Date of Participation		6
	3.2	Change in Employment Status		6
ARTICLE IV. DEFERRED CASH COMPENSATION AWARDS				7
	4.1	Award from Company		7
	4.2	Agreement		7
	4.3	Crediting of Amounts		7
	4.4	Interest		7
	4.5	Vesting		7
	4.6	Distribution		7
	4.7	Forfeiture		7
	4.8	Death, Disability or Vested Retirement		7
	4.9	Change in Control		8
	4.10	Employee Directors		8
ARTICLE V. PARTICIPANT ACCOUNTS				9
	5.1	Participant Accounts		9
	5.2	Accounting for Distributions		9
ARTICLE VI. DISTRIBUTION OF BENEFITS				10
	6.1	Election for Form of Distribution of Benefits		10
	6.2	Time of Distribution		11
	6.3	Distributions In the Event of the Participant’s Death		12
	6.4	Withdrawals in the Event of an Unforeseeable Financial Emergency		13
	6.5	Notice to Trustee		13
	6.6	Elections Under Q&A-21 of notice 2005-1		13
ARTICLE VII. AMENDMENTS AND TERMINATION				15

			Page
	7.1	Amendment by Company		15
	7.2	Plan Termination		15
ARTICLE VIII. TRUST				16
	8.1	Establishment of Trust		16
	8.2	Funding		16
ARTICLE IX. PLAN ADMINISTRATION				17
	9.1	Powers and Responsibilities of the Committee		17
	9.2	Claims and Review Procedures		17
ARTICLE X. MISCELLANEOUS				19
	10.1	Communication to Participants		19
	10.2	Limitation of Rights		19
	10.3	Spendthrift Provision		19
	10.4	Spousal Claims		19
	10.5	Withholding		19
	10.6	Facility of Payment		19
	10.7	Overpayment and Underpayment of Benefits		19
	10.8	Governing Law		20

CENTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN

Effective as of April 1, 2003

ARTICLE I.

NATURE OF PLAN

     Centex Corporation (the “Company”) established the Centex Corporation Executive Deferred Compensation Plan (the “Plan”), effective as of April 1, 2003, for the benefit of certain of its Eligible Employees. The purpose of the Plan is to provide non-qualified Deferred Cash Compensation Awards to Eligible Employees.

     The Plan is intended to be an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

     NOW, THEREFORE, Centex Corporation hereby authorizes the establishment of the Plan, effective as of April 1, 2003, as amended and restated effective April 1, 2006, to read as follows:

1

ARTICLE II.

DEFINITIONS AND CONSTRUCTION

     2.1 Definitions. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

          “Account” means an account established on the books of the Employer for the purpose of recording amounts credited on behalf of a Participant and any income, expenses, gains or losses included thereon as described in Article V.

          “Beneficiary” means the person or persons entitled under Section 6.3 to receive benefits under the Plan upon the death of a Participant.

          “Board” means the Board of Directors of the Company.

          “Change in Control” means, unless otherwise defined by the independent Compensation Committee of the Board, a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), whether or not the Company is then subject to such reporting requirement; provided, that, without limitation, such a change in control shall be deemed to have occurred if:

     (1) a third person, including a “Group” as defined in Section 13(d)(3) of the Act, becomes the beneficial owner of Company common stock, par value $0.25 per share, having 50% or more of total number of votes that may be cast for the election of Directors; or

     (2) as a result of, or in connection with, a contested election for Director, persons who were Directors immediately before such election shall cease to constitute a majority of the Board.

          “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          “Committee” means the Compensation Committee of the Board.

          “Company” means Centex Corporation, a Nevada corporation, or any successor thereto which shall adopt this Plan.

          “Deferral Election Form” means an election, in the form and subject to the conditions prescribed by the Committee, pursuant to which a Participant elects the time and form of distribution of his Account under the Plan.

2

          “Deferred Cash Compensation” means deferred cash compensation granted to an Eligible Employee as a bonus following the conclusion of a fiscal year pursuant to Article IV.

          “Deferred Cash Compensation Award” means an award of Deferred Cash Compensation.

          “Deferred Compensation Agreement” means an agreement between the Company and an Eligible Employee, in the form and subject to the conditions prescribed by the Committee, pursuant to which an Eligible Employee is granted a Deferred Cash Compensation Award from the Company, and which specifies:

     (1) that the Eligible Employee agrees to participate in this Plan in accordance with its provisions; and

     (2) that this Plan is incorporated by reference and the Deferred Compensation Agreement shall be subject to this Plan in all respects.

          “Director” means an individual who is a member of the Board.

          “Disability” means a disability which entitles a Participant to benefits under the Employer’s long-term disability plan or which would entitle the Participant to benefits under such plan were the Participant an employee at the time of such disability.

          “Eligible Employee” means (1) prior to January 1, 2004, an Employee of the Employer who is a member of the Senior Management Team, and (2) after December 31, 2003, an Employee who is an officer or key Employee of the Employer.

          “Employee” means any employee of the Employer.

          “Employee Director” means an individual (1) who is both a member of the Board and an Employee of the Company at the time of the grant of the Deferred Cash Compensation Award or (2) who was an Employee whose date of Retirement is before the Deferred Cash Compensation Award is granted, but who qualifies for such award in accordance with an incentive compensation plan of the Company.

          “Employer” means the Company and any Related Employer.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to time amended.

          “Form of Distribution” means one of the distribution options set forth in Section 6.1(b).

          “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week.

3

          “Maximum Deferral Date” means December 31st of the 7th year after the year in which a Deferred Cash Compensation Award is granted to a Participant.

          “Participant” means any Eligible Employee who participates in the Plan in accordance with Article III and Article IV.

          “Plan” means the Centex Corporation Executive Deferred Compensation Plan, as set forth herein and as may be amended from time to time.

          “Plan Year” means the 12-consecutive month period beginning January 1 and ending December 31.

          “Related Employer” means any employer other than the Company named herein, if the Company and such other employer are members of a controlled group of corporations (as defined in Section 414(b) of the Code) or an affiliated service group (as defined in Section 414(m)), or are trades or businesses (whether or not incorporated) which are under common control (as defined in Section 414(c)), or such other employer is required to be aggregated with the Company pursuant to regulations issued under Code Section 414(o). Related Employer shall also include any joint venture in which the Company or a subsidiary of the Company is a partner, if the Company or a subsidiary of the Company manages such joint venture, and any Affiliated Business Arrangement. For purposes of this definition of Related Employer, an “Affiliated Business Arrangement” means any entity in which either CTX Mortgage Ventures, LLC, a Delaware limited liability company, or a subsidiary of the Company owns an interest and in which a non-Company owned entity also owns an interest, and may take the form of a limited partnership, a limited liability limited partnership, a limited liability company or such other ownership and management structure as CTX Mortgage Ventures, LLC or a subsidiary of the Company, as applicable, may deem appropriate. In addition, predecessors to the Company and its subsidiaries are Related Employers.

          “Retirement” means the Participant’s voluntary termination of employment from the Employer and, where the context indicates, will include Vested Retirement with respect to Deferred Cash Compensation Awards granted prior to April 1, 2006.

          “Senior Management Team” means Messrs. Leldon E. Echols, Timothy R. Eller, Laurence E. Hirsch, Raymond G. Smerge, and Robert S. Stewart.

          “Trust” means a trust fund established, if any, pursuant to the Article VIII hereof.

          “Trustee” means the corporation or individuals named in the agreement establishing a Trust and such successor and/or additional trustees as may be named in accordance with a trust agreement, if one is established.

          “Unforeseeable Financial Emergency” means an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial

4

hardship to the Participant resulting from (i) sudden and unexpected illness or accident of the Participant, the Participant’s spouse, or a dependent of the Participant, (ii) a loss of the Participant’s property due to casualty, or (iii) such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Committee.

          “Vested Retirement” means the voluntary termination by a Participant who is a Full Time Employee of all employment from the Employer at any time after the Participant is age 55 or older, has at least 10 Years of Service and the sum of age and Years of Service equals at least 70. Calculation of eligibility for Vested Retirement shall be based on whole years of age and Years of Service on the date as of which the calculation is being made. Any partial years shall be disregarded. In no event will the Plan’s Vested Retirement provisions apply to Deferred Cash Compensation Awards granted on or after April 1, 2006.

          “Weighted Average Cost of Funds” means the Company’s weighted average borrowing cost as determined quarterly by the Company’s Treasurer.

          “Years of Service” means the Participant’s years of employment with an Employer. A Participant shall be credited with a Year of Service on each anniversary of the date on which he was first employed with an Employer, provided that the Participant continues to be employed by an Employer on such anniversary date.

     2.2 Word Usage. Words used in the masculine shall apply to the feminine where applicable, and wherever the context of the Plan dictates, the plural shall be read as the singular and the singular as the plural. The words “herein,” “hereof,” “hereinafter” and other conjunctive uses of the word “here” shall be construed as reference to another portion of this Plan document. The terms “Section” or “Article” when used as a cross-reference shall refer to other Sections or Articles contained in the Plan and not to another instrument, document or publication unless specifically stated otherwise.

5

ARTICLE III.

ELIGIBILITY TO PARTICIPATE

     3.1 Date of Participation. An Eligible Employee shall become a Participant in the Plan as of the date he is granted a Deferred Cash Compensation Award, pursuant to Section 4.1, subject to his timely execution of a Deferred Compensation Agreement.

     3.2 Change in Employment Status. If any Participant continues in the employ of the Employer or Related Employer but ceases to be an Eligible Employee, the individual shall continue to be a Participant while he remains employed and the Deferred Cash Compensation Award will continue to vest and be paid in accordance with its terms; provided, however, the individual shall not be eligible for new grants of Deferred Cash Compensation Awards on and after the date he is no longer an Eligible Employee.

6

ARTICLE IV.

DEFERRED CASH COMPENSATION AWARDS

     4.1 Award from Company. From time to time while the Plan is in effect, the Committee may in its absolute discretion select from among Eligible Employees such one or more of them as in the opinion of the Committee should receive a Deferred Cash Compensation Award from the Company. The Committee will also, in its absolute discretion, determine the amount of the Deferred Cash Compensation Award for each Eligible Employee so selected.

     4.2 Agreement. Each Deferred Cash Compensation Award under the Plan shall be evidenced by, and subject to, a timely executed Deferred Compensation Agreement setting forth the terms and conditions of the award.

     4.3 Crediting of Amounts. An Employer shall credit a Participant’s Account with the amount of Deferred Cash Compensation that has been awarded to the Participant in accordance with Section 4.1. Such amount shall be credited to a Participant’s Account on the date specified under the applicable Deferred Compensation Agreement.

     4.4 Interest. A Participant’s Account shall accrue interest (compounded on a daily basis) until paid to the Participant, and shall be credited with interest each day at a per annum interest rate equal to the Company’s Weighted Average Cost of Funds for the calendar quarter ended immediately prior to such day or as otherwise provided in the applicable Deferred Compensation Agreement.

     4.5 Vesting. A Participant’s Deferred Cash Compensation Award shall vest in accordance with a schedule established by the Committee, in its sole and absolute discretion, and as described in the applicable Deferred Compensation Agreement. The schedules established by the Committee for each Deferred Cash Compensation Award may differ among Participants.

     4.6 Distribution. The distribution of any vested portion of a Deferred Cash Compensation Award shall be as provided in the applicable Deferred Compensation Agreement, subject to the provisions of Article VI below.

     4.7 Forfeiture. Subject to Sections 4.8, 4.9 and 4.10 below and except as otherwise provided in a Deferred Compensation Agreement or as otherwise determined by the Committee, any unvested portion of an Account attributable to a Deferred Cash Compensation Award shall be immediately forfeited automatically upon termination of employment of the Participant for any reason other than death or Disability, or, with respect to Deferred Cash Compensation Awards granted prior to April 1, 2006, Vested Retirement.

     4.8 Death, Disability or Vested Retirement. Notwithstanding Section 4.5 to the contrary, unless (i) otherwise expressly provided in the applicable Deferred Compensation Agreement or (ii) previously forfeited under Section 4.7, in the event of the Participant’s death or Disability or, with respect to Deferred Cash Compensation Awards granted prior to April 1,

7

2006, Vested Retirement, each Deferred Cash Compensation Award granted to such Participant shall become immediately vested in its entirety.

     4.9 Change in Control. In the event of a Change in Control during a Participant’s employment with the Employer, each Deferred Cash Compensation Award granted under this Plan to the Participant shall become immediately vested and payable and shall be paid in a lump sum in cash (regardless of the otherwise applicable distribution and vesting provided for under the Deferred Compensation Agreement or the terms of the Deferred Cash Compensation Award) unless otherwise expressly provided in such Deferred Compensation Agreement or Deferred Cash Compensation Award.

     4.10 Employee Directors. An Employee Director’s entire Deferred Cash Compensation Award will vest in full on the date the Employee Director ceases to be both a Director and an Employee.

8

ARTICLE V.

PARTICIPANT ACCOUNTS

     5.1 Participant Accounts. The Company will establish and maintain an Account for each Participant to which shall be credited all Employer contributions and any earnings attributable to the Participant’s Account. The Committee will establish and maintain such other accounts and records as it decides in its discretion to be reasonably required or appropriate in order to discharge its duties under the Plan. Participants will be furnished statements of their Account values at least once each Plan Year.

     5.2 Accounting for Distributions. As of any date of a distribution to a Participant or a Beneficiary hereunder, the distribution to the Participant or to the Participant’s Beneficiary(ies) shall be charged to the Participant’s Account.

9

ARTICLE VI.

DISTRIBUTION OF BENEFITS

     6.1 Election for Form of Distribution of Benefits.

     (a) A Participant shall elect the Form of Distribution to be made from the Participant’s Account when such Participant first enters into a Deferred Compensation Agreement and at such other designated times as provided in Section 6.2(b).

     (b) Participants may elect to receive distribution of their Account with respect to the amounts scheduled to vest in the following year from among the following Forms of Distribution, subject to Section 6.2 of the Plan:

     (1) For a distribution following death, Disability, or Retirement prior to the Maximum Deferral Date:

     (A) a lump sum in cash; or

     (B) a series of substantially equal quarterly, semi-annual or annual installments in cash over a period certain which does not exceed the Maximum Deferral Date; or

     (C) two installments in cash in amounts (stated as percentages of the Account that total 100%) payable as of the dates elected by the Participant which do not exceed the Maximum Deferral Date.

     (2) For a distribution during employment prior to the Maximum Deferral Date:

     (A) a lump sum in cash of all or a portion of the Participant’s Account payable as of the date(s) elected by the Participant which do not exceed the Maximum Deferral Date; or

     (B) two installments in cash in amounts (stated as percentages of the Account that total 100%) payable as of the dates elected by the Participant which do not exceed the Maximum Deferral Date.

     (c) Notwithstanding anything herein to the contrary, if a Participant has not elected a Form of Distribution at the time the Participant terminates employment or, if earlier, the Maximum Deferral Date(s), then his vested Account shall be distributed in a lump sum in cash on or about the earlier of his termination date or, if applicable, the Maximum Deferral Date(s).

10

     6.2 Time of Distribution.

     (a) A Participant may elect to receive a distribution as follows:

     (1) If the Participant elects a lump sum distribution, he can elect that the distribution be made:

     (A) within 30 days following his death, Disability, or Retirement; or

     (B) in January of the year following death, Disability or Retirement;

provided, however, that if the Maximum Deferral Date for the amount to be distributed occurs prior to the Participant’s death, Disability or Retirement, then such lump sum distribution shall be made on (or as soon as administratively practicable after) the Maximum Deferral Date.

     (2) If the Participant elects a distribution in quarterly, semi-annual or annual installments, the distribution will commence in January of the year following death, Disability, or Retirement; provided, however, that if the Maximum Deferral Date for the amount to be distributed occurs prior to the Participant’s death, Disability or Retirement, then such amount shall be distributed in lump sum on (or as soon as administratively practicable after) the Maximum Deferral Date.

     (3) If the Participant elects a lump sum distribution during employment, he can elect that the distribution be made after a set number of years not to exceed the Maximum Deferral Date for the amount to be distributed, provided, however, that if the Participant terminates employment prior to such date, then the Plan’s provisions with respect to distribution following death, Disability, or Retirement, or the general provisions of this Section, shall control the distribution of his Account.

An election pursuant to this Section shall be made by the Participant when the Participant first enters into a Deferred Compensation Agreement pursuant to a Deferral Election Form and at other such times as permitted by the Committee on subsequent Deferral Election Forms.

     (b) An election of timing of distribution for a prior Plan Year award may be revoked and a new election substituted therefor during any subsequent Plan Year; provided, however, that such new election (i) shall only be effective with respect to distributions during a Plan Year subsequent to the Plan Year during which the new election is made and (ii) the new distribution date shall not exceed the applicable Maximum Deferral Date with respect to the amounts to be distributed.

11

     (c) Notwithstanding a Participant’s election regarding timing of a distribution, in the event that a Participant terminates employment other than due to death, Disability, or Retirement and such termination date is prior to the Maximum Deferral Date for the amounts to be distributed, then the Participant’s vested Account shall be distributed in a lump sum as soon as administratively practicable after such date; provided, however, that the Committee may, in its sole and absolute discretion, choose to continue the deferral until the Participant’s Account would otherwise be payable for a period not to exceed the earlier of (i) the end of the following Plan Year or (B) the applicable Maximum Deferral Date for the amounts to be distributed, subject to the right of the Committee to revoke the deferral at any time and cause a distribution to occur.

     (d) Notwithstanding the foregoing or any other provision of the Plan to the contrary, in no event will distribution of a Participant’s vested Account balance be deferred later than the date specified by the Participant in his election to defer his Deferred Cash Compensation Award or, if earlier, the applicable Maximum Deferral Date with respect to each Deferred Cash Compensation Award, subject to Section 6.2(c).

     6.3 Distributions In the Event of the Participant’s Death. If a Participant dies before the distribution of his Account has commenced, or before such distribution has been completed, his designated Beneficiary or Beneficiaries will be entitled to receive, to the extent vested, the balance or remaining balance of his Account, plus any amounts thereafter credited to his Account, in a lump sum as soon as administratively practicable after the Participant’s date of death and satisfaction of this Section 6.3.

          If a Participant is married, his Beneficiary is his spouse at the time of his death. A Participant may designate a Beneficiary or Beneficiaries other than his spouse, provided that the Participant’s spouse either consents to such designation or the Participant establishes to the satisfaction of the Committee that the spouse’s consent cannot be obtained because the spouse cannot be located. Spousal consent must be in writing, must acknowledge the effect of the designation, and must be witnessed by a Plan representative or a notary public. Any consent by a spouse (or the establishment that a spouse cannot be located) shall be valid only with respect to that spouse. The designation of a nonspousal Beneficiary or a change in any prior designation of Beneficiary or Beneficiaries shall be made by giving notice to the Committee on a form designated by the Committee.

          If a Participant is not married, he may designate a Beneficiary or Beneficiaries or change any prior designation of Beneficiary or Beneficiaries by giving notice to the Committee on a form designated by the Committee.

          If more than one person is designated as the Beneficiary, their respective interests shall be as indicated on the designation form. Distributions shall be made in lump sum payments in cash as soon as administratively practicable following the Committee’s receipt of notice of the Participant’s death.

12

          A copy of the death notice or other sufficient documentation must be filed with and approved by the Committee. If upon the death of the Participant there is, in the opinion of the Committee, no designated Beneficiary for part or all of the Participant’s vested Account, such amount will be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after benefits to such Beneficiary have commenced, but before they have been completed, and, in the opinion of the Committee, no person has been designated to receive such remaining benefits, then such benefits shall be paid to the deceased Beneficiary’s estate.

     6.4 Withdrawals in the Event of an Unforeseeable Financial Emergency. If the Participant experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee, in the manner and form specified by the Committee, to receive a partial or full distribution of his vested Account. A payout under this section shall not exceed the lesser of the vested balance in the Participant’s Account or the amount reasonably needed to satisfy the Unforeseeable Financial Emergency. Approval of such a request shall be made by the Committee in its sole discretion.

     6.5 Notice to Trustee. The Committee will notify the Trustee, if applicable, in writing whenever any Participant or Beneficiary is entitled to receive benefits under the Plan. The Committee’s notice shall indicate the form, amount and frequency of benefits that such Participant or Beneficiary shall receive.

     6.6 Elections Under Q&A-21 of notice 2005-1.

     (a) Pursuant to Q&A-21 of IRS Notice 2005-1, on or before March 15, 2005, Participants may elect, pursuant to a Deferral Election Form, the form and time of distribution, as set forth in subsection (b) below, of the following amounts of Deferred Cash Compensation awarded to such Participants:

     (1) Deferred Cash Compensation awarded in May 2003 that vests after December 31, 2004, along with earnings thereon (“Unvested May 2003 Award Amounts”);

     (2) Deferred Cash Compensation awarded in May 2004 that vests after December 31, 2004, along with earnings thereon (“Unvested May 2004 Award Amounts”); and

     (3) Deferred Cash Compensation awarded in May 2005, along with earnings thereon (“May 2005 Award Amounts”).

     (b) A Participant may elect a distribution separately for each of his Unvested May 2003 Award Amounts, Unvested May 2004 Award Amounts and May 2005 Award Amounts, as applicable, from among the following:

     (1) total amount in a lump sum in cash on or as soon as

13

administratively practicable after a date, selected by the Participant, that:

     (A) is not earlier than March 31, 2006 and not later than the Maximum Deferral Date (as defined below), for Unvested May 2003 Award Amounts;

     (B) is not earlier than March 31, 2007 and not later than the Maximum Deferral Date, for Unvested May 2004 Award Amounts; and

     (C) is not earlier than March 31, 2008 and not later than the Maximum Deferral Date, for May 2005 Award Amounts;

     (2) in lump sums in cash on or as soon as administratively practicable after January 15^th of the year following the applicable calendar year during which the amounts awarded vest; or

     (3) total amount in a lump sum in cash on or as soon as administratively practicable after the first to occur of:

     (A) termination of the Participant’s employment for any reason (or, if the Participant is a “specified employee” within the meaning of Code Section 409A(a)(B)(i) and the regulations thereunder, as determined by the Committee, and the Participant’s termination is not due to his death, then the date that is six months after the date of the Participant’s termination of employment); or

     (B) the Maximum Deferral Date

For purposes of this Section 6.6, the “Maximum Deferral Date”: is (i) December 31, 2010, for Unvested May 2003 Award Amounts; (ii) December 31, 2011, for Unvested May 2004 Award Amounts; and (iii) December 31, 2012, for May 2005 Award Amounts.

14

ARTICLE VII.

AMENDMENTS AND TERMINATION

     7.1 Amendment by Company. The Company, by action of the Committee, reserves the authority to amend the Plan at any time and in any manner, except that no amendment shall apply retroactively to alter the rights of Participants (or, following the Particpants’ death, their Beneficiaries) with respect to past deferrals, nor shall any such amendment divest any Participant (or, following the Participant’s death, his Beneficiaries) of any deferral made prior to the amendment. Amendments may be made as necessary or appropriate to enable the Plan to satisfy the applicable requirements of the Code or ERISA or to conform the Plan to any change in federal law or to any regulations or ruling thereunder.

     7.2 Plan Termination. The Company has adopted the Plan with the intention and expectation that the Plan will be continued indefinitely. However, the Company has no obligation or liability whatsoever to maintain the Plan for any length of time and may discontinue contributions under the Plan or, by action of the Committee, terminate the Plan at any time. In the event of such discontinuance, Accounts of Participants maintained under the Plan at the time of termination shall continue to be governed by the terms of the Plan until paid out in accordance with the terms of the Plan; provided, however, that the Company reserves the right to distribute to each Participant the total amount deferred, including accrued interest, of the Participant’s Account at any time or times.

15

ARTICLE VIII.

TRUST

     8.1 Establishment of Trust. Benefits hereunder shall constitute an unfunded, general obligation of the Company. The Company may, but shall not be required to, establish a Trust between the Company and the Trustee, in accordance with the terms and conditions as set forth in a separate agreement, under which assets are held, administered and managed, subject to the claims of the Company’s creditors in the event of the Company’s insolvency, until paid to Participants and their Beneficiaries as specified in the Plan. Any such Trust shall be treated as a grantor trust under the Code, and the establishment of any such Trust is not intended to cause Participants to realize current income on amounts contributed thereto. If a Trust is established under this Section 8.1, then benefits may be paid by the Company or from the Trust.

     8.2 Funding. Notwithstanding the ability or obligation, as applicable, of the Company to establish a Trust under this Article VIII, or to take other action to create reserves or funds, benefits under this Plan shall constitute an unfunded and unsecured promise to pay benefits. A Participant and his Beneficiary(ies) shall be general creditors of the Company with respect to the payment of any benefit under this Plan.

16

ARTICLE IX.

PLAN ADMINISTRATION

     9.1 Powers and Responsibilities of the Committee. The Committee has the full power and discretion and the full responsibility to interpret the Plan and to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Committee’s powers and responsibilities include, but are not limited to, the following:

     (a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

     (b) To interpret the Plan, its interpretation thereof in good faith and discretion to be final and conclusive on all persons claiming benefits under the Plan;

     (c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

     (d) To administer the claims and review procedures specified in Section 9.2;

     (e) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;

     (f) To determine the person or persons to whom such benefits will be paid;

     (g) To authorize the payment of benefits;

     (h) To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;

     (i) To designate such persons (which may include Employees of the Company), counsel, accountants, and consultants as may be required to assist in administering the Plan; and

     (j) To allocate and delegate its responsibilities, including the formation of any other committees as appropriate to the administration of the Plan.

     9.2 Claims and Review Procedures.

     (a) If any person believes he is entitled to any rights or benefits under the Plan, such person may file a claim in writing with the Committee, which shall be in appropriate detail to convey a clear understanding of such claim. If any such claim is wholly or partially denied, the Committee will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or

17

information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review, the time limits applicable to such procedures, and a statement of the person’s rights following an adverse benefit determination on review, including a statement of his right to file a lawsuit under ERISA if the claim is denied on appeal. Such notification will be given within 90 days after the claim is received by the Committee (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.

     (b) Within 60 days after the date on which a person receives a notice of denial (or within 60 days after the date on which such denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Committee for a review of his denied claim; (ii) review pertinent documents; and (iii) submit issues and comments in writing. The decision on review will be made within 60 days after the request for review is received by the Committee (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Committee to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). The decision on review shall be in written or electronic form, and include notice of the final determination. If the claim is denied in whole or part, such notice, which shall be in a manner calculated to be understood by the person receiving such notice, shall include (i) the specific reasons for the decision, (ii) the specific references to the pertinent plan provisions on which the decision is based, (iii) a statement that the person is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits, (iv) a description of any voluntary appeal procedures offered by the Plan and the person’s right to obtain further information about any such procedures, and (v) a statement of the person’s right to file a lawsuit under ERISA. If the decision on review is not made within such period, the claim will be considered denied.

          Benefits under this Plan will only be paid if the Committee decides, in its discretion, that a person is entitled to them. Moreover, no action at law or in equity shall be brought to recover benefits under this Plan prior to the date the claimant has exhausted the administrative process of appeal available under the Plan.

18

ARTICLE X.

MISCELLANEOUS

     10.1 Communication to Participants. The Committee shall communicate the terms of the Plan as soon as practicable after an Eligible Employee is designated as a Participant.

     10.2 Limitation of Rights. Neither the establishment of the Plan and, if applicable, the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against the Company, an Employer, the Committee (or its delegates) or Trustee, except as provided herein. The Plan is not an employment contract, and in no event will the terms of employment or service of any Participant be modified or in any way affected hereby.

     10.3 Spendthrift Provision. Except as otherwise provided in Section 10.4, the benefits provided hereunder will not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, either voluntarily or involuntarily, and any attempt to cause such benefits to be so subjected will not be recognized, except to such extent as may be required by law.

     10.4 Spousal Claims. Any claim against benefits under this Plan for child support, spousal maintenance, alimony, property division or other matrimonial or dependent obligations shall be paid in a single lump sum payment in cash as soon as administratively practicable after the Committee (or its delegate) approves such payment. Except as provided herein, such a claim under this Plan shall be subject to the Plan’s claims procedures, provisions and restrictions.

     10.5 Withholding. Any taxes required to be withheld from distributions hereunder shall be deducted and withheld by the Employer, benefit provider or funding agent.

     10.6 Facility of Payment. In the event the Committee determines, on the basis of medical reports or other evidence satisfactory to the Committee, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Committee may, but is not obligated to, provide for disbursement of such payments to such person’s spouse or to any person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under applicable state law for the care and control of such recipient. The receipt by any such person or institution of any such payments therefor, and any such payment to the extent thereof, shall discharge the liability of the Plan for the payment of benefits hereunder to such recipient.

     10.7 Overpayment and Underpayment of Benefits. The Committee may adopt, in its sole discretion, whatever rules, procedures and accounting practices are appropriate in providing for the collection of any overpayment of benefits. If an overpayment is made to a Participant, spouse, other Beneficiary or alternate payee, for whatever reason, the Committee may, in its sole discretion, withhold payment of any further benefits under the Plan until the

19

overpayment has been collected or may require repayment of benefits paid under this Plan, without regard to further benefits to which the person may be entitled and, to the extent deemed necessary by the Committee, in its sole discretion, the Committee may seek repayment of such overpaid amounts through any and all available legal actions, including, but not limited to, filing suit in a court with appropriate jurisdiction. If a Participant, spouse, alternate payee, or other Beneficiary receives an underpayment of benefits, the Committee shall direct that immediate payment be made to make up for the underpayment.

     10.8 Governing Law. The Plan will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the State of Texas.

20

IN WITNESS WHEREOF, Centex Corporation has executed these presents as evidenced by the signature of its officer affixed hereto, in a number of copies, all of which shall constitute but one and the same instrument, which may be sufficiently evidenced by any executed copy hereof, this ___ day of ___, ___.

CENTEX CORPORATION

By:

Its:

21

EX-12.1

Exhibit 12.1

Centex Corporation
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands, except ratios)

	Fiscal Years Ended March 31, (1)
	2006			2005			2004			2003			2002
Total Enterprise:
Earnings
Earnings from continuing operations (2)	$	1,895,493		$	1,401,655		$	1,045,458		$	679,809		$	542,834
Minority interests in income of consolidated subsidiaries		3,469			2,467			3,723			—			—
Undistributed (income) loss from equity investments		5,799			(4,358	)		(17,591	)		6,145			(10,692	)
Fixed charges		323,433			237,201			183,645			149,755			135,206
Interest capitalized		(232,860	)		(176,874	)		(115,186	)		(73,602	)		(53,568	)
Amortization of capitalized interest		171,189			131,937			89,144			49,450			40,851
Net Earnings	$	2,166,523		$	1,592,028		$	1,189,193		$	811,557		$	654,631
Fixed Charges
Interest expense including amortization of debt discount	$	312,133		$	228,501		$	176,645		$	141,755		$	126,306
Interest factor attributable to rentals		11,300			8,700			7,000			8,000			8,900
Total Fixed Charges	$	323,433		$	237,201		$	183,645		$	149,755		$	135,206
Ratio of Earnings to Fixed Charges		6.70			6.71			6.48			5.42			4.84
Total Enterprise (with financial services reflected on the equity method): (3)
Earnings
Earnings from continuing operations (2)	$	1,895,493		$	1,401,655		$	1,045,458		$	679,809		$	542,834
Undistributed (income) loss from equity investments		(78,666	)		(100,330	)		(183,369	)		(108,531	)		(100,343	)
Fixed charges		254,329			202,552			160,020			140,956			119,145
Interest capitalized		(232,860	)		(176,874	)		(115,186	)		(73,602	)		(53,568	)
Amortization of capitalized interest		171,189			131,937			89,144			49,450			40,851
Net Earnings	$	2,009,485		$	1,458,940		$	996,067		$	688,082		$	548,919
Fixed Charges
Interest expense including amortization of debt discount	$	246,229		$	196,352		$	154,720		$	134,756		$	112,145
Interest factor attributable to rentals		8,100			6,200			5,300			6,200			7,000
Total Fixed Charges	$	254,329		$	202,552		$	160,020		$	140,956		$	119,145
Ratio of Earnings to Fixed Charges		7.90			7.20			6.22			4.88			4.61

(1)	The ratios presented in this table have been adjusted to reflect our sub-prime home equity lending operations, international homebuilding operations (sold in September 2005), Centex Construction Products, Inc. (spun off in January 2004), and our manufactured housing operations (spun off in June 2003) as discontinued operations.
(2)	Earnings from Continuing Operations are Before Income Taxes and Cumulative Effect of a Change in Accounting Principle adopted in fiscal 2004.
(3)	Represents a supplemental presentation that reflects the Financial Services segment as if accounted for under the equity method. We believe that separate disclosure of the consolidating information is useful because the Financial Services subsidiaries operate in a distinctly different financial environment that generally requires significantly less equity to support their higher debt levels compared to the operations of our other subsidiaries; the Financial Services subsidiaries have structured their financing programs substantially on a stand alone basis; and we have limited obligations with respect to the indebtedness of our Financial Services subsidiaries. Management uses this information in its financial and strategic planning. We also use this presentation to allow investors to compare us to homebuilders that do not have financial services operations.

EX-21

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
AAA HOLDINGS, L.P.	Delaware
Delaware AAA Holdings, L.P.
ABC HOMES LIMITED	United Kingdom
ACCORD LENDING, L.P.	Texas
ADFITECH, INC.	Nevada
Advanced Financial Technology, Inc.
Xsequor
ALAMEDA POINT COMMUNITY PARTNERS, LLC	Delaware
ALPINE INSURANCE COMPANY	Vermont
AMERICAN LANDMARK MORTGAGE, LTD.	Florida
ARENA DEVELOPMENT/CENTEX CONSTRUCTION, LLC	Florida
ARMOR ASSURANCE COMPANY	Vermont
ARMOR INDEMNITY, INC., A RISK RETENTION GROUP	Hawaii
ASSURANCE HOME LENDING SERVICES, L.P.	Washington
Assurance Financial Services, L.P.
AT-HOME MORTGAGE ASSOCIATES, LTD.	Florida
BARRINGTON CARPET, LLC	Delaware
BATCHELLORS FOREST, LLC	Delaware
BATESON-DAILEY, A JOINT VENTURE	Michigan
BAY VISTA AT MEADOW PARK, L.P.	California
BC STAFFORD, LLC	Delaware
BENICIA CS DEVELOPERS, LLC	Delaware
BUILDERS CHOICE MORTGAGE, LIMITED PARTNERSHIP	Florida
CALLENDAR GROVE, LLC	Delaware
CDMC HOLDING, INC.	Nevada
CDP CENTRAL REALTY, LLC	Texas
Pointe West Realty
CDP WEST REALTY, INC.	Nevada
CDPWH ACQUISITION LLC	Delaware
CENTEAM INSURANCE COMPANY, LTD.	Hawaii
CENTEX BUILDING SERVICES, INC.	Nevada
CENTEX COMMERCIAL DEVELOPMENT, LLC	Delaware
Centex Commercial Development GP, LLC
CENTEX COMMERCIAL DEVELOPMENT, L.P.	Delaware
Centex Commercial Development, Limited Partnership
Centex Commercial Development of North Carolina, Limited Partnership
CENTEX CONCORD	Tennessee
CENTEX CONCORD PROPERTY MANAGEMENT, L.L.C.	Tennessee
CENTEX CONSTRUCTION, INC.	Nevada
Centex Construction Design Build

Page 1 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
CENTEX CONSTRUCTION, LLC	Delaware
Centex Construction Healthcare Group
Centex-Continental, a Joint Venture
Centex Facility Services
Centex/Howard/ROCA, a joint venture
Centex/Jennings, a Joint Venture
Centex/Pegasus, a Joint Venture
Centex Resource Group
Centex Rooney
Centex-Rooney Construction Co.
Centex-Rooney Construction Co. , Inc./Construct Two Construction
Managers, Inc., a Joint Venture
Centex Rooney Construction Co., Inc./Rattler Construction
Contractors, Inc., a Joint Venture
Centex Rooney/Gray Construction, a Joint Venture
Centex/Vestal, a Joint Venture
Cummings-Centex Rooney
Jack Jennings & Sons/Centex Rooney, a Joint Venture
Kirchman/Centex, a Joint Venture
CENTEX CONSTRUCTION GROUP, INC.	Nevada
CENTEX DEVELOPMENT COMPANY, L.P.	Delaware
CDC, LP
Centex Development Company, Limited Partnership
CENTEX DEVELOPMENT MANAGEMENT COMPANY	Nevada
CENTEX EMPLOYEE RELIEF FUND	Texas
CENTEX ENGINEERING & CONSTRUCTION, INC.	Nevada
Centex Engineering & Construction
Centex Facility Services
Centex Technology Construction Group Midwest Division
CENTEX EQUITY CORPORATION	Nevada
CENTEX FINANCIAL SERVICES, LLC	Nevada
CENTEX GOLDEN CONSTRUCTION COMPANY	Nevada
CENTEX HOME EQUITY ADVANCE RECEIVABLES COMPANY, LLC	Delaware
CENTEX HOME EQUITY COMPANY, LLC	Delaware
Centex Home Equity
Centex Home Equity Company
CENTEX HOME SERVICES COMPANY, LLC	Nevada
Centex HomeTeam Services
HomeTeam Services
CENTEX HOMES, INC.	Texas
CENTEX HOMES, LLC	Delaware
Centex Homes
CENTEX HOMES CROWN LLC	Delaware
CENTEX HOMES INTERNATIONAL LIMITED	United Kingdom
CENTEX HOMES MARKETING, INC.	Georgia
CTX Realty
CENTEX HOMES OF CALIFORNIA, LLC	Delaware
CENTEX HOMES OF CALIFORNIA II, LLC	Delaware
CENTEX HOMES OF PORTLAND REALTY, INC.	Washington
CENTEX HOMES REALTY, INC.	Michigan
CENTEX HOMES REALTY COMPANY	Nevada
CENTEX HOMES WESTSIDE URBAN RENEWAL I, LLC	Delaware
CENTEX HOMES WESTSIDE URBAN RENEWAL II, LLC	Delaware

Page 2 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
CENTEX HOMES	Nevada
At Home America
Centex Destination Properties
Centex Destination Properties d/b/a Marquis Homes
Centex Destination Properties dba NorthShore Marina
Centex Development Company
Centex Pools & Spas
City Homes
CityHomes
CTX Builders Supply
Fox & Jacob Homes
Fox & Jacobs
Fox & Jacobs by Centex
Fox & Jacobs Homes
Marquis Homes
Marquis Mountain Homes
Marquis Resort Homes
Marquis Resort Homes by Centex
New Homes Research Group
Riverwood Golf Club
Teal Building Corporation
Teal Homes
Timbercreek Forest Products
Vista Homes
Vista Property Company
Wayne Homes
Wayne Homes, a Division of Centex Homes
Wayne Homes by Centex
CENTEX HOSPITALITY GROUP, LLC	Delaware
Atlantic Grille
Ocean Hammock Beach Club
Ocean Hammock Golf and Resort Club
Ocean Hammock Golf Club
Ocean Hammock Real Estate
Ocean Hammock Rentals
Ocean Hammock Resort
Ocean Hammock Yacht Club
Palm Coast Marina
The 19th Hole
The Lodge at Ocean Hammock
CENTEX HOSPITALITY RENTALS, LLC	Delaware
CENTEX HOUSING RELIEF FUND	Texas
CENTEX INDUSTRIAL CAMARILLO IV, LLC	Delaware
CENTEX INTERNATIONAL, INC.	Nevada
CENTEX INTERNATIONAL, LLC	Delaware
CENTEX LAND VISTA RIDGE LEWISVILLE III, L.P.	Delaware
CENTEX LAND VISTA RIDGE LEWISVILLE III GENERAL PARTNER, LLC	Delaware
CENTEX LANDIS LIMITED LIABILITY COMPANY NO. 1	Louisiana
CENTEX LATIN AMERICA, INC.	Nevada
CENTEX LEE, LLC	Delaware
CENTEX LOST CREEK RANCH, LLC	Delaware
CENTEX MORTGAGE, TITLE AND INSURANCE GROUP, LLC	Delaware
CENTEX MOSELEY, LLC	Virginia
CENTEX MULTI-FAMILY COMMUNITIES, L.P.
White Rock Apartment Homes	Delaware

Page 3 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
CENTEX MULTI-FAMILY COMMUNITIES, LLC	Delaware
CENTEX MULTI-FAMILY COMPANY	Nevada
Centex Multi-Family Development Company
CENTEX MULTI-FAMILY INVESTMENTS, L.P.	Delaware
CENTEX MULTI-FAMILY ST. PETE HOLDING COMPANY, L.L.C.	Delaware
CENTEX MULTI-FAMILY UPPER LANDING, LLC	Delaware
CENTEX OFFICE CITYMARK I, L.P.	Delaware
Centex Development Office Citymark I, L.P.
CENTEX OFFICE CITYMARK I GENERAL PARTNER, LLC	Delaware
Centex Development Office Citymark I General Partner, LLC
CENTEX OFFICE SOUTHPOINTE II, L.L.C.	Delaware
CENTEX REAL ESTATE CONSTRUCTION COMPANY	Nevada
CTX Builders Supply
CENTEX REAL ESTATE CORPORATION	Nevada
Centex Custom Homes
Centex Destination Properties
Centex Homes
Centex Homes, a Nevada general partnership
Centex Homes Corporation
Centex-Crosland Company
Centex-Crosland Homes
CTX Builders Supply
Fox & Jacobs
Fox & Jacobs Homes
Selective Homes
The Selective Group
Timbercreek Forest Products
Vista Homes
Wayne Homes
Wayne Homes, a Division of Centex Homes
Wayne Homes by Centex
CENTEX REALTY, INC.	Florida
Riverwood Properties
The Plantation Realty
The Quarry Realty
CENTEX ROONEY CONSTRUCTION CO., INC./LANDIS COMPANY, INC., A JOINT VENTURE	Louisiana
CENTEX ROONEY CONSTRUCTION COMPANY/ACI, A JOINT VENTURE	Florida
CENTEX ROONEY/BOND CLASSROOMS, LLC	Delaware
CENTEX ROONEY/GRAY CONSTRUCTION, A JOINT VENTURE	Florida
CENTEX ROONEY/LLT, A JOINT VENTURE	Florida
CENTEX ROONEY/SCHENKEL SHULTZ DESIGN/BUILDERS, L.C.	Florida
CENTEX SCHAUMBURG INDUSTRIAL PARK, L.L.C.	Illinois
CENTEX SECURITY, INC.	Nevada
Apartment Protection Systems
Apartment Protection Systems, Inc.
Centex HomeTeam Security
Centex HomeTeam Services
Centex Security
HomeTeam Alarms, Inc.
HomeTeam Security
HomeTeam Security, Inc.
HomeTeam Services, Inc.
CENTEX SEISMIC SERVICES, INC.	Nevada

Page 4 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
CENTEX SERVICE COMPANY, LLC	Nevada
CENTEX SMITHGROUP, LLC	Delaware
CENTEX TECHNOLOGY, INC.	Nevada
CENTEX TITLE & ANCILLARY SERVICES, LLC	Nevada
CENTEX/F&S, L.L.C.	Delaware
CENTEX/FPC, L.L.C.	Delaware
CENTEX/HKS, L.L.C.	Delaware
CENTEX/HKS II, L.L.C.	Delaware
CENTEX/HOWARD/ROCA, A JOINT VENTURE	Texas
CENTEX/JENNINGS, A JOINT VENTURE	Florida
CENTEX/LENNAR AT MARTIN’S CROSSING, LLC	Florida
CENTEX/LENNAR AT PORTOFINO ISLES, LLC	Florida
CENTEX/LENNAR AT WOODFIELD, LLC	Delaware
CENTEX/OMNIPLAN, L.L.C.	Delaware
CENTEX/PEGASUS, A JOINT VENTURE	Texas
CENTEX/SCHENKEL SCHULTZ, L.L.C.	Delaware
CENTEX/TAYLOR, L.LC	Delaware
CENTEX/TOUSA AT WELLINGTON, LLC	Delaware
CENTEX/VESTAL, A JOINT VENTURE	Texas
CENTEX/WORTHGROUP, L.L.C.	Delaware
CENTEX-3D/I, A JOINT VENTURE	Texas
CENTEX-AIM CONSTRUCTION, L.L.C.	Michigan
CENTEX-GILFORD, A JOINT VENTURE	Virginia
CENTEX-GILFORD, A JOINT VENTURE II	Virginia
CENTEX-ROONEY CONSTRUCTION CO. OF GEORGIA, LLC	Delaware
CHEC ASSET RECEIVABLE CORPORATION	Nevada
CHEC CONDUIT FUNDING, LLC	Delaware
CHEC FUNDING, LLC	Delaware
CHEC INDUSTRIAL LOAN COMPANY	Tennessee
CHEC INDUSTRIAL LOAN CORPORATION	Minnesota
CHEC RESIDUAL, LLC	Delaware
CITY HOMEBUILDERS, INC.	Texas
CityHomes
CKC FACILITIES GROUP, L.C.	Florida
CKC Design Builders, L.C.
Miramar Town Center Group
CL NORTH LAKES, LLC	Delaware
CL OCEAN VILLAS, LLC	Delaware
CLAREMONT HILLS LLC	Delaware
CLEVENGERS VILLAGE UTILITY, INC.	Virginia
COLLEGE PARK, LLC	Delaware
COMMERCE APPRAISAL SERVICES, LLC	Delaware
COMMERCE ESCROW COMPANY, LLC	Delaware
COMMERCE LAND TITLE, INC.	Nevada
Commerce Company
Commerce Title Agency
Commerce Title Company
COMMERCE LAND TITLE AGENCY, LLC	Ohio
Commerce Title Company
COMMERCE TITLE COMPANY	California
COMMERCE TITLE COMPANY OF NEW MEXICO, LLC	Delaware
COMMERCE TITLE INSURANCE COMPANY	California

Page 5 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
COMMUNITY COMMITMENT GROUP BUILDERS, LLC	Delaware
CCG Builders
CP OAKLEY DEVELOPERS, LLC	Delaware
CP SUNRIDGE, LLC	Delaware
CREEKSIDE AT MEADOW PARK, L.P.	California
CREEKSIDE DEVELOPMENT LLC	Delaware
CROSLAND ACCEPTANCE ASSOCIATES V	North Carolina
CROSLAND BOND COMPANY	North Carolina
CROWN FARM DEVELOPMENT, LLC	Maryland
CROWN VILLAGE FARM, LLC	Delaware
CTX BUILDERS SUPPLY SERVICES, LLC	Delaware
CTX HOLDING COMPANY	Nevada
CTX MORTGAGE COMPANY, LLC	Delaware
Centex Mortgage Company
CTX Mortgage Company
CTX MORTGAGE FUNDING, LLC	Delaware
CTX MORTGAGE FUNDING III, LLC	Delaware
CTX MORTGAGE VENTURES, LLC	Delaware
CTX SWAP I, LLC	Delaware
CUMMINGS-CENTEX ROONEY	Florida
DARDEN FINANCIAL SERVICES, L.P.	Texas
DAY-HEREFORD, LLC	Delaware
DFW INTEGRATED PARTNERS	Texas
DIAMOND LENDING GROUP, L.P.	Texas
DOVE BARRINGTON DEVELOPMENT LLC	Delaware
EAST FRANKLIN IMPLEMENTATION GROUP, LLC	California
EAST WEST AT SILVER SPRING, LLC	Delaware
EG DEVELOPMENT, LLC	Delaware
EMPRESAS INMOBILIARIAS DE MEXICO, S. DE R.L. DE C.V.	Mexico
EUREKA ESCONDIDO, LLC	Delaware
Eureka Escondido Partners, LLC
FAGAN CANYON PARTNERS, LLC	Delaware
FAIR CHASE DEVELOPMENT LLC	Delaware
FAIRFIELD, L.L.C.	Missouri
FLORIDA CONSERVANCY AND DEVELOPMENT GROUP, LLC	Florida
FOUR OAKS MORTGAGE COMPANY, L.P.	North Carolina
FOX & JACOBS, INC.	Texas
GENBOND TWO, INC.	North Carolina
GHQ COMPANY, INC.	Nevada
GOLD DUST FINANCIAL, L.P.	Washington
GUNSTRA MORTGAGE SERVICES, L.P.	Texas
HARWOOD INSURANCE SERVICES, LLC	California
HARWOOD SERVICE COMPANY, LLC	Delaware
Harwood Insurance Service, LLC
Harwood Service Company of Nebraska, LLC
HARWOOD SERVICE COMPANY OF GEORGIA, LLC	Georgia
Harwood Service Company
HARWOOD SERVICE COMPANY OF NEW JERSEY, LLC	New Jersey
Harwood Service Company
HARWOOD STREET FUNDING II, LLC	Delaware
Main Street Funding, LLC
HEARTLAND MORTGAGE, L.P.	California
HOMESELECT SETTLEMENT SOLUTIONS, LLC	Delaware

Page 6 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
HOMETEAM PEST DEFENSE, INC.	Nevada
HT Pest Defense
M.D. Pest Management
HOMETEAM PEST DEFENSE, LLC	Delaware
Callaghan’s Exterminating
Callaghan’s Pest Defense
Integrated Pest Defense
Stopke Pest Control
Wilson Pest Control
Wilson Pest Defense
INDEPENDENT GENERAL AGENCY, INC.	Texas
JMA EUREKA, L.L.C.	Missouri
JMB NO. 2, L.L.C.	Missouri
JMB TAPAWINGO, L.L.C.	Missouri
JOHN CROSLAND COMPANY	North Carolina
John Crosland Homes
KAWEAH LENDING, L.P.	Texas
LANSDOWNE COMMUNITY DEVELOPMENT LLC	Virginia
LANSDOWNE TOWN CENTER LLC	Delaware
LCD COMMUNICATIONS LLC	Virginia
LENNAR CENTEX DEL RIO PARTNERS, LLC	Delaware
LENNAR/CENTEX AT BAYHILL, LLC	Florida
LENNAR/CENTEX SOUTH CAMPUS, LLC	Delaware
LMX FINANCIAL SERVICES, LTD.	Florida
LOST CREEK RANCH LTD.	Texas
LOWER MISSOURI RIVER, L.L.C.	Missouri
LPC ONE DEVELOPMENT PARTNERS, LLC	Delaware
M&W GENERAL CONSTRUCTION COMPANY	Nevada
MARINA COMMUNITY PARTNERS, LLC	Delaware
MEADOWBROOK DEVELOPMENT COMPANY, LLC	Delaware
MELROSE PARK JOINT VENTURE	Florida
METROPOLITAN TAX SERVICE, INC.	Nevada
Metropolitan Tax & Abstract Services, Inc.
METROPOLITAN TITLE & GUARANTY COMPANY	Florida
Commerce Title Agency
Commerce Title Company
Commerce Title Company of Maryland
Commerce Title Company of Virginia
MORTGAGE ACCEPTANCE ASSOCIATES NO. 2	North Carolina
MORTGAGE COLLATERAL ASSOCIATES NO. 1	North Carolina
MORTGAGE COLLATERAL ASSOCIATES NO. 3	North Carolina
MORTGAGE PORTFOLIO SERVICES, INC.	Delaware
MPS FUNDING CORPORATION	Delaware
NEW HOME MORTGAGE SPECIALISTS, L.P.	Washington
NMC BUILDERS, LLC	California
NOMAS CORP.	Nevada
NOVATO COMMUNITY PARTNERS, LLC	California
OAKDALE COMMUNITY PARTNERS, LLC	Delaware
OPENBAND AT LANSDOWNE L.L.C.	Virginia
PL ROSEVILLE, LLC	California
PLANT 51, LLC	Delaware
PORT ARMOR HOLDING, LLC	Delaware
PORTA D’ITALIA, LLC	Delaware

Page 7 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
POTOMAC YARD DEVELOPMENT LLC	Delaware
POTOMAC YARD DEVELOPMENT SOLE MEMBER LLC	Delaware
PRIME HOME MORTGAGE, L.P.	Washington
PWH HOSPITALITY LLC	Texas
The Hollows Club
The Pointe West Club
R.J. LEEPER COMPANY, INC. IN ASSOCIATION WITH CENTEX CONSTRUCTION, A JOINT VENTURE	North Carolina
REALTY ONE MORTGAGE, L.P.	North Carolina
RIVERMARK PARTNERS, LLC	California
RIVERPARK LEGACY, LLC	Delaware
SANTA CLARITA 700, LLC	Delaware
S-C PERRIS, LLC	Delaware
S-C Perris Development, LLC
SCENE AT HILLTOP, LLC	Delaware
SEABREEZE, LLC	California
SELECTIVE — DELAWARE, L.L.C.	Delaware
Heritage Pointe
SILVER FALLS, LLC	Delaware
SIMPSON CROSSING DEVELOPMENT LLC	Delaware
SOUTHPORT DEVELOPMENT LLC	Delaware
ST LENDING, INC.	Delaware
STOCKTON COMMUNITY PARTNERS, LLC	Delaware
SYCAMORE CREEK	California
T.W. LEWIS MORTGAGE COMPANY, L.P.	Texas
TECH VILLAGE PARTNERS II, LLC	Florida
THE JONES COMPANY BUILDING SERVICES, LLC	Nevada
THE JONES COMPANY HOMES, LLC	Nevada
Centex Homes
Fox & Jacobs Homes
Lexington Homes
The Jones Company
THE JONES COMPANY HOMES REALTY, LLC	Nevada
THE PAVILIONS AT HUNTINGTON METRO, LLC	Delaware
THE RIDINGS DEVELOPMENT LLC	Delaware
TRIPLE A DELAWARE LIMITED, LLC	Delaware
TRIPLE A GENERAL, LLC	Delaware
TRIPLE CREEK, LLC	Delaware
TUSTIN LEGACY COMMUNITY PARTNERS, LLC	Delaware
Tustin Legacy Community Partners
WAYNE HOMES, LLC	Delaware
Wayne Homes Centex, LLC
Wayne Homes Michigan, LLC
WAYNE HOMES MID ATLANTIC, LLC	Delaware
Wayne Homes
WEST HYATTSVILLE METRO DEVELOPMENT LLC	Delaware
WESTLAND ACRES DEVELOPMENT, L.L.C.	Missouri

Page 8 of 9

Exhibit 21

Subsidiaries of Centex Corporation

	Jurisdiction
Subsidiary Name & DBAs	of Organization
WESTWOOD INSURANCE AGENCY	California
Centex Insurance Agency
HomeAdvantage Insurance Agency Services
HomeAdvantage Insurance Services
Massachusetts Westwood Insurance Agency
Westwood Agency
Westwood Insurance Agency, Inc.
Westwood Insurance Agency of Denver, Inc.
WMC Insurance Agency
WMC Insurance Agency Services
WMC Insurance Services
WMC Insurance Services, Inc.
WESTWOOD INSURANCE AGENCY OF ARIZONA, INC.	Arizona
WINDEMERE BLC LAND COMPANY LLC	California

Page 9 of 9

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements on Form S-3 and in the related Prospectuses and in the following Registration Statements on Form S-8 of Centex Corporation and Subsidiaries:

Form S-3  Registration No. 333-54722	Form S-8  Registration No. 33-55083
Registration No. 333-54722-01	Registration No. 33-55083-01
Registration No. 333-54722-02	Registration No. 33-55083-02
Registration No. 333-117470	Registration No. 333-28229
Registration No. 333-117470-01	Registration No. 333-28229-01
Registration No. 333-117470-02	Registration No. 333-28229-02
	Registration No. 333-55717
	Registration No. 333-55717-01
	Registration No. 333-55717-02
	Registration No. 333-74185
	Registration No. 333-74185-01
	Registration No. 333-74185-02
	Registration No. 333-86041
	Registration No. 333-86041-01
	Registration No. 333-86041-02
	Registration No. 333-37956
	Registration No. 333-68790
	Registration No. 333-68790-01
	Registration No. 333-68790-02
	Registration No. 333-100682
	Registration No. 333-100682-01
	Registration No. 333-100682-02
	Registration No. 333-103440
	Registration No. 333-103440-01
	Registration No. 333-103440-02
	Registration No. 333-107701
	Registration No. 333-107701-01
	Registration No. 333-107701-02
	Registration No. 333-109869
	Registration No. 333-109869-01
	Registration No. 333-109869-02
	Registration No. 333-110269
	Registration No. 333-110269-01
	Registration No. 333-110269-02
	Registration No. 33-44575

of our reports dated May 19, 2006, with respect to the consolidated financial statements of Centex Corporation and Subsidiaries, Centex Corporation and Subsidiaries management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Centex Corporation and Subsidiaries, included in this Annual Report (Form 10-K) for the year ended March 31, 2006.

Dallas, Texas
May 19, 2006

EX-24.1

Exhibit 24.1

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in her capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Barbara T. Alexander  

Barbara T. Alexander 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Dan W. Cook III  

Dan W. Cook III 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Juan L. Elek  

Juan L. Elek 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Clint W. Murchison, III  

Clint W. Murchison, III 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Thomas J. Falk  

Thomas J. Falk 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ David W. Quinn  

David W. Quinn 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Thomas M. Schoewe  

Thomas M. Schoewe 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Frederic M. Poses with full power of substitution in the premises, as the undersigned’s true and lawful agent and attorney-in-fact (the “Attorney-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Timothy R. Eller  

Timothy R. Eller 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses with full power of substitution in the premises, as the undersigned’s true and lawful agent and attorney-in-fact (the “Attorney-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ James J. Postl  

James J. Postl 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller with full power of substitution in the premises, as the undersigned’s true and lawful agent and attorney-in-fact (the “Attorney-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Frederic M. Poses  

Frederic M. Poses 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Frederic M. Poses, or either of such individuals, with full power of substitution in the premises, as the undersigned’s true and lawful agents and attorneys-in-fact (the “Attorneys-in-Fact”), with full power and authority in the name and on behalf of the undersigned, in her capacity as a Director of Centex Corporation (the “Company”), to execute and file with the Securities and Exchange Commission the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended March 31, 2006, together with any and all amendments thereto.

This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days’ written notice of such revocation.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11th day of May, 2006.

/s/ Ursula O. Fairbairn  

Ursula O. Fairbairn 

Director
Centex Corporation 

EX-31.1

Exhibit 31.1

Certifications

I, Timothy R. Eller, certify that:

1. I have reviewed this annual report on Form 10-K of Centex Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] and internal control over financial reporting [as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)] for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

(d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 19, 2006

/s/ TIMOTHY R. ELLER

Timothy R. Eller

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certifications

I, Leldon E. Echols, certify that:

1. I have reviewed this annual report on Form 10-K of Centex Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] and internal control over financial reporting [as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)] for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

(d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 19, 2006

/s/ LELDON E. ECHOLS

Leldon E. Echols

Chief Financial Officer

EX-32.1

Exhibit 32.1

CENTEX CORPORATION

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Centex Corporation and Subsidiaries (the “Company”) on Form 10-K for the year ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy R. Eller, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ TIMOTHY R. ELLER

Timothy R. Eller

Chief Executive Officer

Date: May 19, 2006

EX-32.2

Exhibit 32.2

CENTEX CORPORATION

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Centex Corporation and Subsidiaries (the “Company”) on Form 10-K for the year ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leldon E. Echols, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ LELDON E. ECHOLS

Leldon E. Echols

Chief Financial Officer

Date: May 19, 2006