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, 2008

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
(State of incorporation)
75-0778259
(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

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 ü No

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

     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 ü No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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. ü

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

þ	Large accelerated filer	o	Accelerated filer		o	Non-accelerated filer	o	Smaller Reporting Company
				(Do not check if a smaller reporting company)

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

     On September 30, 2007, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $3.23 billion based upon the last sale price reported for such date on the New York Stock Exchange. As of May 9, 2008, 123,483,356 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 10, 2008 is incorporated by reference into Part III hereof.

FORM 10-K

March 31, 2008

TABLE OF CONTENTS

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	18
Item 2.	Properties	18
Item 3.	Legal Proceedings	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
Item 4A.	Executive Officers of the Registrant	19
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 6.	Selected Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 8.	Financial Statements and Supplementary Data	61
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	106
Item 9A.	Controls and Procedures	106
Item 9B.	Other Information	106
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	106
Item 11.	Executive Compensation	106
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	107
Item 13.	Certain Relationships and Related Transactions, and Director Independence	107
Item 14.	Principal Accountant Fees and Services	107
PART IV
Item 15.	Exhibits and Financial Statement Schedules	107
SIGNATURES		112

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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 currently traded on the New York Stock Exchange, or the NYSE. As of May 9, 2008, 123,483,356 shares of our common stock were outstanding. Any reference herein to we, us, our or the Company refers to Centex Corporation and its subsidiary companies or, if the context requires, the particular segment or unit of our business that is being discussed.

     Since our founding in 1950 as a Dallas, Texas-based residential construction company, we expanded our business to include a broad range of activities related to construction, construction products and financing, but have more recently refocused our operations on residential construction and related activities, including mortgage financing to our homebuyers. As of March 31, 2008, our subsidiary companies operated in two principal lines of business: Home Building and Financial Services. We provide a brief overview of each line of business below, with a more detailed discussion of each line of business later in this section.

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

     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 our subsidiaries and others. We have been in the mortgage lending business since 1973.

     Over the last several fiscal years, we have simplified our business portfolio as a result of a number of transactions. The following table summarizes these transactions over the last five fiscal years.

Business	Date	Description
Home Services	April 2008	We sold our home services operations, which were previously included in our Other segment.
Construction Services	March 2007	We sold our commercial construction operations, which were previously a separate reporting segment.
Home Equity	July 2006	We sold our sub-prime home equity lending operations, which were previously included in the Financial Services segment.
International Homebuilding	September 2005	We sold our international homebuilding operations, which were previously included in the Home Building segment.
Commercial Real Estate	February 2004	We simplified the organizational structure of the Company and its affiliates by acquiring a primarily commercial real estate company whose publicly traded securities had previously traded in tandem with our common stock. Those operations have been substantially liquidated.
Construction Products	January 2004	We made a tax-free spin-off to our stockholders of our equity interests in our construction products operations, which were previously a separate reporting segment.
Manufactured Homes	June 2003	We made a tax-free spin-off to our stockholders of substantially all of our manufactured housing operations, which were previously included in our Other segment.

     For all businesses sold or spun off in the table above, the results of operations and financial position of such businesses are reported as discontinued operations for all periods presented. For additional information on our

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discontinued operations, please refer to Note (O), “Discontinued Operations” of the Notes to Consolidated Financial Statements.

     We have refocused our strategy to concentrate on our core homebuilding operations and related activities. Our mortgage lending and title agency services provide our homebuyers with a streamlined home-closing and settlement process, which we believe is important to ensuring customer satisfaction in our homebuilding business. The sales of our construction services and sub-prime home equity operations in fiscal year 2007 and our home service operations in April 2008 are consistent with this strategy. All prior year segment information has been revised in this Report to conform to the current year presentation.

     Within our homebuilding operations, we determined that our operating segments are our divisions, which have been aggregated into seven reporting segments. Our homebuilding operations, or Home Building, consist of the following reporting segments: East, Southeast, Central, Texas, Northwest, Southwest and Other homebuilding. For a complete description of the states and markets in each of our homebuilding segments, please refer to the Home Building markets table later in this section.

     Our mortgage lending, title agency services and insurance products continue to represent one reporting segment, Financial Services.

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 2008, 2007 and 2006.

Description of Business

     Beginning in fiscal year 2006, the U.S. housing industry began to experience a significant downturn. We believe the principal factors that have caused this downturn include: increased inventory of new and existing homes for sale, including homes in foreclosure, a decrease in the affordability of housing in selected markets, and a decline in homebuyer demand due to lower consumer confidence in the consumer real estate market and an inability of many homebuyers to sell their existing homes. Moreover, during fiscal year 2008, the mortgage markets experienced significant disruptions, which led to an unprecedented combination of reduced investor demand for mortgage loans and mortgage-backed securities, tightened credit requirements for homebuyers, reduced mortgage loan liquidity and increased credit risk premiums. These events contributed to a significant overall downturn in the U.S. homebuilding and residential mortgage industries and negatively impacted the economy in many local markets. These factors have had a significant negative impact on the homebuilding and mortgage finance industries and on our business and results of operations.

HOME BUILDING

     The business of Home Building consists of constructing and selling detached and attached single-family homes. The land used for the construction of our homes is acquired through the purchase of finished or partially finished lots and through the purchase of raw land that must be developed. In fiscal year 2008, approximately 80% of the homes closed were single-family, detached homes.

Markets

     Home Building follows a strategy of maximizing its relative market share in those local markets that reward market leaders and provide the highest potential returns. We participate in a wide variety of geographically and economically diverse markets that may fluctuate year to year. As of March 31, 2008, Home Building had substantive homebuilding operations in 74 market areas located in 22 states and the District of Columbia. Each active market is listed below within the reporting segment to which it belongs.

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

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     In fiscal year 2008, Home Building closed the sale of 27,202 homes, including first-time, move-up and, in some markets, luxury homes, generally ranging in price from $65 thousand to $3.0 million. The average revenue per unit in fiscal year 2008 was $276,788.

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

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

     Our goal is to own less than two years’ supply of land and to control, through option agreements, approximately two more years of land that we can acquire over specified time periods or, in certain cases, as the land or lots are needed. At March 31, 2008, Home Building owned 70,222 lots and had options to purchase 18,147 lots. This is considerably less than the 98,311 owned lots and 61,709 optioned lots we held at March 31, 2007. We are transitioning to a strategy that emphasizes the purchase of finished lots on more of a “just-in-time basis” and away from a strategy where we acquire raw land and undertake all development work. In addition, Home Building enters into joint ventures with other builders and developers for land acquisition and development. For additional discussion of our lot option agreements and participation in joint ventures, see Note (C), “Inventories,” and Note (G), “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements.

     Following the purchase of land and, if necessary, the entitlement and development process, we begin to market, sell and construct homes. Substantially all of our construction work is performed by independent contractors. Home Building is moving to an operating model of constructing homes from a sold backlog. This operating model will provide more predictable scheduling of independent contractors which will eventually result in increased efficiency and improved profitability.

     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 neighborhood and model homes and assisting them with the selection of upgrades and options. As market conditions warrant, we may provide potential homebuyers with a variety of incentives, including discounts and free upgrades, to remain competitive.

     Our growth strategy for Home Building has been focused primarily on organically growing our relative market share in those local markets that reward market leaders and provide the highest potential returns. To a lesser extent, we have also grown through the acquisition of other homebuilding companies. There have been no acquisitions of homebuilding companies in the last five fiscal years.

     Home Building sells its homes principally under the Centex name and, in certain markets, under a variety of other 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 first-time and move-up buyers.

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     The table below summarizes by reporting segment Home Building’s units closed, sales orders and backlog units for the five most recent fiscal years.

Units Closed:

	For the Years Ended March 31,
	2008		2007		2006		2005		2004
East		5,345		6,720		7,116		5,674		5,064
Southeast		3,417		5,374		6,426		4,867		4,594
Central		3,718		4,789		5,971		5,593		4,990
Texas		5,772		7,083		6,899		6,173		6,055
Northwest		4,062		4,709		4,580		3,740		3,121
Southwest		4,537		6,209		6,786		5,614		4,981
Other homebuilding		351		901		1,454		1,726		1,553
		27,202		35,785		39,232		33,387		30,358
Average Revenue Per Unit (in 000’s)	$	277	$	308	$	304	$	270	$	242

Sales Orders (in Units):

	For the Years Ended March 31,
	2008		2007		2006		2005		2004
East		4,787		5,495		6,840		6,431		5,616
Southeast		3,234		3,425		5,703		6,125		5,294
Central		3,310		4,271		5,636		5,346		5,320
Texas		5,413		6,914		6,994		6,508		6,250
Northwest		3,629		4,300		4,597		4,211		3,627
Southwest		4,124		4,539		7,196		6,137		5,694
Other homebuilding		160		105		1,064		1,804		1,921
		24,657		29,049		38,030		36,562		33,722

Backlog Units:

	As of March 31,
	2008		2007		2006		2005		2004
East		1,290		1,848		3,073		3,349		2,592
Southeast		1,336		1,519		3,468		4,191		2,933
Central		1,116		1,744		2,262		2,597		2,844
Texas		1,877		2,020		2,189		2,094		1,759
Northwest		1,250		1,805		2,214		2,197		1,726
Southwest		874		1,503		3,173		2,763		2,240
Other homebuilding		3		212		1,008		1,398		1,320
		7,746		10,651		17,387		18,589		15,414

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

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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 ten builders in calendar year 2007 accounted for approximately 22% of the nation’s new housing stock. We believe we ranked fourth in the largest homebuilders in the United States at March 31, 2008, based on publicly reported homebuilding revenues for the most recent twelve-month period for which information is available. Our operations accounted for an estimated 4% of new homes sold in the United States for the twelve months ended March 31, 2008. We calculate our market share by dividing our new home sales by the total single family new home sales as reported by the U. S. Census Bureau. Our top four competitors based on revenues for their most recent fiscal year-end are as follows (listed alphabetically): D. R. Horton, Inc., Lennar Corporation, KB Home and Pulte Homes, Inc. The main competitive factors affecting our operations are location/market, sales price, availability of mortgage financing for customers, construction costs, design and quality of homes, customer service, marketing expertise, availability of land, price of land and reputation. We believe that Home Building competes effectively by building a high quality home, and responding to the specific demands of each market by managing operations at a local level.

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

     The downturn in the homebuilding industry has significantly impacted competition among the homebuilders. The excess supply of homes for sale and the need for builders to generate cash have caused homebuilders and other home sellers to reduce prices. This increased competition has also resulted in increases in discounts and sales incentives, including increases in seller-paid financing and closing costs, and increases in sales commissions to help stimulate sales and close homes. We believe the increased competition in the homebuilding industry affected all categories of builders, but has had a disproportionate effect on smaller homebuilders that may not be capitalized as well as most of the large homebuilders.

     We have used the downturn in the industry as an opportunity to adjust certain of our product offerings and marketing efforts. To simplify our business, reduce costs and offer products that homebuyers can afford, we have reduced the number of floor plans offered across our neighborhoods and also reduced the number of available options and upgrades.

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

     The homebuilding industry is subject to extensive regulation. Home Building and its contractors must comply with various federal, state and local laws and regulations, including worker health and safety, zoning and land entitlement, building standards, advertising, consumer credit rules and regulations and the extensive and changing federal, state and local laws, regulations and ordinances governing the protection of the environment, including laws related to erosion and storm water pollution control and the protection of endangered species and waters of the United States. We are also subject to other rules and regulations in connection with our construction and sales activities, including requirements as to incorporated building materials and building designs, such as requirements for the use of energy efficient materials or designs. While these regulatory requirements are generally applicable to all regions in which we operate, regulations in coastal markets tend to be more extensive. 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 we are in compliance with these requirements in all material respects.

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     As discussed further in “Item 3. Legal Proceedings,” in May 2008, Home Building agreed to sign a consent decree with the United States Environmental Protection Agency, which we refer to as the EPA, and various states with respect to our prior and future storm water pollution prevention practices at all of Home Building’s sites. When the consent decree is signed by all parties, the Justice Department will file suit in Federal Court in accordance with the accepted practice in matters of this nature and simultaneously submit the proposed consent decree for approval by the Court. We anticipate that the consent decree will become final during the second quarter of the fiscal year ending March 31, 2009. Under the proposed consent decree, Home Building will agree to certain management practices related to controlling storm water discharges at all of Home Building’s sites, which may result in increased capital expenditures.

     We purchase materials, land and services from numerous sources. 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. We attempt to maintain efficient operations by utilizing standardized materials available from a variety of sources. A number of 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 contractors in our various markets and are not dependent on any single contractor.

FINANCIAL SERVICES

     Our Financial Services’ operations include mortgage lending and other related services for purchasers of homes sold by our homebuilding operations and other homebuilders, refinancing of existing mortgages, title agency services and the sale of title insurance and other insurance products, including property and casualty.

     We established the predecessor of CTX Mortgage Company, LLC to provide mortgage financing for homes built by Home Building. By opening mortgage offices in Home Building’s housing markets, we have been able to provide mortgage financing for an average of 76% of Home Building’s non-cash unit sales over the past five years and for 79% of such closings in fiscal year 2008. In 1985, we expanded our mortgage operations to include the origination of mortgage loans that are not associated with the sale of homes built by Home Building. We refer to mortgage financing for homes built by Home Building as Builder loans and to mortgage financing for homes built by others, loans for existing homes and loans to refinance existing mortgages as Retail loans.

     As a result of the significant disruptions in the mortgage markets and the related reductions in the mortgage market liquidity, during fiscal year 2006, we began to focus our mortgage operations on Builder loans to support Home Building. Retail mortgage originations represented approximately 54.8%, 53.0%, and 61.3% of total mortgage originations during the fiscal years ended March 31, 2008, 2007, and 2006, respectively. However, we expect Retail mortgage originations to decline during the fiscal year ending March 31, 2009. We anticipate the reduction in total Retail mortgage originations may have a negative impact on Financial Services’ operating results.

     At March 31, 2008, Financial Services’ loan officers originated Builder loans from 48 offices licensed in 31 states and the District of Columbia and Retail loans from 86 offices licensed in 47 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 the five years ended March 31, 2008:

	For the Years Ended March 31,
	2008			2007			2006			2005			2004
Loan Types (originations):
Builder		20,431			27,141			27,364			22,517			20,865
Retail (1)		24,729			30,638			43,319			44,816			67,481
		45,160			57,779			70,683			67,333			88,346
Origination Volume (in millions)	$	9,991.3		$	13,826.0		$	15,827.4		$	13,039.0		$	15,116.0
Percent of Home Building’s Closings Financed (2)		79	%		80	%		75	%		73	%		74	%

(1) Over the last five fiscal years, the reduction in retail loan originations is primarily attributable to decreases in refinancing activity and homebuyer demand, and our strategic decision to reduce the number of retail loan officers. In fiscal year 2008, retail loan originations were also affected by adverse market conditions that further reduced demand and resulted in a reduction of mortgage loan products.

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(2) Excludes non-financed cash-only closings.

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

     Financial Services’ revenues and operating earnings are derived primarily from the sale of mortgage loans, together with all related servicing rights, broker fees, title and other various insurance coverages, 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.

     Generally, our business strategy is to originate and sell loans rather than hold them, which reduces our capital investment and related risks. Until the second quarter of fiscal year 2008, mortgage loans held for sale were primarily funded by CTX Mortgage Company, LLC’s sale of substantially all the mortgage loans it originated to Harwood Street Funding I, LLC, which we refer to as HSF-I. Following unprecedented disruptions in the mortgage markets during the second quarter of fiscal year 2008, CTX Mortgage Company LLC discontinued sales of mortgage loans to HSF-I, and is now relying on committed bank warehouse credit facilities to provide funding for its loan originations. In November 2007, we terminated HSF-I and all of its outstanding obligations were redeemed. HSF-I was a variable interest entity of which we were the primary beneficiary, and it was consolidated in our financial statements.

     Financial Services also holds other mortgage loans, including performing and nonperforming construction loans and other nonperforming mortgage loans. During the year ended March 31, 2008, Financial Services ceased originating new construction loans; however, it will fulfill its existing funding commitments.

     We offer title agent, title underwriting, closing and other settlement services in 23 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 10 other homebuilders in 44 states. Westwood Insurance also provides coverage for some commercial customers.

Competition and Other Factors

     The financial services industry in the United States is highly competitive. Financial Services competes with the mortgage banking subsidiaries of large commercial banks, mortgage companies, and savings and other financial institutions to supply mortgage financing at attractive rates to homebuyers. Key competitive factors among industry participants are varied and include convenience in obtaining a loan, customer service, marketing and distribution channels, amount and term of the loan, loan origination fees and interest rates. Any increase in 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.

     The disruptions in the mortgage markets and downturn in the residential mortgage industry during the fiscal year significantly impacted competition. Many mortgage lenders were unable to finance the origination of new mortgage loans, and as a result, some mortgage lenders ceased or severely restricted operations. Additionally, the decline in homebuyer demand reduced the population of potential mortgage customers. In addition, the disruptions in the mortgage and credit markets significantly reduced the ability of mortgage lenders to sell nonconforming mortgage loans as there are fewer investors willing to accept the risks associated with these loan products. As a result, many mortgage lenders limit their mortgage loan originations to conforming loan products.

     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 and selling loans and providing title and other insurance products. In addition, there are other federal and state statutes and

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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 lender, 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 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.

EMPLOYEES

     The following table presents a breakdown of our employees as of March 31, 2008:

Line of Business	Employees
Home Building		4,143
Financial Services		1,920
Other		467
Total		6,530

     The 467 Other employees include our corporate employees. Employees related to our home services operations are not included in the table above as these operations are included in discontinued operations.

NYSE AND SEC CERTIFICATIONS

     We submitted our 2007 Annual CEO Certification to the New York Stock Exchange on July 23, 2007. The certification was not qualified in any respect. Additionally, we filed with the Securities and Exchange Commission, or SEC, as exhibits to our Form 10-K for the year ended March 31, 2007, 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 2008 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 SEC, without charge, by contacting our Investor Relations office at (214) 981-5000; 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 SEC, 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 Securities Exchange Act of 1934, or Exchange Act, available on our web site as soon as reasonably practicable after we electronically file the material with, or furnish it to, the SEC. To retrieve any of this information, go to http://www.centex.com, select “Investors” 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,

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2728 N. Harwood, Dallas, Texas 75201. The reference to our web site is merely intended to suggest where additional information may be obtained by investors, and the materials and other information presented on our web site are not incorporated in and should not otherwise be considered part of this Report.

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 affected, or may in the future affect, our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.

HOME BUILDING

The homebuilding industry is undergoing a significant downturn; this downturn has had a material adverse effect on our business and results of operations and is expected to continue through our next fiscal year.

     Beginning in fiscal year 2006, the U.S. housing industry began to experience a significant downturn, which has had and continues to have a material adverse effect on our business and results of operations. We believe the principal factors that have caused this downturn include each of the following, the impact of which varies based upon geographic market, product segment and the time since commencement of the downturn:

• increased inventory of new and existing homes for sale, including the impact of increases in residential foreclosures,

• reduced availability and increased cost of mortgage financing due to the significant mortgage market disruptions,

• a decrease in the affordability of housing in selected markets as a result of significant price appreciation in the years preceding the downturn and tightened credit standards for homebuyers,

• a decline in homebuyer demand due to lower consumer confidence in the consumer real estate market and an inability of many homebuyers to sell their existing homes, and

• pricing pressures resulting from a variety of factors, including the decision of homebuilders to offer significant discounts and sales incentives, to liquidate unsold inventories in order to generate cash, and the need for home prices to fall within mortgage qualification limits.

     These conditions have led to, among other things, (i) significant decreases in our homebuilding revenues, (ii) substantial land-related and goodwill impairments, (iii) significant losses on land sales, (iv) write-offs of land deposits and pre-acquisition costs, and (v) joint ventures’ impairments. As a result, our homebuilding operations incurred substantial losses and may continue to do so for some time. Any worsening in market conditions in the homebuilding industry would have a further material adverse effect on our business and results of operations.

     Although we were successful in generating positive operating cash flow and reducing our inventories in fiscal year 2008, we incurred significant operating losses and recorded substantial asset impairment charges which contributed to the substantial net loss we recognized in this period. Many of the factors that have resulted in these losses are beyond our control, and we have limited means at our disposal to mitigate or respond to the effects of these factors on our results of operations.

The market value of land is subject to significant fluctuations, which have resulted in significant impairments and write-offs in our land holdings and may continue to do so.

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

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     During the year ended March 31, 2008, we decided not to pursue development and construction in certain areas where we held land or had made option deposits, which resulted in $120.4 million in write-offs of option deposits and pre-acquisition costs. During the year ended March 31, 2008, we recognized losses of $388.7 million on land sales. In addition, market conditions led to recorded land-related impairments on neighborhoods and land during the year ended March 31, 2008 of $1,792.4 million, including $14.9 million of direct construction impairments. Land-related impairments during the quarter ended March 31, 2008 represented 94 neighborhoods and land investments, some of which have been impaired more than once. These market conditions also adversely affected land values in our Home Building joint ventures. Our share of joint ventures’ impairments was $100.5 million for the year ended March 31, 2008. These land-related impairments contributed to the significant operating losses we incurred during the year ended March 31, 2008. If market conditions do not improve in future periods, we may experience additional write-offs of option deposits and pre-acquisition costs, losses on land sales, land related impairments and impairments relating to our ownership interest in joint ventures. Additionally, our land-related impairment analyses are affected by market conditions and certain assumptions, such as sales prices, sales rates and discount rates used, and relatively small changes in these assumptions could lead to significant land-related impairments.

Continued cancellations of home sales contracts may have a material adverse effect on our business.

     Our backlog reflects the number and value of homes for which we have entered into a sales contract with a customer but have not yet closed the home. We have received a customer deposit for each home reflected in our backlog, and generally we have the right to compel the customer to complete the purchase. In many cases, however, a customer may cancel the contract and receive a complete or partial refund of the deposit for reasons such as his or her inability to obtain mortgage financing or to sell his or her current home. Customers may also decide to run the risk of failing to perform under the contract without legal justification. If the current industry downturn continues, or if mortgage financing becomes less available, more homebuyers may cancel their contracts with us. Significant cancellations have had, and could have in the future, a material adverse effect on our business and results of operations.

Increases in interest rates, decreases in the availability of mortgage financing or other changes in market conditions 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 increased credit standards, deteriorating customer credit quality or disruptions or other adverse conditions in mortgage lending markets. Any increases in interest rates could cause potential homebuyers to be less willing or able to purchase our homes. In general, if mortgage rates increase, it could become more difficult or costly for customers to purchase our homes, which would have an adverse effect on our results of operations.

     Certain of our homebuyers use down payment assistance programs, which allow homebuyers to receive gift funds from non-profit corporations to be used as a down payment. Homebuilders are a source of funding for these programs. The HUD and Congress are considering limitations and further regulation of these programs. Such restrictions may limit the ability of seller-funded non-profit corporations to fund down payment assistance programs for government-insured mortgage loans. HUD has issued a rule that eliminates seller-funded down payment assistance as an acceptable minimum investment in the property for FHA insured loans. However, the implementation of that rule has been delayed as a result of litigation filed by certain down payment assistance providers. The ultimate outcome of this litigation is uncertain. If, as a result of legislative, regulatory or other action, certain of the gift fund programs that our customers use would no longer be available to them, we would expect to work to provide other financing alternatives, and seek different down payment programs for our customers that meet applicable guidelines. There can be no assurance, however, that any such alternative programs would be as attractive to our customers as the programs offered today and that our sales would not suffer.

Competition for homebuyers could reduce our closings 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. The current downturn in the homebuilding industry has significantly increased competition among homebuilders, as evidenced by price reductions, increases in discounts and sales commissions and increased sales commissions in an effort to stimulate sales. Any further increases in the level 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 close, or cause us to accept reduced margins or losses on home sales.

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     We also compete with resales of existing 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 markets where we operate could decrease demand for new homes, cause us to increase our sales incentives or price 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 conduct certain of our homebuilding operations through joint ventures with independent third parties in which we do not have a majority interest, and we can be adversely impacted by joint venture partners’ failure to fulfill their obligations.

     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 by partnering with other homebuilders or developers and, to a lesser extent, financial partners, Home Building is able to share the risks and rewards of ownership and obtain other strategic advantages.

     Total joint venture debt outstanding as of March 31, 2008 and 2007 was $423.2 million and $1.0 billion, respectively. 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. Additionally, we have agreed to indemnify the construction lender for certain environmental liabilities in the case of most joint ventures and most guarantee arrangements provide that we are liable for our proportionate share of the outstanding debt if the joint venture files for voluntary bankruptcy. To date, we have not been requested to perform under the environmental liabilities or voluntary bankruptcy guarantees for any of our joint ventures.

     Four of our joint ventures are in default of their joint venture debt agreements. In addition, we expect two other joint ventures to be in default of their joint venture debt agreements subsequent to March 31, 2008. Our joint venture partner to one of these joint ventures filed for bankruptcy during the year ended March 31, 2008. We are in discussions with the joint venture partners and lenders with respect to each joint venture and are evaluating alternatives to mitigate our exposure. We expect to fulfill our contractual obligations under the joint venture agreements. Costs associated with fulfilling such contractual obligations may be less than our share of the joint ventures’ debt. Recourse under joint venture debt agreements is limited to either the underlying collateral or completion obligations of the joint venture partners. Based upon the terms and debt amounts outstanding for these joint ventures and the terms of the joint venture agreements, we do not believe our exposure related to these joint venture defaults will be material to our financial position or results of operations.

     In general, we are subject to various risks of the type described above related to joint venture debt, construction debt and other obligations and liabilities of the joint ventures in which we participate, and these debts, liabilities and obligations may in some cases be material. In the case of many joint ventures, we have the right to be reimbursed by our joint venture partners for any amounts which we pay that exceed our pro rata share of the joint ventures’ obligations. However, particularly if our joint venture partners have filed for bankruptcy protection or are having financial problems, we may have difficulty collecting the sums they owe us, and therefore, we may be required to pay a disproportionately large portion of the guaranteed amounts. In addition, because we lack a controlling interest in these joint ventures, we are usually unable to require that the joint venture sell assets, return invested capital or take any other action without the consent of at least one of our joint venture partners. As a result, without the consent of one or more joint venture partners, we may be unable to liquidate our joint venture investments to generate cash. If we are able to liquidate joint venture investments, the amounts received upon liquidation may be insufficient to cover the costs we have incurred.

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 pollution prevention and use of open spaces. In addition, we are subject to a variety of laws and regulations concerning safety and the protection of health and the environment. The particular environmental laws that apply to any given neighborhood vary greatly according to the neighborhood site, the site’s environmental conditions and the present and former uses of the site. In some of the markets where we operate, we are required to pay environmental impact fees, use energy-saving construction materials, such as extra insulation or double-paned windows, and make commitments to municipalities to provide certain infrastructure such as roads and sewage systems. We and the contractors that we engage to work on our jobsites are also subject to laws and

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regulations related to workers’ health and safety, wage and hour practices and immigration. We generally are required to obtain permits and approvals from local authorities to commence and complete residential development or home construction. Such permits and approvals may from time to time be opposed or challenged by local governments, neighboring property owners or other interested parties, adding delays, costs and risks of non-approval to the process. Our obligation to comply with the laws and regulations under which we operate, or the obligation of our independent contractors 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. The additional costs associated with new regulatory requirements or compliance programs may not be recoverable from our homebuyers in the form of higher sales prices which could adversely affect our results of operations.

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

     Our Home Building 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 warranty 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, and we could be adversely affected if we are required to post additional collateral in respect of bonds issued in connection with past construction projects.

     As is customary in the homebuilding industry, 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 credit rating, capitalization, working capital, past performance, management expertise and certain external factors, including the overall capacity of the surety market. Under certain circumstances, such as a claim on a bond, a breach of the contract to which the bond applies, or a material breach of a representation made to a surety, we may be required to provide one or more sureties with additional collateral to support our bond obligations. In addition, in some cases, upon request of a surety, we may be required to cause the surety to be discharged from all bond obligations by providing collateral sufficient to cover all of such surety’s bond exposure or alternative funding of such bond obligations. If one or more of our third-party sureties were to request additional collateral, our obligations could be significant, which could have a material adverse effect on our financial position or results of operations.

FINANCIAL SERVICES

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

     Our Financial Services operations are sensitive to general business and economic conditions in the United States. These conditions include the liquidity and availability of financing in mortgage finance markets, 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.

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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 mortgage banking subsidiaries of 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. Competition has been significantly affected by recent disruptions in the mortgage market, which have significantly reduced the pool of qualified homebuyers. 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.

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.

FACTORS AFFECTING MULTIPLE BUSINESS SEGMENTS

Market conditions in the mortgage lending and mortgage finance industries have worsened significantly in fiscal year 2008, which adversely affected the availability of credit for some purchasers of our homes, reduced the population of potential mortgage customers and reduced mortgage liquidity. Further tightening of mortgage lending or mortgage financing requirements or further reduced mortgage liquidity could have a material adverse effect on our homebuilding and mortgage lending operations and their respective results of operations.

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

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

     Further tightening of the mortgage lending markets in the form of reduced numbers or types of loan products, or tighter loan qualification requirements (including credit score and down payment requirements), could further reduce the demand for our homes or the mortgages we originate, which could have a material adverse effect on our business or results of operations. In addition, further disruptions or other adverse conditions in the mortgage finance markets leading to further reduced mortgage liquidity or decreased demand for mortgage loans could result in an inability to sell or finance the loans we originate, or less favorable terms of sale or reduced yield or greater reserves pending sale, which could have a material adverse effect on our business or results of operations.

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

     Our ability to sustain or grow our business and to operate in a profitable manner depends to a significant extent upon our ability to access capital. We use capital principally to finance operations, purchase and develop land, construct houses and originate mortgage loans. Until recently, our access to capital was enhanced by the fact that our senior debt securities had an investment-grade credit rating from each of the principal credit rating agencies, and we were able to issue commercial paper. During the quarter ended December 31, 2007, Moody’s Investors Service, which we refer to as Moody’s, and Standard & Poors, which we refer to as S&P, lowered their ratings of our senior debt, and changed our commercial paper rating to non-prime. On May 7, 2008, S&P further lowered its ratings of our senior debt. See “Financial Condition and Liquidity” in Item 7 of this Report for additional information about our credit rating. As a result of our current rating, we do not have access to many financing strategies that are available to companies with investment grade ratings. As a consequence, it may become more difficult and costly for us to access the capital that is required in order to implement our business plans and operate our business. We may experience a further downgrade in our credit rating by the rating agencies that would likely result in increased costs for certain of our financing and also further restrict our ability to finance mortgage loan originations.

     As a result of the more recent adverse market conditions affecting mortgage loans, which worsened significantly in August 2007, CTX Mortgage Company, LLC no longer relies on asset-backed funding vehicles, such as HSF-I, for its mortgage funding needs. Instead, CTX Mortgage Company, LLC uses committed bank warehouse credit facilities.

     On May 7, 2008, S&P lowered our debt rating from BB+ to BB. This downgrade triggered a provision in CTX Mortgage Company, LLC’s $450 million committed bank warehouse credit facility which allows the bank to convert the facility to an amortizing loan based on the ultimate sale of the underlying collateral and not to purchase any additional mortgage loans. On May 9, 2008, CTX Mortgage Company, LLC executed an amendment to the bank warehouse credit facility which lowered the commitment to $375 million, reset the debt ratings trigger that provides the bank the option to convert the facility to an amortizing loan if our credit rating falls below BB by S&P and Fitch or below Ba2 by Moody’s. A further downgrade in our credit rating by a rating agency could result in the wind-down of the $375 million warehouse credit facility. For more information about our current mortgage financing, see the “Financial Condition and Liquidity” section of Item 7 of this Report.

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

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

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

     From time to time, we are audited by various federal, state and local authorities regarding tax matters. We fully cooperate with all audits. Our audits are in various stages of completion; however, no outcome for a particular audit can be determined with certainty prior to the conclusion of the audit, appeal and, in some cases, litigation process. As each audit is concluded, we record appropriate adjustments, if any, in our financial statements in the period determined. We maintain reserves to provide for potential tax exposures relating to uncertain tax positions, based on reasonable estimates of our potential exposure (including interest and penalties, when applicable) that may result from audits. However, if the reserves are insufficient upon completion of any audit process, there could be an adverse impact on our financial position and results of operations.

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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 creating investment securities that they either sell to investors or hold in their portfolios. These organizations provide liquidity to the secondary mortgage market. Any new federal laws that restrict or curtail 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.

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.

Failure to comply with the covenants and conditions imposed by our credit facilities could restrict future borrowing or cause our debt to become immediately due and payable.

     We are required to maintain compliance with certain financial covenants in our multi-bank revolving credit facility. Material covenants include a maximum leverage ratio, a minimum tangible net worth requirement and a borrowing base limiting the amount of available borrowings. There can be no assurance that we will continue to comply with the covenants in our multi-bank revolving credit facility, and depending on our future results of operations, we may need to seek waivers or amendments from our lenders in future periods. Furthermore, there can be no assurance that our lenders will agree to such waivers or amendments on terms we regard as satisfactory.

     In addition, our committed bank warehouse credit facilities and loan agreements relating to certain of our joint ventures contain various affirmative and negative covenants and guarantees requested by lenders for facilities of these types. In order to continue to borrow funds under these facilities, we will need to continue to be in compliance with these covenants and guarantees.

     In general, with respect to our multi-bank revolving credit facility, bank warehouse credit facilities and loan agreements relating to certain of our joint ventures, if we fail to comply with any of the covenants or guarantees contained therein, which may occur if we experience additional asset impairments or incur additional net losses, we may be unable to obtain future financing for working capital, capital expenditures, letters of credit, acquisitions, debt service requirements or other requirements, or the credit providers could cause our debt to become immediately due and payable, or we may be required to make certain payments in connection with our joint venture indebtedness.

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

     Over the past several fiscal years, we have completed the sale of our international homebuilding operations, Home Equity and Construction Services in separate transactions to unrelated third parties. In addition, in March 2008, we sold a portfolio of 27 developed, partially developed and undeveloped properties to a joint venture and sold a portfolio of five resort/second home properties to a third party. Finally, in April 2008, we completed the sale of our home services operations. In connection with each of these transactions, we made representations and warranties to the purchasers of the applicable businesses or assets, agreed to retain responsibility for certain actual or contingent liabilities and agreed to indemnify the purchasers against breaches of representations and warranties and other liabilities. In addition, certain of the businesses we sold had bonds or letters of credit outstanding at the date of sale, which were assumed by the purchasers, but for which we retain responsibility under indemnities or other direct contractual relationships with the sureties issuing the bonds or letters of credit. To date, we have not incurred any material losses in respect of claims asserted by the purchasers in connection with these transactions or claims asserted by sureties in respect of outstanding bonds or letters of credit. In addition, our liability to the purchasers is subject to certain limitations, including limitations on the time period during which claims may be asserted and the amounts for which we are liable. However, there can be no assurance that we will not incur future liabilities to the purchasers in connection with these transactions or the sureties issuing any bonds or letters of credit or that the amount of such liabilities will not be material.

16

We may not realize our net deferred tax assets.

     As of March 31, 2008, we had gross deferred tax assets of $1.02 billion for which an $830 million valuation allowance was established in fiscal year 2008. The ultimate realization of the deferred tax assets is dependent upon a variety of factors, including taxable income in prior carryback years, estimates of future taxable income, tax planning strategies and reversals of existing taxable temporary differences. The Financial Accounting Standards Board (“FASB”) provides in Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes,” (“SFAS 109”) that a cumulative loss in recent years is significant negative evidence in considering whether deferred tax assets are realizable. Based on our assessment, including the implementation of certain tax planning strategies, the realization of approximately $830 million of our deferred tax assets is dependent upon future taxable income and, accordingly, we have established a valuation allowance equal to such amount.

     The valuation allowance may be increased or decreased as conditions change or if we are unable to implement certain tax planning strategies. An increase in the valuation allowance would reduce the carrying value of the deferred tax assets and increase the provision for income taxes in the reporting period, which would reduce net income for the period and could have a material adverse effect on our financial position and results of operations.

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

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

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

17

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

     None.

ITEM 2. PROPERTIES

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

     Home Building owns property in Phoenix, Arizona; Albemarle, North Carolina; Plant City, Florida and Prosper, Texas. These properties consist of office and warehouse space used to support our business.

     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. We believe that our existing facilities are suitable and adequate for our current and planned levels of operation. For additional information on our operating leases, see Note (G), “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements.

     See “Item 1. Business” for additional information relating to our 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 certain 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, including those described below, are likely to 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, which we refer to as the EPA, pursuant to Section 308 of the Clean Water Act seeking information about compliance with permits regulating storm water discharges at projects that we had completed or were building. Subsequently, the EPA limited its request to Home Building’s operations at 30 neighborhoods. 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 neighborhoods have violated regulatory requirements applicable to storm water discharges, and that injunctive relief and civil penalties may be warranted. Home Building has been exploring methods of settling this matter. In May 2008, Home Building agreed to sign a consent decree with the EPA and various states with respect to our prior and future storm water pollution prevention practices at all of Home Building’s sites. When the consent decree is signed by all parties, the Justice Department will file suit in Federal Court in accordance with the accepted practice in matters of this nature and simultaneously submit the proposed consent decree for approval by the Court. A notice of lodging of the proposed consent decree will then be published in the Federal Register, which triggers the opening of a public comment period. The public comment period is typically 30 days. The Justice Department will review and respond to any comments it receives and will then ask the Court to sign and enter the proposed consent decree. The Court may require a hearing before it rules. Once the Court is satisfied, it will sign and enter the consent decree. We anticipate that the consent decree will become final during the second quarter of the fiscal year ending March 31, 2009. Under the proposed consent decree, Home Building will pay a civil penalty of $1,485,000, and will agree to certain management practices related to controlling storm water discharges at all of Home Building’s sites.

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

     None.

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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

     The following is an alphabetical listing of our executive officers as of May 11, 2008, as such term is defined under the rules and regulations of the SEC. 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 the Company or Business Experience
David L. Barclay		55	President, Western Region, of Centex Real Estate Corporation (since April 2007); Co-President and Co-Chief Operating Officer (West Operating Region) of Centex Real Estate Corporation from March 2006 to April 2007; 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
Joseph A. Bosch		50	Senior Vice President — Human Resources since July 2006; Senior Vice President — Human Resources at Tenet Healthcare Corporation from August 2004 to June 2006; Chief People Officer at Pizza Hut, a unit of YUM! Brands, Inc. from June 1997 to July 2004
Timothy R. Eller		59	Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer of Centex Corporation (Chairman of the Board and Chief Executive Officer since April 2004; President and Chief Operating Officer since April 2002); Executive Vice President of Centex Corporation from August 1998 to April 2002; Chairman of the Board of Centex Real Estate Corporation from April 1998 to April 2003, and since April 2006; Chief Executive Officer of Centex Real Estate Corporation from July 1991 to April 2002, and since April 2006; President and Chief Operating Officer of Centex Real Estate Corporation from January 1990 to May 1996
Mark D. Kemp		46	Senior Vice President and Controller of Centex Corporation since September 2004; interim Chief Financial Officer from June 2006 to October 2006; Vice President and Controller of Centex Corporation from December 2002 to September 2004; Partner and employee at Arthur Andersen LLP from December 1983 to August 2002
Catherine R. Smith		44	Executive Vice President and Chief Financial Officer of Centex Corporation since October 2006; Executive Vice President and Chief Financial Officer of Kennametal, Inc. from April 2005 to October 2006; Executive Vice President and Chief Financial Officer of Bell Systems, a business segment of Textron, Inc., from October 2003 to April 2005; various financial positions including Vice President and Chief Financial Officer of the Intelligence and Information Systems business segment of Raytheon Company from August 1986 to September 2003
Robert S. Stewart		54	Senior Vice President — Strategy, Sales, Marketing and Corporate Development of Centex Corporation since July 2007; Senior Vice President — Strategy and Corporate Development from April 2005 to June 2007; Senior Vice President — Strategic Planning and Marketing from May 2000 to March 2005; Employee at the Weyerhaeuser Company from March 1977 to May 2000, during which time he held a range of key management positions, including positions in strategic planning
Brian J. Woram		47	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

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PART II

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

Stock Prices and Dividends

	Year Ended March 31, 2008						Year Ended March 31, 2007
	Price						Price
	High		Low		Dividends		High		Low		Dividends
Quarter
First	$	49.85	$	39.59	$	.04	$	64.62	$	44.13	$	.04
Second	$	44.23	$	24.55	$	.04	$	55.70	$	42.90	$	.04
Third	$	30.75	$	17.77	$	.04	$	58.42	$	48.34	$	.04
Fourth	$	30.29	$	18.17	$	.04	$	56.45	$	40.41	$	.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 9, 2008 was 2,917.

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

     From time to time, we have repurchased 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, 2008:

	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		—	$	—		—		9,399,700
February 1-29		—	$	—		—		9,399,700
March 1-31		8,338	$	24.21		—		9,399,700
Total (1)		8,338	$	24.21		—

(1) The 8,338 shares repurchased for the quarter ended March 31, 2008 represent the delivery to us 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 our share repurchase program.

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

Performance Graph

     The following graph compares the yearly change in the cumulative total stockholder return on our common stock during the five fiscal years ended March 31, 2008 with the S&P 500 Index and the S&P Home Building Index.

     The comparison assumes $100 was invested on March 31, 2003 in our common stock and in each of the foregoing indices, and assumes reinvestment of dividends in the form of cash or property. This graph is not intended to forecast the future performance of our common stock and may not be indicative of such future performance.

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     On January 30, 2004, we spun-off shares of common stock and Class B common stock of Eagle Materials Inc. f/k/a Centex Construction Products, Inc., which we refer to as Construction Products, to its stockholders. For each share of Centex common stock owned, stockholders received 0.044322 shares of Construction Products common stock and 0.149019 shares of Construction Products Class B common stock. On June 30, 2003, we spun-off our stock in Cavco Industries, Inc. to our stockholders. For each share of Centex common stock owned, stockholders received 0.05 shares of Cavco. On the respective distribution dates, this number of shares had a public market value of $4.32, $8.13 and $0.97, respectively. For purposes of the following graph, it is assumed that each share of Construction Products and Cavco received in the distribution was immediately sold for its market value and the proceeds reinvested in additional shares of Centex common stock. The value of Centex common stock at March 31, 2008 therefore includes the value of the spin-off shares but not the separate performance of those securities since the respective dates of the spin-offs.

Comparative Five Year Cumulative Total Stockholder Return

Centex Corporation

	2003		2004		2005		2006		2007		2008
Centex Corporation	$	100	$	212	$	225	$	245	$	165	$	96
S&P 500 Index	$	100	$	135	$	144	$	161	$	180	$	171
S&P HB Index	$	100	$	213	$	267	$	294	$	202	$	118

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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,
	2008			2007			2006			2005			2004
Revenues	$	8,275,562		$	11,887,601		$	12,742,666		$	9,842,700		$	8,078,056
Earnings (Loss) from Continuing Operations (2)	$	(2,660,968	)	$	(9,477	)	$	1,212,665		$	898,571		$	695,742
Net Earnings (Loss)	$	(2,657,482	)	$	268,366		$	1,289,313		$	1,011,364		$	827,686
Stockholders’ Equity	$	2,298,661		$	5,112,269		$	5,011,658		$	4,280,757		$	3,050,225
Net Earnings (Loss) as a Percentage of Average Stockholders’ Equity		(71.7	%)		5.3	%		27.8	%		27.6	%		29.0	%
Total Assets	$	8,137,332		$	13,199,933		$	21,364,999		$	20,011,163		$	16,077,260
Deferred Income Tax Assets, net	$	191,246		$	500,703		$	248,004		$	202,441		$	121,445
Total Long-term Debt, Consolidated	$	3,321,117		$	3,960,310		$	3,910,816		$	3,155,640		$	2,452,358
Debt (with Financial Services reflected on the equity method) (3)	$	3,325,167		$	3,902,117		$	3,977,982		$	3,103,510		$	2,313,358
Financial Services’ Debt		337,053			1,663,040			2,077,215			1,695,855			1,676,718
Total Debt, Consolidated	$	3,662,220		$	5,565,157		$	6,055,197		$	4,799,365		$	3,990,076
Capitalization (with Financial Services reflected on the equity method and excluding lot option minority interest) (3) (4)	$	5,625,794		$	9,037,452		$	9,027,304		$	7,424,651		$	5,364,864
Financial Services Capitalization (4)		586,688			1,825,467			2,742,764			2,314,465			2,194,533
Lot Option Minority Interest (4)		75,344			152,936			492,096			415,413			332,668
Consolidating Eliminations		(249,184	)		(161,492	)		(664,376	)		(617,248	)		(516,280	)
Total Capitalization, Consolidated	$	6,038,642		$	10,854,363		$	11,597,788		$	9,537,281		$	7,375,785
Debt as a Percentage of Capitalization (4)
With Financial Services reflected on the equity method and excluding lot option minority interest (3)		59.1	%		43.2	%		44.1	%		41.8	%		43.1	%
Consolidated		60.7	%		51.3	%		52.2	%		50.3	%		54.1	%
Per Common Share
Earnings (Loss) from Continuing Operations Per Share — Basic (2)	$	(21.71	)	$	(0.08	)	$	9.56		$	7.18		$	5.64
Earnings (Loss) from Continuing Operations Per Share — Diluted (2)	$	(21.71	)	$	(0.08	)	$	9.13		$	6.79		$	5.38
Net Earnings (Loss) Per Share — Basic	$	(21.68	)	$	2.23		$	10.16		$	8.08		$	6.71
Net Earnings (Loss) Per Share — Diluted	$	(21.68	)	$	2.23		$	9.71		$	7.64		$	6.40
Cash Dividends	$	0.16		$	0.16		$	0.16		$	0.16		$	0.10
Book Value Per Share Based on Shares Outstanding at Year End	$	18.65		$	42.61		$	41.04		$	33.51		$	24.87
Average Shares Outstanding
Basic		122,577,071			120,537,235			126,870,887			125,226,596			123,382,068
Diluted		122,577,071			120,537,235			132,749,797			132,397,961			129,392,821
Stock Prices
High	$	49.85		$	64.62		$	79.66		$	66.14		$	58.40
Low	$	17.77		$	40.41		$	55.10		$	39.94		$	26.78

(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 home services operations (sold in April 2008), Construction Services (sold in March 2007), Home Equity (sold in July 2006), International Homebuilding (sold in September 2005), Construction Products (spun off in January 2004) and Manufactured Homes (spun off in June 2003) as discontinued operations.
(2)	Earnings (Loss) from Continuing Operations are Before Cumulative Effect of a Change in Accounting Principle adopted in fiscal year 2004 associated with the initial consolidation of HSF-I pursuant to the provisions of FIN 46.
(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, 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 2008, 2007, 2006, 2005 and 2004 excludes $75.3 million, $152.9 million, $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.

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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 included in this Report.

Executive Summary

     Fiscal year 2008 was a very challenging year. Our results of operations for the year ended March 31, 2008 were materially affected by continuing adverse conditions impacting our homebuilding and mortgage lending operations. The market conditions continued to deteriorate significantly during the year ended March 31, 2008, and we are unable to predict whether they will deteriorate further, improve or what effects any future changes in market conditions would have on our business or results of operations. A summary of our results of operations by line of business is as follows (dollars in thousands):

	For the Year Ended March 31,
	2008			2007			2006
Revenues
Home Building	$	7,965,614		$	11,414,827		$	12,272,203
Financial Services		309,948			468,001			462,223
Other		—			4,773			8,240
Total	$	8,275,562		$	11,887,601		$	12,742,666
Earnings (Loss) from Continuing Operations
Before Income Taxes
Home Building	$	(2,603,118	)	$	205,353		$	2,084,829
Financial Services		(138,153	)		84,530			84,465
Other		(133,887	)		(183,097	)		(288,556	)
Total	$	(2,875,158	)	$	106,786		$	1,880,738

     Revenues for the year ended March 31, 2008 were $8.28 billion, which represents a 30.4% decrease compared to the year ended March 31, 2007. Earnings (loss) from continuing operations before income taxes for the year ended March 31, 2008 decreased to a loss of $2.88 billion. The decrease in our revenues and the loss from continuing operations before income taxes during the year ended March 31, 2008 are primarily attributable to continuing adverse conditions affecting our homebuilding and mortgage lending operations.

     Beginning in fiscal year 2006, the U.S. housing industry began to experience a significant downturn, which directly and adversely affected, and continues to adversely affect, our business and results of operations. We believe the principal factors that have caused this downturn include each of the following, the impact of which varies based upon geographic market, product segment and the time since commencement of the downturn:

• increased inventory of new and existing homes for sale, including the impact of increases in residential foreclosures,

• reduced availability and increased cost of mortgage financing due to the significant mortgage market disruptions,

• a decrease in the affordability of housing in selected markets as a result of significant price appreciation in the years preceding the downturn and tightened credit standards for homebuyers,

• a decline in homebuyer demand due to lower consumer confidence in the consumer real estate market and an inability of many homebuyers to sell their existing homes, and

• pricing pressures resulting from a variety of factors, including the decision of homebuilders to offer significant discounts and sales incentives, to liquidate unsold inventories in order to generate cash, and the need for home prices to fall within mortgage qualification limits.

     The inventory of new and existing homes for sale remains high as homebuilders have continued to build homes and attempt to liquidate unsold inventory as residential foreclosures continue to increase. The decline in homebuyer demand can be attributed to, in part, concerns of prospective homebuyers that prices will continue to decline and, in fact, the excess supply of homes for sale and the need for builders to generate cash have caused homebuilders and other home sellers to reduce prices. In addition, many prospective homebuyers have been unable to sell their existing homes. Moreover, during fiscal year 2008, the mortgage markets experienced significant disruptions

23

which led to an unprecedented combination of reduced investor demand for mortgage loans and mortgage-backed securities, tightened credit requirements for homebuyers, reduced mortgage loan liquidity and increased credit risk premiums. As a result, prospective borrowers experienced more difficulty or greater expense in obtaining loans, or were subject to increased credit score or down payment requirements, which further reduced the demand for homes and mortgage loans during the year.

     These market conditions materially impacted Home Building’s operating results for the year ended March 31, 2008 as evidenced by the following:

• a $3,449.2 million decrease in homebuilding revenues, net of discounts,

• $1,792.4 million in land-related impairments,

• $388.7 million in losses on land sales,

• $120.4 million in write-offs of land deposits and pre-acquisition costs,

• $100.5 million in our share of joint ventures’ impairments, and

• $78.2 million in goodwill impairments.

     During the year, we assessed our neighborhoods and land for possible land-related impairments. The market conditions during the year adversely impacted anticipated future selling prices, sales rates and other assumptions included in our impairment evaluations, and we recorded significant impairments totaling $1,792.4 million. During the year ended March 31, 2008, 410 land-related impairments were recorded representing 296 neighborhoods and land investments, certain of which have been impaired more than once. Land-related impairments during the year ended March 31, 2007 represented 83 neighborhoods and land investments. During the fourth quarter of fiscal year 2008, we recorded $300.0 million in impairments. At March 31, 2008, the remaining carrying value of neighborhoods and land investments for which an impairment was recorded in the quarter ended March 31, 2008 was $174.8 million. If market conditions worsen, or if any of our assumptions are adjusted negatively in future periods, we may have additional land-related impairments, which could be significant.

     In March 2008, we sold a portfolio of 27 developed, partially-developed and undeveloped properties to a joint venture funded principally by certain investment funds for $161.2 million in cash. The portfolio of assets sold includes properties that represent 8,545 lots in 27 neighborhoods across 11 states, with the majority located in California and Nevada. In March 2008, we also sold a portfolio of five resort/second home properties to a third party for $53.7 million in cash, net of $14.9 million in seller financing for one of the properties. The resort/second home properties sold include properties located in Texas, North Carolina and New Hampshire. Total losses related to these transactions were approximately $442.1 million. These transactions resulted in the realization of significant tax losses and a refund from tax authorities of taxes paid in prior years.

     These transactions are consistent with our near-term goals of reducing our land supply and generating cash. These land sales accelerate our move to a more asset-light operating model, sharpen our focus on core markets and consumer segments, reduce future land development cash obligations and monetize approximately $350 million of our deferred tax assets. For additional information on these land sale transactions, please refer to the Home Building discussion later in this section.

     Our homebuilding operations also experienced a significant decline in operating margin primarily attributable to lower home prices, increases in discounts and sales incentives, including increases in seller-paid financing and closing costs, and increases in sales commissions to help stimulate sales and close homes. In addition, customer cancellation rates remain elevated when compared to historical levels. Customer discounts have increased since the fourth quarter of fiscal year 2006. Customer discounts increased to 12.3% of housing revenues for the year ended March 31, 2008, up from 7.1% for the year ended March 31, 2007. As a percentage of revenues, closing and financing costs have increased from 3.0% to 3.3% for the year ended March 31, 2008 as compared to the year ended March 31, 2007. Sales commissions, as a percentage of revenues, have increased from 4.2% to 4.6% for the year ended March 31, 2008 as compared to the year ended March 31, 2007.

     Financial Services’ operating loss for the year ended March 31, 2008 was $138.2 million as compared to operating earnings of $84.5 million for the year ended March 31, 2007. For the year ended March 31, 2008, mortgage loan origination volume decreased 27.7%. This change is primarily attributable to the adverse conditions in the mortgage markets described above, which also resulted in a significant decrease in revenues and a $158.5 million increase in provisions for losses on mortgages loans for the year ended March 31, 2008. Continued adverse market conditions and further declines in homebuyer demand could have a negative impact on Financial Services’ future operating results.

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     We anticipate that our business and results of operations will continue to be affected by the difficult industry conditions for some time. In general, we believe that our existing sources of funding, including cash flow from operations and our committed credit facilities are adequate to meet our currently anticipated operating needs, capital expenditures and debt service requirements for at least the next twelve months. However, further deterioration in market conditions, including lower demand or prices for our homes or further disruptions of the mortgage markets, would likely result in declines in sales of our homes, accumulation of unsold inventory and margin deterioration, as well as potential additional land-related impairments and write-offs of deposits and pre-acquisition costs, which could reduce cash flow and profits and require that we seek amendments or waivers to our credit facilities to ensure continued availability of committed debt financing.

     We believe the fundamentals that support homebuyer demand in the long-term remain solid and the current market conditions will moderate and improve over time; however, we cannot predict the duration of the current market conditions. We continue to adjust our operations in response to market conditions by reducing our unsold inventory, reducing our land position, and lowering our costs. Our unsold inventory has decreased from 4,909 units as of March 31, 2007 to 1,754 units as of March 31, 2008. Since March 31, 2007, our total land position has decreased by 71,651 lots or 44.8%. Further, Home Building’s selling, general and administrative expenses have decreased from $1,523.0 million for the year ended March 31, 2007 to $1,111.6 million for the year ended March 31, 2008. We are also working to reduce the costs of constructing our homes, although in many cases, cost savings will not be realized until future periods.

     During the year ended March 31, 2008, we generated $1,480.6 million in cash flows from operating activities, which was primarily derived through decreases in Home Building’s inventories and Financial Services’ proceeds from sales of mortgage loans that were not reinvested in new mortgage loans. The decreases in Home Building’s inventories were primarily the result of units closed and reductions in land acquisition and development.

FISCAL YEAR 2008 COMPARED TO FISCAL YEAR 2007

HOME BUILDING

     The following summarizes the results of our Home Building operations for the two-year period ended March 31, 2008 (dollars in thousands except per unit data):

	For the Years Ended March 31,
	2008						2007
				Change						Change
Revenues — Housing	$	7,529,191			(31.6	%)	$	11,014,975			(7.6	%)
Revenues — Land Sales and Other		436,423			9.1	%		399,852			13.7	%
Cost of Sales — Housing		(6,543,086	)		(23.9	%)		(8,599,465	)		1.7	%
Cost of Sales — Land Sales and Other		(2,721,219	)		160.5	%		(1,044,455	)		251.7	%
Selling, General and Administrative Expenses		(1,111,641	)		(27.0	%)		(1,523,001	)		0.4	%
Goodwill Impairments		(78,236	)		100.0	%		—			—
Earnings (Loss) from Unconsolidated Entities (1)		(128,902	)		74.7	%		(73,782	)		(194.8	%)
Other Income		14,352			(54.0	%)		31,229			282.1	%
Operating Earnings (Loss) (2)	$	(2,603,118	)	NM			$	205,353			(90.2	%)
Operating Earnings (Loss) as a Percentage of
Revenues:
Housing Operations (3)		(1.7	%)		(9.8	)		8.1	%		(8.2	)
Total Homebuilding Operations		(32.7	%)		(34.5	)		1.8	%		(15.2	)

	NM = Not Meaningful
(1)	Earnings (Loss) from Unconsolidated Entities include our share of joint ventures’ impairments.
(2)	Operating earnings (loss) represent Home Building’s earnings exclusive of certain homebuilding corporate general and administrative expenses.
(3)	Operating earnings (loss) from housing operations is a non-GAAP financial measure, which we believe is useful to investors as it allows them to separate housing operations from activities related to land holdings, options to acquire land and related land valuation adjustments. Management uses this non-GAAP financial measure to aid in evaluating the performance of its ongoing housing projects. Operating earnings from housing operations is equal to Housing Revenues less Housing Cost of Sales and Selling, General and Administrative Expenses, all of which are set forth in the table above.

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     Home Building consists of the following reporting segments with operations located in the following states:

     East: Georgia (Savannah only), Maryland, New Jersey, North Carolina, South Carolina and Virginia
     Southeast: Florida, Georgia (Atlanta only) and Tennessee
     Central: Indiana, Illinois, Michigan, Minnesota and Missouri
     Texas: Texas
     Northwest: Colorado, Hawaii, Nevada (except Las Vegas), Northern California, Oregon, Washington
     Southwest: Arizona, Southern California, Nevada (Las Vegas only), New Mexico
     Other homebuilding ⁽¹⁾

(1) Other homebuilding includes certain resort/second home projects in Florida that we plan to build-out and liquidate, and holding companies. In addition, Other homebuilding includes amounts consolidated under the caption “land held under option agreements not owned” and capitalized interest for all regions.

	For the Years Ended March 31,
	2008					2007
			Change					Change
Units Closed
East		5,345		(20.5	%)		6,720		(5.6	%)
Southeast		3,417		(36.4	%)		5,374		(16.4	%)
Central		3,718		(22.4	%)		4,789		(19.8	%)
Texas		5,772		(18.5	%)		7,083		2.7	%
Northwest		4,062		(13.7	%)		4,709		2.8	%
Southwest		4,537		(26.9	%)		6,209		(8.5	%)
Other homebuilding		351		(61.0	%)		901		(38.0	%)
		27,202		(24.0	%)		35,785		(8.8	%)
Average Revenue Per Unit
East	$	303,202		(6.5	%)	$	324,286		(4.3	%)
Southeast	$	257,726		(14.1	%)	$	300,105		3.4	%
Central	$	201,633		(7.0	%)	$	216,737		(0.4	%)
Texas	$	166,426		4.8	%	$	158,775		6.2	%
Northwest	$	397,952		(10.4	%)	$	444,113		(4.3	%)
Southwest	$	347,576		(18.1	%)	$	424,323		1.9	%
Other homebuilding	$	353,900		(4.7	%)	$	371,255		48.2	%
Total Home Building	$	276,788		(10.1	%)	$	307,810		1.3	%

Revenues

     Housing revenues decreased for the year ended March 31, 2008 as compared to fiscal year 2007 due to decreases in units closed and average revenue per unit. For the year ended March 31, 2008, average revenue per unit (which is net of customer discounts) decreased primarily as a result of increases in discounts and lower prices experienced in many of our markets. Customer discounts increased to 12.3% of housing revenues for the year ended March 31, 2008, up from 7.1% for fiscal year 2007. For the year ended March 31, 2008, our closings declined when compared to the prior year as a result of decreases in sales orders caused principally by the challenging market conditions as described above.

     Revenues from land sales and other increased 9.1% to $436.4 million for the year ended March 31, 2008 as compared to the prior year. Although the timing and amount of land sales vary from period to period, the increase in revenues from land sales is primarily the result of the sale of a portfolio of 27 properties to a joint venture, the sale of a portfolio of five resort/second home properties and other sales of land that required significant future development spending and did not meet our strategic objectives.

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     Changes in average operating neighborhoods and closings per average neighborhood are outlined in the table below.

	For the Years Ended March 31,
	2008					2007
			Change					Change
Average Operating Neighborhoods (1)		646		(6.0	%)		687		9.7	%
Closings Per Average Neighborhood		42.1		(19.2	%)		52.1		(16.9	%)

(1) We define a neighborhood as an individual active selling location targeted to a specific buyer segment that has completed at least one sale and has ten or more units remaining to sell.

     Our neighborhood count as of March 31, 2007 was 690 neighborhoods, and it has steadily decreased to a neighborhood count of 602 as of March 31, 2008. The drop in neighborhood count is primarily the result of our decision to build-out and not reinvest in certain markets and our decision to sell certain properties that did not meet our strategic initiatives.

Operating Margins

     Homebuilding operating margins (consisting of operating earnings or loss as a percentage of revenues) declined to (32.7%) for the year ended March 31, 2008 as compared to 1.8% for the year ended March 31, 2007. The decrease in homebuilding operating margins as compared to the prior year is primarily attributable to the following factors: (1) decreases in revenues, net of discounts, (2) land-related and goodwill impairments, (3) losses on land sales, (4) write-offs of land deposits and pre-acquisition costs, and (5) our share of joint ventures’ impairments. The $128.9 million in losses from unconsolidated entities for the year ended March 31, 2008 includes $100.5 million of our share of joint ventures’ impairments and losses.

     Home Building’s operating margins were impacted by $388.7 million in losses on land sales. In March 2008, we sold a portfolio of 27 developed, partially-developed and undeveloped properties to a joint venture funded principally by certain investment funds for $161.2 million in cash. The portfolio of assets sold includes properties that represent 8,545 lots in 27 properties across 11 states, with the majority located in California and Nevada. The joint venture is led by RSF Partners, Inc. and includes funds under management by Farallon Capital Management, L.L.C. and Greenfield Partners, L.L.C. We have a 5% interest in the joint venture, and we have the right to receive a greater share of distributions if certain financial targets are met.

     We deposited with the joint venture $1.9 million for options to purchase 350 lots. Included in revenues — land sales and other is $150.5 million related to this transaction which excludes proceeds for lots sold and subsequently optioned back from the joint venture which was accounted for as a financing transaction. The book value of the properties sold was $528.5 million, excluding capitalized interest of $28.6 million. In connection with the sale, we incurred $12.8 million in transaction costs. Cost of sales — land sales and other includes $542.4 million and cost of sales — housing includes $27.5 million related to this transaction.

     In March 2008, we also sold a portfolio of five resort/second home properties to a third party for $53.7 million in cash, net of $14.9 million in seller financing for one of the properties. The resort/second home properties sold include properties located in Texas, North Carolina and New Hampshire. We have agreed to finance future construction on two of the properties sold for a maximum commitment of $23.9 million. We have a contingent receivable of $8.1 million that will be recognized if and when the contingency is resolved.

     These transactions are consistent with our near-term goals of reducing our land supply and generating cash. These land sales accelerate our move to a more asset-light operating model, sharpen our focus on core markets and consumer segments, reduce future land development cash obligations and monetize a portion of our deferred tax assets through the expected receipt of a tax refund of approximately $350 million.

     Homebuilding operating margins were also significantly impacted by $1,792.4 million of land-related impairments in the year ended March 31, 2008. We regularly assess our land holdings, including our lot options, taking into consideration changing market conditions and other factors. In connection with our quarterly neighborhood assessments, during the quarter ended March 31, 2008, we reviewed approximately 970 housing projects and land investments for potential land-related impairments. Approximately 868 of these housing projects are owned land positions that are either designated as active neighborhoods, are under development but are not considered active neighborhoods, are currently held for sale or will be developed in future periods. The remaining 102 housing

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projects represent controlled land positions approved for purchase. Land-related impairments during the quarter ended March 31, 2008 represented 94 neighborhoods and land investments, some of which have been impaired more than once.

     In addition to land-related impairments, we recorded $78.2 million in goodwill impairments, which represents 64.4% of our total homebuilding goodwill balance at the beginning of our fiscal year. The goodwill impairments contributed to the decrease in homebuilding operating margins for the year ended March 31, 2008.

     Also, during the year ended March 31, 2008, we determined it was probable we would not exercise certain lot option contracts, which resulted in a write-off of 108 option contracts and related pre-acquisition costs, resulting in a remaining balance of 145 outstanding option contracts and deposits (including contracts in the due diligence process) at March 31, 2008.

     The following table summarizes Home Building’s impairments and write-offs of deposits and pre-acquisition costs, excluding our share of joint ventures’ impairments (dollars in thousands):

	For the Years Ended March 31,
	2008						2007
	Goodwill		Land-related		Land-related		Goodwill		Land-related		Land-related
	Impairments		Impairments (1)		Write-offs		Impairments		Impairments		Write-offs
East	$	559	$	62,904	$	45,673	$	—	$	63,023	$	58,886
Southeast		24,202		260,834		16,798		—		51,321		30,286
Central		5,359		74,485		13,782		—		30,440		39,105
Texas		3,499		1,230		2,141		—		3,502		522
Northwest		20,316		478,118		22,701		—		61,119		66,845
Southwest		24,301		742,824		19,199		—		104,296		162,165
Other homebuilding		—		172,034		131		—		10,212		2,190
	$	78,236	$	1,792,429	$	120,425	$	—	$	323,913	$	359,999

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

     We assess the recoverability of our investment in land holdings on a quarterly basis. Continued deterioration in demand and market conditions could result in significant additional impairments and a decision to not exercise additional lot option contracts, which would result in additional write-offs. In addition, we could incur additional losses and impairments related to our joint ventures. Please refer to “Inventory Valuation” in the Critical Accounting Estimates and to Note (C), “Inventories,” of the Notes to Consolidated Financial Statements for additional details on our land holdings.

     Home Building’s selling, general and administrative expenses decreased $411.4 million for the year ended March 31, 2008 when compared to fiscal year 2007. Although the decrease in Home Building’s selling, general and administrative expenses during the year ended March 31, 2008 was substantial, representing a decrease of 27.0% as compared to the prior year, the percentage decrease did not keep pace with the percentage decrease in Home Building’s revenues, which were 30.2% less than the prior year. The decrease in selling, general and administrative expenses for the year ended March 31, 2008 is primarily due to decreases in compensation and benefit costs as a result of reductions in personnel and decreases in our estimated performance-related incentive compensation. As a percentage of revenues during the year ended March 31, 2008, we increased advertising and marketing costs, sales commissions and sales incentives, when compared to the prior year, to help stimulate sales orders and sell our existing inventory. The following table summarizes Home Building’s selling, general and administrative expenses (dollars in thousands):

	For the Years Ended March 31,
	2008						2007
				Change						Change
Compensation and Benefits	$	408,932			(35.8	%)	$	636,748			(10.8	%)
Sales Commissions		364,236			(21.6	%)		464,469			6.7	%
Advertising and Marketing		145,919			(26.9	%)		199,488			18.6	%
Other		192,554			(13.4	%)		222,296			11.0	%
Selling, General and Administrative Expenses	$	1,111,641			(27.0	%)	$	1,523,001			0.4	%
SG&A as a Percentage of Revenues		14.0	%		0.7			13.3	%		0.9

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Sales Orders, Backlog Units and Land Holdings

     The following tables summarize sales orders and backlog units:

	For the Years Ended March 31,
	2008					2007
			Change					Change
Sales Orders (in Units)
East		4,787		(12.9	%)		5,495		(19.7	%)
Southeast		3,234		(5.6	%)		3,425		(39.9	%)
Central		3,310		(22.5	%)		4,271		(24.2	%)
Texas		5,413		(21.7	%)		6,914		(1.1	%)
Northwest		3,629		(15.6	%)		4,300		(6.5	%)
Southwest		4,124		(9.1	%)		4,539		(36.9	%)
Other homebuilding		160		52.4	%		105		(90.1	%)
		24,657		(15.1	%)		29,049		(23.6	%)
Sales Per Average Neighborhood		38.2		(9.7	%)		42.3		(30.4	%)

	As of March 31,
	2008					2007
			Change					Change
Backlog Units
East		1,290		(30.2	%)		1,848		(39.9	%)
Southeast		1,336		(12.0	%)		1,519		(56.2	%)
Central		1,116		(36.0	%)		1,744		(22.9	%)
Texas		1,877		(7.1	%)		2,020		(7.7	%)
Northwest		1,250		(30.7	%)		1,805		(18.5	%)
Southwest		874		(41.8	%)		1,503		(52.6	%)
Other homebuilding		3		(98.6	%)		212		(79.0	%)
		7,746		(27.3	%)		10,651		(38.7	%)

     For the year ended March 31, 2008, sales orders declined in all of the regions in which we do business when compared to the prior year except for the Other homebuilding segment. We expect that the decreases in sales orders will have a negative impact on our closings in fiscal year 2009.

     As previously discussed, some of the factors we believe are contributing to the decrease in sales orders are a continued decline in homebuyer demand due to lower consumer confidence in the consumer real estate market, as well as the inability of some prospective buyers to sell their existing homes. The decline in homebuyer demand has also been caused by the tightened homebuyer credit requirements. These factors are evidenced by lower customer traffic and cancellation rates that are much higher than our long-term average cancellation rates ranging from 18% to 26%. For the years ended March 31, 2008 and 2007, cancellation rates were 32.1% and 35.5%, respectively.

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     In light of the continuing adverse market conditions, our strategy is to focus on selling homes and reducing inventories, reducing costs, generating cash and simplifying our business. We curtailed speculative housing starts so that we could reduce our speculative inventory and facilitate our transition to an operating model more focused on constructing homes from a sold backlog. Total speculative inventory decreased 64.3% to 1,754 units, excluding models, at March 31, 2008 compared to 4,909 units at March 31, 2007. We have also taken steps to reduce our land position. The following table summarizes our land position:

	As of March 31,
	2008									2007
	Lots			Lots						Lots			Lots
	Owned			Controlled			Total Lots			Owned			Controlled			Total Lots
East		15,417			7,043			22,460			18,604			25,829			44,433
Southeast		21,187			2,442			23,629			25,485			7,113			32,598
Central		5,163			1,948			7,111			8,851			5,303			14,154
Texas		13,057			3,467			16,524			16,113			10,405			26,518
Northwest		5,887			2,217			8,104			10,388			6,224			16,612
Southwest		8,419			1,030			9,449			14,694			6,755			21,449
Other homebuilding		1,092			—			1,092			4,176			80			4,256
		70,222			18,147			88,369			98,311			61,709			160,020
Change		(28.6	%)		(70.6	%)		(44.8	%)		(9.7	%)		(67.0	%)		(45.9	%)

     Capitalized costs related to lots owned are included in land under development and land held for development and sale. Lot counts related to completed homes or homes under construction are excluded from the totals above. The dollar amounts related to these lot counts are classified as direct construction, a component of housing projects, in our Consolidated Balance Sheets. The direct construction lot counts as of March 31, 2008 and March 31, 2007 were 7,324 and 13,301 respectively, including 1,323 and 1,608 respectively, of lots for model homes completed or under construction.

     We decreased our total land position when compared to March 31, 2007 with the most pronounced declines occurring in lots controlled. The decrease in our land position for the year ended March 31, 2008 is a result of our decision to decrease land purchases and new lot option arrangements and our decision to sell certain parcels of land. Based on current market conditions, we believe we are oversupplied in total lots in certain markets and will continue to seek opportunities to reduce our land position. These steps may include one or more sales of land. As compared to March 31, 2007, our total land position has decreased by 71,651 lots or 44.8%. Included in our total land position are 3,429 and 6,115 lots controlled through joint venture arrangements as of March 31, 2008 and 2007, respectively. We have completed due diligence on 11,093 lots of the 18,147 lots we control. Generally, lots where we have completed due diligence have more substantial deposits and pre-acquisition costs incurred, and the deposits are non-refundable.

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Regional Discussion

     Changes in revenues and operating earnings for our homebuilding reporting segments are outlined in the table below:

	For the Years Ended March 31,
	2008						2007
				Change						Change
Revenues
East	$	1,673,236			(25.8	%)	$	2,255,702			(7.7	%)
Southeast		940,121			(44.2	%)		1,686,003			(15.0	%)
Central		764,309			(27.1	%)		1,048,883			(19.9	%)
Texas		977,063			(15.4	%)		1,154,702			8.6	%
Northwest		1,672,957			(21.1	%)		2,121,669			(1.0	%)
Southwest		1,695,140			(37.9	%)		2,730,392			(3.9	%)
Other homebuilding		242,788			(41.8	%)		417,476			(14.0	%)
	$	7,965,614			(30.2	%)	$	11,414,827			(7.0	%)
Operating Earnings (Loss)
East	$	(81,440	)		(153.6	%)	$	151,821			(66.2	%)
Southeast		(422,428	)		(487.9	%)		108,902			(70.9	%)
Central		(136,144	)		151.0	%		(54,231	)		(162.0	%)
Texas		32,256			(65.4	%)		93,209			9.3	%
Northwest		(595,784	)		(628.1	%)		112,824			(77.3	%)
Southwest		(1,163,622	)		546.5	%		(179,995	)		(134.5	%)
Other homebuilding		(235,956	)		768.2	%		(27,177	)		(138.6	%)
	$	(2,603,118	)	NM			$	205,353			(90.2	%)

East

     Revenues decreased 25.8% for the year ended March 31, 2008 primarily due to significant decreases in revenues in the Hilton Head, Washington, D.C., Myrtle Beach and New Jersey markets. These same four markets were also primarily the reason for the 20.5% decrease in units closed when compared to the year ended March 31, 2007. Average revenue per unit decreased 6.5% when compared to the prior year, with the largest decrease occurring in the Washington, D.C. market. Discounts as a percentage of housing revenues increased to 11.2%, as all markets in the East region experienced an increase in discounts. Sales orders decreased 12.9% when compared to the prior year primarily due to decreases in customer traffic and neighborhood counts, while cancellation rates improved slightly from 25.8% to 24.2% for the current fiscal year.

     Operating earnings decreased $233.3 million to a loss of $81.4 million for the year ended March 31, 2008 as compared to the prior year with most of the decrease occurring in the Washington, D.C., Myrtle Beach and New Jersey markets. The decrease in operating earnings is primarily the result of losses on land sales and a decrease in average revenue per unit and increases in discounts and sales incentives.

Southeast

     For the year ended March 31, 2008, a 36.4% decrease in units closed was the primary contributor to the 44.2% decrease in revenues when compared to the year ended March 31, 2007. All markets in the Southeast region experienced substantial decreases in revenues and units closed. Average revenue per unit decreased 14.1% when compared to the prior year primarily due to an increase in discounts from 8.7% for the year ended March 31, 2007 to 15.4% for the year ended March 31, 2008. Although cancellation rates improved from 40.6% to 28.5% for the current fiscal year, sales orders decreased 5.6%. Significant sales order increases were experienced in the Southwest Florida and Nashville markets primarily due to improvements in cancellation rates and traffic counts.

     The Southeast region incurred an operating loss of $422.4 million for the year ended March 31, 2008 as compared to earnings of $108.9 million in the prior year. The Nashville market was the only market in the Southeast region that reported operating earnings for the year ended March 31, 2008. A substantial portion of the operating loss for fiscal year 2008 can be attributed to the Southwest Florida and Southeast Florida markets, which also recorded the majority of the land-related impairments, losses on land sales and goodwill impairments in the region.

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Central

     Revenues for the year ended March 31, 2008 decreased 27.1% primarily due to a 22.4% decrease in units closed as compared to the year ended March 31, 2007. All markets in the Central region experienced significant decreases in units closed. Discounts as a percentage of housing revenues increased to 12.5% for the year ended March 31, 2008, which contributed to the 7.0% decrease in average revenue per unit. Sales orders decreased 22.5% as the region experienced a 32.7% decrease in customer traffic. Cancellation rates improved slightly from 33.4% to 31.9% when compared to the prior year.

     The majority of the Central region’s operating loss of $136.1 million for the year ended March 31, 2008 can be attributed to land-related impairments and losses on land sales. The Detroit market recognized the majority of the Central region’s land-related impairments. All markets within the Central region reported a decrease in operating earnings for the year ended March 31, 2008.

Texas

     Revenues for the Texas region for the year ended March 31, 2008 decreased 15.4% compared to the prior year. The decrease in revenues was primarily due to an 18.5% decrease in units closed, which was partially offset by a 4.8% increase in average revenue per unit. All markets within the Texas region experienced decreases in revenues and units closed. The largest dollar decrease in revenues occurred in the Dallas/Ft. Worth market, which also experienced the largest decrease in units closed. Average revenue per unit increased in all markets in the Texas region, despite an increase in discounts from 3.6% to 5.1% for the year ended March 31, 2008. Sales orders decreased 21.7%. The largest decrease in sales orders occurred in the Dallas/Ft. Worth market where customer traffic has declined and cancellation rates have increased.

     Operating earnings for the year ended March 31, 2008 were $32.3 million, a $61.0 million decrease when compared to the same period in the prior year. The Texas region was the only one of our regions to realize operating earnings. The decrease in operating earnings is primarily the result of discounts and sales incentives, and a loss on a land sale in the Dallas/Ft. Worth market. To date, the Texas region has been less affected by the challenging market conditions experienced in other regions, which we believe results from the moderate growth rates and price appreciation realized in this region in prior periods. In addition, the Texas region has been the least impacted by land-related impairments and write-offs of deposits and pre-acquisition costs.

Northwest

     Revenues for the year ended March 31, 2008 decreased 21.1% as compared to the year ended March 31, 2007, which was due to a combination of a 10.4% decrease in average revenue per unit and a 13.7% decrease in units closed. All markets in the Northwest region experienced decreases in revenues with the exception of the Reno market. The Reno market was the only market within the Northwest region to experience an increase in average revenue per unit and units closed. Discounts as a percentage of housing revenues increased to 14.6% for the year ended March 31, 2008, with the largest increase occurring in the Sacramento market. Sales orders for the year ended March 31, 2008 decreased 15.6% primarily due to decreases in customer traffic and neighborhood counts. The Reno market was the only market within the Northwest region to experience an increase in sales orders.

     The Northwest region experienced an operating loss of $595.8 million for the year ended March 31, 2008 as compared to earnings of $112.8 million in the prior year. Almost all of the operating loss, which includes significant land-related impairments and losses on land sales, was realized in the Reno, Bay Area and Sacramento markets. The Portland and Hawaii markets were the only markets within the region to generate operating earnings.

Southwest

     The decrease in the Southwest region’s revenues for the year ended March 31, 2008 was primarily due to a 26.9% decrease in units closed and an 18.1% decrease in average revenue per unit when compared to the prior year. The largest decreases in units closed were experienced in the Southern California Coastal and Inland Empire markets. The Southwest region experienced the largest decrease in average revenue per unit of all of our regions. Additionally, discounts as a percentage of housing revenues increased to 13.7% for the year ended March 31, 2008, with the most significant discounts offered in the Phoenix market. Sales orders decreased 9.1% when compared to the year ended March 31, 2007 despite the fact that cancellation rates improved from 45.3% to 38.7% for the year ended March 31, 2008.

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     The Southwest region experienced operating losses of $1,163.6 million and $180.0 million for the years ended March 31, 2008 and 2007, respectively. The Southwest region incurred the most substantial operating losses of all of our regions for the year. The most significant operating losses occurred in the Phoenix and Inland Empire markets. The operating loss for the year ended March 31, 2008 includes $742.8 million in land-related impairments and $156.9 million in losses on land sales. The operating loss is also reflective of a decrease in average revenue per unit, which was not offset by commensurate reductions in construction costs, and increases in discounts and sales incentives.

Other homebuilding

     Other homebuilding is primarily comprised of certain operating segments that are not part of our long-term strategy. The projects in these operating segments will be built out and liquidated. Certain homebuilding ancillary businesses and certain income and expenses that are not allocated to our operating segments are reported in this segment.

     The Other homebuilding region experienced an operating loss of $236.0 million for the year ended March 31, 2008 as compared to a loss of $27.2 million in the prior year. This decrease in operating earnings is primarily the result of $172.0 million in land-related impairments in the year ended March 31, 2008. These land-related impairments were all recognized on projects located in Texas, North Carolina and New Hampshire in connection with the sale of certain resort/second home properties.

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 homebuilding operations and other homebuilders, refinancing of existing mortgages, title agency services and the sale of title insurance and other insurance products, including property and casualty.

     As a result of the significant disruptions in the mortgage markets and the related reductions in the mortgage market liquidity, during fiscal year 2006, we began to focus our mortgage operations on Builder loans to support Home Building. Retail mortgage originations represented approximately 54.8%, 53.0%, and 61.3% of total mortgage originations during the fiscal years ended March 31, 2008, 2007, and 2006, respectively. However, we expect Retail mortgage originations to decline during the fiscal year ending March 31, 2009. We anticipate the reduction in total Retail mortgage originations may have a negative impact on Financial Services’ operating results.

     Financial Services’ revenues and operating earnings are derived primarily from the sale of mortgage loans, together with all related servicing rights, broker fees, 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 mortgage loans receivable are recognized using the interest (actuarial) method. Other revenues, including fees for title insurance, mortgage broker and other services performed in connection with mortgage lending activities, are recognized as earned.

     In the normal course of our activities, we 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 and interest expense on debt used to fund the mortgage loans.

     Generally, our business strategy is to originate and sell loans rather than hold them, which reduces our capital investment and related risks. Following unprecedented disruptions in the mortgage markets during the second quarter of fiscal year 2008, CTX Mortgage Company, LLC discontinued sales of mortgage loans to HSF-I, and is now relying on committed bank warehouse credit facilities to provide funding for its loan originations. HSF-I was a variable interest entity of which we were the primary beneficiary, and it was consolidated in our financial statements. In November 2007, we terminated HSF-I and all of its outstanding obligations were redeemed.

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     The following summarizes Financial Services’ results for the two-year period ended March 31, 2008 (dollars in thousands):

	For the Years Ended March 31,
	2008						2007
				Change						Change
Revenues	$	309,948			(33.8	%)	$	468,001			1.3	%
Cost of Sales		(54,380	)		(39.8	%)		(90,328	)		37.1	%
Selling, General and Administrative Expenses		(393,721	)		34.3	%		(293,143	)		(6.0	%)
Operating Earnings (Loss)	$	(138,153	)		(263.4	%)	$	84,530			0.1	%
Operating Margin		(44.6	%)		(62.7	)		18.1	%		(0.2	)
Financial Services Margin (1)		(54.1	%)		(76.5	)		22.4	%		1.1
Net Interest Income	$	16,024			(49.1	%)	$	31,478			(17.6	%)
Average Interest Earning Assets	$	1,016,653			(37.0	%)	$	1,612,851			2.4	%
Average Yield		6.93	%		(0.62	)		7.55	%		0.94
Average Interest Bearing Liabilities	$	909,213			(42.1	%)	$	1,571,509			(0.2	%)
Average Rate Paid		6.13	%		0.34			5.79	%		1.61

(1) Financial Services margin is a non-GAAP financial measure, which we believe is useful as it allows investors to assess the operating performance of our Financial Services’ operations by netting the cost of funding mortgage originations (interest expense) against the related interest income. Financial Services margin is equal to Operating Earnings as a percentage of Financial Services Revenues less interest expense, all of which are set forth in the table above.

     Financial Services’ revenues for the year ended March 31, 2008 decreased as compared to the prior year due to decreases in gain on sale of mortgage loans, broker fees and interest income. Contributing to the decrease in interest income and average yield was an increase in contractually delinquent loans that are not accruing interest. Interest accruals are suspended, except for interest accruals related to insured mortgage loans, when the mortgage loan becomes contractually delinquent for 90 days or more. At March 31, 2008 and 2007, mortgage loans, on which revenue was not being accrued, were $162.9 million and $37.8 million, respectively. For the year ended March 31, 2008, cost of sales, which is solely comprised of interest expense, declined as compared to the prior year as a result of decreases in average interest bearing liabilities. These decreases in average interest bearing liabilities were partially offset by the effect of higher short-term borrowing costs.

     During the year ended March 31, 2008, Financial Services recorded significant mortgage loan loss provisions as a component of selling, general and administrative expenses. The most significant provision during the year ended March 31, 2008 was recorded in connection with Financial Services’ construction loans. A construction loan is a loan supporting the construction of a home on the borrower’s lot. Construction on the home must be completed before a construction loan can be modified into a permanent loan (i.e., a mortgage loan held for sale) and sold to a third party. Due to their lengthy holding period, construction loans are susceptible to market value and credit risks. Recent significant changes in the mortgage markets, declining property values and increasing delinquencies were the primary drivers behind the significant loss provisions recorded by Financial Services during the year ended March 31, 2008. These factors also contributed to Financial Services’ decision in the second quarter of fiscal year 2008 to discontinue the origination of new construction loans. For additional information on Financial Services’ provisions, please refer to our Critical Accounting Estimates, “Mortgage Loan Allowances and Related Reserve.” The following table summarizes Financial Services’ provisions (dollars in thousands):

	For the Years Ended March 31,
	2008		2007
Provision for Losses on Mortgage Loans	$	170,365	$	11,843
Provision for Losses on Real-estate Owned		5,744		114
Anticipated Losses for Loans Originated		6,291		(459	)
Total Provisions	$	182,400	$	11,498

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     In addition to the provisions discussed above, Financial Services recorded a $6.9 million impairment on its construction loans during the year ended March 31, 2007. The increase in selling, general and administrative expenses discussed above was partially offset by decreases in branch operating expenses, branch and corporate compensation, and sales incentives. Operating margin and Financial Services margin for the year ended March 31, 2008 decreased primarily due to increases in loss provisions.

     The following table provides a comparative analysis of: (1) the volume of loan sales to investors (third parties) and the gains on those sales and related derivative activity, known collectively as “gain on sale of mortgage loans,” and (2) loans brokered to third party lenders and fees received for related broker services for the years ended March 31, 2008 and 2007 (dollars in thousands, except for average loan size and volume):

	For the Years Ended March 31,
	2008					2007
			Change					Change
Loan Sales to Investors
Volume (in millions)	$	9,258.0		(14.0	%)	$	10,766.4		(9.1	%)
Number of Loans Sold		44,687		(12.7	%)		51,170		(17.4	%)
Gain on Sale of Mortgage Loans	$	125,600		(23.9	%)	$	164,995		0.1	%
Loans Brokered to Third Party Lenders
Volume (in millions)	$	1,807.1		(46.1	%)	$	3,353.8		(6.0	%)
Number of Brokered Loans		5,378		(51.1	%)		11,005		(14.5	%)
Broker Fees	$	32,382		(50.7	%)	$	65,663		(4.8	%)
Average Loan Size
Loans Sold to Investors	$	207,176		(1.5	%)	$	210,407		10.1	%
Loans Brokered to Third Party Lenders	$	336,016		10.3	%	$	304,767		10.0	%

     In addition to a decrease in the volume of loan sales to investors, gain on sale of mortgage loans decreased for the year ended March 31, 2008 primarily as a result of unfavorable pricing on: (1) the sale of mortgage loan products that have been eliminated due to the disruptions in the mortgage markets, and (2) accelerated mortgage loan sales necessitated by the termination of HSF-I which negatively impacted Financial Services’ liquidity. The unfavorable pricing on mortgage loans was partially offset by a shift in the product mix of loans originated to more conforming loans, which generate higher service release premiums than nonconforming loans. Broker fee income decreased for the year ended March 31, 2008 as a result of a decrease in the volume of loans brokered to third party lenders. The decrease in broker volume is also primarily due to the significant disruptions in the mortgage markets, including the significant reduction of homebuyers’ access to nonconforming mortgage products.

     We track loan applications until such time as the loan application is closed as an originated loan or cancelled. The application data presented below includes loan applications, which resulted in originated loans in the period presented and applications for loans scheduled to close in subsequent periods.

	For the Years Ended March 31,
	2008						2007
				Change						Change
Open Applications — Beginning		17,648			(24.0	%)		23,219			(6.8	%)
New Applications		127,956			33.5	%		95,868			(14.4	%)
Cancelled Applications		(85,337	)		95.5	%		(43,660	)		1.4	%
Originated Loans		(45,160	)		(21.8	%)		(57,779	)		(18.3	%)
Open Applications — Ending		15,107			(14.4	%)		17,648			(24.0	%)

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     The table below provides a comparative analysis of mortgage loan originations for the years ended March 31, 2008 and 2007.

	For the Years Ended March 31,
	2008					2007
			Change					Change
Origination Volume (in millions)	$	9,991.3		(27.7	%)	$	13,826.0		(12.6	%)
Number of Originated Loans
Builder		20,431		(24.7	%)		27,141		(0.8	%)
Retail		24,729		(19.3	%)		30,638		(29.3	%)
		45,160		(21.8	%)		57,779		(18.3	%)
Average Loan Size — Originated Loans	$	221,200		(7.6	%)	$	239,300		6.9	%

     Total originations for the year ended March 31, 2008 decreased primarily as a result of a decline in homebuyer demand and a reduction in the number of mortgage product offerings. Refinancing activity accounted for 20% and 18% of our originations for the years ended March 31, 2008 and 2007, respectively. For the years ended March 31, 2008 and 2007, Financial Services originated 79% and 80%, respectively, of the non-cash unit closings of Home Building’s customers.

     Beginning in early 2007, the mortgage markets were affected by declines in values and increased default levels of sub-prime mortgage loans. The deterioration of the mortgage markets accelerated during the second quarter of fiscal year 2008, which resulted in the virtual elimination of the nonconforming mortgage market which would include sub-prime mortgage loans. As a result, Financial Services has essentially ceased originating sub-prime or other nonconforming loans. Further disruptions in the mortgage markets could further reduce the population of potential mortgage customers and/or the profit on loans we originate, and in turn, negatively impact Financial Services’ future operating results.

OTHER

     Our Other segment includes corporate general and administrative expense. The following summarizes the components of the Other segment’s loss from continuing operations before income tax (dollars in thousands):

	For the Years Ended March 31,
	2008						2007
				Change						Change
Corporate General and Administrative Expense	$	(154,308	)		(16.9	%)	$	(185,585	)		(33.5	%)
Interest Expense		(8,642	)		100.0	%		—			(100.0	%)
Other		29,063			NM			2,488			44.7	%
Operating Loss	$	(133,887	)		(26.9	%)	$	(183,097	)		(36.5	%)

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     Included in other for the year ended March 31, 2008 is a $13.4 million gain on the sale of an airplane and interest income. Corporate general and administrative expense represents corporate employee compensation and benefits, professional services and other corporate costs such as investor communications, insurance, rent, utilities and travel costs. The following table summarizes corporate general and administrative expense (dollars in thousands):

	For the Years Ended March 31,
	2008					2007
			Change						Change
Compensation and Benefits	$	113,544		(28.5	%)	$	158,723			(28.8	%)
Professional Services		21,876		8.5	%		20,170			(18.0	%)
Rent and Utilities		6,667		(1.9	%)		6,795			(0.9	%)
Travel		5,230		(23.4	%)		6,828			(30.3	%)
Other (1)		6,991		(200.9	%)		(6,931	)		(146.0	%)
General and Administrative Expense	$	154,308		(16.9	%)	$	185,585			(33.5	%)

(1) Among other items, other general and administrative expense includes reimbursement of certain costs that have been billed to the Home Building operating segments.

     The decrease in corporate general and administrative expense in fiscal year 2008 versus the prior year is primarily related to decreases in compensation and benefits. The decrease in compensation and benefits is a result of reductions in personnel at our corporate offices and decreases in our performance-related incentive compensation.

INCOME TAXES

     We recognized an income tax benefit of $214.2 million for the year ended March 31, 2008 as compared to the previous fiscal year’s tax provision of $116.3 million. Our effective tax rate of 7% for the year ended March 31, 2008 differed from the statutory rate primarily as a result of the recognition of a deferred tax asset valuation allowance and the recognition of a liability for unrecognized tax benefits and related accrued interest and penalties. See Note (J), “Income Taxes,” of the Notes to Consolidated Financial Statements regarding our valuation allowance. The Company’s effective tax rate was 109% for the year ended March 31, 2007 which differed from the statutory rate primarily due to provisions for tax contingencies.

DISCONTINUED OPERATIONS

     On March 30, 2007, we sold Construction Services to an unrelated third party and received $344.8 million in cash, net of related expenses and as adjusted for the estimated settlement of post-closing adjustments. The effect of the post-closing adjustment was estimated in our calculation of the gain on sale of Construction Services for the year ended March 31, 2007, but was subject to change. During the first quarter of fiscal year 2008, the amount of the post-closing adjustment was determined. In connection with the sale, we will also receive an aggregate of $60.0 million in cash to be paid in annual installments of $4.0 million over a 15-year period. During the fourth quarter of fiscal year 2008, we received our first $4.0 million annual installment payment. The post-closing adjustment and the $4.0 million annual installment payment are reflected as additional gain on sale of Construction Services for the year ended March 31, 2008.

     In March 2008, we signed a definitive agreement to sell our home services operations to an unrelated third party. As a result, our home services operations are now reflected as a discontinued operation in our financial statements. On April 3, 2008 we completed the sale and received $134.6 million in cash, which is subject to post-closing adjustments.

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

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Construction Services

     Discontinued operations for Construction Services are as follows (dollars in thousands):

	For the Years Ended March 31,
	2008		2007
Revenues	$	—	$	2,108,620
Operating Earnings	$	—	$	27,062
Pre-tax Gain on Sale	$	8,341	$	344,752

     After the sale of Construction Services, we remain responsible for certain surety bond obligations relating to Construction Services’ projects commenced prior to March 30, 2007. At March 31, 2008, these surety bonds have a total face amount of $3.09 billion, although the risk of liability with respect to these surety bonds declines as the relevant construction projects are performed. We estimate that $584.6 million of work remains to be performed on these projects at March 31, 2008. In connection with certain of these surety bond obligations, we provided certain sureties with a $100 million letter of credit. In connection with the sale of Construction Services, the purchaser has agreed to indemnify us against losses relating to such surety bond obligations, including amounts that may be drawn under such letter of credit. In addition, we have purchased for our benefit an additional back-up indemnity provided by a financial institution with an A+ (S&P) and A1 (Moody’s) credit rating. The obligation of such financial institution under the back-up indemnity is $856.8 million as of March 31, 2008, which declines to $400 million over time and terminates in 2016.

Home Services

     Discontinued operations for our home services operations are as follows (dollars in thousands):

	For the Years Ended March 31,
	2008			2007
Revenues	$	130,118		$	126,966
Operating Loss	$	(1,876	)	$	(4,013	)

     The increase in home services revenues as compared to the prior year is the result of an expanded customer base. We had 421 thousand pest defense customers as of March 31, 2008 as compared to 360 thousand as of March 31, 2007. The decrease in operating losses realized by our home services operations for the year ended March 31, 2008 is primarily due to the increase in revenues and leverage in selling, general and administrative expenses.

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FISCAL YEAR 2007 COMPARED TO FISCAL YEAR 2006

HOME BUILDING

     The following summarizes the results of our Home Building operations for the two-year period ended March 31, 2007 (dollars in thousands except per unit data and lot information):

	For the Years Ended March 31,
	2007						2006
				Change						Change
Revenues — Housing	$	11,014,975			(7.6	%)	$	11,920,634			32.3	%
Revenues — Land Sales and Other		399,852			13.7	%		351,569			(0.3	%)
Cost of Sales — Housing		(8,599,465	)		1.7	%		(8,458,995	)		30.4	%
Cost of Sales — Land Sales and Other		(1,044,455	)		251.7	%		(296,938	)		13.6	%
Selling, General and Administrative Expenses		(1,523,001	)		0.4	%		(1,517,439	)		33.7	%
Earnings (Loss) from Unconsolidated Entities		(73,782	)		(194.8	%)		77,824			44.0	%
Other Income		31,229			282.1	%		8,174			(44.5	%)
Operating Earnings	$	205,353			(90.2	%)	$	2,084,829			34.9	%
Operating Earnings as a Percentage of Revenues:
Housing Operations		8.1	%		(8.2	)		16.3	%		0.9
Total Homebuilding Operations		1.8	%		(15.2	)		17.0	%		0.5

	For the Years Ended March 31,
	2007					2006
			Change					Change
Units Closed
East		6,720		(5.6	%)		7,116		25.4	%
Southeast		5,374		(16.4	%)		6,426		32.0	%
Central		4,789		(19.8	%)		5,971		6.8	%
Texas		7,083		2.7	%		6,899		11.8	%
Northwest		4,709		2.8	%		4,580		22.5	%
Southwest		6,209		(8.5	%)		6,786		20.9	%
Other homebuilding		901		(38.0	%)		1,454		(15.8	%)
		35,785		(8.8	%)		39,232		17.5	%
Average Revenue Per Unit
East	$	324,286		(4.3	%)	$	338,778		14.5	%
Southeast	$	300,105		3.4	%	$	290,275		11.2	%
Central	$	216,737		(0.4	%)	$	217,665		1.1	%
Texas	$	158,775		6.2	%	$	149,452		5.9	%
Northwest	$	444,113		(4.3	%)	$	463,931		15.4	%
Southwest	$	424,323		1.9	%	$	416,274		9.5	%
Other homebuilding	$	371,255		48.2	%	$	250,486		26.3	%
Total Home Building	$	307,810		1.3	%	$	303,850		12.6	%

Revenues

     Housing revenues decreased for the year ended March 31, 2007 as compared to fiscal year 2006 primarily due to decreases in units closed. For the year ended March 31, 2007, average revenue per unit increased primarily as a result of price increases being largely offset by increases in discounts and lower prices experienced in many of our markets. Customer discounts increased to 7.1% of housing revenues for the year ended March 31, 2007, up from 2.6% for fiscal year 2006. For the year ended March 31, 2007, our closings declined when compared to fiscal year 2006 as a result of decreases in sales orders caused principally by increased cancellations and decreased customer traffic. This decrease in closings was a direct result of challenging market conditions.

     Revenues from land sales and other increased 13.7% to $399.9 million for the year ended March 31, 2007 as compared to the year ended March 31, 2006. We increased our land sales in fiscal year 2007 to address our oversupply of land in certain markets.

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     Changes in average operating neighborhoods and closings per average neighborhood are outlined in the table below.

	For the Years Ended March 31,
	2007					2006
			Change					Change
Average Operating Neighborhoods		687		9.7	%		626		6.3	%
Closings Per Average Neighborhood		52.1		(16.9	%)		62.7		10.6	%

     The increase in average operating neighborhoods for the year ended March 31, 2007 was a result of closing out of neighborhoods at a slower rate as compared to fiscal year 2006 due to a decrease in sales. For the year ended March 31, 2007, we opened 224 new neighborhoods and closed out of 199 neighborhoods. For the year ended March 31, 2006, we opened 340 new neighborhoods and closed out of 278 neighborhoods.

Operating Margins

     Homebuilding operating margins declined to 1.8% for the year ended March 31, 2007 as compared to 17.0% for the year ended March 31, 2006. The decrease in homebuilding operating margins as compared to the year ended March 31, 2006 was primarily attributable to the following factors: (1) decreases in revenues, net of discounts, (2) land-related write-offs of deposits and pre-acquisition costs, (3) land-related impairments, and (4) our share of joint ventures’ impairments and our decision to exit one joint venture. The losses from joint ventures were the primary cause of the significant decrease in earnings from unconsolidated entities when compared to fiscal year 2006.

     Homebuilding operating margins were also significantly impacted by a $747.5 million increase in “cost of sales — land sales and other.” We periodically reassess our land holdings, including our lot options, while taking into consideration changing market conditions and other factors. During the year ended March 31, 2007, we determined it was probable we would not exercise certain lot option contracts, which resulted in a write-off of certain option contracts and related pre-acquisition costs. These determinations were made in light of increased housing inventory, a decline in homebuyer demand, increased cancellations and deteriorating market conditions in the homebuilding industry. The deteriorating market conditions also resulted in significant land-related impairments.

     In connection with our quarterly neighborhood assessments, during the quarter ended March 31, 2007, we reviewed approximately 1,200 housing projects and land investments for potential land-related impairments. Approximately 1,060 of these housing projects were owned land positions that were either designated as active neighborhoods or were under development and were not considered active. The remaining 140 housing projects represented controlled land positions approved for purchase. During fiscal year 2007, we recorded land-related impairments on 83 neighborhoods and land investments. Also during fiscal year 2007, we wrote off land deposits and pre-acquisition costs related to 226 option contracts, resulting in 259 outstanding option contracts and deposits (including contracts in the due diligence process) at March 31, 2007. The following table summarizes Home Building’s land-related write-offs of deposits and pre-acquisition costs and land-related impairments included in “cost of sales — land sales and other” (dollars in thousands):

	For the Years Ended March 31,
	2007				2006
	Land-related		Land-related		Land-related		Land-related
	Impairments		Write-offs		Impairments		Write-offs
East	$	63,023	$	58,886	$	—	$	7,217
Southeast		51,321		30,286		—		3,544
Central		30,440		39,105		—		5,190
Texas		3,502		522		—		506
Northwest		61,119		66,845		—		8,175
Southwest		104,296		162,165		—		9,627
Other homebuilding		10,212		2,190		—		896
	$	323,913	$	359,999	$	—	$	35,155

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     Operating margins also decreased due to increases in operating segments’ selling, general and administrative expenses as a percentage of revenues. Selling, general and administrative expenses increased for the year ended March 31, 2007 due to increases in advertising, marketing and sales commissions to stimulate sales in light of current housing industry conditions. This increase in selling-related expenses was offset by decreases in compensation and benefit costs, including bonuses and profit sharing. The following table summarizes Home Building’s selling, general and administrative expenses (dollars in thousands):

	For the Years Ended March 31,
	2007						2006
				Change						Change
Compensation and Benefits	$	636,748			(10.8	%)	$	713,514			29.2	%
Sales Commissions		464,469			6.7	%		435,413			33.4	%
Advertising and Marketing		199,488			18.6	%		168,156			34.6	%
Other		222,296			11.0	%		200,356			52.1	%
Selling, General and Administrative Expenses	$	1,523,001			0.4	%	$	1,517,439			33.7	%
SG&A as a Percentage of Revenues		13.3	%		0.9			12.4	%		0.3

Sales Orders, Backlog Units and Land Holdings

     The following tables summarize sales orders and backlog units:

	For the Years Ended March 31,
	2007					2006
			Change					Change
Sales Orders (in Units)
East		5,495		(19.7	%)		6,840		6.4	%
Southeast		3,425		(39.9	%)		5,703		(6.9	%)
Central		4,271		(24.2	%)		5,636		5.4	%
Texas		6,914		(1.1	%)		6,994		7.5	%
Northwest		4,300		(6.5	%)		4,597		9.2	%
Southwest		4,539		(36.9	%)		7,196		17.3	%
Other homebuilding		105		(90.1	%)		1,064		(41.0	%)
		29,049		(23.6	%)		38,030		4.0	%
Sales Per Average Neighborhood		42.3		(30.4	%)		60.8		(2.1	%)

	As of March 31,
	2007					2006
			Change					Change
Backlog Units
East		1,848		(39.9	%)		3,073		(8.2	%)
Southeast		1,519		(56.2	%)		3,468		(17.3	%)
Central		1,744		(22.9	%)		2,262		(12.9	%)
Texas		2,020		(7.7	%)		2,189		4.5	%
Northwest		1,805		(18.5	%)		2,214		0.8	%
Southwest		1,503		(52.6	%)		3,173		14.8	%
Other homebuilding		212		(79.0	%)		1,008		(27.9	%)
		10,651		(38.7	%)		17,387		(6.5	%)

     For the year ended March 31, 2007, sales orders declined in all of the regions in which we do business with significant declines in most regions and more moderate declines in the Texas and Northwest regions. These declines led to a significant decrease in backlog in substantially all regions.

     As previously discussed, some of the factors we believe were contributing to the decrease in sales orders and backlog were a continued decline in homebuyer demand due to lower consumer confidence in the consumer real estate market, increased inventory of new and existing homes for sale, and lower prices resulting from the imbalance

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between supply and demand. These factors were evidenced by lower customer traffic and increased cancellation rates. For the year ended March 31, 2007 and 2006, cancellation rates were 35.5% and 25.2%, respectively.

     In light of the challenging market conditions, our strategy was to focus on increasing our inventory turns and generating cash. As a result, we increased advertising costs, sales commissions and sales incentives to help stimulate sales orders and sell our existing inventory. We also curtailed speculative housing starts to reduce our speculative inventory. We also reduced our land position. The following table summarizes our land position as of March 31, 2007 and 2006:

	As of March 31,
	2007									2006
	Lots			Lots						Lots			Lots
	Owned			Controlled			Total Lots			Owned			Controlled			Total Lots
East		18,604			25,829			44,433			20,036			49,421			69,457
Southeast		25,485			7,113			32,598			26,570			38,227			64,797
Central		8,851			5,303			14,154			10,793			15,994			26,787
Texas		16,113			10,405			26,518			18,823			12,774			31,597
Northwest		10,388			6,224			16,612			11,286			28,451			39,737
Southwest		14,694			6,755			21,449			17,986			38,827			56,813
Other homebuilding		4,176			80			4,256			3,334			3,199			6,533
		98,311			61,709			160,020			108,828			186,893			295,721
Change		(9.7	%)		(67.0	%)		(45.9	%)		12.3	%		11.0	%		11.5	%

     We decreased our total land position when compared to March 31, 2006 with the most pronounced declines occurring in lots controlled. The decrease in our land position for the year ended March 31, 2007 was a result of our decision to decrease land purchases and new lot option arrangements, as well as our determination that it was probable we would not acquire certain existing lots controlled under option agreements. Included in our total land position were 6,115 and 35,063 lots controlled through joint venture arrangements as of March 31, 2007 and 2006, respectively.

Regional Discussion

     Changes in revenues and operating earnings for our homebuilding reporting segments are outlined in the table below:

	For the Years Ended March 31,
	2007						2006
				Change					Change
Revenues
East	$	2,255,702			(7.7	%)	$	2,444,433		38.3	%
Southeast		1,686,003			(15.0	%)		1,983,837		45.9	%
Central		1,048,883			(19.9	%)		1,310,039		7.3	%
Texas		1,154,702			8.6	%		1,063,379		21.2	%
Northwest		2,121,669			(1.0	%)		2,143,852		40.2	%
Southwest		2,730,392			(3.9	%)		2,841,081		28.7	%
Other homebuilding		417,476			(14.0	%)		485,582		22.0	%
	$	11,414,827			(7.0	%)	$	12,272,203		31.1	%
Operating Earnings (Loss)
East	$	151,821			(66.2	%)	$	449,587		45.2	%
Southeast		108,902			(70.9	%)		373,908		71.6	%
Central		(54,231	)		(162.0	%)		87,477		(30.9	%)
Texas		93,209			9.3	%		85,284		23.6	%
Northwest		112,824			(77.3	%)		496,764		46.1	%
Southwest		(179,995	)		(134.5	%)		521,324		18.5	%
Other homebuilding		(27,177	)		(138.6	%)		70,485		67.2	%
	$	205,353			(90.2	%)	$	2,084,829		34.9	%

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East

     Revenues decreased 7.7% primarily due to a 5.6% decrease in units closed when compared to fiscal year 2006. The largest decrease in unit closings occurred in the New Jersey and Washington D.C. markets. The decrease in unit closings experienced in the New Jersey and Washington D.C. markets were partially offset by increases in unit closings in the North Carolina markets. Sales orders in New Jersey and Washington D.C. markets also decreased 32.2% and 27.5% as compared to fiscal year 2006. The sales orders decrease in the Washington D.C. market can primarily be attributed to a 30.1% cancellation rate versus 19.1% in fiscal year 2006. Discounts as a percentage of revenues in the East region increased from 2.2% in fiscal year 2006 to 6.0% in fiscal year 2007.

     Operating earnings decreased $297.8 million as compared to the year ended March 31, 2006 primarily due to declines in operating earnings in the Washington D.C. and New Jersey markets where earnings decreased 124.4% and 84.0%, respectively, versus fiscal year 2006. The primary factors that led to the decrease in operating earnings in the Washington D.C. and New Jersey markets were decreases in housing margins resulting from additional discounts and sales incentives offered in these markets to stimulate sales orders. In addition, we recorded $94.9 million of land-related impairments and land-related write-offs of deposits and pre-acquisition costs in the Washington D.C. market during fiscal year 2007.

Southeast

     Revenues decreased 15.0% when compared to fiscal year 2006. All markets in the Southeast region experienced double-digit percentage decreases in revenues except for the Nashville and West Florida markets. The decrease in revenues for the Southeast region was primarily due to a 16.4% decrease in closings as compared to fiscal year 2006, offset slightly by a 3.4% increase in average revenue per unit. The decrease in closings was the result of a 39.9% decrease in sales orders versus the year ended March 31, 2006. We experienced double-digit percentage decreases in sales orders in all markets in the Southeast region. The primary factor contributing to the decrease in sales orders was the increase in cancellation rates from 24.7% in fiscal year 2006 to 40.6% in fiscal year 2007.

     Operating earnings for the region decreased $265.0 million as compared to fiscal year 2006. The most pronounced declines in operating earnings were experienced in the Southwest and Southeast Florida markets, which totaled 70.9% of the decrease. The decrease in operating earnings in the Southeast Florida market was partially the result of $52.0 million in land-related impairments and land-related write-offs of deposits and pre-acquisition costs.

Central

     Revenues decreased 19.9% primarily due to a 19.8% decrease in units closed as compared to the year ended March 31, 2006. The Indianapolis market was the only market within the Central region to experience increases in revenues and closings. All markets within the Central region experienced double-digit percentage decreases in sales orders when compared to fiscal year 2006, with the most pronounced decline in the Columbus market at 43.8%. Despite an increase in discounts from 4.5% in fiscal year 2006 to 7.6% in fiscal year 2007, average revenue per unit held relatively stable, with only a 0.4% decrease over the year ended March 31, 2006.

     Operating earnings decreased $141.7 million when compared to fiscal year 2006. The Detroit, Minnesota and Illinois markets combined for a total of 88.9% of the total decrease in operating earnings. The decrease in operating earnings in the Detroit, Minnesota and Illinois markets was partially the result of a $59.4 million increase in land-related impairments and land-related write-offs of deposits and pre-acquisition costs.

Texas

     Revenues increased 8.6% as compared to the year ended March 31, 2006 primarily due to revenue increases in the San Antonio and Central Texas markets of 39.3% and 23.2%, respectively, partially offset by a decrease in the Dallas/Fort Worth market. The increase in revenues was attributable to a 6.2% increase in average revenue per unit. All markets within the Texas region experienced increases in average revenue per unit with the largest increases in the San Antonio and Houston markets.

     Operating earnings increased $7.9 million as compared to fiscal year 2006. The increase in operating earnings was primarily due to an increase in housing margin in all markets in the Texas region except for the Dallas/Fort Worth market.

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Northwest

     Revenues decreased 1.0% as compared to fiscal year 2006. Double-digit percentage decreases in revenues experienced in the Reno, Denver and Sacramento markets were largely offset by double-digit percentage increases in the Seattle and Central Valley markets. Closings increased 2.8% in the Northwest region, but were more than offset by an increase in discounts as a percentage of revenues from 2.6% to 8.7% in fiscal year 2007.

     Operating earnings decreased $383.9 million when compared to fiscal year 2006. The primary contributors to the decrease in operating earnings in the Northwest region were a decrease in housing margin and an increase in land-related impairments and land-related write-offs of deposits and pre-acquisition costs of $119.8 million as compared to the year ended March 31, 2006. In addition, we recorded $79.4 million in our share of joint ventures’ impairments in the Sacramento market in fiscal year 2007. Hawaii, Seattle and Portland were the only markets within the Northwest region to experience slight to moderate increases in housing margin and operating earnings.

Southwest

     Revenues decreased 3.9% primarily due to an 8.5% decrease in units closed. The largest decreases in units closed occurred in the Southern California markets, but were partially offset by an increase in units closed in the Inland Empire market. Overall, average revenue per unit increased 1.9% for the region despite increases in discounts as a percentage of revenue from 1.5% in fiscal year 2006 to 6.8% in fiscal year 2007. In addition, sales orders decreased 36.9% as compared to the year ended March 31, 2006. All markets within the Southwest region experienced double-digit percentage decreases in sales orders, and cancellation rates have averaged 45.3% in fiscal year 2007 versus 26.7% in fiscal year 2006.

     Operating earnings decreased $701.3 million when compared to fiscal year 2006. All markets within the Southwest region experienced decreases in operating earnings with the exception of the New Mexico market. The most significant decreases were experienced in the Southern California and Las Vegas markets. The decreases in operating earnings in Southern California and Las Vegas markets were attributable to decreases in housing margin and increases in land-related impairments and land-related write-offs of deposits and pre-acquisition costs. Land-related impairments and land-related write-offs of deposits and pre-acquisition costs in our Southern California and Las Vegas markets totaled $215.9 million. In addition, we recorded $45.1 million in our share of joint ventures’ impairments and our decision to exit one joint venture in the Southern California Coastal market in fiscal year 2007.

Other homebuilding

     Revenues decreased 14.0% primarily due to the wind down of our Salt Lake City and Greenville/Columbia South Carolina operations. Total revenues for these two divisions were $113.5 million in fiscal year 2006 compared to $1.1 million in fiscal year 2007. The decrease in revenues was partially offset by an increase in revenues for our resort operations in our Texas markets.

     Operating earnings decreased as additional sales incentives and discounts were used to stimulate sales activity in certain markets. Additionally, a $10.2 million land-related impairment was recorded for one of our projects in the Southeast Florida market.

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FINANCIAL SERVICES

     The following summarizes Financial Services’ results for the two-year period ended March 31, 2007 (dollars in thousands):

	For the Years Ended March 31,
	2007						2006
				Change						Change
Revenues	$	468,001			1.3	%	$	462,223			9.6	%
Cost of Sales		(90,328	)		37.1	%		(65,904	)		105.0	%
Selling, General and Administrative Expenses		(293,143	)		(6.0	%)		(311,854	)		6.2	%
Operating Earnings	$	84,530			0.1	%	$	84,465			(12.0	%)
Operating Margin		18.1	%		(0.2	)		18.3	%		(4.5	)
Net Interest Income	$	31,478			(17.6	%)	$	38,201			(22.9	%)
Average Interest Earning Assets	$	1,612,851			2.4	%	$	1,574,856			12.8	%
Average Yield		7.55	%		0.94			6.61	%		0.76
Average Interest Bearing Liabilities	$	1,571,509			(0.2	%)	$	1,574,235			15.4	%
Average Rate Paid		5.79	%		1.61			4.18	%		1.84

     Revenues for the year ended March 31, 2007 increased slightly as compared to the year ended March 31, 2006. An increase in interest income was offset by a decrease in revenues from our title operations. Loan funding costs increased as a result of higher short-term interest rates. This increase in funding costs was the primary factor contributing to the increase in cost of sales and the decrease in net interest income for the year ended March 31, 2007. The decrease in selling, general and administrative expenses for the year ended March 31, 2007 was primarily the result of decreases in branch operating, branch support and sales management expenses. These reductions were partially offset by an increase in additions to the loan origination reserve. Operating margin for the year ended March 31, 2007 declined slightly since revenues only increased slightly and the increase in cost of sales was offset by a decrease in selling, general and administrative expenses.

     The following table provides a comparative analysis of: (1) the volume of loan sales to investors (third parties) and the gains recorded on those sales and related derivative activity and (2) loans brokered to third party lenders and fees received for related broker services for the years ended March 31, 2007 and 2006 (dollars in thousands, except average loan size and volume):

	For the Years Ended March 31,
	2007					2006
			Change					Change
Loan Sales to Investors
Volume (in millions)	$	10,766.4		(9.1	%)	$	11,845.5		27.0	%
Number of Loans Sold		51,170		(17.4	%)		61,961		17.1	%
Gain on Sale of Mortgage Loans	$	164,995		0.1	%	$	164,804		16.3	%
Loans Brokered to Third Party Lenders
Volume (in millions)	$	3,353.8		(6.0	%)	$	3,566.3		11.1	%
Number of Brokered Loans		11,005		(14.5	%)		12,867		(3.5	%)
Broker Fees	$	65,663		(4.8	%)	$	69,005		(3.7	%)
Average Loan Size
Loans Sold to Investors	$	210,407		10.1	%	$	191,178		8.5	%
Loans Brokered to Third Party Lenders	$	304,767		10.0	%	$	277,166		15.1	%

     The volume and number of loans sold to investors decreased for the year ended March 31, 2007 as compared to the year ended March 31, 2006. The decreases experienced in the volume and number of these loans sold for the year ended March 31, 2007 were offset by an increase in average income received from the sale of mortgage servicing rights for each loan.

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     The application data presented below includes loan applications, which resulted in originated loans in the period presented and applications for loans scheduled to close in subsequent periods.

	For the Years Ended March 31,
	2007						2006
				Change						Change
Open Applications — Beginning		23,219			(6.8	%)		24,912			(7.1	%)
New Applications		95,868			(14.4	%)		112,033			3.8	%
Cancelled Applications		(43,660	)		1.4	%		(43,043	)		1.2	%
Originated Loans		(57,779	)		(18.3	%)		(70,683	)		5.0	%
Open Applications — Ending		17,648			(24.0	%)		23,219			(6.8	%)

     The table below provides a comparative analysis of mortgage loan originations for the years ended March 31, 2007 and 2006.

	For the Years Ended March 31,
	2007					2006
			Change					Change
Origination Volume (in millions)	$	13,826.0		(12.6	%)	$	15,827.4		21.4	%
Number of Originated Loans
Builder		27,141		(0.8	%)		27,364		21.5	%
Retail		30,638		(29.3	%)		43,319		(3.3	%)
		57,779		(18.3	%)		70,683		5.0	%
Average Loan Size — Originated Loans	$	239,300		6.9	%	$	223,900		15.7	%

     Total originations for the year ended March 31, 2007 decreased primarily as a result of a decrease in Retail originations, which is the result of a decline in homebuyer demand and the strategic decision to reduce the number of Retail loan officers. Refinancing activity accounted for 18% and 20% of originations for the years ended March 31, 2007 and 2006, respectively. For the years ended March 31, 2007 and 2006, Financial Services originated 80% and 75%, respectively, of the non-cash unit closings of Home Building’s customers.

OTHER

     Our Other segment includes our 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 thousands):

	For the Years Ended March 31,
	2007						2006
				Change						Change
Corporate General and Administrative Expense	$	(185,585	)		(33.5	%)	$	(279,172	)		12.0	%
Interest Expense		—			(100.0	%)		(11,103	)		(40.7	%)
Other		2,488			44.7	%		1,719			(92.0	%)
Operating Loss	$	(183,097	)		(36.5	%)	$	(288,556	)		17.0	%

     The following table summarizes corporate general and administrative expense (dollars in thousands):

	For the Years Ended March 31,
	2007						2006
				Change					Change
Compensation and Benefits	$	158,723			(28.8	%)	$	222,874		10.5	%
Professional Services		20,170			(18.0	%)		24,593		74.4	%
Rent and Utilities		6,795			(0.9	%)		6,854		37.4	%
Travel		6,828			(30.3	%)		9,795		16.7	%
Other		(6,931	)		(146.0	%)		15,056		(25.5	%)
General and Administrative Expense	$	185,585			(33.5	%)	$	279,172		12.0	%

46

     The decrease in corporate general and administrative expense in fiscal year 2007 was primarily related to decreases in compensation and benefits and in professional services. The decrease in compensation and benefits was a result of reductions in head count at our corporate offices and decreases in our performance-related incentive compensation.

     During the year ended March 31, 2007, we recorded a tax provision of $116.3 million as compared to a tax provision of $668.1 million during the year ended March 31, 2006. Our effective tax rate for fiscal year 2007 was 109% as compared to the effective tax rate of 36% for fiscal year 2006.

     During fiscal year 2007, we increased our reserve for tax contingencies (including interest and penalties, if applicable) resulting in a tax provision of $65.5 million. Excluding the effect of the adjustment to tax reserves, our effective tax rate for the year ended March 31, 2007 was 48% as compared to 36% for the year ended March 31, 2006. The increase in the effective tax rate primarily results from the net impact of various permanent tax differences compared to the decrease in earnings from continuing operations. Additionally, the effective tax rate for fiscal year 2007 increased as compared to fiscal year 2006 due to a nonrecurring tax benefit in fiscal year 2006 of $28.1 million resulting from a payment received from the U.S. Treasury that was, effectively, a tax refund. See Note (J), “Income Taxes,” of the Notes to Consolidated Financial Statements for additional information on tax contingencies.

DISCONTINUED OPERATIONS

Home Equity

     Discontinued operations for Home Equity are as follows (dollars in thousands):

	For the Years Ended March 31,
	2007			2006
Revenues	$	171,170		$	834,526
Operating (Loss) Earnings	$	(42,691	)	$	118,198
Pre-tax Gain on Sale	$	125,365		$	—

Construction Services

     Discontinued operations for Construction Services are as follows (dollars in thousands):

	For the Years Ended March 31,
	2007		2006
Revenues	$	2,108,620	$	1,547,805
Operating Earnings	$	27,062	$	23,217
Pre-tax Gain on Sale	$	344,752	$	—

     Revenues for the year ended March 31, 2007 increased as compared to the year ended March 31, 2006 primarily due to a substantial increase in backlog in prior periods resulting in a portfolio of larger jobs in terms of size from which revenue was realized. The increase in operating earnings for the year ended March 31, 2007 was primarily the result of the larger portfolio of jobs and improved job profit margins.

47

Home Services

     Discontinued operations for our home services operations were as follows (dollars in thousands):

	For the Years Ended March 31,
	2007			2006
Revenues	$	126,966		$	109,198
Operating Loss	$	(4,013	)	$	(7,498	)

     Our home services revenues increased 16.3% to $127.0 million in fiscal year 2007. This increase in revenues was the result of an expanded customer base. We had 360 thousand pest defense customers as of March 31, 2007 as compared to 305 thousand as of March 31, 2006. The decrease in our home services division’s operating loss for the year ended March 31, 2007 was primarily due to the increase in revenues and leverage in selling, general and administrative expenses.

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, 2008, 2007 and 2006 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,
	2008			2007			2006
Net Cash (Used in) Provided by
Centex*
Operating Activities	$	558,792		$	930,116		$	(667,292	)
Investing Activities		(315,340	)		46,120			77,133
Financing Activities		(551,346	)		(142,259	)		138,041
Effect of Exchange Rate on Cash		—			—			(1,479	)
		(307,894	)		833,977			(453,597	)
Financial Services
Operating Activities		1,004,093			580,684			12,996
Investing Activities		77,691			76,538			786,790
Financing Activities		(1,069,806	)		(656,400	)		(800,820	)
		11,978			822			(1,034	)
Centex Corporation and Subsidiaries
Operating Activities		1,480,634			950,193			(763,381	)
Investing Activities		32,602			87,485			900,261
Financing Activities		(1,809,152	)		(202,879	)		(590,032	)
Effect of Exchange Rate on Cash		—			—			(1,479	)
Net (Decrease) Increase in Cash	$	(295,916	)	$	834,799		$	(454,631	)

* “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, 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 Consolidated Cash Flows have not been restated for discontinued operations. As a result, all international homebuilding (sold in September 2005), Construction Services (sold in March 2007) and home services operations (sold in April 2008) cash flows are included with the Centex cash flows and all Home Equity (sold in July 2006) cash flows are included with the Financial Services cash flows in the table above. Significant components of cash flows from discontinued operations are discussed below.

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Centex

     We generally fund our Centex operating and other short-term liquidity needs through cash provided by operations, short-term borrowings and the issuance of senior debt. Centex’s operating cash is derived primarily through home and land sales from our homebuilding operations. During the year ended March 31, 2008, Centex’s cash from operating activities was primarily provided by a decrease in inventory, which was partially offset by an increase in taxes receivable and reductions in accounts payable and accrued liabilities. Centex’s cash used in investing activities during the year ended March 31, 2008 primarily relates to net capital contributions of $188.0 million made to Financial Services in order to meet the equity requirements under its committed warehouse facilities and to facilitate the funding of Financial Services’ construction loan program, and to a lesser extent, cash contributions to Home Building joint ventures. During fiscal year 2008, Financial Services ceased originating new construction loans. Cash used in Centex’s financing activities during the year ended March 31, 2008 was primarily for the repayment of $581.4 million in long-term debt.

     During fiscal year 2007, Centex’s cash from operating activities was primarily provided by dividends received from Financial Services and the net reduction in Home Building inventories. Included in Centex’s financing activities for the year ended March 31, 2007 was cash used to fund share repurchases. In addition, Centex’s financing activities for the year ended March 31, 2007 included the refinancing of scheduled debt maturities, the repayment of short-term borrowings and cash received from option exercises. 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 for the year ended March 31, 2006 were primarily from debt issuances.

Financial Services

     We generally fund our Financial Services’ operating and other short-term liquidity needs through committed warehouse facilities, proceeds from the sale of mortgage loans and cash flows from operations. Financial Services’ operating cash is derived through sales of mortgage loans and origination and servicing fees. During the year ended March 31, 2008, cash from operations was provided by proceeds from sales of mortgage loans that were not reinvested in new mortgage loans and origination and servicing fees. These funds were used in financing activities to repay short-term and long-term debt. The capital contribution made by Centex to Financial Services described above is also reflected as a financing activity during the year ended March 31, 2008.

     During fiscal year 2007, cash was provided by sales of mortgage loans and origination and servicing fees; whereas, during fiscal year 2006, cash was used to fund these mortgage loans. The funds provided by Financial Services’ investing activities in fiscal year 2007 was primarily related to the cash proceeds received from the sales of Home Equity and our technology operations. This was substantially offset by an increase in funding construction loans and Home Equity’s mortgage loans held for investment prior to its sale (see further explanation below).

Discontinued Operations

     Included in Centex’s operating cash flows for the year ended March 31, 2007 were general contracting fees obtained through our Construction Services segment. For the year ended March 31, 2007, cash provided by Construction Services’ operating cash flows was $16.4 million. Additionally, Construction Services had $18.1 million in cash and cash equivalents when this business was sold on March 30, 2007. Prior to the sale of Construction Services, cash generated by the operations of Construction Services was frequently used to finance the operations of our other businesses. After the sale of Construction Services, we no longer had access to this source of internal financing.

     Included in Financial Services’ operating cash flows for the year ended March 31, 2007 were funds from securitizations and interest income on mortgage loans held by Home Equity for investment. Financial Services’ cash provided by investing activities in fiscal year 2006 was primarily from a reduction in Home Equity’s mortgage loans held for investment. Home Equity originated mortgage loans with the intent to securitize; however, whole loan sales periodically occurred. Financial Services’ cash used in financing activities in fiscal years 2007 and 2006 was primarily from the repayment of debt from the liquidation of Home Equity’s mortgage loans held for investment.

     Construction Services and Home Equity did not require significant capital resources nor did they provide significant liquidity. As a result, our liquidity and capital resources have not been materially impacted by the sale of these operations.

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Contractual and Other Obligations

     Our future cash requirements for contractual obligations, excluding discontinued operations, as of March 31, 2008 (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	$	345,632	$	1,277,730	$	889,071	$	1,756,790	$	4,269,223
Operating Leases		46,284		72,422		42,125		15,647		176,478
Joint Venture Obligations		145,350		29,375		24,402		—		199,127
Purchase Obligations		1,636		1,953		—		—		3,589
		538,902		1,381,480		955,598		1,772,437		4,648,417
Financial Services
Operating Leases		10,648		10,323		1,291		172		22,434
	$	549,550	$	1,391,803	$	956,889	$	1,772,609	$	4,670,851

     As outlined above, our primary contractual obligations are principal and interest payments under long-term debt agreements and lease payments under operating leases.

     Effective April 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB No. 109,” which we refer to as FIN 48. The cumulative effect of the adoption of FIN 48 was recorded as a $208.3 million reduction to beginning retained earnings in the first quarter of fiscal year 2008. In accordance with FIN 48, at March 31, 2008, accrued liabilities include $492.3 million in unrecognized tax benefits, accrued interest and penalties (which excludes the tax benefit relating to the deductibility of interest and state income tax). Due to the nature of these liabilities and ongoing examinations by taxing authorities, we are unable to reasonably estimate during which future periods these amounts will ultimately be settled. For further information regarding FIN 48, see Note (J), “Income Taxes,” of the Notes to Consolidated Financial Statements.

     Our homebuilding operations also have certain obligations under our joint venture arrangements, community district development bonds and other special financing districts. Additionally, Financial Services has committed to fund certain loans. See Note (G), “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements for further discussion of these obligations.

     We expect to fund our contractual and other obligations in the ordinary course of business through our operating cash flows, cash on-hand and through our credit facilities.

Credit Facilities and Liquidity

     Our existing credit facilities and available capacity as of March 31, 2008 are summarized below (dollars in thousands):

	Existing Credit		Available
	Facilities		Capacity
Centex
Multi-Bank Revolving Credit Facility
Revolving Credit	$	750,000	$	141,897
Letters of Credit		600,000		193,753
		1,350,000		335,650	(1)
Financial Services
Secured Credit Facilities		605,000		267,947	(2)
	$	1,955,000	$	603,597

(1) This is an unsecured, committed, multi-bank revolving credit facility, maturing in July 2010, that serves as funding for general corporate purposes and provides $600 million of letter of credit capacity. As of March 31, 2008, there were no borrowings under the revolving credit facility. The revolving credit facility’s available capacity is subject to a borrowing base limitation when our senior unsecured debt does not have an investment grade rating from at least two of the following: Moody’s, S&P and Fitch Ratings, which we refer to as Fitch. Under the borrowing base limitation, the sum of our net senior debt and any

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amounts drawn on the revolving credit facility may not exceed an amount based on certain percentages of various categories of our unencumbered inventory and other assets. Available capacity amounts above reflect the borrowing base limitation. Financial letters of credit reduce the available capacity under the revolving credit facility and letters of credit. Financial letters of credit are generally issued as a form of financial or payment guarantee.

(2)

At March 31, 2008, CTX Mortgage Company, LLC maintained $605 million of secured, committed mortgage warehouse facilities. Subsequent to March 31, 2008, existing credit facilities were reduced $75.0 million to $530.0 million with a corresponding decrease in available capacity. See Note (P), “Subsequent Events” of the Notes to Consolidated Financial Statements for additional information.

     Our outstanding debt (in thousands) as of March 31, 2008 was as follows (due dates are presented in fiscal years):

Centex
Short-term Debt:
Short-term Note Payable	$	4,050
Senior Debt:
Senior Notes, weighted-average 6.00%, due through 2017		3,319,190
Other Indebtedness, weighted-average 8.98%, due through 2018		1,927
		3,325,167
Financial Services
Short-term Debt:
Short-term Notes Payable		337,053
	$	3,662,220

     As of March 31, 2008, our short-term debt was $341.1 million, most of which was applicable to Financial Services. As of March 31, 2008, we had no borrowings under our revolving credit facility. From time to time, we borrow under our facility for general working capital purposes. Amounts are repaid using cash flows from operations.

     We are required to maintain compliance with certain financial covenants in our multi-bank revolving credit facility. In addition, our committed bank warehouse credit facilities contain various affirmative and negative covenants that are generally customary for facilities of this type. At March 31, 2008, we were in compliance with all our financial covenants. We monitor compliance with these covenants on a quarterly basis, including forward-looking projections.

     Prior to the second quarter of fiscal year 2008, substantially all of the mortgage loans originated by CTX Mortgage Company, LLC were funded through the sale of such mortgage loans to HSF-I. HSF-I was a variable interest entity of which we were the primary beneficiary, and it was consolidated in our financial statements. HSF-I obtained the funds needed to purchase eligible mortgage loans from CTX Mortgage Company, LLC, by issuing short-term secured liquidity notes and other securities. Since the second quarter of fiscal year 2008, HSF-I has not been able to issue short-term liquidity notes to finance the purchase of mortgage loans from CTX Mortgage Company, LLC as a result of current market conditions affecting the mortgage finance industry. Accordingly, CTX Mortgage Company, LLC discontinued sales of mortgage loans to HSF-I. In November 2007, we terminated HSF-I and all of its outstanding obligations were redeemed. Our decision to terminate HSF-I was influenced by external market conditions and not by any quality or performance issues related to HSF-I or its underlying collateral. For additional information regarding HSF-I and certain related arrangements, see Note (F), “Indebtedness,” of the Notes to Consolidated Financial Statements.

     Due to the unavailability of HSF-I as a funding source for CTX Mortgage Company, LLC’s mortgage loan originations, CTX Mortgage Company, LLC increased its use of committed bank mortgage warehouse credit facilities. Under one such warehouse credit facility amounting to $450 million at March 31, 2008, the bank had the option to convert the facility to an amortizing loan based on the ultimate sale of the underlying collateral and not to purchase any additional mortgage loans if our long-term unsecured debt ratings fell below BB+ by S&P, below BBB by Fitch or below Ba1 by Moody’s. At March 31, 2008, our long-term unsecured debt was rated BB+ by S&P, BBB by Fitch and Ba1 by Moody’s.

     On May 7, 2008, S&P lowered our debt rating from BB+ to BB. This downgrade triggered the provision in the $450 million committed bank warehouse credit facility which allows the bank to convert the facility to an amortizing loan based on the ultimate sale of the underlying collateral and not to purchase any additional mortgage loans. On May 9, 2008, CTX Mortgage Company, LLC executed an amendment to the bank warehouse credit facility which lowered the commitment to $375 million, reset the debt ratings trigger that provides the bank the option to

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convert the facility to an amortizing loan if our credit rating falls below BB by S&P and Fitch, or below Ba2 by Moody’s. Our long-term unsecured debt is currently rated BB by S&P, BBB by Fitch and Ba1 by Moody’s. CTX Mortgage Company, LLC may seek to enter into additional mortgage warehouse facilities with other lenders. A further downgrade in our credit rating by a rating agency could result in the wind-down of the $375 million warehouse credit facility. The rating change by S&P is not currently anticipated to have a material adverse impact on our ability to access the capital we need to fund our operations.

     In order to reduce debt and to decrease future cash interest payments, as well as principal payments that are due at maturity or would be required to be made upon redemption, we may, from time to time, repurchase our outstanding debt securities for cash in open market purchases or privately negotiated transactions. We will evaluate any such transactions in light of market conditions prevailing at the time, taking into account our liquidity, our future debt service requirements and our requirements for future access to capital.

     If the current funding sources were to become unavailable, Financial Services would need to make other financing arrangements to fund its mortgage loan origination activities, or we may be required to fund Financial Services’ loan originations and make additional capital contributions to Financial Services. Although we believe that Financial Services could broker loans to other mortgage companies, sell loans directly to FNMA, or arrange for alternative financing that is common for other homebuilders and mortgage companies, there can be no assurance that such financing would be available on satisfactory terms, and any delay in obtaining such financing could adversely affect the results of operations of Financial Services.

     In general, we believe that our existing cash and future sources of funding, cash flow from operations, including anticipated federal tax refunds, and our committed credit facilities are adequate to meet our currently anticipated operating needs, capital expenditures and debt service requirements for at least the next twelve months. As a supplement to our cash provided by operations, we may elect to sell certain non-strategic assets. There can be no assurance that such sales could be completed on terms or within a timeframe acceptable to us in order to create additional cash flow. In addition, our future cash flow from operations may vary depending on a number of factors, including market conditions in the homebuilding industry, the availability of financing to homebuyers, the level of competition and general and economic factors beyond our control. We cannot predict what effect these factors will have on our future liquidity. For additional information on factors impacting our liquidity and capital resources, please refer to Part I, Item 1A, “Risk Factors.”

Seasonality and Inflation

     We have historically experienced variability in our quarterly results of operations due to the seasonal nature of the homebuilding industry. Due to the deteriorating market conditions and our strategic responses to such downturn, we can make no assurances as to whether our historical seasonal pattern will provide guidance as to future results of operations.

     Periods of high inflation may adversely affect us and the homebuilding industry in general, as it may contribute to higher land, financing, labor and construction costs. In addition, higher mortgage interest rates, which may accompany inflation, significantly affect the affordability of permanent mortgage financing to prospective homebuyers. Traditionally, we have attempted to pass increases in our costs to our customers through increased sales prices, however, current market instability may limit our ability to offset our cost increases with higher selling prices. If we are unable to raise sales prices enough to compensate for higher costs, or if mortgage interest rates increase significantly, affecting our prospective homebuyers’ ability to adequately finance home purchases, our results of operations would be adversely affected.

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 homebuilders or developers and, to a lesser extent, financial partners, allows Home Building to share the risks and rewards of ownership and to provide broader strategic advantages.

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

	As of March 31,
	2008						2007
					Centex’s						Centex’s
	Number				Share		Number				Share
	of JVs (1)		Investments		of Debt		of JVs (1)		Investments		of Debt
Unleveraged Joint Ventures		29	$	70,043	$	—		28	$	33,369	$	—
Joint Ventures with Debt:		13						21
Limited Maintenance Guarantee (2) (3) (4)				43,311		27,500				108,057		162,425
Repayment Guarantee (2) (5)				3,154		13,692				2,247		16,045
Completion Guarantee (4)				78,274		133,935				126,469		209,927
No Recourse or Guarantee				12,040		24,000				11,502		24,000
		42	$	206,822	$	199,127		49	$	281,644	$	412,397

(1)	The number of joint ventures includes unconsolidated Home Building joint ventures for which we have an investment balance as of the end of the period and/or current fiscal year activity. We were the managing member of 23 and 28 of the joint ventures as of March 31, 2008 and 2007, respectively. The number of joint ventures includes 17 and 14 joint ventures as of March 31, 2008 and 2007, respectively, for which substantially all the joint ventures’ activities are complete.
(2)	These amounts represent our maximum exposure related to the joint ventures’ debt at each respective date.
(3)	We have guaranteed that certain of the joint ventures will maintain a specified loan to value ratio. For certain joint ventures, we have contributed additional capital in order to maintain loan to value requirements. At March 31, 2008, we had one remaining joint venture with a limited maintenance guarantee. In April 2008, this joint venture repaid its outstanding debt.
(4)	Certain joint venture agreements require us to guarantee the completion of a project or phase if the joint venture does not perform the required land development. A portion of these completion guarantees are joint and several with our partners.
(5)	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.

     Total joint venture debt outstanding as of March 31, 2008 and 2007 was $423.2 million and $1.0 billion, respectively. 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. Additionally, we have agreed to indemnify the construction lender for certain environmental liabilities in the case of most joint ventures and most guarantee arrangements provide that we are liable for our proportionate share of the outstanding debt if the joint venture files for voluntary bankruptcy. To date, we have not been requested to perform under the environmental liabilities or voluntary bankruptcy guarantees for any of our joint ventures.

     Four of our joint ventures are in default of their joint venture debt agreements. In addition, we expect two other joint ventures to be in default of their joint venture debt agreements subsequent to March 31, 2008. Our joint venture partner to one of these joint ventures filed for bankruptcy during the year ended March 31, 2008. Our share of the total debt of these joint ventures is $64.0 million and is included in the table above. We are in discussions with the joint venture partners and lenders with respect to each joint venture and are evaluating alternatives to mitigate our exposure. We expect to fulfill our contractual obligations under the joint venture agreements. Costs associated with fulfilling such contractual obligations may be less than our share of the joint ventures’ debt. Recourse under joint venture debt agreements is limited to either the underlying collateral or completion obligations of the joint venture partners. Based upon the terms and debt amounts outstanding for these joint ventures and the terms of the joint venture agreements, we do not believe our exposure related to these joint venture defaults will be material to our financial position or results of operations.

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     A summary of the estimated maturities of our share of joint ventures’ debt is provided below (dollars in thousands). We have estimated the debt maturities with the assumption that all payments are first applied to pay down the outstanding debt balances as of March 31, 2008. Our share of joint ventures’ debt for which the joint ventures are in default is included in fiscal year ending 2009 in the table below.

	For the Fiscal Years Ending
	March 31,
2009	$	168,941
2010		2,268
2011		3,918
2012		24,000
	$	199,127

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 of the Board of Directors.

Mortgage Loan Allowances and Related Reserve

     Financial Services has established a liability for anticipated losses associated with mortgage loans originated and sold based upon, among other things, historical loss rates and current trends in loan originations. This liability includes losses and settlements associated with certain borrower payment defaults, credit quality issues, or misrepresentations and reflects our judgment of the loss exposure at the end of the reporting period. Please refer to Note (G), “Commitments and Contingencies” of the Notes to Consolidated Financial Statements for additional information on this reserve as of March 31, 2008 and 2007.

     Financial Services also periodically reviews its construction loan commitments for collectibility. To establish the appropriate allowance, we first classify our construction loans into risk categories. These categories are based on, among other things, the loan product, the borrower’s credit profile, the draw activity on the loan, the loan delinquency rate, and the historical realization on construction loans. Each category of loans is then evaluated for potential credit and market-related risks. The allowance for loans we expect to convert to permanent loans that will be held for sale is based on the estimated market value of the loans. The allowance for loans we expect to eventually default is based on the credit risk of the loan.

     From time to time, Financial Services will be required to repurchase certain loans we originated and sold to third parties under the representations and warranty provisions in our loan sale agreements. If a repurchased loan is performing, it is classified as a mortgage loan held for sale and will most likely be sold to a third party. If a repurchased loan is nonperforming, the loan and its related allowance are classified as other mortgage loans. In addition, Financial Services will foreclose on certain nonperforming construction loans. We establish an allowance for loans in foreclosure based on our historical loss experience and current loss trends. Please refer to Note (B), “Mortgage Loans,” of the Notes to Consolidated Financial Statements for additional information on our other mortgage loans and the related allowance as of March 31, 2008 and 2007.

     If a nonperforming loan becomes current, it is reclassified to mortgage loans held for sale. On all other nonperforming loans, we proceed to foreclose on the loan. Once we have received title to the underlying collateral, we classify the loan amount, net of its allowance, as real-estate owned. We establish an allowance for real-estate owned based upon the estimated value of the property. Real-estate owned is reflected as a component of other inventory. At March 31, 2008 and 2007, real-estate owned was $10.9 million and $8.7 million, respectively, which were net of allowances of $12.8 million and $2.7 million, respectively.

     Although we consider our mortgage loan allowances and related reserve reflected in our Consolidated Balance Sheets at March 31, 2008 to be adequate, there can be no assurance that these allowances and related reserve will prove to be sufficient over time to cover ultimate losses in connection with our loan originations. These

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allowances and related reserve may prove to be inadequate due to unanticipated adverse changes in the economy, the mortgage market, or discrete events adversely affecting specific customers.

Inventory Valuation

     Land acquisition, land development, and home construction costs include costs incurred (land acquisition and development, direct construction, capitalized interest and real estate taxes), as well as certain estimated costs. These estimated costs include accruals for estimated costs incurred but not yet paid and estimates of remaining costs. These estimates are based on homebuilding and land development budgets that are assembled from historical experience and local market conditions. Actual results may differ from anticipated costs due to a variety of factors including, but not limited to, a change in the length of construction period, a change in cost of construction materials and contractors, and a change in housing demand. To mitigate these factors, we regularly review and revise our construction budgets and estimates of costs to complete.

     On a quarterly basis we assess each neighborhood and land investment, which include housing projects and land held for development and sale, in order to identify underperforming neighborhoods and to identify land investments that may not be recoverable through future operations. Each neighborhood is assessed as an individual project. This quarterly assessment is an integral part of our local market level processes. We measure the recoverability of assets by comparing the carrying amount of an asset to its estimated future undiscounted net cash flows. These evaluations are significantly impacted by the following key assumptions related to the project:

• estimates of average future selling prices,

• estimates of future construction and land development costs, and

• estimated future sales rates.

     These key assumptions are dependent on project specific local market (or neighborhood) conditions and are inherently uncertain. Local market-specific factors that may impact our project assumptions include:

• historical project results such as average sales price and sales rates, if closings have occurred in the project,

• competitors’ local market (or neighborhood) presence and their competitive actions,

• project specific attributes such as location desirability and uniqueness of product offering,

• potential for alternative product offerings to respond to local market conditions, and

• current local market economic and demographic conditions and related trends and forecasts.

     These and other factors are considered by our local personnel as they prepare or update the project level assumptions. The key assumptions included in our estimated future undiscounted net cash flows are interrelated. For example, a decrease in estimated sales price due to increased discounting may result in a complementary increase in sales rates. Based on the results of our assessments, if the carrying amount of the neighborhood exceeds the estimated undiscounted cash flows, an impairment is recorded to reduce the carrying value of the project to fair value. Fair value is determined based on discounted estimated cash flows for a neighborhood. Discount rates used in our evaluations are based on a risk free interest rate, increased for estimates of market risks associated with a neighborhood. Market risks considered in our discount rate include, among others:

• geographic location of project,

• product type (for example, multifamily high rise product or single family product),

• average sales price of the product, and

• estimated project life.

     For the quarter ended March 31, 2008, discount rates used in our estimated discounted cash flow assessments ranged from 12% to 20%, with an average discount rate of 15%.

     Our quarterly assessments reflect management’s estimates, which we believe are reasonable; however, if homebuilding market conditions continue to deteriorate, or if the current challenging market conditions continue for an extended period, future results could differ materially from management’s judgments and estimates.

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Land Held Under Option Agreements Not Owned and Other Land Deposits

     Under certain land option agreements with unaffiliated entities, we pay a stated deposit in consideration for the right to purchase land at a future time, usually at predetermined prices. We evaluate these entities in accordance with the provisions of FIN 46 which require us to consolidate the financial results of a variable interest entity if we are its primary beneficiary. 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. If we determine that we are the primary beneficiary, we consolidate the assets and liabilities of the variable interest entity.

     We determine if we are the primary beneficiary 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 our estimates of the variability and probabilities of future land prices and the probabilities of expected cash flows and entitlement risks related to the underlying land, among other factors. We perform our analysis at the inception of each lot option agreement. Local market personnel are actively involved in our evaluation, including the development of our estimates of expected gains and losses of the variable interest entity. To the extent an option agreement is significantly modified or amended, the agreement is reevaluated pursuant to FIN 46. Based on our evaluation, if we are the primary beneficiary of those entities for which we have entered into land option agreements, the variable interest entity is consolidated. 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 (C), “Inventories,” of the Notes to Consolidated Financial Statements for further discussion on the results of our analysis of land option agreements.

     In addition to land options recorded pursuant to FIN 46, we evaluate land options in accordance with the provisions of SFAS No. 49, “Product Financing Arrangements.” When our deposits and pre-acquisition development costs exceed certain thresholds, or we have determined it is likely we will exercise our option, 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 to accrued liabilities.

     In addition to the land options recorded pursuant to FIN 46 and SFAS No. 49 discussed above, we have other land option deposits for which the underlying asset is not consolidated. These land option agreements and related pre-acquisition costs are capitalized in accordance with SFAS No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects.”

     Land option deposits (including those consolidated) and pre-acquisition costs are expensed if the option agreement terminates, is in default, expires by its terms or if we determine it is probable that the property will not be acquired. On a periodic basis, we assess the probability of acquiring the land we control under option agreements. This assessment is performed for each option agreement by local market personnel. The key factors that impact our assessment include:

• local market housing inventory levels for both existing and new homes,

• our existing local supply of owned and controlled lots,

• contract purchase price and terms,

• evaluation of local regulatory environment and, if not fully entitled, likelihood of obtaining required approvals, and

• local market economic and demographic factors such as job growth, long- and short-term interest rates, consumer confidence, population growth and immigration.

Goodwill

     Goodwill represents the excess of purchase price over net assets of businesses acquired. Goodwill is tested for impairment at the reporting unit level on an annual basis (at January 1) or when management determines that due to certain circumstances the carrying amount of goodwill may not be recoverable. Goodwill is tested for impairment using a two-step process with the first step comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount exceeds the fair value, the second step is performed to measure the amount

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of impairment loss to be recognized defined as the carrying value of the reporting unit goodwill that exceeds the implied fair value of that goodwill.

     We periodically 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. Key assumptions utilized in our discounted cash flow model include estimated future sales levels, estimated costs of sales, varying discount rates and working capital constraints as they principally relate to estimated future inventory levels. Material variations of these assumptions may have a significant impact to the carrying value of goodwill.

     For the year ended March 31, 2008, we recorded $78.2 million in goodwill impairments. We had no impairments of goodwill for the years ended March 31, 2007 and 2006. Please refer to Note (E), “Goodwill,” of the Notes to Consolidated Financial Statements for additional information on our goodwill impairments.

Warranty Accruals

     Home Building offers a ten-year limited warranty for most homes constructed and sold. The warranty covers defects in materials or workmanship in the first two years of the 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 Sheets to be adequate, there can be no assurance that this accrual will prove to be sufficient over time to cover ultimate losses.

Insurance Accruals

     We have certain self-insured retentions and deductible limits under our workers’ compensation, automobile and general liability insurance policies. We establish reserves for our self-insured retentions and deductible limits based on an analysis of historical claims and an estimate of claims incurred but not yet reported. Projection of losses concerning these liabilities is subject to a high degree of variability due to factors such as claim settlement patterns, litigation trends and legal interpretations, among others. On an annual basis, we engage actuaries to assist in the evaluation and development of claim rates and required reserves for self insurance including reserves related to construction defects and general liability claims. 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 Sheets to be adequate, there can be no assurance that this accrual will prove to be sufficient over time to cover ultimate losses.

Income Taxes

     We account for income taxes on the deferral method whereby deferred tax assets and liabilities are provided for the tax effect of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

     In accordance with the provisions of SFAS 109, we assess, on a quarterly basis, the realizability of our deferred tax assets. A valuation allowance must be established when, based upon the evaluation of all available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies and reversals of existing taxable temporary differences. SFAS 109 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. Please refer to Note (J), “Income Taxes,” of the Notes to Consolidated Financial Statements regarding our valuation allowance.

     On April 1, 2007, we adopted FIN 48. The cumulative effect of the adoption of FIN 48 was recorded as a $208.3 million reduction to beginning retained earnings in the first quarter of fiscal year 2008. For further discussion regarding the adoption of FIN 48, please refer to Note (J), “Income Taxes,” of the Notes to Consolidated Financial Statements.

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     In accordance with the provisions of FIN 48, we recognize in our financial statements the impact of tax return positions or future tax positions if it is more likely than not to prevail (defined as a likelihood of more than fifty percent of being sustained upon audit, based on the technical merits of the tax position). Tax positions that meet the more likely than not threshold are measured (using a probability weighted approach) at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement.

     Prior to the adoption of FIN 48, we applied SFAS No. 5, “Accounting for Contingencies,” to assess and provide for potential income tax exposures. In accordance with SFAS No. 5, we maintained reserves for tax contingencies based on reasonable estimates of the tax liabilities, interest, and penalties (if any) that may result from tax audits. FIN 48 substantially changes the applicable accounting model and is likely to cause greater volatility in income statements and effective tax rates as more items are recognized and/or derecognized discretely within income tax expense.

     The federal statute of limitations has expired for our federal tax returns filed for tax years through March 31, 2000. In July 2007, we received a revenue agent’s report from the Internal Revenue Service, or IRS, relating to the ongoing audit of our federal income tax returns for fiscal years 2001 through 2004. We believe that our tax return positions are supported and will vigorously dispute the proposed adjustments. The IRS has commenced an examination of our federal income tax returns for fiscal years 2005 and 2006. The estimated liability for unrecognized tax benefits is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, certain changes and/or developments with respect to audits, and expiration of the statute of limitations. The outcome for a particular audit cannot be determined with certainty prior to the conclusion of the audit and, in some cases, appeal or litigation process. The actual benefits ultimately realized may differ from our estimates. As each audit is concluded, adjustments, if any, are appropriately recorded in our financial statements. Additionally, in future periods, changes in facts, circumstances, and new information may require us to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the change occurs.

RECENT ACCOUNTING PRONOUNCEMENTS

     In September 2006, the FASB issued SFAS No. 157, or SFAS 157, “Fair Value Measurements,” that serves to define fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 will be effective for us as of April 1, 2008. However, in February 2008, the FASB issued FASB Staff Position, or FSP, FAS 157-2 which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of items to which this FSP applies include, but are not limited to, reporting units measured at fair value in the first step of a goodwill impairment test and long-lived assets (asset groups) measured at fair value for an impairment assessment (i.e. inventory impairment assessments). This FSP defers the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities for us to April 1, 2009. We do not expect the adoption of SFAS 157 related to financial assets and financial liabilities to have a material impact on our results of operations or financial position. We are currently evaluating the impact, if any, of SFAS 157 related to nonfinancial assets and nonfinancial liabilities on our results of operations or financial position.

     In February 2007, the FASB issued SFAS No. 159, or SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” Under the provisions of SFAS 159, companies may elect to measure specified financial instruments, warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings. The election, called the “fair value option,” will enable some companies to reduce the volatility in reported earnings caused by measuring related assets and liabilities differently, and it is simpler than using the complex hedge-accounting requirements in FASB Statement No. 133, or SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” to achieve similar results. SFAS 159 will be effective for us as of April 1, 2008. We do not expect the adoption of SFAS 159 to have a material impact on our results of operations or financial position.

     In November 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 109, or SAB 109, “Written Loan Commitments Recorded at Fair Value Through Earnings.” SAB 109 required that the expected net future cash flows related to the associated servicing of a loan be included in the measurement of all written loan commitments that were accounted for at fair value through earnings. The provisions of SAB 109 were applicable to written loan commitments issued or modified beginning January 1, 2008. We adopted SAB 109 in the fourth quarter of fiscal year 2008, and it did not have a material impact on our results of operations or financial position.

58

     In December 2007, the FASB issued SFAS No. 160, or SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51.” Under the provisions of SFAS 160, a noncontrolling interest in a subsidiary, or minority interest, must be classified as equity and the amount of consolidated net income specifically attributable to the minority interest must be clearly identified in the statement of consolidated earnings. SFAS 160 also requires consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling interest retained in a deconsolidation. SFAS 160 will be effective for us as of April 1, 2009. We do not expect the adoption of SFAS 160 to have a material impact on our 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 mortgage loans receivable. We utilize derivative instruments, including interest rate swaps, in conjunction with our overall strategy to manage the outstanding debt that is subject to changes in interest rates. We utilize forward sale commitments to mitigate the risk associated with the majority of our mortgage loan portfolio. Other than the forward commitments and interest rate swaps discussed earlier, we do not utilize forward or option contracts on foreign currencies or commodities, or other types of derivative financial instruments. The following analysis provides a framework to understand our sensitivity to hypothetical changes in interest rates as of March 31, 2008.

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, 2008, short-term debt was $341.1 million, most of which was applicable to Financial Services. Financial Services’ debt is collateralized by mortgage loans. We borrow on a short-term basis under our committed revolving credit facility at prevailing market rates. The weighted-average interest rate on short-term borrowings outstanding at March 31, 2008 was 3.65%.

     The maturities of Centex’s long-term debt outstanding at March 31, 2008 were as follows:

	Maturities through March 31,
	2009			2010			2011			2012			2013			Thereafter			Total			Fair Value
Centex (1)
Fixed-Rate Debt	$	151,091		$	225,101		$	700,104		$	349,321		$	315,135		$	1,580,365		$	3,321,117		$	2,871,378
Average Interest Rate		4.90	%		5.80	%		6.45	%		7.50	%		5.45	%		5.71	%		6.00	%

(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, 2007 were as follows:

	Maturities through March 31,
	2008			2009			2010			2011			2012			Thereafter			Total			Fair Value
Centex (1)
Fixed-Rate Debt	$	335,083		$	150,091		$	225,101		$	700,101		$	349,111		$	1,950,490		$	3,709,977		$	3,654,121
Average Interest Rate		4.83	%		4.88	%		5.80	%		6.45	%		7.50	%		5.67	%		5.89	%
Variable-Rate Debt	$	190,333		$	—		$	—		$	—		$	—		$	—		$	190,333		$	192,378
Average Interest Rate		5.70	%		—			—			—			—			—			5.70	%

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

Financial Services

     Financial Services enters into interest rate lock commitments, or IRLCs, with its customers under which it agrees to make mortgage loans at agreed upon rates within a period of time, generally from one to 30 days, if certain conditions are met. Initially, the IRLCs are treated as derivative instruments and their fair value is recorded on the balance sheet in other assets or accrued liabilities. The fair value of these loan commitment derivatives includes future cash flows related to the associated servicing of the loan, but does not include the value of any internally-developed intangible assets. Subsequent changes in the fair value of the IRLCs are recorded as an adjustment to earnings.

59

     To offset the interest rate risk related to its IRLCs, Financial Services executes forward trade commitments. Certain forward trade commitments are not designated as hedges under SFAS 133 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.

     Financial Services 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. 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 no impact to earnings. To the extent the hedge contains some ineffectiveness, the ineffectiveness is recognized immediately in earnings.

60

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Information	Page
Statements of Consolidated Earnings		62
Consolidated Balance Sheets with Consolidating Details		63
Statements of Consolidated Cash Flows with Consolidating Details		65
Statements of Consolidated Stockholders’ Equity		67
Notes to Consolidated Financial Statements		69
Report of Independent Registered Public Accounting Firm		102
Management’s Report on Internal Control Over Financial Reporting		103
Report of Independent Registered Public Accounting Firm — Internal Control		104
Quarterly Results		105

61

Centex Corporation and Subsidiaries

Statements of Consolidated Earnings

(Dollars in thousands, except per share data)

	For the Years Ended March 31,
	2008			2007			2006
Revenues
Home Building	$	7,965,614		$	11,414,827		$	12,272,203
Financial Services		309,948			468,001			462,223
Other		—			4,773			8,240
		8,275,562			11,887,601			12,742,666
Costs and Expenses
Home Building		10,454,182			11,166,921			10,273,372
Financial Services		448,101			383,471			377,758
Other		(3,542	)		2,285			6,521
Corporate General and Administrative		154,308			185,585			279,172
Interest Expense		8,642			—			11,103
		11,061,691			11,738,262			10,947,926
Earnings (Loss) from Unconsolidated Entities		(128,902	)		(73,782	)		77,824
Other Income		39,873			31,229			8,174
Earnings (Loss) from Continuing Operations Before Income Taxes		(2,875,158	)		106,786			1,880,738
Income Tax (Benefit) Provision		(214,190	)		116,263			668,073
Earnings (Loss) from Continuing Operations		(2,660,968	)		(9,477	)		1,212,665
Earnings from Discontinued Operations, net of Tax Provision of $2,979, $171,023 and $78,016		3,486			277,843			76,648
Net Earnings (Loss)	$	(2,657,482	)	$	268,366		$	1,289,313
Basic Earnings (Loss) Per Share
Continuing Operations	$	(21.71	)	$	(0.08	)	$	9.56
Discontinued Operations		0.03			2.31			0.60
	$	(21.68	)	$	2.23		$	10.16
Diluted Earnings (Loss) Per Share
Continuing Operations	$	(21.71	)	$	(0.08	)	$	9.13
Discontinued Operations		0.03			2.31			0.58
	$	(21.68	)	$	2.23		$	9.71
Average Shares Outstanding
Basic		122,577,071			120,537,235			126,870,887
Dilutive Securities:
Options		—			—			5,420,789
Other		—			—			458,121
Diluted		122,577,071			120,537,235			132,749,797
Cash Dividends Per Share	$	0.16		$	0.16		$	0.16

See Notes to Consolidated Financial Statements.

62

Centex Corporation and Subsidiaries

Consolidated Balance Sheets with Consolidating Details

(Dollars in thousands)

	Centex Corporation and Subsidiaries
	March 31,
	2008			2007
Assets
Cash and Cash Equivalents	$	586,810		$	882,534
Restricted Cash		51,440			146,532
Receivables —
Mortgage Loans, net		515,880			1,710,348
Trade and Other, including Notes of $17,388 and $10,129		823,861			197,211
Inventories —
Housing Projects		4,628,860			8,474,883
Land Held for Development and Sale		558,756			158,212
Land Held Under Option Agreements Not Owned		147,792			282,116
Other		27,023			33,204
Investments —
Joint Ventures and Other		206,822			281,644
Unconsolidated Subsidiaries		—			—
Property and Equipment, net		77,931			134,741
Other Assets —
Deferred Income Taxes, net		191,246			500,703
Goodwill		51,622			130,453
Deferred Charges and Other, net		172,300			168,186
Assets of Discontinued Operations		96,989			99,166
	$	8,137,332		$	13,199,933
Liabilities and Stockholders’ Equity
Accounts Payable	$	259,170		$	518,421
Accrued Liabilities		1,805,519			1,802,540
Debt —
Centex		3,325,167			3,902,117
Financial Services		337,053			1,663,040
Payable from Affiliates		—			—
Liabilities of Discontinued Operations		34,001			24,609
Commitments and Contingencies
Minority Interests		77,761			176,937
Stockholders’ Equity —
Preferred Stock, Authorized 5,000,000 Shares, None Issued		—			—
Common Stock, $.25 Par Value; Authorized 300,000,000 Shares; Outstanding 123,278,881 and 119,969,733 Shares		31,763			31,041
Capital in Excess of Par Value		95,088			48,349
Retained Earnings		2,365,634			5,250,873
Treasury Stock, at Cost; 3,774,643 and 4,193,523 Shares		(193,824	)		(217,994	)
Total Stockholders’ Equity		2,298,661			5,112,269
	$	8,137,332		$	13,199,933

See Notes to Consolidated Financial Statements.

63

Centex Corporation and Subsidiaries

Consolidated Balance Sheets with Consolidating Details

(Dollars in thousands)

Centex*						Financial Services
March 31,						March 31,
2008			2007			2008			2007
$	562,766		$	870,468		$	24,044		$	12,066
	28,562			56,467			22,878			90,065
	—			—			515,880			1,710,348
	800,275			167,979			23,586			29,232
	4,628,860			8,474,883			—			—
	558,756			158,212			—			—
	147,792			282,116			—			—
	16,173			24,457			10,850			8,747
	206,822			281,644			—			—
	292,647			137,704			—			—
	65,298			117,772			12,633			16,969
	119,590			476,136			71,656			24,567
	42,670			121,501			8,952			8,952
	145,719			154,050			26,581			14,136
	96,989			99,166			—			—
$	7,712,919		$	11,422,555		$	717,060		$	1,915,082
$	250,096		$	507,694		$	9,074		$	10,727
	1,727,684			1,699,864			77,835			102,676
	3,325,167			3,902,117			—			—
	—			—			337,053			1,663,040
	—			—			43,463			(23,788	)
	34,001			24,609			—			—
	77,310			176,002			451			935
	—			—			—			—
	31,763			31,041			1			1
	95,088			48,349			478,467			275,467
	2,365,634			5,250,873			(229,284	)		(113,976	)
	(193,824	)		(217,994	)		—			—
	2,298,661			5,112,269			249,184			161,492
$	7,712,919		$	11,422,555		$	717,060		$	1,915,082

* 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.

64

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,
	2008			2007			2006
Cash Flows — Operating Activities
Net Earnings (Loss)	$	(2,657,482	)	$	268,366		$	1,289,313
Adjustments
Depreciation and Amortization		52,473			59,795			63,069
Stock-based Compensation		37,761			64,850			68,743
Provision for Losses on Mortgage Loans Held for Investment and Construction Loans		129,719			30,046			94,319
Impairments and Write-off of Assets		1,991,090			690,831			35,155
Deferred Income Tax Provision (Benefit)		409,765			(172,235	)		(127,699	)
Loss (Earnings) of Joint Ventures and Unconsolidated Subsidiaries		128,902			72,807			(78,323	)
Distributions of Earnings of Joint Ventures and Unconsolidated Subsidiaries		6,769			89,225			96,318
Minority Interest, net of Taxes		(484	)		(413	)		(315	)
Gain on Sale of Assets		(20,310	)		(482,331	)		(6,500	)
Changes in Assets and Liabilities, Excluding Effect of Acquisitions
Decrease (Increase) in Restricted Cash		26,911			11,233			(19,301	)
(Increase) Decrease in Trade Receivables, Notes and Other		(594,308	)		31,529			(93,049	)
Decrease (Increase) in Mortgage Loans Held for Sale		940,535			513,878			(194,379	)
Decrease (Increase) in Housing Projects and Land Held for Development
and Sale		1,460,404			(478,199	)		(2,482,554	)
Decrease (Increase) in Other Inventories		26,733			(3,114	)		(1,368	)
(Decrease) Increase in Accounts Payable and Accrued Liabilities		(493,337	)		220,992			635,629
Decrease (Increase) in Other Assets, net		34,825			33,100			(42,841	)
Increase (Decrease) in Payables to Affiliates		—			—			—
Other		668			(167	)		402
		1,480,634			950,193			(763,381	)
Cash Flows — Investing Activities
(Issuance of) Payments received on Notes Receivable		(7,254	)		21,768			25,174
(Increase) Decrease in Mortgage Loans Held for Investment		—			(292,448	)		952,449
(Increase) Decrease in Construction Loans		79,521			(91,722	)		(154,257	)
Investment in and Advances to Joint Ventures		(181,854	)		(268,206	)		(372,937	)
Distributions of Capital from Joint Ventures		126,236			158,658			218,544
(Increase) Decrease in Investment in and Advances to Unconsolidated Subsidiaries		—			—			—
Purchases of Property and Equipment, net		(6,638	)		(40,643	)		(92,234	)
Proceeds from Dispositions		26,861			606,759			327,415
Other		(4,270	)		(6,681	)		(3,893	)
		32,602			87,485			900,261
Cash Flows — Financing Activities
Decrease (Increase) in Restricted Cash		68,181			(53,522	)		(15,501	)
(Decrease) Increase in Short-term Debt, net		(1,262,744	)		(346,903	)		764,540
Proceeds from Land Financing Transaction, net		7,483			—			—
Centex
Issuance of Long-term Debt		—			500,695			972,028
Repayment of Long-term Debt		(581,378	)		(293,620	)		(343,322	)
Financial Services
Issuance of Long-term Debt		—			961,126			2,008,372
Repayment of Long-term Debt		(60,000	)		(746,680	)		(3,366,188	)
Proceeds from Stock Option Exercises		39,567			66,142			58,971
Purchases of Common Stock, net		(799	)		(271,022	)		(648,638	)
Dividends Paid and Capital Contributions Received		(19,462	)		(19,095	)		(20,294	)
		(1,809,152	)		(202,879	)		(590,032	)
Effect of Exchange Rate on Cash		—			—			(1,479	)
Net (Decrease) Increase in Cash and Cash Equivalents		(295,916	)		834,799			(454,631	)
Cash and Cash Equivalents at Beginning of Year (1)		882,754			47,955			502,586
Cash and Cash Equivalents at End of Year (2)	$	586,838		$	882,754		$	47,955

See Notes to Consolidated Financial Statements.

(1)	Amount includes cash and cash equivalents of discontinued operations of $220, $4,630 and $6,192 as of March 31, 2007, 2006 and 2005, respectively.
(2)	Amount includes cash and cash equivalents of discontinued operations of $28, $220 and $4,630 as of March 31, 2008, 2007 and 2006, respectively.

65

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,
2008			2007			2006			2008			2007			2006
$	(2,657,482	)	$	268,366		$	1,289,313		$	(100,308	)	$	101,596		$	119,385
	46,307			51,491			48,081			6,166			8,304			14,988
	37,761			64,850			68,743			—			—			—
	—			—			—			129,719			30,046			94,319
	1,991,090			683,912			35,155			—			6,919			—
	456,854			(243,664	)		(55,196	)		(47,089	)		71,429			(72,503	)
	229,210			(28,789	)		(197,708	)		—			—			—
	21,769			685,005			169,065			—			—			—
	—			(175	)		(126	)		(484	)		(238	)		(189	)
	(20,310	)		(349,524	)		(6,500	)		—			(132,807	)		—
	27,905			14,261			(17,485	)		(994	)		(3,028	)		(1,816	)
	(624,789	)		25,614			(88,073	)		30,481			5,915			(4,976	)
	—			—			—			940,535			513,878			(194,379	)
	1,460,404			(478,199	)		(2,482,554	)		—			—			—
	8,978			(621	)		(1,420	)		17,755			(2,493	)		52
	(466,843	)		212,157			622,375			(26,494	)		133			13,744
	47,270			25,599			(51,364	)		(12,445	)		7,501			8,523
	—			—			—			67,251			(26,471	)		35,848
	668			(167	)		402			—			—			—
	558,792			930,116			(667,292	)		1,004,093			580,684			12,996
	(7,254	)		21,662			24,937			—			106			237
	—			—			—			—			(292,448	)		952,449
	—			—			—			79,521			(91,722	)		(154,257	)
	(181,854	)		(268,206	)		(372,937	)		—			—			—
	126,236			158,658			218,544			—			—			—
	(270,251	)		23,378			(36,338	)		—			—			—
	(4,808	)		(33,404	)		(80,595	)		(1,830	)		(7,239	)		(11,639	)
	26,861			150,713			327,415			—			467,841			—
	(4,270	)		(6,681	)		(3,893	)		—			—			—
	(315,340	)		46,120			77,133			77,691			76,538			786,790
	—			—			—			68,181			(53,522	)		(15,501	)
	3,243			(125,359	)		119,296			(1,265,987	)		(221,544	)		645,244
	7,483			—			—			—			—			—
	—			500,695			972,028			—			—			—
	(581,378	)		(293,620	)		(343,322	)		—			—			—
	—			—			—			—			961,126			2,008,372
	—			—			—			(60,000	)		(746,680	)		(3,366,188	)
	39,567			66,142			58,971			—			—			—
	(799	)		(271,022	)		(648,638	)		—			—			—
	(19,462	)		(19,095	)		(20,294	)		188,000			(595,780	)		(72,747	)
	(551,346	)		(142,259	)		138,041			(1,069,806	)		(656,400	)		(800,820	)
	—			—			(1,479	)		—			—			—
	(307,894	)		833,977			(453,597	)		11,978			822			(1,034	)
	870,688			36,711			490,308			12,066			11,244			12,278
$	562,794		$	870,688		$	36,711		$	24,044		$	12,066		$	11,244

* 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 consolidated cash flows.

66

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, 2005		127,729		$	33,327		$	407,995		$	(197	)
Issuance of Restricted Stock and Stock Units		686			62			(12,436	)		—
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		(9,285	)		—			—			—
Other Stock Transactions		4			—			215			—
Net Earnings		—			—			—			—
Unrealized Gain on Hedging Instruments		—			—			—			—
Foreign Currency Translation Adjustments (1)		—			—			—			—
Comprehensive Income
Balance, March 31, 2006		122,104			34,132			580,010			—
Issuance of Restricted Stock and Stock Units		513			30			(29,366	)		—
Stock Compensation		—			—			64,850			—
Exercise of Stock Options, Including Tax Benefits		2,507			627			76,629			—
Cash Dividends		—			—			—			—
Purchases of Common Stock for Treasury		(5,159	)		—			—			—
Retirement of Treasury Stock		—			(3,750	)		(645,059	)		—
Other Stock Transactions		5			2			1,285			—
Net Earnings		—			—			—			—
Unrealized Gain on Hedging Instruments (2)		—			—			—			—
Foreign Currency Translation Adjustments		—			—			—			—
Comprehensive Income
Balance, March 31, 2007		119,970			31,041			48,349			—
Adoption of FIN 48		—			—			(4,898	)		—
Issuance of Restricted Stock and Stock Units		607			40			(32,373	)		—
Stock Compensation		—			—			37,761			—
Exercise of Stock Options, Including Tax Benefits		2,724			681			46,067			—
Cash Dividends		—			—			—			—
Purchases of Common Stock for Treasury		(28	)		—			—			—
Other Stock Transactions		6			1			182			—
Net Loss		—			—			—			—
Balance, March 31, 2008		123,279		$	31,763		$	95,088		$	—

See Notes to Consolidated Financial Statements.

(1)	Amount includes a reclassification adjustment of $48,354, net of tax, for foreign currency translation adjustments included in earnings from discontinued operations.
(2)	Amount includes a reclassification adjustment of $15,738, net of tax, for hedging gain included in earnings from discontinued operations.

67

Centex Corporation and Subsidiaries

Statements of Consolidated Stockholders’ Equity

(in thousands)

						Accumulated
			Treasury			Other
Retained			Stock			Comprehensive
Earnings			at Cost			Income (Loss)			Total
$	3,982,306		$	(213,801	)	$	71,127		$	4,280,757
	—			7,142			—			(5,232	)
	—			—			—			68,743
	—			—			—			116,433
	(20,294	)		—			—			(20,294	)
	—			(655,780	)		—			(655,780	)
	—			—			—			215
	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
	(1,926	)		18,861			—			(12,401	)
	—			—			—			64,850
	—			—			—			77,256
	(19,095	)		—			—			(19,095	)
	—			(271,022	)		—			(271,022	)
	(247,797	)		896,606			—			—
	—			—			—			1,287
	268,366			—			—			268,366
	—			—			(8,702	)		(8,702	)
	—			—			72			72
										259,736
	5,250,873			(217,994	)		—			5,112,269
	(208,295	)		—			—			(213,193	)
	—			24,969			—			(7,364	)
	—			—			—			37,761
	—			—			—			46,748
	(19,462	)		—			—			(19,462	)
	—			(799	)		—			(799	)
	—			—			—			183
	(2,657,482	)		—			—			(2,657,482	)
$	2,365,634		$	(193,824	)	$	—		$	2,298,661

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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 (C), “Inventories,” and Note (F), “Indebtedness.” 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.

     Certain operations have been classified as discontinued. For additional information, refer to Note (O), “Discontinued Operations.” Associated results of operations and financial position are separately reported for all periods presented. Information in these Notes to Consolidated Financial Statements, unless otherwise noted, does 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, there are no significant obligations on the part of the seller, and the buyer’s commitment to pay is supported by a substantial initial and continuing investment in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 66, “Accounting for Sales of Real Estate” (“SFAS 66”). For home closings that do not meet the minimum investment criteria under SFAS 66, the Company records such closings under the cost recovery method. Under this method, the gross profit is deferred until sufficient cash has been paid by the buyer or the loan is sold to a third-party. 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 receivable 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, mortgage broker and other services performed in connection with mortgage lending activities, are recognized as earned.

     Interest revenues on mortgage loans receivable are recognized as revenue using the interest (actuarial) method. Interest accruals are suspended, except for interest accruals related to insured mortgage loans, when the mortgage loan becomes contractually delinquent for 90 days or more. The accrual is resumed when the mortgage loan becomes less than 90 days contractually delinquent. At March 31, 2008 and 2007, mortgage loans, on which revenue was not being accrued, were $162.9 million and $37.8 million, respectively.

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Sales Discounts and Incentives

     Sales discounts and incentives include items such as cash discounts, discounts on options included in the home, option upgrades (such as upgrades for cabinetry, carpet and flooring), and seller-paid financing or closing costs. In addition, from time to time, the Company may also provide homebuyers with retail gift certificates and/or other nominal retail merchandise. Cash discounts are accounted for as a reduction in the sales price of the home. All other sales incentives are recognized as a cost of selling the home.

Advertising Costs

     Advertising costs are expensed as incurred. Advertising costs for the years ended March 31, 2008 and 2007 and 2006 (“fiscal year 2008,” “fiscal year 2007” and “fiscal year 2006”) were $101.4 million, $138.9 million and $114.3 million, respectively.

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 or otherwise charged to costs and expenses. In prior years, the Company’s inventory subject to interest capitalization exceeded its debt levels. Due to the reduction in homebuilding inventories, the Company’s debt level exceeded its inventory subject to capitalization during the year the ended March 31, 2008. As a result, a portion of the interest incurred during the year ended March 31, 2008 was charged directly to interest expense.

	For the Years Ended March 31,
	2008			2007			2006
Total Interest Incurred	$	285,960		$	483,342		$	674,351
Less — Interest Capitalized		(222,938	)		(284,181	)		(227,246	)
Financial Services’ Interest Expense		(54,380	)		(90,328	)		(65,904	)
Discontinued Operations (1)		—			(108,833	)		(370,098	)
Interest Expense, net	$	8,642		$	—		$	11,103
Capitalized Interest Charged to Home Building’s Costs and Expenses	$	312,665		$	237,539		$	169,887

(1) Includes the Company’s home services operations, Home Equity, and the Company’s international homebuilding operations.

Income Taxes

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

     On April 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109,” (“FIN 48”). The cumulative effect of the adoption of FIN 48 was recorded as a $208.3 million reduction to beginning retained earnings in the first quarter of fiscal year 2008. Please refer to Note (J), “Income Taxes,” for additional information relating to the adoption of FIN 48.

     In accordance with the provisions of FIN 48, the Company recognizes in its financial statements the impact of tax return positions or future tax positions if it is more likely than not to prevail (defined as a likelihood of more than fifty percent of being sustained upon audit, based on the technical merits of the tax position). Tax positions that meet

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the more likely than not threshold are measured (using a probability weighted approach) at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement.

     The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the financial statements as a component of the income tax provision, which is consistent with the Company’s historical accounting policy. The Company’s liability for unrecognized tax benefits, combined with accrued interest and penalties, is reflected as a component of accrued liabilities.

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

     Prior to the adoption of FIN 48, the Company applied SFAS No. 5, “Accounting for Contingencies” (“SFAS 5”), to assess and provide for potential income tax exposures. In accordance with SFAS 5, the Company maintained reserves for tax contingencies based on reasonable estimates of the tax liabilities, interest, and penalties (if any) that may result from tax audits. FIN 48 substantially changes the applicable accounting model and is likely to cause greater volatility in the income statements and effective tax rates as more items are recognized and/or derecognized discretely within income tax expense.

Earnings Per Share

     Basic earnings (loss) 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 restricted stock units under the long-term incentive plan. Diluted earnings (loss) 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 restricted stock units under the long-term incentive plan. Stock options, unvested shares of restricted stock and unvested restricted stock units under the long-term incentive plan are not considered in the diluted earnings (loss) per share calculation when the Company has a loss from continuing operations.

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 requirements, (2) customer deposits that are temporarily restricted in accordance with regulatory requirements, and (3) required cash balances for structured finance arrangements. Cash restricted pursuant to insurance related regulatory requirements includes the restricted cash of the Company’s title, property and casualty insurance operations, the restricted cash of a subsidiary that issues surety bonds, and cash restricted pursuant to the Company’s casualty insurance. Customer deposits are restricted as certain states, in which the Company operates, require it to restrict customers’ cash deposits until a home is closed. The Company is also required to restrict cash it receives from customers for future mortgage origination costs, including credit report fees and appraisal fees. The changes in these restricted cash balances are directly related to the Company’s operations and are therefore, classified as operating activity in the Statements of Consolidated Cash Flows.

     The restricted cash balances associated with structured finance arrangements represent cash collateral associated with the Company’s warehoused mortgage loans. The changes in these restricted cash balances are reflected as financing activity in the Statements of Consolidated Cash Flows.

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Mortgage Loans

     Mortgage loans receivable consist of mortgage loans held for sale and other mortgage loans, net of their related allowances. Mortgage loans held for sale represent mortgage loans originated by Financial Services, which will be sold to third parties. The carrying value of these 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 held for sale 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 held for sale are pledged as collateral for secured financings.

     Financial Services has established a liability for anticipated losses associated with mortgage loans originated and sold based upon, among other things, historical loss rates and current trends in loan originations. This liability includes losses and settlements 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.

     Financial Services also holds other mortgage loans, which are carried at cost, net of their related allowance. Other mortgage loans include performing and nonperforming construction loans and other nonperforming mortgage loans. During the year ended March 31, 2008, Financial Services ceased originating new construction loans. Under its discontinued construction loan program, Financial Services entered into an agreement to finance a specified amount for the construction of a home. As the construction of the home progressed, the borrower draws on the committed amount. These loans were intended to be modified into a permanent loan (i.e., a mortgage loan held for sale) once the total committed amount was funded. Financial Services will continue to fulfill its existing funding commitments.

     Financial Services also periodically reviews its construction loan commitments for collectibility. To establish the appropriate allowance, Financial Services first classifies its construction loans into risk categories. These categories are based on, among other things, the loan product, the borrower’s credit profile, the draw activity on the loan, the loan delinquency rate, and the historical realization on construction loans. Each category of loans is then evaluated for potential credit and market-related risks. The allowance for loans Financial Services expects to convert to permanent loans that will be held for sale is based on the estimated market value of the loans. The allowance for loans Financial Services expects to eventually default is based on the credit risk of the loan.

     From time to time, Financial Services will be required to repurchase certain loans it originated and sold to third parties under the representations and warranty provisions in its loan sale agreements. If a repurchased loan is performing, it is classified as a mortgage loan held for sale and will most likely be sold to a third party. If a repurchased loan is nonperforming, the loan and its related allowance are classified as other mortgage loans. In addition, Financial Services will foreclose on certain nonperforming construction loans. Financial Services establishes an allowance for loans in foreclosure based on its historical loss experience and current loss trends. Please refer to Note (B), “Mortgage Loans,” for additional information on Financial Services’ other mortgage loans and the related allowance as of March 31, 2008 and 2007.

     If a nonperforming loan becomes current, it is reclassified to mortgage loans held for sale. On all other nonperforming loans, Financial Services proceeds to foreclose on the loan. Once Financial Services has received title to the underlying collateral through the foreclosure process, Financial Services classifies the loan amount, net of its allowance, as real-estate owned. Financial Services establishes an allowance for real-estate owned based upon the estimated value of the property. Real-estate owned is reflected as a component of other inventory. At March 31, 2008 and 2007, real-estate owned was $10.9 million and $8.7 million, respectively, which were net of allowances of $12.8 million and $2.7 million, respectively.

     Although Financial Services considers its mortgage loan allowances and related reserves reflected in the Consolidated Balance Sheets at March 31, 2008 to be adequate, there can be no assurance that these allowances and related reserve will prove to be sufficient over time to cover ultimate losses in connection with its loan originations. These allowances and related reserve may prove to be inadequate due to unanticipated adverse changes in the economy, the mortgage market, or discrete events adversely affecting specific customers.

Trade Accounts and Notes Receivable

     Trade accounts receivable primarily consist of income taxes receivable, insurance claims receivable, funds in transit or in escrow for homes closed and vendor rebate receivables and are net of an allowance for doubtful accounts. The allowance for doubtful accounts was $40.6 million and $9.1 million as of March 31, 2008 and 2007, respectively.

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Notes receivable at March 31, 2008 are collectible primarily over four years with $5.3 million being due within one year.

Housing Projects

     Housing projects are stated at cost (including land acquisition and development, direct construction, capitalized interest and real estate taxes), net of any impairment. 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. Housing projects include direct construction costs and land under development. A summary of these amounts is included in Note (C), “Inventories.”

     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. Allocated land acquisition and development costs are estimated based on the total costs expected in a project. Direct construction also includes amounts paid through the closing date of the home for construction materials and contractor 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; however, such costs are charged to expense for neighborhoods where all or substantially all homes have already been closed. Land acquisition and land development costs are included in land under development.

Land Held for Development and Sale

     Land held for development and sale is stated at cost, net of impairment. Land option agreements and related pre-acquisition costs are capitalized in accordance with SFAS No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects.” Land held for development and sale consists of owned land that is currently not being developed and is not anticipated to be developed for at least two years, land held for sale, deposits for land purchases and related acquisition costs. Carrying costs for land held for development and sale such as property taxes and insurance are expensed as incurred. The Company enters into certain land option purchase agreements with unaffiliated entities. Under certain land 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. To the extent the Company does not exercise its 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 the Company’s maximum exposure to loss except in certain circumstances, which would not be material.

     Land option deposits (including those consolidated and included in land held under option agreements not owned) and pre-acquisition costs are expensed if the option agreement terminates, is in default, expires by its terms or if the Company determines it is probable that the property will not be acquired. On a periodic basis, the Company assesses the probability of acquiring the land it controls under option agreements. This assessment is performed for each option agreement by local market personnel. The key factors that impact the Company’s assessment include:

• local market housing inventory levels for both existing and new homes,

• the Company’s existing local supply of owned and controlled lots,

• contract purchase price and terms,

• the availability of other or more desirable land in the local markets,

• evaluation of local regulatory environment and, if not fully entitled, likelihood of obtaining required approvals, and

• local market economic and demographic factors such as job growth, long- and short-term interest rates, consumer confidence, population growth and immigration.

     During the years ended March 31, 2008, 2007 and 2006, $120.4 million, $360.0 million and $35.2 million, respectively, of land deposits and related pre-acquisition costs were written off to cost of land sales and other.

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Land Held Under Option Agreements Not Owned and Other Land Deposits

     The Company has evaluated those entities with which the Company entered into land option agreements in accordance with the provisions of 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. 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. If the Company determines that it is the primary beneficiary, the Company consolidates the assets and liabilities of the variable interest entity.

     The Company determines if it is the primary beneficiary 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 prices and the probabilities of expected cash flows and entitlement risks related to the underlying land, among other factors. The Company performs its analysis at the inception of each lot option agreement. Local market personnel are actively involved in the evaluation, including the development of management’s estimates of expected gains and losses of the variable interest entity. To the extent an option agreement is significantly modified or amended, the agreement is reevaluated pursuant to FIN 46. Based on its evaluation, if the Company is the primary beneficiary of those entities for which it has entered into land option agreements, the variable interest entity is consolidated. To the extent financial statements or other information is 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. See Note (C), “Inventories,” for further discussion on the results of the Company’s analysis of land option agreements.

     In addition to land options consolidated pursuant to FIN 46, the Company evaluates land options in accordance with the provisions of SFAS No. 49, “Product Financing Arrangements” (“SFAS 49”). When the Company’s deposits and pre-acquisition development costs exceed certain thresholds, or the Company has determined it is likely it will exercise its option, 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 to accrued liabilities.

Investments in Joint Ventures

     The Company is a participant in certain joint ventures with interests ranging from 5.0% 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 its share of intercompany profits from joint ventures until realized in a third party transaction. For the year ended March 31, 2008, the Company did not defer any profits associated with its purchases from joint ventures. For the years ended March 31, 2007 and 2006, the Company deferred $20.9 million and $26.9 million, respectively, related to profits associated with the Company’s land purchases from joint ventures.

     For the years ended March 31, 2008 and 2007, loss from unconsolidated entities includes $100.5 million and $124.5 million, respectively, of the Company’s share of joint ventures’ impairments. There were no significant joint venture impairments recorded in the year ended March 31, 2006.

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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. The depreciable life for Buildings and Improvements is typically 20 years; depreciable lives for Machinery, Equipment and Other typically range from three to five 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 SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). Land held for development and sale includes the purchase price plus any land development incurred to date, capitalized interest, real estate taxes, deposits and pre-acquisition costs. SFAS 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, sales rates 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. Fair value of housing projects, land held for development and sale and property, plant and equipment is determined primarily based on estimated cash flows discounted for market risks associated with the long-lived assets. The Company recorded $1,792.4 million and $323.9 million in land-related impairments to housing projects and land held for development and sale during the years ended March 31, 2008 and 2007, respectively. No significant land-related impairments were recorded during the year ended March 31, 2006. See Note (C), “Inventories,” for a discussion of land option write-offs.

Goodwill

     Goodwill represents the excess of purchase price over net assets of businesses acquired. Goodwill is tested for impairment at the reporting unit level on an annual basis (at January 1) or when management determines that due to certain circumstances the carrying amount of goodwill may not be recoverable. Goodwill is tested for impairment using a two-step process with the first step comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount exceeds the fair value, the second step is performed to measure the amount of impairment loss to be recognized defined as the carrying value of the reporting unit goodwill that exceeds the implied fair value of that goodwill.

     The Company periodically evaluates 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. Key assumptions utilized in the Company’s discounted cash flow model include estimated future sales levels, estimated costs of sales, varying discount rates and working capital constraints as they principally relate to estimated future inventory levels. Material variations of these assumptions may have a significant impact to the carrying value of goodwill.

     For the year ended March 31, 2008, the Company recorded $78.2 million of goodwill impairments. The Company had no impairment of goodwill in fiscal years 2007 or 2006. Please refer to Note (E), “Goodwill,” for additional information on the Company’s goodwill impairments.

Deferred Charges and Other

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

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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 (G), “Commitments and Contingencies.”

Insurance Accruals

     The Company has certain self-insured retentions and deductible limits under its workers’ compensation, automobile and general liability insurance policies. The Company establishes reserves for its self-insured retentions and deductible limits based on an analysis of historical claims and an estimate of claims incurred but not yet reported. Projection of losses concerning these liabilities is subject to a high degree of variability due to factors such as claim settlement patterns, litigation trends and legal interpretations, among others. On an annual basis, the Company engages actuaries to assist in the evaluation and development of claim rates and required reserves for self insurance including reserves related to construction defects and general liability claims. The Company periodically assesses the adequacy of its insurance accruals and adjusts the amounts as necessary. Although the Company considers the insurance accruals reflected in its Consolidated Balance Sheets to be adequate, there can be no assurance that this accrual will prove to be sufficient over time to cover ultimate losses. Expenses associated with insurance claims up to the Company’s deductible limits were $47.0 million, $51.4 million and $60.7 million for fiscal years 2008, 2007 and 2006, respectively. As of March 31, 2008 and 2007, accrued insurance included in accrued liabilities in the accompanying Consolidated Balance Sheets was $221.0 million and $179.2 million, respectively.

Stock-Based Employee Compensation Arrangements

     Prior to January 1, 2006, the Company accounted for its stock-based compensation arrangements in accordance with the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” under which the Company recognized compensation expense of a stock option award over the vesting period based on the fair value of the award on the grant date. 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.

     The following information represents the Company’s grants of stock-based compensation to employees and directors during the years ended March 31, 2008 and 2007:

		Number of
		Shares		Fair Value
Period of Grant	Grant Type	Granted		of Grant
For the year ended March 31, 2007	Stock Options		1,420.3	$	28,603.0
	Stock Units		366.2	$	19,955.4
	Restricted Stock		121.2	$	6,379.9
For the year ended March 31, 2008	Stock Options		646.6	$	10,116.9
	Stock Units		283.3	$	11,901.2
	Restricted Stock		160.1	$	5,035.0

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

     In addition to the stock-based awards in the above table, the Company issued to officers and employees during the first quarter of fiscal year 2008 long-term performance awards that vest after three years with an initial aggregate value of $18.9 million. These awards will be settled in cash and adjusted based on the Company’s performance relative to its peers in earnings per share growth and return on equity, as well as changes in the Company’s stock price between the date of grant and the end of the performance period. At March 31, 2008, these awards were adjusted to an aggregate value of $8.9 million. In accordance with the provisions of SFAS 123(R), these awards are accounted for as liability awards for which compensation expense will be recognized over the vesting period with a corresponding increase in accrued liabilities.

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Statements of Consolidated Cash Flows — Supplemental Disclosures

     In accordance with the provisions of SFAS No. 95, “Statement of Cash Flows,” the Statements of Consolidated Cash Flows have not been restated for discontinued operations. For further information on the sale of the Company’s construction services operations (“Construction Services”), sub-prime lending operations (“Home Equity”) and international homebuilding operations, see Note (O), “Discontinued Operations.” As a result, all Construction Services and 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.

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

	For the Years Ended March 31,
	2008		2007		2006
Cash Paid for Interest (1)	$	280,649	$	469,133	$	656,525
Net Cash Paid for Taxes	$	164,037	$	325,224	$	772,153

(1) Amounts include capitalized interest.

     As explained in Note (C), “Inventories,” pursuant to the provisions of FIN 46, as of March 31, 2008 and 2007, the Company consolidated $75.3 million and $152.9 million, respectively, of land as inventory under the caption “land held under option agreements not owned.” The Company also recorded $38.1 million and $90.5 million as of March 31, 2008 and 2007, respectively, of lot option agreements for which the Company’s deposits exceeded certain thresholds.

     In addition to the items noted above, the Company’s adoption of FIN 48 was treated as a non-cash item in the Statements of Consolidated Cash Flows. The adoption of FIN 48 resulted in a $116.0 million increase to deferred income taxes, a $329.2 million increase in accrued liabilities and a $213.2 million reduction in stockholders’ equity in the first quarter of fiscal year 2008. Transfers of mortgage loans between categories (i.e., loans in foreclosure included in trade and other receivables, real-estate owned included in other inventories, etc.) have been treated as non-cash items.

Recent Accounting Pronouncements

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), that serves to define fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 will be effective for the Company as of April 1, 2008. However, in February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2 which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of items to which this FSP applies include, but are not limited to, reporting units measured at fair value in the first step of a goodwill impairment test and long-lived assets (asset groups) measured at fair value for an impairment assessment (i.e. inventory impairment assessments). This FSP defers the effective date for nonfinancial assets and nonfinancial liabilities of SFAS 157 for the Company to April 1, 2009. The adoption of SFAS 157 related to financial assets and financial liabilities is not expected to have a material impact on the Company’s results of operations or financial position. The Company is currently evaluating the impact, if any, of SFAS 157 related to nonfinancial assets and nonfinancial liabilities on the Company’s results of operations or financial position.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). Under the provisions of SFAS 159, companies may elect to measure specified financial instruments, warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings. The election, called the “fair value option,” will enable some companies to reduce the volatility in reported earnings caused by measuring related assets and liabilities differently, and it is simpler than using the complex hedge-accounting requirements in FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” to achieve similar results. SFAS 159 will be effective for the Company as of April 1, 2008. The Company does not expect the adoption of SFAS 159 to have a material impact on the Company’s results of operations or financial position.

     In November 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 109, “Written Loan Commitments Recorded at Fair Value Through Earnings” (“SAB 109”). SAB 109 required that the

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expected net future cash flows related to the associated servicing of a loan be included in the measurement of all written loan commitments that were accounted for at fair value through earnings. The provisions of SAB 109 were applicable to written loan commitments issued or modified beginning January 1, 2008. The Company adopted SAB 109 in the fourth quarter of fiscal year 2008, and it did not have a material impact on its results of operations or financial position.

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“SFAS 160”). Under the provisions of SFAS 160, a noncontrolling interest in a subsidiary, or minority interest, must be classified as equity and the amount of consolidated net income specifically attributable to the minority interest must be clearly identified in the statement of consolidated earnings. SFAS 160 also requires consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling interest retained in a deconsolidation. SFAS 160 will be effective for the Company as of April 1, 2009. The Company does not expect the adoption of SFAS 160 to have a material impact on its financial statements.

Reclassifications

     Certain prior year balances have been reclassified to be consistent with the March 31, 2008 presentation, including reclassification of the other mortgage loan allowance against the related mortgages, reclassification of certain inventory amounts from housing projects to other inventory, reclassification of nonperforming mortgage loans from trade receivable to other mortgage loans and reclassifications of discontinued operations.

(B) MORTGAGE LOANS

     Mortgage loans receivable consist of the following:

	As of March 31,
	2008		2007
Mortgage Loans Held for Sale, net of Allowance of $4,092 and $2,365	$	384,293	$	1,311,196
Other Mortgage Loans, net of Allowance of $151,604 and $12,513		131,587		399,152
Mortgage Loans Receivable, net	$	515,880	$	1,710,348

     For the years ended March 31, 2008 and 2007, the Company recorded provisions for losses on mortgage loans of $170.4 million and $11.8 million, respectively. As of March 31, 2008, Financial Services is committed, under existing construction loan agreements, to fund an additional $26.3 million. During the year ended March 31, 2008, Financial Services ceased originating new construction loans; however, it will fulfill its existing funding commitments.

(C) INVENTORIES

Housing Projects and Land Held for Development and Sale

     A summary of housing projects is provided below:

	As of March 31,
	2008		2007
Direct Construction	$	1,746,016	$	3,041,290
Land Under Development		2,882,844		5,433,593
Housing Projects	$	4,628,860	$	8,474,883

     For the year ended March 31, 2008, the Company recorded $1,792.4 million in land-related impairments due to challenging market conditions. For the year ended March 31, 2007, the Company recorded $323.9 million in land-related impairments. No significant land-related impairments were recorded for the year ended March 31, 2006. During the year ended March 31, 2008, 410 land-related impairments were recorded representing 296 neighborhoods and land investments, certain of which have been impaired more than once. Land-related impairments during the year ended March 31, 2007 represented 83 neighborhoods and land investments. During the fourth quarter of fiscal year

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2008, the Company recorded $300.0 million in impairments. At March 31, 2008, the remaining carrying value of neighborhoods and land investments for which an impairment was recorded in the quarter ended March 31, 2008 was $174.8 million.

Land Held Under Option Agreements Not Owned and Other Land Deposits

     The Company enters into land option purchase agreements. Under the option agreements, the Company pays a stated deposit or issues a letter of credit in consideration for the right to purchase land at a future time, usually at predetermined prices. These options generally do not contain performance requirements from the Company nor obligate the Company to purchase the land, and expire on various dates. At March 31, 2008, the Company had 145 land option agreements.

     In accordance with the provisions of FIN 46, the Company is the primary beneficiary of certain option agreements to purchase land, for which the remaining purchase price of the land was $75.3 million and $152.9 million as of March 31, 2008 and 2007, respectively. Land consolidated under FIN 46 is recorded under the caption “land held under option agreements not owned,” with a corresponding increase to minority interests. At March 31, 2008, 12 land option agreements were consolidated pursuant to FIN 46.

     In addition to land options recorded pursuant to FIN 46, the Company determined that 11 land option agreements represent financing arrangements pursuant to the provisions of SFAS 49, “Product Financing Arrangements” (“SFAS 49”). As a result, the Company recorded $38.1 million and $90.5 million as of March 31, 2008 and 2007, respectively, which represents the remaining purchase price of the land. Land consolidated pursuant to SFAS 49 is recorded under the caption “land held under option agreements not owned,” with a corresponding increase to accrued liabilities.

     A summary of the Company’s deposits for land options and the total purchase price of such options is provided below:

	As of March 31,
	2008		2007
Cash Deposits included in:
Land Held for Development and Sale	$	20,711	$	89,737
Land Held Under Option Agreements Not Owned		33,230		38,642
Total Cash Deposits in Inventory		53,941		128,379
Letters of Credit		943		12,854
Total Invested through Deposits or
Secured with Letters of Credit	$	54,884	$	141,233
Total Purchase Price of Land Option Agreements	$	1,131,976	$	3,324,636

     In addition to deposits, the Company capitalizes pre-acquisition development costs related to land held under option agreements. As of March 31, 2008 and 2007, pre-acquisition development costs were $11.9 million and $48.0 million, respectively. Included in “land held for development and sale” is owned land that is not currently anticipated to be developed for more than two years and land that the Company intends to sell within one year, which amounted to $527.2 million and $20.5 million as of March 31, 2008 and 2007, respectively.

     The Company writes off deposits and pre-acquisition costs when it determines it is probable the property will not be acquired. Write-offs of land deposits and pre-acquisition costs amounted to $120.4 million, $360.0 million and $35.2 million for the years ended March 31, 2008, 2007 and 2006, respectively.

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(D) PROPERTY AND EQUIPMENT

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

	March 31,
	2008			2007
Land, Buildings and Improvements	$	70,554		$	78,979
Machinery, Equipment and Other		210,691			254,391
		281,245			333,370
Accumulated Depreciation and Amortization		(203,314	)		(198,629	)
	$	77,931		$	134,741

     The Company had depreciation and amortization expense related to property and equipment of $41.8 million, $46.5 million, and $41.6 million for fiscal years 2008, 2007, and 2006, respectively.

(E) GOODWILL

     A summary of changes in goodwill by segment for the years ended March 31, 2008 and 2007 are presented below:

	As of		Goodwill			Goodwill		As of
	March 31, 2006		Disposed			Impairments		March 31, 2007
Home Building
East	$	27,945	$	—		$	—	$	27,945
Southeast		29,160		—			—		29,160
Central		7,654		—			—		7,654
Texas		9,720		—			—		9,720
Northwest		22,721		—			—		22,721
Southwest		24,301		—			—		24,301
Other homebuilding		—		—			—		—
Total Home Building		121,501		—			—		121,501
Financial Services		11,737		(2,785	)		—		8,952
Total	$	133,238	$	(2,785	)	$	—	$	130,453

	As of		Goodwill			Goodwill			As of
	March 31, 2007		Disposed			Impairments			March 31, 2008
Home Building
East	$	27,945	$	—		$	(559	)	$	27,386
Southeast		29,160		—			(24,202	)		4,958
Central		7,654		(595	)		(5,359	)		1,700
Texas		9,720		—			(3,499	)		6,221
Northwest		22,721		—			(20,316	)		2,405
Southwest		24,301		—			(24,301	)		—
Other homebuilding		—		—			—			—
Total Home Building		121,501		(595	)		(78,236	)		42,670
Financial Services		8,952		—			—			8,952
Total	$	130,453	$	(595	)	$	(78,236	)	$	51,622

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(F) 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, 2008 and 2007 is presented below. Due dates are presented in fiscal years.

	March 31,
	2008					2007
			Weighted-					Weighted-
			Average					Average
			Interest					Interest
			Rate					Rate
Short-term Debt:
Centex	$	4,050		5.25	%	$	1,807		—
Financial Services
Financial Institutions		337,053		3.63	%		428,144		5.56	%
Harwood Street Funding I, LLC Secured Liquidity Notes		—		—			1,174,896		5.38	%
Consolidated Short-term Debt		341,103					1,604,847
Long-term Debt:
Centex
Medium-term Note Program		—		—			170,000		5.61	%
Senior Notes, due through 2017		3,319,190		6.00	%		3,708,976		5.89	%
Other Indebtedness, due through 2018		1,927		8.98	%		21,334		6.65	%
		3,321,117					3,900,310
Financial Services
Harwood Street Funding I, LLC Variable-Rate Subordinated Extendable Certificates		—		—			60,000		7.32	%
Consolidated Long-term Debt		3,321,117					3,960,310
Total Debt	$	3,662,220				$	5,565,157

     Centex’s short-term debt as of March 31, 2008 consisted of land and land-related acquisition notes of $4.1 million. Centex’s short-term debt as of March 31, 2007 consisted of land and land-related acquisition notes of $1.8 million.

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     The weighted-average interest rates for short-term and long-term debt during the years ended March 31, 2008, 2007, and 2006 were:

	For the Years Ended March 31,
	2008			2007			2006
Short-term Debt
Centex		2.89	%		5.35	%		4.23	%
Financial Services		5.97	%		5.59	%		4.04	%
Long-term Debt:
Centex
Medium-term Note Programs		5.68	%		6.00	%		5.54	% (1)
Senior Notes		5.90	%		5.89	%		5.90	%
Other Indebtedness		7.15	%		6.43	%		5.60	%
Subordinated Debentures		—			8.75	%		8.56	%
Financial Services
Harwood Street Funding I, LLC Variable-Rate Subordinated Extendable Certificates		7.42	%		7.34	%		5.85	%

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

     Maturities of the Company’s long-term debt during the next five years ending March 31 of each year and thereafter are:

	For the Fiscal Years Ending March 31,
2009	$	151,091
2010		225,101
2011		700,104
2012		349,321
2013		315,135
Thereafter		1,580,365
	$	3,321,117

     The Company is required to maintain compliance with certain financial covenants in the Company’s multi-bank revolving credit facility. Material covenants include a maximum leverage ratio, a minimum tangible net worth requirement and a borrowing base limitation on the availability of borrowings. The Company’s credit facility also includes an interest coverage ratio. This ratio is a determinant of the maximum leverage ratio covenant and certain of the credit facility’s pricing provisions. In addition, Financial Services’ committed bank warehouse credit facilities contain various affirmative and negative covenants that are generally customary for a facility of this type. At March 31, 2008, the Company was in compliance with its financial covenants.

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Credit Facilities

     The Company’s existing credit facilities and available borrowing capacity as of March 31, 2008 are summarized below:

	Existing Credit		Available
	Facilities		Capacity
Centex
Multi-Bank Revolving Credit Facility
Revolving Credit	$	750,000	$	141,897
Letters of Credit		600,000		193,753
		1,350,000		335,650	(1)
Financial Services
Secured Credit Facilities		605,000		267,947	(2)
	$	1,955,000	$	603,597

(1)

This is an unsecured, committed, multi-bank revolving credit facility, maturing in July 2010, which serves as funding for general corporate purposes and provides $600 million of letter of credit capacity. As of March 31, 2008, there were no borrowings under the revolving credit facility. The revolving credit facility’s available capacity is subject to a borrowing base limitation when the Company’s senior unsecured debt does not have an investment grade rating from at least two of the following: Moody’s, S&P and Fitch. Under the borrowing base limitation, the sum of the Company’s net senior debt and any amounts drawn on the revolving credit facility may not exceed an amount based on certain percentages of various categories of the Company’s unencumbered inventory and other assets. Available capacity amounts above reflect the borrowing base limitation. Financial letters of credit reduce the available capacity under the revolving credit facility and letters of credit. Financial letters of credit are generally issued as a form of financial or payment guarantee.

(2)

At March 31, 2008, CTX Mortgage Company, LLC maintained $605 million of secured, committed mortgage warehouse facilities. Subsequent to March 31, 2008, existing credit facilities were reduced $75.0 million to $530.0 million with a corresponding decrease in available capacity. See Note (P), “Subsequent Events,” for additional information.

Funding of Mortgage Loans

     CTX Mortgage Company, LLC has historically funded its origination of mortgage loans through the sale of such mortgage loans to Harwood Street Funding I, LLC (“HSF-I”) and, to a lesser extent, through borrowings under more traditional committed bank warehouse credit facilities and mortgage loan sale agreements. As a result of the significant disruptions in the mortgage and asset-backed commercial paper markets, beginning in the second quarter of fiscal year 2008, HSF-I was unable to finance the purchase of mortgage loans from CTX Mortgage Company, LLC. In November 2007, HSF-I and the related swap arrangements were terminated and all outstanding obligations were redeemed. The termination of HSF-I was entirely due to these external market factors and not to any quality or performance issues related to HSF-I or its underlying collateral.

     CTX Mortgage Company, LLC is currently funding its mortgage originations primarily through borrowings under committed bank warehouse credit facilities. The warehouse facilities generally allow CTX Mortgage Company, LLC to sell to the bank, on a revolving basis, mortgage loans up to an aggregate specified amount. Simultaneously, the bank has entered into an agreement to transfer such mortgage loans back to CTX Mortgage Company, LLC on a specified date or on the Company’s demand for subsequent sale by CTX Mortgage Company, LLC to third parties. Mortgage loans eligible for sale by CTX Mortgage Company, LLC under the warehouse facilities are conforming loans, FHA/VA eligible loans, and jumbo loans meeting conforming underwriting guidelines except as to the size of the loan. Under one such warehouse credit facility amounting to $450 million at March 31, 2008, the bank had the option to convert the facility to an amortizing loan based on the ultimate sale of the underlying collateral and not to purchase any additional mortgage loans if our long-term unsecured debt ratings fell below BB+ by Standard & Poors (“S&P”), below BBB by Fitch Ratings (“Fitch,”) or below Ba1 by Moody’s Investors Service (“Moody’s”). At March 31, 2008, the Company’s long-term unsecured debt was rated BB+ by S&P, BBB by Fitch and Ba1 by Moody’s. CTX Mortgage Company, LLC may also seek to enter into additional mortgage warehouse facilities with other lenders. Borrowings under the warehouse facilities constitute short-term debt of Financial Services.

     On May 7, 2008, S&P lowered the Company’s debt rating from BB+ to BB which triggered the debt ratings provision in the $450 million committed bank warehouse credit facility discussed above. On May 9, 2008, CTX Mortgage Company, LLC executed an amendment to the bank warehouse credit facility to effectively reset the debt ratings trigger. See note (P), “Subsequent Events,” for further discussion.

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

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

     Prior to August 2007, substantially all of the mortgage loans originated by CTX Mortgage Company, LLC were funded through the sale of such mortgage loans to HSF-I under the terms of a mortgage loan purchase agreement. HSF-I was a variable interest entity of which the Company was the primary beneficiary, and it was consolidated in the Company’s financial statements. HSF-I obtained 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, 2008, HSF-I had no outstanding secured liquidity notes, medium-term debt or subordinated certificates. All of HSF-I’s outstanding secured liquidity notes were redeemed in accordance with their scheduled maturity dates, and in November 2007, all outstanding subordinated certificates were redeemed.

     CTX Mortgage Company, LLC and its related companies sold $9.3 billion and $10.8 billion of mortgage loans to investors during the years ended March 31, 2008 and 2007, respectively. CTX Mortgage Company, LLC and its related companies recognized gains on sales of mortgage loans and related derivative activity of $125.6 million, $165.0 million and $164.8 million during the years ended March 31, 2008, 2007 and 2006, respectively.

(G) COMMITMENTS AND CONTINGENCIES

Joint Ventures

     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 homebuilders or developers and, to a lesser extent, financial partners, allows Home Building to share the risks and rewards of ownership and to provide broader strategic advantages.

     A summary of the Company’s Home Building joint ventures is presented below (dollars in thousands):

	As of March 31,
	2008						2007
					Centex’s						Centex’s
	Number of				Share		Number of				Share
	JVs (1)		Investments		of Debt		JVs (1)		Investments		of Debt
Unleveraged Joint Ventures		29	$	70,043	$	—		28	$	33,369	$	—
Joint Ventures with Debt:		13						21
Limited Maintenance Guarantee (2) (3) (4)				43,311		27,500				108,057		162,425
Repayment Guarantee (2) (5)				3,154		13,692				2,247		16,045
Completion Guarantee (4)				78,274		133,935				126,469		209,927
No Recourse or Guarantee				12,040		24,000				11,502		24,000
		42	$	206,822	$	199,127		49	$	281,644	$	412,397

(1) The number of joint ventures includes unconsolidated Home Building joint ventures for which the Company has an investment balance as of the end of the period and/or current fiscal year activity. The Company was the managing member of 23 and 28 of the joint ventures as of March 31, 2008 and 2007, respectively. The number of joint ventures includes 17 and

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	14 joint ventures as of March 31, 2008 and 2007, respectively, for which substantially all the joint ventures’ activities are complete.
(2)	These amounts represent the Company’s maximum exposure related to the joint ventures’ debt at each respective date.
(3)	The Company has guaranteed that certain of the joint ventures will maintain a specified loan to value ratio. For certain joint ventures, the Company has contributed additional capital in order to maintain loan to value requirements. At March 31, 2008, the Company had one remaining joint venture with a limited maintenance guarantee. In April 2008, this joint venture repaid its outstanding debt.
(4)	Certain joint venture agreements require the Company to guarantee the completion of a project or phase if the joint venture does not perform the required land development. A portion of these completion guarantees are joint and several with the Company’s partners.
(5)	The Company has guaranteed repayment of a portion of certain joint venture debt limited to its ownership percentage of the joint venture or a percentage thereof.

     Total joint venture debt outstanding as of March 31, 2008 and 2007 was $423.2 million and $1.0 billion, respectively. 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. Additionally, the Company has agreed to indemnify the construction lender for certain environmental liabilities in the case of most joint ventures and most guarantee arrangements provide that the Company is liable for its proportionate share of the outstanding debt if the joint venture files for voluntary bankruptcy. To date, the Company has not been requested to perform under the environmental liabilities or voluntary bankruptcy guarantees for any of its joint ventures.

     Four of the Company’s joint ventures are in default of their joint venture debt agreements. In addition, the Company expects two other joint ventures to be in default of their joint venture debt agreements subsequent to March 31, 2008. Our joint venture partner in one of these joint ventures filed for bankruptcy during the year ended March 31, 2008. The Company’s share of the total debt of these joint ventures is $64.0 million and is included in the table above. The Company is in discussions with the joint venture partners and lenders with respect to each joint venture and is evaluating alternatives to mitigate the Company’s exposure. The Company expects to fulfill its contractual obligations under the joint venture agreements. Costs associated with fulfilling such contractual obligations may be less than the Company’s share of the joint ventures’ debt. Recourse under joint venture debt agreements is limited to either the underlying collateral or completion obligations of the joint venture partners. Based upon the terms and debt amounts outstanding for these joint ventures and the terms of the joint venture agreements, the Company does not believe its exposure related to these joint venture defaults will be material to the Company’s financial position or results of operations.

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

	For the Fiscal Years Ending
	March 31,
2009	$	168,941
2010		2,268
2011		3,918
2012		24,000
	$	199,127

Letters of Credit and Surety Bonds

     In the normal course of business, the Company issues letters of credit and surety bonds: (1) pursuant to certain performance related obligations, (2) as security for certain land option purchase agreements of the Home Building line of business, and (3) under various insurance programs. The Company also previously issued surety bonds, which are reflected as discontinued operations in the table below, pursuant to construction obligations of Construction Services prior to the sale of this segment on March 30, 2007. The Company does not expect these letters of credit or bonds will be drawn upon.

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     A summary of the Company’s outstanding letters of credit and surety bonds as of March 31, 2008 and March 31, 2007 is presented below (dollars in millions):

	As of March 31, 2008					As of March 31, 2007
	Letters of Credit		Surety Bonds			Letters of Credit		Surety Bonds
Home Building	$	168.6	$	1,527.9	(1)	$	209.1	$	1,542.3
Financial Services		35.7		12.3			0.7		10.7
Other		167.0		0.2			85.9		0.2
Discontinued Operations (2)		35.3		3,093.9			46.6		4,163.3
	$	406.6	$	4,634.3		$	342.3	$	5,716.5

(1)

The Company estimates that $580.0 million of work remains to be performed on these projects as of March 31, 2008.

(2)

After the sale of Construction Services, the Company remains responsible to a surety for certain surety bond obligations relating to Construction Services’ projects commenced prior to March 30, 2007. These surety bonds have a total face amount of $3.09 billion at March 31, 2008, although the risk of liability with respect to these surety bonds declines as the relevant construction projects are performed. At March 31, 2008, the Company estimates that $584.6 million of work remains to be performed on these projects. In connection with certain of these surety bond obligations, the Company provided a $100 million letter of credit to such surety which is included in Other above. The purchaser of Construction Services has agreed to indemnify the Company against losses relating to such surety bond obligations, including amounts drawn under any such letter of credit. The Company has purchased for its benefit an additional back-up indemnity provided by a financial institution with an A+ (S&P), A1 (Moody’s) credit rating. The obligation of such financial institution under the back-up indemnity is $856.8 million as of March 31, 2008, which declines to $400 million over time and terminates in 2016.

Community Development and Other Special District Obligations

     A Community Development District or similar development authority (“CDD”) is a unit of local government created under various state statutes that utilizes bond financing to finance the construction or acquisition of infrastructure assets of a development. A portion of the liability associated with the bonds including principal and interest is assigned to each parcel of land within the development. This debt is typically paid by subsequent special assessments levied by the CDD on the landowners. In accordance with EITF 91-10, “Accounting for Special Assessments and Tax Increment Financing,” the Company records a liability for future assessments, which are fixed or determinable for a fixed or determinable period. In addition and in accordance with SFAS 5, the Company evaluates whether it is contingently liable for any of the debt related to the bond issuance. This is typically the case where bonds issued by the CDD have maturity dates of ten years or less that will be paid by the Company as the developer and current landowner and not by future homeowners. At March 31, 2008 and 2007, the Company had recorded $351.9 million and $280.2 million, respectively, in accrued liabilities for outstanding CDD obligations.

Warranties and Guarantees

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

     Home Building offers a ten-year limited warranty for most homes constructed and sold. The warranty covers defects in materials or workmanship in the first two years of the customers’ ownership of the home and certain designated components or structural elements of the home in the third through tenth years. Home Building estimates the costs that may be incurred under its warranty program for which it will be responsible and records a liability at the time each home is closed. Factors that affect Home Building’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.

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

	For the Years Ended March 31,
	2008			2007			2006
Balance at Beginning of Period	$	44,293		$	47,199		$	34,961
Warranties Issued		27,858			42,422			53,036
Settlements Made		(40,915	)		(45,228	)		(40,173	)
Change in Liability of Pre-Existing Warranties,
Including Expirations		(2,081	)		(100	)		(625	)
Balance at End of Period	$	29,155		$	44,293		$	47,199

     Financial Services has established a liability for anticipated losses associated with mortgage loans originated. Changes in Financial Services’ liability at March 31 are as follows:

	For the Years Ended March 31,
	2008			2007			2006
Balance at Beginning of Period	$	16,863		$	18,500		$	18,803
Provisions for Losses		1,676			2,160			2,522
Settlements		(9,251	)		(1,178	)		(2,921	)
Changes in Pre-Existing Reserves		4,615			(2,619	)		96
Balance at End of Period	$	13,903		$	16,863		$	18,500

Forward Trade and Interest Rate Lock Commitments

     Forward trade commitments represent the fair value of contracts with investors for delayed delivery of mortgage loans for which the Company agrees to make delivery at a specified future date at a specified price. The Company utilizes such delayed delivery contracts to hedge market risk based upon the number of commitments issued to borrowers that are expected to close. Fair value is estimated using quoted market prices for current dealer commitments to purchase loans. At March 31, 2008, the Company had $377.3 million of commitments to deliver mortgages to investors against interest rate lock commitments. In addition, at March 31, 2008, the Company had commitments to deliver approximately $380.0 million of mortgage loan inventory to investors.

     Interest rate lock commitments (“IRLCs”) represent the fair value of individual borrower agreements that commit the Company to lend at a specified price for a specified period as long as there is no violation of any condition established in the commitment contract. Fair value is estimated using quoted market prices on fixed loan commitments in the mortgage pipeline. The fair value of these loan commitment derivatives includes future cash flows related to the associated servicing of the loan, but does not include the value of any internally-developed intangible assets. At March 31, 2008, the Company had loan commitments to prospective borrowers of $465.7 million.

     For additional information on forward trade commitments and interest rate lock commitments, please refer to Note (L), “Derivatives and Hedging.”

Litigation and Related Matters

     In the normal course of its business, the Company is named as a defendant in certain suits filed in various state and federal courts. Management believes that none of the litigation matters in which the Company is involved, including those described below, would have a material adverse effect on the consolidated financial condition or operations of the Company.

     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 compliance with permits regulating storm water discharges at projects the Company had completed or was building. Subsequently, the EPA limited its request to Home Building’s operations at 30 neighborhoods. 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 neighborhoods have violated regulatory requirements applicable to storm water discharges, and that injunctive relief and civil penalties may be warranted. Home Building has been exploring methods of settling this matter. In May 2008, Home Building agreed to sign a

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consent decree with the EPA and various states with respect to the Company’s prior and future storm water pollution prevention practices at all of Home Building’s sites. When the consent decree is signed by all parties, the Justice Department will file suit in Federal Court in accordance with the accepted practice in matters of this nature and simultaneously submit the proposed consent decree for approval by the Court. A notice of lodging of the proposed consent decree will then be published in the Federal Register, which triggers the opening of a public comment period. The public comment period is typically 30 days. The Justice Department will review and respond to any comments it receives and will then ask the Court to sign and enter the proposed consent decree. The Court may require a hearing before it rules. Once the Court is satisfied, it will sign and enter the consent decree. The Company anticipates that the consent decree will become final during the second quarter of the fiscal year ending March 31, 2009. Under the proposed consent decree, Home Building will pay a civil penalty of $1,485,000, and will agree to certain management practices related to controlling storm water discharges at all of Home Building’s sites.

Operating Leases

     The Company leases certain office facilities and other equipment under operating leases. Future minimum payments under the noncancelable leases are as follows: 2009 — $56.9 million; 2010 — $46.6 million; 2011 — $36.2 million; 2012 — $26.0 million; 2013 — $17.4 million and thereafter — $15.8 million.

     Rental expense for the years ended March 31, 2008, 2007 and 2006 was $63.5 million, $75.1 million and $65.9 million, respectively.

(H) COMPREHENSIVE INCOME

     A summary of comprehensive income (loss) is presented below:

	For the Years Ended March 31,
	2008			2007			2006
Net Earnings (Loss)	$	(2,657,482	)	$	268,366		$	1,289,313
Other Comprehensive Income (Loss), net of Tax:
Unrealized Gain on Hedging Instruments		—			7,036			263
Foreign Currency Translation Adjustments		—			72			(14,406	)
Hedging Gain Reclassified to Net Earnings		—			(15,738	)		—
Foreign Currency Gain Reclassified to Net Earnings		—			—			(48,354	)
Comprehensive Income (Loss)	$	(2,657,482	)	$	259,736		$	1,226,816

     The unrealized gain on hedging instruments represented the deferral in other comprehensive income (loss) of the unrealized gain on interest rate swap agreements designated as cash flow hedges. The foreign currency translation adjustments were reclassified to earnings from discontinued operations in connection with the sale of the Company’s international homebuilding operations. The accumulated other comprehensive income associated with Home Equity’s hedging gains was reclassified to earnings from discontinued operations and included in the gain on sale of Home Equity recorded in the second quarter of fiscal year 2007.

(I) BUSINESS SEGMENTS

     As of March 31, 2008, the Company operated in two principal lines of business: Home Building and Financial Services. These lines of business operate in the United States, and their markets are nationwide. Revenues from any one customer are not significant to the Company.

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     The Company’s Home Building line of business consists of the following reporting segments that have operations located in the following states:

East: Georgia (Savannah only), Maryland, New Jersey, North Carolina, South Carolina and Virginia

Southeast: Florida, Georgia (Atlanta only) and Tennessee

Central: Indiana, Illinois, Michigan, Minnesota and Missouri

Texas: Texas

Northwest: Colorado, Hawaii, Nevada (except Las Vegas), Northern California, Oregon, Washington

Southwest: Arizona, Southern California, Nevada (Las Vegas only), New Mexico

Other homebuilding ⁽¹⁾

(1) Other homebuilding includes certain resort/second home projects in Florida that the Company plans to build-out and liquidate, and holding companies. In addition, Other homebuilding includes amounts consolidated under the caption “land held under option agreements not owned” and capitalized interest for all regions.

     The Company’s mortgage lending, title agency services and insurance products represent one reporting segment, Financial Services.

     In March 2008, the Company signed a definitive agreement to sell its home services operations. The sale was completed in April 2008. In fiscal year 2007, the Company completed the sale of Construction Services and Home Equity. In fiscal year 2006, the Company completed the sale of its international homebuilding operations. For additional information regarding the sale of these entities, refer to Note (O), “Discontinued Operations.” All prior year segment information has been revised to conform to the current year presentation.

Home Building

     Home Building’s operations currently involve the construction and sale of detached and attached single-family homes. The land used for the construction of the Company’s homes is acquired through the purchase of finished or partially finished lots, and through the purchase of raw land that must be developed. During the year ended March 31, 2008 approximately 80% of the homes closed were single-family, detached homes. Included in Home Building’s loss from unconsolidated entities for the years ended March 31, 2008 and 2007 is the Company’s share of joint ventures’ impairments totaling $100.5 million and $124.5 million, respectively. There were no significant joint venture impairments recorded in the year ended March 31, 2006.

Financial Services

     As a result of the significant disruptions in the mortgage markets and the related reductions in the mortgage market liquidity, during the fiscal year 2006, the Company began to focus its mortgage operations on Builder loans to support Home Building. 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. Retail mortgage originations represented approximately 54.8%, 53.0%, and 61.3% of total mortgage originations during the fiscal years ended March 31, 2008, 2007, and 2006, respectively. The Company anticipates the reduction in total Retail mortgage originations may have a negative impact on Financial Services’ operating results.

     Financial Services’ revenues include interest income of $70.4 million, $121.8 million and $104.1 million in fiscal years 2008, 2007 and 2006, respectively. The majority 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.

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Other

     The Company’s Other segment consists of corporate general and administrative expense, including Home Building corporate-related general and administrative expense and interest income and interest expense.

     The following are components of the Other segment’s loss from continuing operations before income tax:

	For the Years Ended March 31,
	2008			2007			2006
Corporate General and Administrative Expense	$	(154,308	)	$	(185,585	)	$	(279,172	)
Interest Expense		(8,642	)		—			(11,103	)
Other		29,063			2,488			1,719
	$	(133,887	)	$	(183,097	)	$	(288,556	)

	For the Year Ended March 31, 2008
	(Dollars in thousands)
						Earnings
			Earnings			(Loss) from
			(Loss)			Continuing
			from			Operations
			Unconsolidated			Before			Goodwill		Land-related		Land-related
	Revenues		Entities			Income Tax			Impairments		Impairments		Write-offs
Home Building
East	$	1,673,236	$	(15,266	)	$	(81,440	)	$	559	$	62,904	$	45,673
Southeast		940,121		(35,916	)		(422,428	)		24,202		260,834		16,798
Central		764,309		424			(136,144	)		5,359		74,485		13,782
Texas		977,063		39			32,256			3,499		1,230		2,141
Northwest		1,672,957		(38,087	)		(595,784	)		20,316		478,118		22,701
Southwest		1,695,140		(40,096	)		(1,163,622	)		24,301		742,824		19,199
Other homebuilding		242,788		—			(235,956	)		—		172,034		131
Total Home Building		7,965,614		(128,902	)		(2,603,118	)		78,236		1,792,429		120,425
Financial Services		309,948		—			(138,153	)		—		—		—
Corporate & Other		—		—			(133,887	)		—		—		—
Total	$	8,275,562	$	(128,902	)	$	(2,875,158	)	$	78,236	$	1,792,429	$	120,425

	For the Year Ended March 31, 2007
	(Dollars in thousands)
						Earnings
			Earnings			(Loss) from
			(Loss)			Continuing
			from			Operations
			Unconsolidated			Before			Goodwill		Land-related			Land-related
	Revenues		Entities			Income Tax			Impairments		Impairments			Write-offs
Home Building
East	$	2,255,702	$	(1,820	)	$	151,821		$	—	$	63,023		$	58,886
Southeast		1,686,003		(187	)		108,902			—		51,321			30,286
Central		1,048,883		1,523			(54,231	)		—		30,440			39,105
Texas		1,154,702		—			93,209			—		3,502			522
Northwest		2,121,669		(25,990	)		112,824			—		61,119			66,845
Southwest		2,730,392		(47,308	)		(179,995	)		—		104,296			162,165
Other homebuilding		417,476		—			(27,177	)		—		10,212			2,190
Total Home Building		11,414,827		(73,782	)		205,353			—		323,913			359,999
Financial Services		468,001		—			84,530			—		6,919	(1)		—
Corporate & Other		4,773		—			(183,097	)		—		—			—
Total	$	11,887,601	$	(73,782	)	$	106,786		$	—	$	330,832		$	359,999

(1) Financial Services’ impairment was recorded on its construction loans.

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	For the Year Ended March 31, 2006
	(Dollars in thousands)
						Earnings
			Earnings			(Loss) from
			(Loss)			Continuing
			from			Operations
			Unconsolidated			Before			Goodwill		Land-related		Land-related
	Revenues		Entities			Income Tax			Impairments		Impairments		Write-offs
Home Building
East	$	2,444,433	$	5,891		$	449,587		$	—	$	—	$	7,217
Southeast		1,983,837		(887	)		373,908			—		—		3,544
Central		1,310,039		74			87,477			—		—		5,190
Texas		1,063,379		—			85,284			—		—		506
Northwest		2,143,852		61,102			496,764			—		—		8,175
Southwest		2,841,081		11,644			521,324			—		—		9,627
Other homebuilding		485,582		—			70,485			—		—		896
Total Home Building		12,272,203		77,824			2,084,829			—		—		35,155
Financial Services		462,223		—			84,465			—		—		—
Corporate & Other		8,240		—			(288,556	)		—		—		—
Total	$	12,742,666	$	77,824		$	1,880,738		$	—	$	—	$	35,155

	For the Years Ended March 31,
	(Dollars in thousands)
	2008				2007
	Inventory		Total Assets		Inventory		Total Assets
Home Building
East	$	1,152,818	$	1,331,720	$	1,477,904	$	1,663,815
Southeast		1,263,337		1,360,690		1,703,614		1,821,660
Central		343,989		369,450		606,508		652,799
Texas		517,865		530,038		605,200		630,396
Northwest		893,443		966,004		1,725,847		1,829,961
Southwest		851,326		923,537		2,112,369		2,304,415
Other homebuilding		328,803		1,128,285		704,868		1,212,444
Total Home Building		5,351,581		6,609,724		8,936,310		10,115,490
Financial Services		10,850		717,060		8,747		1,915,082
Corporate & Other		—		713,559		3,358		1,070,195
Discontinued Operations		—		96,989		—		99,166
Total	$	5,362,431	$	8,137,332	$	8,948,415	$	13,199,933

(J) INCOME TAXES

     The provision for income taxes includes the following components:

	For the Years Ended March 31,
	2008			2007			2006
Current Provision
Federal	$	(617,921	)	$	318,703		$	614,635
State		(5,065	)		46,122			97,243
		(622,986	)		364,825			711,878
Deferred Provision (Benefit)
Federal		356,065			(216,525	)		(31,167	)
State		52,731			(32,037	)		(12,638	)
		408,796			(248,562	)		(43,805	)
Provision (Benefit) for Income Taxes	$	(214,190	)	$	116,263		$	668,073

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     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,
	2008			2007			2006
Earnings (Loss) from Continuing Operations Before Income Taxes	$	(2,875,158	)	$	106,786		$	1,880,738
Income Taxes at Statutory Rate	$	(1,006,305	)	$	37,375		$	658,258
Increases (Decreases) in Tax Resulting from —
State Income Taxes, net		(93,364	)		9,156			54,197
U.S. Government Tax Refund		—			—			(28,101	)
Change in Valuation Allowance		828,950			—			—
Change in Reserve for Tax Contingencies		—			65,480			(5,860	)
FIN 48		41,088			—			—
Other		15,441			4,252			(10,421	)
Provision (Benefit) for Income Taxes	$	(214,190	)	$	116,263		$	668,073
Effective Tax Rate		7	%		109	%		36	%

     Components of deferred income taxes, net are as follows:

	As of March 31,
	2008			2007
Deferred Tax Assets
Deferred Compensation	$	51,315		$	71,326
Land Impairments and Option Write-offs		454,877			176,087
Uniform Capitalization for Tax Reporting		47,065			58,452
Accrued Liabilities		334,597			172,439
Partnership Reporting Differences		2,560			31,442
Tax Credit and State Net Operating Loss Carryforwards		109,080			—
Depreciation and Amortization		11,335			—
All Other		10,895			4,752
		1,021,724			514,498
Valuation Allowance		(830,000	)		—
Total Deferred Tax Assets, net of Valuation Allowance		191,724			514,498
Deferred Tax Liabilities
Depreciation and Amortization		—			12,823
All Other		478			972
Total Deferred Tax Liabilities		478			13,795
Deferred Income Taxes, net	$	191,246		$	500,703

     The Company recognized an income tax benefit of $214.2 million for the year ended March 31, 2008 as compared to the previous fiscal year’s tax provision of $116.3 million. The significant change in the Company’s tax provision for the year ended March 31, 2008 reflects the recognition of a deferred tax asset valuation allowance, the recognition of a liability for unrecognized tax benefits and related accrued interest and penalties.

     At March 31, 2008, the Company had a $648.5 million federal income tax receivable primarily relating to the net operating loss carryback refund claim. The Company’s net deferred tax assets before the valuation allowance were $1.02 billion and $500.7 million as of March 31, 2008 and 2007, respectively. The increase in the deferred tax assets before the valuation allowance recorded during fiscal year 2008 was due primarily to land-related impairments. The Company had a $109.1 million deferred tax asset resulting from tax credit and state net operating loss carryforwards. If unused, the various state tax net operating loss and carryforwards will expire (beginning at various times depending on the tax jurisdiction) in the years 2013 through 2028. As a result of the goodwill impairments recorded in fiscal year 2008 and the reclassification of the Company’s home services operations to discontinued operations, the deferred tax balance related to depreciation and amortization is now classified as a deferred tax asset. In the previous fiscal year, the balance resulted in a deferred tax liability.

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

     Based on the Company’s assessment, including the implementation of certain tax planning strategies, the realization of approximately $830 million of the Company’s deferred tax assets is dependent upon future taxable income. Based on the Company’s consideration of the current homebuilding industry conditions and the related uncertainty in projections of future taxable income, the Company established a valuation allowance, which increased losses from continuing operations by $830 million, or $6.77 per share, during the year ended March 31, 2008.

     Realization of the remaining net deferred tax assets of $191.2 million as of March 31, 2008 is not assured. The valuation allowance may be increased or decreased as conditions change or if the Company is unable to implement certain tax planning strategies. The Company’s future realization of its deferred tax assets ultimately depends on the existence of sufficient taxable income in the carryforward periods (both federal and state). Changes in existing laws could affect the valuation of deferred tax assets for future periods.

     On April 1, 2007, the Company adopted FIN 48. The cumulative effect of the adoption of FIN 48 was recorded as a $208.3 million reduction to beginning retained earnings in the first quarter of fiscal year 2008. The total amount of gross unrecognized tax benefits as of April 1, 2007 was $341.4 million and $353.1 million as of March 31, 2008 (which excludes interest, penalties, and the tax benefit relating to the deductibility of interest and state income tax). The following table summarizes the changes in gross unrecognized tax benefits from April 1, 2007 (date of adoption) to March 31, 2008:

Gross Unrecognized Tax Benefits as of April 1, 2007	$	341,388
Tax positions taken relating to a prior year		(2,134	)
Tax positions taken relating to the current year		14,352
Settlements of tax positions with taxing authorities		(459	)
Balance as of March 31, 2008	$	353,147

     It is reasonably possible that, within the next 12 months, total unrecognized tax benefits may decrease as a result of the potential resolution with the IRS relating to issues stemming from fiscal years 2001 through 2004 federal income tax returns, in addition to the resolution of various state income tax audits and/or appeals. However, the change that could occur within the next 12 months cannot be estimated at this time.

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

     The total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate was $248.8 million as of April 1, 2007 and $272.3 million as of March 31, 2008. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the financial statements as a component of the income tax provision that is consistent with the Company’s historical accounting policy. After the adoption of FIN 48, the total amount of gross accrued interest and penalties was $112.3 million. As of March 31, 2008, gross accrued interest and penalties was $153.6 million. For the year ended March 31, 2008, the Company accrued $41.3 million of gross accrued interest and penalties. The Company’s liability for unrecognized tax benefits combined with accrued interest and penalties is reflected as a component of accrued liabilities.

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(K) CAPITAL STOCK AND EMPLOYEE BENEFIT PLANS

Stock Options

     The Company has issued stock options under the following plans: 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 Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan (the “1998 Plan”). Stock options granted under these plans may not be granted at less than fair market value. The Company also issued stock options until the year ended March 31, 2002 under the Amended and Restated 1987 Stock Option Plan (the “1987 Plan”). The 1987 Plan provides that stock options may not be granted at less than fair market value except in limited circumstances. These stock option plans, which are administered by the Compensation and Management Development Committee of the Board of Directors, provide for the grant of nonqualified stock options to officers, employees and directors of the Company and its affiliates, other than the 1998 Plan, which excludes officers and directors of the Company. The exercise price of any option granted under these plans 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 or issuable pursuant to a grant (including pursuant to a net exercise). Under the provisions of the 1998 Plan and 1987 Plan, stock options can no longer be granted under these plans.

     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. 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.

     A summary of the activity of the stock option plans as of March 31, 2008, and changes during the year then ended is presented below (dollars in thousands, except per share data):

	For the Year Ended March 31, 2008
						Weighted-
				Weighted-		Average
				Average		Remaining
				Exercise		Contractual		Aggregate
	Number of Shares			Price		Life (Years)		Intrinsic Value (1)
Options Outstanding, Beginning of Year		10,773,784		$	31.45
Options Granted at Fair Market Value		646,618		$	44.79
Options Exercised		(3,412,574	)	$	18.61
Options Cancelled		(1,222,747	)	$	48.74
Options Outstanding, End of Year		6,785,081		$	36.13		2.98	$	17,459,776
Options Exercisable, End of Year		5,974,909		$	34.37		2.61	$	17,459,776
Shares Available for Future Stock Option Grants, End of Year		3,135,476
Weighted-Average Fair Value of Options Granted During the Year	$	15.76

(1) Aggregate intrinsic value excludes options where the exercise price exceeds fair value at March 31, 2008.

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     A summary of the activity of the stock option plans for the years ended March 31, 2007 and 2006 is presented below (dollars in thousands, except per share date):

	For the Years Ended March 31,
	2007					2006
				Weighted-					Weighted-
	Number			Average		Number			Average
	of			Exercise		of			Exercise
	Shares			Price		Shares			Price
Options Outstanding, Beginning of Year		12,361,056		$	28.49		14,042,776		$	23.22
Options Granted at Fair Market Value		1,470,049		$	40.77		1,716,209		$	57.36
Options Exercised		(2,507,870	)	$	25.03		(3,290,472	)	$	20.59
Options Cancelled		(549,451	)	$	54.65		(107,457	)	$	42.04
Options Outstanding, End of Year		10,773,784		$	31.45		12,361,056		$	28.49
Options Exercisable, End of Year		9,475,817		$	28.25		10,620,005		$	24.57
Shares Available for Future Stock Option
Grants, End of Year		2,912,055					4,035,310
Weighted-Average Fair Value of Options
Granted During the Year	$	20.14				$	22.90

     The total intrinsic value of options exercised during the years ended March 31, 2008, 2007 and 2006 was $47.4 million, $70.5 million and $163.0 million, respectively.

     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,
	2008						2007						2006
	All Others			Directors			All Others			Directors
Expected Volatility		33.9	%		35.1	%		36.7	%		38.8	%		41.8	%
Risk-Free Interest Rate		4.6	%		4.9	%		5.0	%		4.8	%		3.8	%
Dividend Yield		0.4	%		0.4	%		0.3	%		0.3	%		0.3	%
Expected Life (Years)		4.5			5.1			4.5			5.4			4.7

Restricted Stock and Restricted Stock Units

     The Company has issued restricted stock awards under the 2003 Plan and the 2001 Plan to executive officers and directors. These shares vest and become unrestricted on the vesting dates specified at the time of the award (typically three or four years, or upon a change in control, as defined in such plans). These shares have voting rights and are entitled to receive dividends at the same time and in the same amounts as other shares of Centex common stock outstanding. At March 31, 2008, there were 241,444 shares of restricted stock awards outstanding. The fair value of each restricted stock award was calculated using the closing stock price on the date of grant.

     The Company also grants restricted stock units, which are converted into shares of Centex common stock at payout, to certain officers and employees under the 2003 Plan and the Long Term Incentive Plan (the “LTIP Plan”). Restricted stock units represent 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 or four-year period or upon a change in control, as defined in such plans, and are generally paid out upon vesting or a later date specified by the holder. At March 31, 2008, there were 864,424 restricted stock units outstanding. The fair value of each restricted stock unit was calculated using the closing stock price on the date of grant.

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     A summary of the status of the Company’s unvested shares of restricted stock awards and restricted stock units as of March 31, 2008, and changes during the year ended March 31, 2008 is presented below:

				Weighted-
				Average
				Grant-Date
Unvested Shares	Shares			Fair Value
Unvested at March 31, 2007		516,140		$	55.47
Granted		443,417		$	38.19
Vested		(362,061	)	$	54.92
Forfeited		(62,255	)	$	50.88
Unvested at March 31, 2008		535,241		$	42.06

     In addition, at March 31, 2008, there were 570,627 restricted stock units outstanding that had vested but had not yet been paid out because the payout date had been deferred by the holder.

     As of March 31, 2008, there was $32.1 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under these Plans. That cost is expected to be recognized over a weighted average period of 1.7 years. The total fair value of shares vested during the years ended March 31, 2008, 2007 and 2006 was $37.8 million, $64.9 million and $68.7 million, respectively.

Equity Plan Summary

     The following table summarizes information about the Company’s equity compensation plans, other than tax qualified plans, as of March 31, 2008:

							(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		1,055,222	$	13.13			—
Approved by	2001		2,101,728	$	42.60			157,055
Stockholders	2003		1,655,313	$	51.35			2,978,421	(2)
Equity Compensation Plans	1998		1,972,818	$	28.78			—
Not Approved by	Long Term
Stockholders	Incentive Plan		864,424	$	—			70,225
Total			7,649,505	$	36.13	(1)		3,205,701

(1)	Weighted-average exercise price excludes any items with an exercise price of $0.
(2)	Of the amount indicated, a total of 657,771 awards may be granted as stock awards (typically issued as restricted stock awards or restricted stock units).

Non-Equity Long-Term Performance Units

     In addition to the stock-based awards, the Company issued under the 2003 Plan to officers and employees during the first quarter of fiscal year 2008 long-term performance awards that vest after three years with an initial aggregate value of $18.9 million. These awards will be settled in cash (and are not considered shares awarded under the 2003 Plan) and adjusted based on the Company’s performance relative to its peers in earnings per share growth and return on equity, as well as changes in the Company’s stock price between the date of grant and the end of the performance period. At March 31, 2008, these awards were adjusted to an aggregate value of $8.9 million. In accordance with the provisions of SFAS 123(R), these awards are accounted for as liability awards for which compensation expense will be recognized based upon the estimated fair value of the awards over the vesting period.

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The Company recognized $3.4 million in compensation expense related to these awards during the year ended March 31, 2008.

Employee Benefit Plans

     Benefits are provided to eligible employees of the Company and certain subsidiaries under the Company’s benefit plans. The plans operate on a calendar year and permit both 401(k) matching contributions and profit sharing contributions. The aggregate cost of these plans to the Company was $9.9 million in fiscal year 2008, $11.4 million in fiscal year 2007 and $33.9 million in fiscal year 2006. There were no profit sharing contributions made with respect to the 2007 plan year under any of these plans.

(L) DERIVATIVES AND HEDGING

     The Company is exposed to the risk of interest rate fluctuations on its debt and other obligations. Financial Services 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, Financial Services enters into other derivatives not designated as hedges. The following discussion summarizes the Company’s derivatives used to manage the risk of interest rate fluctuations.

Fair Value Hedges

     Financial Services 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. 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 no 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 loss of $16.5 million for the year ended March 31, 2008. For the years ended March 31, 2007 and 2006, the amount of hedge ineffectiveness included in earnings was a gain of $2.6 million and $20.9 million, respectively.

Other Derivatives

     Financial Services enters into IRLCs with its customers under which Financial Services agrees to make mortgage loans at agreed upon rates within a period of time, generally from one to 30 days, if certain conditions are met. Initially, the IRLCs are treated as derivative instruments and their fair value is recorded on the balance sheet in other assets or accrued liabilities. The fair value of these loan commitment derivatives includes future cash flows related to the associated servicing of the loan, but does not include the value of any internally-developed intangible assets. Subsequent changes in the fair value of the IRLCs are recorded as an adjustment to earnings.

     To offset the interest rate risk related to its IRLCs, Financial Services 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 $4.7 million, a loss of $1.9 million and a gain of $1.0 million for the years ended March 31, 2008, 2007 and 2006, respectively.

     From time to time, the Company may enter into other forms of derivatives to hedge changes in market values of certain assets and liabilities. The notional value of such derivatives was $79.0 million at March 31, 2008.

(M) 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

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market exchange. All assets and liabilities that are not considered financial instruments have been valued using historical cost accounting.

     The consolidated carrying values of cash and cash equivalents, restricted cash, other receivables, accounts payable and accrued liabilities, forward trade commitments, IRLCs 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,
	2008					2007
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Financial Assets
Mortgage Loans, net	$	515,880	$	516,003	(1)	$	1,710,348	$	1,711,401	(1)
Financial Liabilities
Centex Long-term Debt	$	3,321,117	$	2,871,378	(2)	$	3,900,310	$	3,846,499	(2)
Financial Services Long-term Debt	$	—	$	—		$	60,000	$	58,688	(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.

(N) 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 (G), “Commitments and Contingencies.”

(O) DISCONTINUED OPERATIONS

     Over the last several fiscal years, the Company has completed the sale of its international homebuilding operations, Home Equity and Construction Services to unrelated third parties. In March 2008, the Company signed a definitive agreement to sell its home services operations, and the sale was completed in April 2008. Prior to their sale, the Company’s international homebuilding operations were included in the Home Building segment, Home Equity was included in the Financial Services segment, Construction Services was a separate reporting segment and the Company’s home services operations were included in the Other segment. International Home Building, Home Equity, Construction Services and the Company’s home services operations were reclassified to discontinued operations in September 2005, March 2006, March 2007 and March 2008, respectively. All prior period information has been reclassified to be consistent with the March 31, 2008 presentation. A brief summary of each transaction is provided below. For a discussion of the sale of the Company’s home services operations, please refer to Note (P), “Subsequent Events.”

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International Home Building

     In September 2005, the Company sold its international homebuilding operations. 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 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 and review 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:

	For the Year ended
	March 31, 2006
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	)

Home Equity

     On July 11, 2006, the Company sold Home Equity and received $518.5 million in cash, net of related expenses and as adjusted for the settlement of post-closing adjustments. In connection with the sale, all intercompany accounts with Home Equity were repaid and settled. As a result of the sale, Home Equity is no longer a subsidiary of Centex Corporation and has changed its name to Nationstar Mortgage, LLC. The purchase price was based on the book value of Home Equity, plus a premium calculated in accordance with agreed upon formulas and procedures.

     Additionally, the Company has agreed to indemnify the purchaser of Home Equity for certain contingencies. The Company does not believe such contingencies, if paid, will be material to the Company’s results of operations or financial position. The net gain on sale recorded in connection with the sale of Home Equity, including post-closing adjustments recognized subsequent to December 31, 2006, is summarized below:

	For the Year ended
	March 31, 2007
Sales and Related Proceeds, net of Related Expenses	$	518,500
Assets Sold		(400,706	)
Intercompany Liability Paid by Buyer		(11,795	)
Deferred Income		(6,100	)
Hedging Gain		25,466
Pre-tax Gain on Sale		125,365
Income Tax Expense		(50,390	)
Net Gain on Sale	$	74,975

Construction Services

     On March 30, 2007, the Company sold Construction Services and received $344.8 million in cash, net of related expenses and as adjusted for the estimated settlement of post-closing adjustments. In connection with the sale, all intercompany accounts with Construction Services were repaid and settled. As a result of the sale, Construction Services is no longer a subsidiary of Centex Corporation and has changed its name to Balfour Beatty Construction Group, Inc.

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     The Company will also receive an aggregate of $60.0 million in cash to be paid in annual installments of $4.0 million over a 15-year period (the “Additional Payments”). The Additional Payments will be made in connection with an election with respect to the tax treatment of the transaction pursuant to Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). If the Internal Revenue Code is amended so that the purchaser is no longer entitled to the benefits of the Section 338(h)(10) election, the amount of the Additional Payments will be subject to change to ensure that any subsequent payments to be made by the purchaser do not exceed 50% of the tax benefits to be realized by it thereafter as a result of such election. The Additional Payments are an unsecured receivable from the purchaser that was not recorded in connection with the sale of Construction Services. As the Additional Payments are received in future periods, the amounts will be reflected in the Statements of Consolidated Earnings. In March 2008, the Company received a $4.0 million installment of the Additional Payment which is reflected in earnings from discontinued operations.

     The stock purchase agreement provided for a post-closing adjustment, which was intended to reflect a final calculation of, among other things, the final stockholder’s equity balance of Construction Services immediately prior to its sale. In connection with the sale, Construction Services was required to pay a dividend to Centex Corporation equal to its stockholder’s equity. The effect of the post-closing adjustment was estimated in the Company’s calculation of the gain on sale of Construction Services for the year ended March 31, 2007, but was subject to change. During fiscal year 2008, the amount of the post-closing adjustment was determined, which resulted in an additional $4.3 million pre-tax gain on sale. A summary of the Company’s calculation of the gain on sale of Construction Services is below:

	For the Years Ended March 31,
	2008			2007
Sales and Related Proceeds, net of Related Expenses	$	8,341		$	344,752
Assets Sold		—			—
Pre-tax Gain on Sale		8,341			344,752
Income Tax Expense		(3,224	)		(131,695	)
Net Gain on Sale	$	5,117		$	213,057

Summarized Financial Information

     Earnings from discontinued operations include: the financial information for entities included in discontinued operations, the gains (losses) on the sale of such entities, intercompany eliminations between entities in discontinued operations and entities in continuing operations, and certain general and administrative expenses incurred in the sale of such entities. The following table provides summarized balance sheets for entities included in discontinued operations:

	As of March 31,
	2008			2007
Assets
Cash and Cash Equivalents	$	28		$	220
Receivables		8,367			7,704
Other Inventories		1,922			2,664
Property and Equipment, net		989			1,431
Deferred Income Taxes, net		(11,858	)		(10,889	)
Goodwill		89,648			88,589
Deferred Charges and Other, net		7,893			9,447
	$	96,989		$	99,166
Liabilities
Accounts Payable and Accrued Liabilities	$	32,260		$	22,301
Long-term Debt		1,741			2,308
	$	34,001		$	24,609

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     The following table provides summarized earnings information for entities included in discontinued operations:

	For the Years Ended March 31,
	2008 (1)			2007 (2)			2006 (3)
Revenues	$	130,118		$	2,405,147		$	2,715,944
Costs and Expenses		(131,994	)		(2,427,373	)		(2,568,954	)
Earnings from Unconsolidated Entities and Other		—			975			1,174
Earnings (Loss) Before Income Taxes		(1,876	)		(21,251	)		148,164
Benefit (Provision) for Income Taxes		245			11,062			(62,356	)
Gain (Loss) on Sale, net of Tax		5,117			288,032			(9,160	)
	$	3,486		$	277,843		$	76,648

(1)	Includes Construction Services and home services operations.
(2)	Includes Construction Services, Home Equity and home services operations.
(3)	Includes Construction Services, Home Equity, International Home Building and home services operations.

Significant Accounting Policies Related to Discontinued Operations

Revenue Recognition — Construction Services

     Long-term construction contract revenues were recognized on the percentage-of-completion method based on the costs incurred relative to total estimated costs. Full provision was made for any anticipated losses. Billings for long-term construction contracts were 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.

     Claims related to long-term construction contracts were recognized as revenue only after management had determined that the collection was probable and the amount could be reliably estimated. There were no claims included in revenues for the fiscal years ended March 31, 2007 and 2006.

(P) Subsequent Events (Unaudited)

     In March 2008, the Company signed a definitive agreement to sell its home services operations to a third party, and the sale was completed in April 2008. The Company received $134.6 million in cash, which is subject to post-closing adjustments. The Company estimates the pre-tax gain on the sale of its home services operations will be approximately $40 million.

     On May 7, 2008, S&P lowered the Company’s debt rating from to BB+ to BB. This downgrade triggered a provision in CTX Mortgage Company, LLC’s $450 million committed bank warehouse credit facility which allows the bank to convert the facility to an amortizing loan based on the ultimate sale of the underlying collateral and not to purchase any additional mortgage loans. On May 9, 2008, CTX Mortgage Company, LLC executed an amendment to the bank warehouse credit facility which lowered the commitment to $375 million, reset the debt ratings trigger that provides the bank the option to convert the facility to an amortizing loan if the Company’s credit rating falls below BB by S&P and Fitch or below Ba2 by Moody’s. A further downgrade in the Company’s credit rating by a rating agency could result in the wind-down of the $375 million warehouse credit facility. The rating change by S&P is not currently anticipated to have a material adverse impact on the Company’s ability to access the capital it needs to fund its operations.

     In May 2008, the Company issued to officers and employees 1,628,220 stock options under the 2003 Plan and the 2001 Plan (having an aggregate fair value of $12,879,220), 363,600 restricted stock units under the 2003 Plan and the LTIP Plan (having an aggregate fair value of $8,028,288), and long-term performance units having an aggregate fair value of $28,383,515.

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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, 2008 and 2007, and the related consolidated statements of earnings, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2008. 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, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2008, in conformity with U.S. generally accepted accounting principles.

     As discussed in Note A to the consolidated financial statements, the Company adopted the provisions of Statement of Financial Accounting Standard No. 123(R), Statement of Financial Accounting Standard No. 48, and Staff Accounting Bulletin 109 effective January 1, 2006; April 1, 2007; and January 1, 2008 respectively.

     Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The consolidating details appearing in conjunction with the consolidated balance sheet and cash flow statement of Centex Corporation 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.

     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, 2008, 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 21, 2008 expressed an unqualified opinion thereon.

 
Dallas, Texas
 
May 21, 2008

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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, 2008 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, 2008.

     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.

     The independent registered public accounting firm that audited the Company’s consolidated financial statements, Ernst & Young LLP, has issued an audit report on the Company’s internal control over financial reporting. This report appears on page 104 of this Report.

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Report of Independent Registered Public Accounting Firm

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

     We have audited Centex Corporation and subsidiaries (Centex Corporation’s) internal control over financial reporting as of March 31, 2008, 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 included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on 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, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, 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, Centex Corporation maintained, in all material respects, effective internal control over financial reporting as of March 31, 2008, based on the COSO criteria.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2008 consolidated financial statements of Centex Corporation and subsidiaries and our report dated May 21, 2008 expressed an unqualified opinion thereon.

 
Dallas, Texas

May 21, 2008

104

Quarterly Results (Unaudited) ⁽¹⁾
(Dollars in thousands, except per share data)

	For the Quarters Ended 2008 and 2007
	Q1			Q2			Q3			Q4
2008
Revenues	$	1,901,786		$	2,186,184		$	1,873,287		$	2,314,305
Gross Profit ( Loss)	$	(181,738	)	$	(1,009,310	)	$	(662,949	)	$	(932,132	)
Loss from Continuing Operations	$	(132,081	)	$	(644,761	)	$	(976,051	)	$	(908,075	)
Earnings (Loss) from Discontinued Operations, net of Taxes		4,122			928			863			(2,427	)
Net Loss	$	(127,959	)	$	(643,833	)	$	(975,188	)	$	(910,502	)
Loss from Continuing Operations Per Share
Basic	$	(1.08	)	$	(5.27	)	$	(7.95	)	$	(7.34	)
Diluted	$	(1.08	)	$	(5.27	)	$	(7.95	)	$	(7.34	)
Net Loss Per Share
Basic	$	(1.05	)	$	(5.26	)	$	(7.94	)	$	(7.36	)
Diluted	$	(1.05	)	$	(5.26	)	$	(7.94	)	$	(7.36	)
Average Shares Outstanding
Basic		121,469,951			122,301,587			122,787,414			123,750,049
Diluted		121,469,951			122,301,587			122,787,414			123,750,049
2007
Revenues	$	2,772,503		$	2,783,322		$	2,694,750		$	3,637,026
Gross Profit (Loss)	$	269,523		$	133,518		$	(252,177	)	$	(1,525	)
Earnings (Loss) from Continuing Operations	$	173,496		$	81,269		$	(241,588	)	$	(22,654	)
Earnings (Loss) from Discontinued Operations, net of Taxes		(13,239	)		56,131			13,442			221,509
Net Earnings (Loss)	$	160,257		$	137,400		$	(228,146	)	$	198,855
Earnings (Loss) from Continuing Operations
Per Share
Basic	$	1.42		$	0.68		$	(2.01	)	$	(0.19	)
Diluted	$	1.37		$	0.66		$	(2.01	)	$	(0.19	)
Net Earnings (Loss) Per Share
Basic	$	1.31		$	1.15		$	(1.90	)	$	1.65
Diluted	$	1.27		$	1.11		$	(1.90	)	$	1.65
Average Shares Outstanding
Basic		121,969,085			119,634,303			119,935,522			120,627,559
Diluted		126,233,469			123,504,535			119,935,522			120,627,559

(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 home services operations (sold in April, 2008), Construction Services (sold in March 2007) and Home Equity (sold in July 2006) as discontinued operations.

105

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, 2008. 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, 2008. There has been no change in our internal controls over financial reporting during the quarter ended March 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

     For management’s and the 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, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The sections of our Proxy Statement for our Annual Meeting to be held on July 10, 2008, which we refer to as the 2008 Proxy Statement, captioned “Part Two — Corporate Governance Information, Board of Directors and Board Committees and Director Nomination Process” and “Part Three — Proposals to be Voted on at the 2008 Annual Meeting, Proposal No. 1 — Election of Directors,” identify the members of the Board of Directors of the Company and nominees, and identify members of the Audit Committee of the Board of Directors and audit committee financial experts, and are incorporated in this Item 10 by reference. Information about the executive officers of the Company is contained in Item 4A of Part I of this Report and is incorporated herein by reference.

     The section of the 2008 Proxy Statement captioned “Part Four — Other Important Information, Other Matters — Section 16(a) Beneficial Ownership Reporting Compliance and — Stockholder Proposals” is incorporated in this Item 10 by reference.

     The policies comprising our 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 web site at http://www.centex.com. The Board will not permit any waiver of any ethics policy for any director or executive officer.

ITEM 11. EXECUTIVE COMPENSATION

     The information in the sections of the 2008 Proxy Statement captioned “Part Two — Corporate Governance Information, Board of Directors and Board Committees and Other Governance Matters” and “Part Four — Other Important Information, Executive Compensation and Board Compensation” is incorporated in this Item 11 by reference.

106

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

     The information in the section of the 2008 Proxy Statement captioned “Part Four — Other Important Information, Stock Ownership” is incorporated in this Item 12 by reference. Information called for by this item relating to securities authorized for issuance under equity compensation plans is included in Note (K), “Capital Stock and Employee Benefit Plans,” of the Notes to Consolidated Financial Statements, and is incorporated in this Item 12 by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

     The information in the sections of the 2008 Proxy Statement captioned “Part Two — Corporate Governance Information, Board of Directors and Board Committees, Director Independence and Other Governance Matters,” and “Part Four — Other Important Information, Certain Relationships and Related Transactions” is incorporated in this Item 13 by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information in the section of the 2008 Proxy Statement captioned “Part Three — Proposals to be Voted on at the 2008 Annual Meeting, Proposal No. 2” is incorporated in this Item 14 by reference.

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, 2008 and 2007, and the related consolidated statements of earnings, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2008, 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 (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.

107

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
3.1a	Certificate of Correction to Restated Articles of Incorporation of Centex dated November 13, 2007	Exhibit 3.2 to Centex’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007
3.2	Amended and Restated By-Laws of Centex dated October 10, 2007	Exhibit 3.1 to Centex’s Current Report on Form 8-K dated October 16, 2007
4.1	Specimen Centex common stock certificate	Exhibit 4.1 to Centex’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006
4.5	Indenture, dated October 1, 1998, between Centex and U.S. Bank National Association (as successor to JPMorgan Chase Bank, N.A.)	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
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 indentures or other agreements in connection with certain asset securitizations involving certain subsidiaries of Centex in private transactions and (c) 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*	Exhibit 10.5 to Centex’s Current Report on Form 8-K dated February 19, 2008
10.2	Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan (“1998 Stock Option Plan”)*	Exhibit 10.4 to Centex’s Current Report on Form 8-K dated February 19, 2008
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”)*	Exhibit 10.3 to Centex’s Current Report on Form 8-K dated February 19, 2008
10.3a	Form of stock option agreement for 2001 Stock Plan*	Exhibit 10.5 to Centex’s Current Report on Form 8-K dated May 13, 2008

108

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
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	Centex Corporation Long Term Incentive Plan (“LTIP”)*	Exhibit 10.6 to Centex’s Current Report on Form 8-K dated February 19, 2008
10.4a	Form of award agreement for LTIP*	Filed herewith
10.5	Centex Corporation 2003 Annual Incentive Compensation Plan* +	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated February 19, 2008
10.5a	Form of award agreement for incentive compensation (fiscal 2009)*	Exhibit 10.8 to Centex’s Current Report on Form 8-K dated May 13, 2008
10.6	Centex Corporation 2003 Equity Incentive Plan (“2003 Equity Incentive Plan”)* +	Filed herewith
10.6a	Form of stock option agreement for 2003 Equity Incentive Plan*	Exhibit 10.6 to Centex’s Current Report on Form 8-K dated May 13, 2008
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 10.5 to Centex’s Current Report on Form 8-K dated May 16, 2007
10.6d	Form of non-employee director stock option agreement for 2003 Equity Incentive Plan*	Exhibit 10.1 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006
10.6e	Form of non-employee director restricted stock agreement for 2003 Equity Incentive Plan*	Exhibit 10.2 to Centex’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006
10.6f	Form of long-term performance unit award for 2003 Equity Incentive Plan (May 2007 award)*	Exhibit 10.4 to Centex’s Current Report on Form 8-K dated May 23, 2007
10.6g	Form of long-term performance unit award for 2003 Equity Incentive Plan (May 2008 award)*	Exhibit 10.7 to Centex’s Current Report on Form 8-K dated May 13, 2008
10.7	Supplemental Executive Retirement Plan of Centex Corporation*	Exhibit 10.9 to Centex’s Current Report on Form 8-K dated February 19, 2008
10.8	Centex Corporation Deferred Compensation Plan*	Exhibit 10.7 to Centex’s Current Report on Form 8-K dated February 19, 2008
10.9	Centex Corporation Executive Deferred Compensation Plan (“Executive Deferred Compensation Plan”)*	Exhibit 10.8 to Centex’s Current Report on Form 8-K dated February 19, 2008
10.9a	Form of deferred compensation agreement for Executive Deferred Compensation Plan*	Filed herewith
10.10	Summary of Outside Director Compensation Plan*	Filed herewith
10.11	Centex Corporation Executive Severance Policy*	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated October 16, 2007
10.12	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
10.13	Centex Comprehensive Medical Plan*	Exhibit 10.11 to Centex’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005
10.13a	Amendment No. 1 to Centex Comprehensive Medical Plan*	Filed herewith

109

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
10.25	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
10.25a	First Amendment to Credit Agreement, dated May 25, 2006 among Centex, Bank of America, N.A., as Administrative Agent, and the lenders named therein	Exhibit 10.2 to Centex’s Current Report on Form 8-K dated June 1, 2006
10.25b	Second Amendment to Credit Agreement, dated July 20, 2007, among Centex, Bank of America, N.A., as Administrative Agent, and the lenders named therein	Exhibit 10.3 to Centex’s Current Report on Form 8-K dated July 23, 2007
10.25c	Third Amendment to Credit Agreement, dated March 26, 2008, among Centex, Bank of America, N.A., as Administrative Agent, and the lenders named therein	Exhibit 10.4 to Centex’s Current Report on Form 8-K dated April 1, 2008
10.26	Securities Purchase Agreement, dated as of March 30, 2006, among Centex Home Equity Company, LLC, Centex Financial Services, LLC and FIF HE Holdings, LLC. In accordance with the instructions to Item 601(b)(2) of Regulation S-K, the schedules to the foregoing Securities Purchase Agreement are not filed herewith. The Securities Purchase Agreement identifies such schedules, including the general nature of their content. Centex undertakes to provide such schedules to the Securities and Exchange Commission upon request.	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated April 4, 2006
10.26a	Amendment No. 1 to Securities Purchase Agreement, dated as of July 11, 2006, among Centex Home Equity Company, LLC, Centex Financial Services, LLC and FIF HE Holdings, LLC. In accordance with the instructions to Item 601(b)(2) of Regulation S-K, the schedules to the foregoing Amendment No. 1 to Securities Purchase Agreement are not filed herewith. The Amendment No. 1 to Securities Purchase Agreement identifies such schedules, including the general nature of their content. Centex undertakes to provide such schedules to the Securities and Exchange Commission upon request.	Exhibit 2.2 to Centex’s Current Report on Form 8-K dated July 14, 2006
10.26b	Amendment No. 2 to Securities Purchase Agreement among Centex Financial Services, LLC, Nationstar Mortgage LLC and FIF HE Holdings, LLC, dated as of December 20, 2006.	Exhibit 2.3 to Centex’s Current Report on Form 8-K dated December 22, 2006

110

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
10.27	Stock Purchase Agreement, dated as of January 31, 2007, among Centex Construction Group, Inc., Centex Corporation, Balfour Beatty, Inc. and Balfour Beatty plc. In accordance with the instructions to Item 601(b)(2) of Regulation S-K, the schedules to the foregoing Stock Purchase Agreement are not filed herewith. The Stock Purchase Agreement identifies such schedules, including the general nature of their content. Centex undertakes to provide such schedules to the Securities and Exchange Commission upon request.	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated February 6, 2007
10.28	Contribution Agreement, dated as of March 29, 2008, between Centex Homes and Corona Real Estate Holding Company, LLC	Filed herewith
10.29	Member Interests Purchase Agreement, dated as of March 31, 2008, between Centex Homes and Corona Land Company, LLC	Filed herewith
10.30	Form of Director Indemnification Agreement*	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated February 14, 2006
10.31	Form of Officer Indemnification Agreement*	Exhibit 10.1 to Centex’s Current Report on Form 8-K dated May 13, 2008
10.32	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
+	Does not include amendments adopted subject to stockholder approval, which are included in the versions of such plans included as appendices to the Company’s proxy statement for its 2008 annual meeting.

111

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 22, 2008	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 22, 2008	By:	/s/ TIMOTHY R. ELLER
		Timothy R. Eller, Chairman of the Board and Chief Executive Officer (principal executive officer)
May 22, 2008	By:	/s/ CATHERINE R. SMITH
		Catherine R. Smith, Executive Vice President and Chief Financial Officer (principal financial officer)
May 22, 2008	By:	/s/ MARK D. KEMP
		Mark D. Kemp, Senior Vice President — Controller (principal accounting officer)
	Directors:	Barbara T. Alexander, 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, Matthew K. Rose and Thomas M. Schoewe
May 22, 2008	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.

112

EX-10.4A

Exhibit 10.4(a)

LTIP Stock Units

May 2008 Stock Unit Award

Dear [Full Name]:

     You have been granted an Award as of May 7, 2008 of [amount] units of Deferred Stock under the Centex Corporation Long Term Incentive Plan (as amended and restated effective January 1, 2008, and as such plan may be amended from time to time, the “Plan”), giving you the right to receive Payout of a number of Shares of the common stock of Centex Corporation (the “Company”) equal to your vested units within the period specified in the Plan following each vesting date (or such earlier date that a substantial risk of forfeiture lapses as provided for under the Plan), provided you are still employed by the Company or an Affiliate on each such date. This Award will vest at the rate of 33¹/3% per year on each vesting date, which will occur on March 31, 2009, March 31, 2010 and March 31, 2011. If you cease to be employed by the Company or any of its Affiliates before a vesting date, in most cases you will forfeit any portion of this Award that has not vested as of your Termination Date.

     Most participants receiving this Award were provided an opportunity to make a deferred payment election in 2007. If you made a deferred payment election, the Payout rules in the foregoing paragraph do not apply and your Payment Election Form and the terms and conditions of the Plan related to deferred payment control the timing of Payout of this Award.

     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 the provisions of this Award, and all terms, provisions and definitions set forth in the Plan are incorporated into this Award and made a part of this Award for all purposes. Capitalized terms used and not otherwise defined in the Plan have the meanings ascribed to such terms in the Plan. A copy of the Plan is available to you upon request to the Law Department during the term of this Award. This Award is subject to the Company’s Policy on Recoupment in Restatement Situations, and you agree that you will comply with the terms of that Policy.

     This Award has been signed by Centex Corporation and delivered to you, and (when signed by you) has been accepted by you effective as of May 7, 2008.

ACCEPTED	CENTEX CORPORATION
[Full Name]	Timothy R. Eller Chairman & Chief Executive Officer

EX-10.6

Exhibit 10.6

CENTEX CORPORATION 2003 EQUITY INCENTIVE PLAN

(Amended and Restated Effective May 7, 2008)

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

     (a) Purpose. 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.

     (b) IRC Section 409A. The Plan and Awards granted hereunder are intended to comply with or be exempt from the requirements of Code Section 409A, and shall be interpreted and administered in a manner consistent with those intentions. Any provision of this Plan to the contrary notwithstanding, Grandfathered Awards shall not be governed by the provisions of this amended and restated Plan but instead shall continue to be governed by the provisions of the Plan as in effect on December 31, 2007.

3. Definitions

     As used herein, the terms set forth below shall have the following respective meanings:

     “Affiliate” means a Subsidiary or Joint Venture; provided, however, that a Subsidiary or Joint Venture shall be considered an Affiliate only if the Subsidiary or Joint Venture would be aggregated and treated as a single employer with the Corporation under Code Section 414(b) (controlled group of corporations) or Code Section 414(c) (group of trades or businesses under common control), as applicable, but in applying such Code Sections, an ownership threshold of 50% shall be used as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (a) Code Section 1563 and the regulations thereunder for determining a controlled group of corporations under Code Section 414(b), and (b) Treasury Regulation § 1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c).

     “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, and does not include a Grandfathered 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.

1

     “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” means, unless otherwise defined by the Committee, 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, 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;

provided, however, that no Change in Control shall be deemed to have occurred with respect to paragraph 10 unless such event constitutes an event specified in Code Section 409A(a)(2)(A)(v) and the Treasury Regulations and other guidance issued under or related to Section 409A of the Code.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Code Section 409A” means Section 409A of the Code and all applicable regulations and other guidance issued under or related to Section 409A of the Code.

     “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 determination in accordance with the terms of the Long Term Disability Plan of Centex Corporation, provided that with respect to Awards that are subject to Code Section 409A, the Participant also must meet one of the following conditions:

     (a) the Participant is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or

     (b) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous

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period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s Employer.

     “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 Affiliate.

     “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 closing price per share of such Common Stock, as reported on the consolidated transaction reporting system for the New York Stock Exchange or such other national securities exchange on which the Common Stock is listed that is at the applicable time the principal market for the Common Stock, or any other source selected by the Committee, or, if there shall have been no such sales so reported on that date, on the last preceding date on which such a sale was so reported, (B) if Common Stock is not so listed, the mean between the closing bid and asked price of Common Stock on that date, or, if there are no quotations available for such date, on the last preceding date on which such a quotation was reported, as reported on a recognized quotation system selected by the Committee, or, if not so reported, then as reported by The Pink Sheets LLC (or a similar organization or agency succeeding to its functions of reporting prices), or (C) 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. Any determination of Fair Market Value shall be consistent with Code Section 409A to the extent applicable.

     “Family Member” means a Participant’s spouse and any parent, stepparent, grandparent, child, stepchild or grandchild of the Participant, including adoptive relationships, or a trust, family limited partnership or any other entity in which these persons (with or without the Participant) have more than 50% of the beneficial interest.

     “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week.

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     “Grandfathered Awards” means all Awards made pursuant to the Plan that were earned and vested on or before December 31, 2004. Grandfathered Awards are subject to the provisions of paragraph 2(b).

     “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 a 50% ownership, voting, capital or profits 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.

     “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 paragraph 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 Separation from Service and, where the context indicates, includes Vested Retirement. Calculation of eligibility for Retirement shall be based on whole Years of Service on the date as of which the calculation is being made. Any partial years shall be disregarded.

     “Separation from Service” means a termination of services provided by a Participant to his or her Employer (as defined below), whether voluntarily or involuntarily, as determined by the Committee in accordance with Treasury Regulation § 1.409A-1(h). In determining whether a Participant has incurred a Separation from Service, the following provisions shall apply:

     (a) For a Participant who provides services to an Employer as an employee, except as otherwise provided in this definition, a Separation from Service will occur when such Participant has experienced a termination of employment with the Employer. A Participant will be considered to have experienced a termination of employment when the facts and

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circumstances indicate that the Participant and his or her Employer reasonably anticipate that either (A) no further services will be performed for the Employer after a certain date, or (B) that the level of bona fide services the Participant will perform for the Employer after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 33¹/3 percent of the average level of bona fide services performed by the Participant (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months).

     If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer will be treated as continuing, provided that the period of the leave of absence does not exceed 6 months, or if longer, so long as the Participant has a right to reemployment with the Employer under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant does not have a right to reemployment under an applicable statute or by contract, the employment relationship will be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period. In applying the provisions of this paragraph, a leave of absence will be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.

     (b) For a Participant who provides services to an Employer as an independent contractor, except as otherwise provided in this definition, a Separation from Service will occur upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for the Employer, provided that the expiration of such contract or contracts is determined by the Committee to constitute a good-faith and complete termination of the contractual relationship between the Participant and the Employer.

     (c) For a Participant who provides services to an Employer as both an employee and an independent contractor, a Separation from Service generally will not occur until the Participant has ceased providing services for the Employer as both as an employee and as an independent contractor, as determined in accordance with the provisions set forth in subparagraphs (a) and (b) of this definition, respectively. If a Participant either (i) ceases providing services for an Employer as an independent contractor and begins providing services for such Employer as an employee, or (ii) ceases providing services for an Employer as an employee and begins providing services for such Employer as an independent contractor, the Participant will not be considered to have experienced a Separation from Service until the Participant has ceased providing services for the Employer in both capacities, as determined in accordance with the applicable provisions set forth in subparagraphs (a) and (b) of this definition.

     Notwithstanding the foregoing provisions in this subparagraph (c), if a Participant provides services for an Employer as both an employee and as a member of the board of directors of an Employer, to the extent permitted by Treasury Regulation § 1.409A-1(h)(5), the services provided by the Participant as a director will not be taken into account in determining whether the Participant has experienced a Separation from Service as an employee, and the services provided by the Participant as an employee will not be taken into account in determining whether the Participant has experienced a Separation from Service as a director.

     (d) In addition, notwithstanding the provisions of this definition, where as part of a sale or other disposition of substantial assets by an Employer to an unrelated buyer, a Participant would otherwise experience a Separation from Service as defined above, the Employer and the

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buyer shall retain the discretion to specify, and may specify, that a Participant performing services for an Employer immediately before the asset purchase transaction and providing services to the buyer after and in connection with the asset purchase transaction shall not experience a Separation from Service for purposes of this Plan and the Participant shall be bound by same, provided that such transaction and the specification meet the requirements of Code Section 409A.

     (e) For purposes of this definition, “Employer” means:

     (i) The entity for whom the Participant performs services and with respect to which the legally binding right to an Award or payment under an Award arises; and

     (ii) All other entities with which the entity described in subparagraph (e)(i) of this definition would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (group of trades or businesses under common control), as applicable. To identify the group of entities described in the preceding sentence, an ownership threshold of 50% shall be used as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (A) Code Section 1563 and the regulations thereunder for determining a controlled group of corporations under Code Section 414(b), and (B) Treasury Regulation § 1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c).

     “Specified Employee” means any Participant who is determined to be a “key employee” (as defined under Code Section 416(i) without regard to paragraph (5) thereof) for the applicable period, as determined by the Corporation in accordance with Treasury Regulation § 1.409A-1(i).

     “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.

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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. Notwithstanding the foregoing, Employees of Affiliates that are not considered a single employer with the Corporation under Code Section 414(b) or Code Section 414(c) shall not be eligible to receive Employee Awards that are subject to Code Section 409A until the Affiliate adopts this Plan as a participating employer in accordance with paragraph 23.

     (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, after considering tax and other potential legal implications, (1) provide for the extension of the

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exercisability of an Option but only to the extent such extension does not result in a modification of the Option for purposes of Code Section 409A, (2) accelerate the vesting or exercisability of an Award in connection with the death, Disability, Retirement or termination of a Participant (including pursuant to a severance policy or plan approved by the Board or the Committee), or a Change in Control, (3) eliminate or make less restrictive any restrictions applicable to an Award, or waive any restriction or other provision of this Plan (insofar as such provision relates to Awards) or an Award, in connection with the death, Disability, Retirement or termination of a Participant (including pursuant to a severance policy or plan approved by the Board or the Committee), or a Change in Control, or (4) 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; provided, however, that payment in respect of an Award may be deferred only as provided in paragraph 10 of this Plan. 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

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Common Stock subject to such Option on the Grant Date. Notwithstanding anything contrary contained in this Plan including paragraphs 8(a)(i)(A) and (B), in no event shall the 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, or, unless the Option is structured to comply with Code Section 409A, otherwise provide for the deferral of compensation within the meaning of Code Section 409A other than the deferral of recognition of income until the later of the exercise or disposition of the Option or the time the Common Stock acquired pursuant to the exercise of the Option first becomes substantially vested. Subject to the foregoing provisions and the provisions of paragraph 11, 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 paragraph 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 (but in no event later than the end of the original period of the Option).

     (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 (but in no event later than the end of the original period of the Option).

     (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

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one provided in the Option or seven (7) years from the grant date, whichever occurs earlier. This 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 12 months following the date of the Vested Retirement (but in no event later than the end of the original period of the Option). To the extent that such Award provides a longer term to exercise, such Award will control.

     (D) Attached hereto as Exhibit A 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 paragraph 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 unless otherwise specified in an Award Agreement entered into on or after January 1, 2008, 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-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

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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:

     (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

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     (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.

     (i) Except as otherwise provided in paragraph 10(b) or an Award Agreement, payment in respect of Awards granted on or after January 1, 2008 other than Options will be made as soon as administratively practicable but no later than 60 days following the date on which the payment is no longer subject to a substantial risk of forfeiture within the meaning of Code Section 409A; provided, however, that payment may be made at a later date for administrative reasons to the extent permitted by Code Section 409A; provided, further, that the Participant shall not be permitted, directly or indirectly, to designate the calendar year of payment. Delivery of Common Stock upon exercise of Options will be made in accordance with paragraph 11.

     (ii) 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 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

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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, payment in respect of Awards other than Options 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 such Awards or any other compensation otherwise payable by the Corporation in accordance with the provisions of this paragraph 10(b) and such other procedures as may be established by the Committee and may provide that such deferred compensation may be payable in shares of Common Stock. The Committee also may specify in an Award Agreement or the terms of the Award that payment in respect of an Award will be deferred. Any deferred payment pursuant to an Award, whether elected by the Participant or specified by the Award Agreement or the terms of the Award, may be forfeited if and to the extent that the Award Agreement or the terms of the Award so provide. Any such deferral of payment will be made in accordance with the following:

     (i) Initial Deferral Elections by Participants. Except as otherwise provided in this paragraph 10(b), the Participant must make a written, irrevocable election as to deferral of payment in respect of an Award and the time and form of such payment on or before the deadline established by the Committee, which shall be no later than:

     (A) December 31^st of the calendar year preceding the calendar year during which the Participant will commence performing the services giving rise to the Award subject to the deferral election; or

     (B) for the first year in which the Participant becomes eligible to participate in the Plan, 30 days after the date the Participant first becomes eligible to participate in the Plan, provided that such an election will only be effective with respect to the portion of the Award related to services performed after the election.

     (ii) Initial Participant Deferral Elections for Performance-Based Compensation. In the event that the Committee determines that a deferral election may be made with respect to an Award that is Performance-Based Compensation (as defined below), an eligible Participant may make a written, irrevocable election as to deferral of payment in respect of the Award and the time and form of such payment on or before the deadline established by the Committee, which shall not be later than 6 months before the end of the performance period.

     For purposes of this subparagraph, “Performance-Based Compensation” means an Award, the amount of which, or the entitlement to which, is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Committee in accordance with Treasury Regulation § 1.409A-1(e). Performance criteria are considered preestablished if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established.

     For a Participant to be eligible to make a deferral election in accordance with this subparagraph, the Participant must have performed services continuously from the later of (A) the beginning of the performance period for the Performance-Based Compensation or (B) the date upon which the performance criteria with respect to the Performance-Based Compensation are established, through the date on which the Participant makes the deferral election. In addition, in no event may a deferral election under this subparagraph be made after the Performance-Based

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Compensation has become readily ascertainable within the meaning of Treasury Regulation § 1.409A-2(a)(8).

     (iii) Initial Participant Deferral Elections for Fiscal Year Compensation. In the event that the Committee determines that a deferral election may be made with respect to an Award that is Fiscal Year Compensation (as defined below), the Participant may make a written, irrevocable election as to the deferral of payment in respect of the Award and the time and form of such payment on or before the deadline established by the Committee, which shall not be later than the close of the Employer’s fiscal year immediately preceding the first fiscal year in which any services are performed for which the Award is payable. For purposes of this subparagraph, the term “Fiscal Year Compensation” means an Award relating to a period of service coextensive with one or more consecutive fiscal years of the Employer, of which no amount is paid or payable during the fiscal year(s) constituting the period of service.

     (iv) Initial Participant Deferral Elections for Short-Term Deferrals. If a Participant has a legally binding right to an Award under the Plan or a payment under an Award in a subsequent calendar year that, absent a deferral election, would be treated as a short-term deferral within the meaning of Treasury Regulation § 1.409A-1(b)(4) and the Committee determines that a deferral election may be made with respect to payment in respect of the Award, the Participant may make a written, irrevocable election to defer such payment in accordance with the requirements of subparagraph (vii) of this paragraph, applied as if the payment were a deferral of compensation and the scheduled payment date for the payment were the date the substantial risk of forfeiture lapses. The Committee may provide in the deferral election that the deferred payment will be payable upon a Change in Control without regard to the five-year additional deferral requirement in subparagraph (vii) of this paragraph 10(b).

     (v) Initial Participant Deferral Elections for Compensation Subject to a Risk of Forfeiture. If a Participant has a legally binding right to an Award under the Plan or payment in respect of an Award in a subsequent year and the payment of or under the Award is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least 12 months from the date the Participant obtains the legally binding right, the Committee may permit the Participant to make a written, irrevocable election to defer such payment no later than the 30^th day after the Participant obtains the legally binding right to the payment, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition could lapse, as determined in accordance with Treasury Regulation § 1.409A-2(a)(5). For purposes of this subparagraph, a condition will not be treated as failing to require the Participant to continue to provide services for a period of at least 12 months from the date the Participant obtains the legally binding right merely because the condition immediately lapses upon Disability or death of the Participant or upon a Change in Control. However, if the Participant’s Disability or death or a Change in Control event occurs before the end of such 12-month period, a deferral election under this subparagraph will be effective only if it would be permissible under another subparagraph of this paragraph 10(b).

     (vi) Deferrals by Committee. If an Award is made that provides for the deferral of compensation for services performed during a Participant’s taxable year and the Participant is not given an opportunity to elect the time or form of payment of such Award, the Committee must designate the time and form of payment no later than the time the Participant first has a legally binding right to the Award or, if later, the time the Participant would be required under this subparagraph 10(b) to make such an election if the Participant were provided such an election.

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     (vii) Subsequent Participant Deferral Elections. Notwithstanding the foregoing provisions of this paragraph 10(b), with approval of the Committee, a Participant may elect to further delay payment in respect of an Award or change the form of payment if:

     (A) the election will not take effect until at least 12 months after the date on which the election is made;

     (B) for any payment not made on account of death or Disability, the payment is deferred for a period of not less than five years from the date the payment would otherwise have been paid and not later than the expiration date of the Award; and

     (C) any election related to a payment to be made at a specified time or pursuant to a fixed schedule must be made not less than 12 months before the date the payment is scheduled to be paid.

Notwithstanding the foregoing or any other provision of this Plan to the contrary, the Committee may permit Participants to make new payment elections on or before December 31, 2008, with respect to the time and/or form of payment in respect of an Award, provided that the election applies only to amounts that would not otherwise be payable in the year in which the election is made and does not cause an amount to be paid in the year in which the election is made that would not otherwise be payable in that year.

     (viii) Acceleration of Payments. Notwithstanding any provision of this Plan, an Award Agreement or a deferral election to the contrary, the Committee, in its discretion, may accelerate payment in respect of an Award in accordance with the provisions of Treasury Regulation § 1.409A-3(j)(4)(ii) through (xiv).

     (ix) Delay of Payments. Notwithstanding any provision of this Plan, an Award Agreement or a deferral election to the contrary, payment in respect of an Award may be delayed by the Committee under the circumstances described in Treasury Regulation § 1.409A-2(b)(7), provided that the Committee treats all payments to similarly situated Participants on a reasonably consistent basis.

     (c) Permissible Payment Events/Times. The Committee may specify any one or more of the following as an event upon or a time at which payment of the vested portion of an Award may be made pursuant to a deferral election under paragraph 10(b): (i) Separation from Service, (ii) Disability, (iii) death, (iv) a specified date or pursuant to a fixed schedule, or (v) a Change in Control. The Committee may provide for payment upon the earliest or latest of more than one such event or time.

     (d) Time of Payment. The payment date with respect to payment of an Award that is deferred under paragraph 10(b) shall be the permissible payment event or time under paragraph 10(c) designated by the Participant or the Committee, as applicable, in accordance with paragraph 10(b). Payment in respect of an Award shall be made within 60 days following the payment date; provided, however, that payment may be made at a later date for administrative reasons to the extent permitted by Code Section 409A; provided, further, that the Participant shall not be permitted, directly or indirectly, to designate the calendar year of the payment.

     (e) Specified Employees. Any provision of the Plan to the contrary notwithstanding, if any payment in respect of a Participant’s Award provides for a deferral of compensation under Code Section 409A and the Participant is a Specified Employee as of the date of his or her Separation from Service, no payment on account of the Participant’s Separation from Service may be made with respect to such Participant before the date that is six months after the Participant’s Separation from Service (or, if earlier

15

than the end of the six-month period, the date of the Participant’s death). In such case, any payment that would be made within such six-month period will be accumulated and paid in a single lump sum on the on the earliest business day that complies with the requirements of Code Section 409A.

     (f) 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.

     (g) Substitution of Awards. Subject to paragraphs 13 and 15, at the discretion of the Committee and after considering tax and other potential legal implications, 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 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

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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, except in connection with a corporate transaction involving the Corporation (including, without limitation, a subdivision or consolidation of outstanding shares, stock dividend, stock split, extraordinary cash dividend, recapitalization, capital reorganization, split-up, spin-off, merger, consolidation, combination or exchange of shares), (a) the terms of outstanding Awards may not be amended to reduce the exercise price of Options, (b) Options will not be repriced, replaced, or regranted through cancellation or by decreasing the Grant Price of a previously granted Option, and (c) outstanding Options will not be replaced with cash or another Award, in each case without approval of the Corporation’s stockholders.

14. Assignability

     (a) Except as provided in paragraphs 14(b) and (c), no Award or any other benefit under this Plan shall be assignable or otherwise transferable except by will, beneficiary designation, the laws of descent and distribution, or a domestic relations order. The Committee may prescribe and include in applicable Award Agreements or the terms of the Award other restrictions on transfer. No right or interest of a Participant in any Award may be pledged, encumbered or hypothecated to, or in favor of, any party other than the Corporation or an Affiliate. Any attempted assignment of an Award or any other benefit under this Plan in violation of this paragraph 14 shall be null and void.

     (b) During his or her lifetime a Participant may transfer an Award without value or consideration to any Family Member if the transfer is approved by the Committee, in its discretion. A Participant seeking a transfer of an Award pursuant to this subparagraph shall make a request for approval to the Committee by contacting the Corporation in writing. The Committee shall be under no obligation to grant a request for a transfer to a Family Member. If an Award is transferred as contemplated herein, such transferred Award may not be subsequently transferred by the transferee (other than another transfer meeting the conditions herein) except by will or the laws of descent and distribution. A transferred Award shall continue to be governed by and be subject to the terms and limitations of this Plan and the relevant Award Agreement, and the transferee shall be entitled to same rights as a Participant, as if the transfer had not taken place.

     (c) A Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representatives, or other person claiming any rights pursuant to this Plan is subject to all the terms and conditions of the Plan and any Award

17

Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provides, and any additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been designated or survives the Participant, payments to be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution. If a beneficiary designation conflicts with an assignment by will, the beneficiary designation will prevail. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is provided to the Corporation on behalf of the Committee.

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 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 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

18

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 or an Affiliate 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 was submitted to the stockholders of the Corporation for approval and approved at the 2003 annual meeting of shareholders to be effective as of April 1, 2003. The Plan has been amended since then by the Board with the most recent amendment effective as of May 7, 2008.

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.

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23. Adoption By Affiliates

     With the consent of the Committee, any Affiliate that is not considered a single employer with the Corporation under Code Section 414(b) or Code Section 414(c) may adopt the Plan for the benefit of its Employees by written instrument delivered to the Committee before the grant of any Award subject to Code Section 409A to the Affiliate’s Employees under the Plan.

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Exhibit A
to the
Centex Corporation 2003 Equity Incentive Plan
(Amended and Restated Effective January 1, 2008)

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.

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EX-10.6B

Exhibit 10.6(b)
2003 EIP Stock Units

May 2008 Stock Unit Award

Dear [Full Name]:

     You have been granted an Award as of May 7, 2008 of [amount] Stock Units under the Centex Corporation 2003 Equity Incentive Plan (as amended and restated effective May 7, 2008, and as such plan may be amended from time to time, the “Plan”), giving you the right to receive payment of a number of Shares of the common stock of Centex Corporation (the “Company”) equal to your vested units within the period specified in the Plan following each vesting date (or such earlier date that a substantial risk of forfeiture lapses as provided for under the Plan), provided you are still employed by the Company or an Affiliate on each such date. This Award will vest at the rate of 33¹/3% per year on each vesting date, which will occur on March 31, 2009, March 31, 2010 and March 31, 2011. If you cease to be employed by the Company or any of its Affiliates before a vesting date, in most cases you will forfeit any portion of this Award that has not vested as of your termination date.

     Most participants receiving this Award were provided an opportunity to make a deferred payment election in 2007. If you made a deferred payment election, the payment rules in the foregoing paragraph do not apply and your Payment Election Form and the terms and conditions of the Plan related to deferred payment control the timing of payment of this Award.

     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 the provisions of this Award, and all terms, provisions and definitions set forth in the Plan are incorporated into this Award and made a part of this Award for all purposes. Capitalized terms used and not otherwise defined in the Plan have the meanings ascribed to such terms in the Plan. A copy of the Plan is available to you upon request to the Law Department during the term of this Award. This Award is subject to the Company’s Policy on Recoupment in Restatement Situations, and you agree that you will comply with the terms of that Policy.

     This Award has been signed by Centex Corporation and delivered to you, and (when signed by you) has been accepted by you effective as of May 7, 2008.

ACCEPTED	CENTEX CORPORATION
[Full Name]	Timothy R. Eller
	Chairman & Chief Executive Officer

EX-10.9A

Exhibit 10.9(a)

CENTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN

DEFERRED COMPENSATION AGREEMENT
May 7, 2008 Award

          This Deferred Compensation Agreement (“Agreement”) is entered into as of May 7, 2008, by and between ________________________ (the “Participant”) and Centex Corporation (the “Company”).

          WHEREAS, the Company has established the Centex Corporation Executive Deferred Compensation Plan (which, as amended from time to time, is referred to in this Agreement as the “Plan”), the purpose of which is to permit Eligible Employees the option to defer receipt of cash compensation; and

          WHEREAS, the Plan’s Committee has determined that the Participant should receive an award of non-qualified deferred cash compensation as more fully described herein (“Deferred Cash Compensation”), subject to the terms and conditions of this Agreement.

          NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the Participant and the Company agree as follows:

SECTION 1. The Plan.

          The Plan is incorporated by reference and made a part of this Agreement for all purposes. This Agreement and the Plan shall govern the rights of the Participant and the Company with respect to the award of Deferred Cash Compensation described below. All capitalized terms used herein, unless otherwise defined, have the meaning ascribed to such terms in the Plan.

SECTION 2. Amount of Award.

          The Participant is hereby awarded Deferred Cash Compensation from the Company in the amount of $____________ in accordance with the terms of this Agreement and the Plan. The Deferred Cash Compensation shall vest and be paid as provided in this Agreement and the Plan.

SECTION 3. Terms of Award.

     3.1. Account. The Committee shall cause an Account to be kept in the name of the Participant (or, in the event of the Participant’s death, his or her Beneficiary) which shall reflect the amount awarded pursuant to Section 2 on the effective date of this Agreement and the value of any portion of the Deferred Cash Compensation that has vested pursuant to Section 3.4 that is payable to the Participant or Beneficiary under the Plan. The obligation to pay to the Participant the Deferred Cash Compensation, with the interest provided for in this Agreement, shall be carried on the books of the Company as an unsecured debt in an Account.

1

          The Participant acknowledges and agrees that nothing in this Agreement shall be deemed to create a trust of any nature or kind or create any fiduciary relationship. Neither the Participant, his or her estate or personal representative(s), nor his or her Beneficiary shall have any right, title or interest in or to any funds in the Account, which is established by the Company merely for the purpose of recording such unsecured contractual obligation. Until and except to the extent that Deferred Cash Compensation hereunder is vested or paid to the Participant or his or her Beneficiary, the interest of the Participant or the Beneficiary is contingent only and is subject to forfeiture as provided in Section 3.4 below. All funds in the Account, if any, shall continue to be part of the general funds of the Company, and title to and beneficial ownership of any assets, whether cash or investments, which the Company may, in its sole discretion, set aside or earmark to meet its obligations hereunder shall at all times remain in the Company until paid to the Participant. Neither the Participant nor any Beneficiary shall under any circumstances acquire any property interest in any specific assets of the Company.

     3.2. Beneficiary. The Participant may designate a Beneficiary in accordance with the Plan.

     3.3. Interest. The Deferred Cash Compensation shall be credited with interest, compounded monthly, as of May 31, 2008 and each month thereafter until the Deferred Cash Compensation, as well as any interest earned and credited to the Account, shall have been distributed in accordance with the Plan and this Agreement. Appropriate pro-ration shall be made for part year interest credits. The rate of interest credited from time to time pursuant to this paragraph shall be the Weighted Average Cost of Funds in effect as of the date of such credit.

     3.4. Vesting. The Participant’s contingent right to receive the Deferred Cash Compensation (and any interest accrued thereto) shall vest on the dates and in the percentages described below. Other than as provided in the Plan, the Participant must be an Employee of the Company in good standing as of the applicable vesting date. The foregoing to the contrary notwithstanding, the Participant shall be fully vested in all amounts in his or her Account, regardless of the vesting schedule below or his or her standing with the Company, as of the date of his or her termination of employment due to his or her death or Disability (or as he or she may otherwise be entitled under the Plan).

     The Deferred Cash Compensation shall vest in installments such that it is fully vested as of March 31, 2011, as follows:

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	Vesting Percentage of
Vesting Dates	Deferred Cash Compensation
March 31, 2009		33.33	%
March 31, 2010		33.33	%
March 31, 2011		33.34	%
		100.00	%

     3.5. Timing and Form of Distribution. If the Participant timely elected and returned to the Company a properly completed election form, as prescribed by the Committee (an “Election Form”), the Participant’s vested Deferred Cash Compensation (and any interest credited thereto) shall be distributed pursuant to the Election Form, subject to such terms and conditions set forth in such form and the Plan. If the Participant failed to timely elect and return or properly complete an Election Form, the Participant’s Deferred Cash Compensation (and any interest credited thereto) will be distributed in a lump sum in cash within the period specified in the Plan following each vesting date (or such earlier date that a substantial risk of forfeiture lapses as provided for under the Plan), provided the Participant is still employed by the Company or an Affiliate on each such date. If the Participant has elected a deferred payment of his or her Deferred Cash Compensation (and any interest credited thereto) on his or her Election Form, payment of his or her Deferred Cash Compensation (and any interest credited thereto) on account of separation from service for any reason (other than death) will be delayed for six months after such Participant’s separation from service if the Participant is a specified employee for purposes of Section 409A of the Internal Revenue Code (“Section 409A”) on the date of his or her separation from service.

          The Participant agrees that the Deferred Cash Compensation will be paid out only to the extent that it has vested in accordance with this Agreement and the Plan. Any unvested portion of the Deferred Cash Compensation shall be forfeited and terminate automatically upon termination of employment of the Participant for any reason (other than death or Disability as described in Section 3.4 above), unless otherwise provided in the Plan.

     3.6. Tax Withholding. The Participant agrees that the Company may take whatever steps the Company, in its sole discretion, deems appropriate or necessary to satisfy the Company’s state and federal income tax, social security, Medicare, and other tax withholding obligations arising out of the award.

SECTION 4. General Provisions.

     4.1. This Agreement and the Plan express the entire agreement of the parties as to the Deferred Cash Compensation Award described herein, and all promises, representations, understandings, arrangements and prior agreements are merged herein and superseded hereby. The foregoing notwithstanding, this Agreement shall be interpreted, and such Deferred Cash Compensation shall in all events be deferred and

3

paid, in a manner consistent with Section 409A. The Company reserves the right, exercisable in its sole discretion, to amend the Plan, this Agreement and the Participant’s Election Form (without Participant’s consent) in order to accomplish such result. This Agreement is subject to the Company’s Policy on Recoupment in Restatement Situations, and the Participant agrees that the Participant will comply with the terms of that Policy.

     4.2. If any of the provisions of this Agreement should be held to be invalid, the remainder of this Agreement shall not be affected thereby.

     4.3. This Agreement and the Plan shall be governed by and construed in accordance with ERISA, and to the extent not preempted thereby, the laws of the State of Texas.

     IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the day and year first written above.

PARTICIPANT
CENTEX CORPORATION
By:
	Timothy R. Eller
	Chairman & Chief Executive Officer

4

EX-10.10

Exhibit 10.10

Summary of Outside Director Compensation

          Each outside director of Centex Corporation (the “Corporation”) will receive the following compensation for his or her services as a director beginning with the Board service year commencing July 2008:

• The compensation package consists of annual compensation having a value of $265,000. No separate meeting fees will be payable for attending board and committee meetings.

     The amount of $65,000 of the annual compensation amount will be paid in the form of cash, payable in monthly installments.

     The amount of $100,000 of the annual compensation amount will be paid in the form of restricted stock, to be issued at the beginning of the Board year commencing immediately after the annual meeting of stockholders (with a grant date delayed until after publication of quarterly earnings in accordance with the Company’s grants and equity awards policy). The number of shares awarded will be based on the market price of the common stock on the date of grant. Restricted stock awards will vest immediately but will be subject to certain restrictions set forth in the Plan and the award agreement. Generally, the restrictions will lapse three years after the anniversary of the date of grant. The restrictions will terminate immediately upon the director’s retirement, death or disability or upon a change in control. These restricted stock awards will be made under the Corporation’s stockholder-approved Centex Corporation 2003 Equity Incentive Plan and the terms of restricted stock award agreements.

     The amount of $100,000 of this annual compensation amount will be paid in the form of stock options, to be awarded at the meeting of the Compensation and Management Development Committee of the Board of Directors held in July after the board service year for which the options are granted (with a grant date delayed until after publication of quarterly earnings in accordance with the Company’s grants and equity awards policy). The number of shares of common stock subject to these awards will be determined based on the Black-Scholes valuation methodology as of the date of grant. Options granted to directors will vest upon grant. These stock option awards will be made under the Corporation’s stockholder-approved Centex Corporation 2003 Equity Incentive Plan and the terms of stock option award agreements.

     Directors joining the Board during a Board year will receive a pro-rata portion of the compensation based upon the effective date of their election to the Board.

• The chairperson of the Audit Committee will receive additional compensation of $25,000, payable in monthly installments. The chairperson of each of the Compensation and Management Development Committee and the Corporate Governance and Nominating Committee will receive additional compensation of $20,000, payable in monthly installments.

• The lead director will receive additional compensation of $35,000, payable in monthly installments.

• Directors will be entitled to other compensation pursuant to existing plans in which they are eligible to participate, including travel benefits.

EX-10.13A

Exhibit 10.13a

CENTEX CORPORATION
COMPREHENSIVE MEDICAL PLAN
(As Amended and Restated Effective January 1, 2005)

First Amendment

     Centex Corporation, a Nevada corporation, having established and maintaining the Centex Corporation Comprehensive Medical Plan, as amended and restated effective January 1, 2005 (the “Plan”), and having reserved the right under Section 8.2 thereof to amend the terms of the Plan in accordance with Section VII of the Centex Corporation Group Welfare Benefits Plan, does hereby amend the Plan, effective as of January 1, 2008, as follows:

     1. Members of the Centex Corporation Board of Directors (“Directors”) shall no longer participate in the Plan, and shall cease to be a Participant as defined in the Plan, unless such Director is an Employee, as defined in the Plan.

     2. Section 3.1 of the Plan is hereby amended to delete the word “Directors” in the first sentence thereof.

     3. The second sentence of Section 3.2 is hereby deleted and replaced in its entirety with the following:

To be eligible for coverage, a Retired Long-Term Employee (“RLTE”) must have been covered as an Employee under the Plan at the time of retirement, must be at least 55 years of age with at least 10 years of service with the Company, must have a minimum annual base salary at the date of retirement of $100,000 (to be adjusted annually for cost of living index increases), must elect coverage at the time of retirement and must not be a member of the Board of Directors of the Company following termination of employment by the Company.

     4. Section 3.2(e) is hereby deleted in its entirety.

     Notwithstanding any language to the contrary in Section 8.3 of the Plan, the terms and conditions of the Plan shall remain in full force and effect, except as such terms and conditions are specifically amended above.

     IN WITNESS WHEREOF, Centex Corporation has caused this Plan to be amended by action of the Plan’s Plan Administrator.

/s/ Michael S. Albright  

Michael S. Albright 

(Senior Vice President – Administration of Centex Corporation), Plan Administrator 

ATTEST:

/s/ Drew F. Nachowiak                    
Name: Drew F. Nachowiak                    
Title: Assistant Secretary                    

EX-10.28

Exhibit 10.28

CONTRIBUTION AGREEMENT

between

CENTEX HOMES

and

CORONA REAL ESTATE HOLDING COMPANY, L.L.C.

Dated as of March 29, 2008

TABLE OF CONTENTS

		Page
1.	Definitions		2
2.	Asset Transfer; Contribution of Transferred Subsidiary Member Interests; Retained Assets		11
3.	Contributed Stipulated Value		11
4.	Assumed Liabilities; Retained Liabilities		12
5.	Conditions to the Company’s Acceptance of the Contribution of the Transferred Subsidiary Member Interests		12
6.	Indemnity for Failure to Satisfy the Conditions; Put		13
7.	Condition to Centex’s Contribution of the Transferred Subsidiary Member Interests		14
8.	Inspection Rights of the Company; Condition of the Properties		15
9.	Title		16
10.	Assignment of Contracts; Consents		16
11.	Operating Covenants; Other Covenants		17
12.	Closing of the Asset Transfer		22
13.	Closing of the Transferred Subsidiary Member Interests Contribution; Closing Actions		23
14.	Closing Costs and Prorations		24
15.	Condemnation		25
16.	Centex Representations		25
17.	Contribution Date Representations Certificate		31
18.	Assignment; Successors and Assigns		31
19.	Survival; Indemnification		31
20.	Dispute Resolution		33
21.	Notices		33
22.	Entire Agreement		34
23.	Severability		34
24.	Waivers		34
25.	Construction		34
26.	Performance Due On Day Other Than Business Day		35
27.	Counterparts		35
28.	Governing Law		35
29.	Brokerage		35
30.	Parties in Interest		35

Exhibit A-1	Legal Descriptions of the Properties
Exhibit A-2	Schedule of Retained Assets
Exhibit A-3	Schedule of Retained Liabilities
Exhibit A-4	Schedule of Specified Transferred Assets
Exhibit A-5	Schedule of Specified Transferred Liabilities
Exhibit A-6	Schedule of Transferred Subsidiaries and Corresponding Projects
Exhibit A-7	Schedule of Contributed Lots
Exhibit B	[Intentionally Left Blank]
Exhibit C	Project Summaries References

Exhibit D-1	Schedule of Title Insurance Underwriters for the Title Policies
Exhibit D-2	Schedule of Performance Bonds and Letters of Credit
Exhibit D-3	Schedule of Division individuals for each Project for “Knowledge of Centex”
Exhibit D-4	Schedule of Survey Standards by Project
Exhibit D-5	Plant 51 Deposits
Exhibit E-1	[Intentionally Left Blank]
Exhibit E-2	Form of Assignment and Bill of Sale
Exhibit E-3	Form of Non-Foreign Certificate
Exhibit E-4	Form of Transferred Subsidiary Member Interests Assignment
Exhibit E-5	Form of Transferred Subsidiary Agreement
Exhibit F	State Specific Provisions in Respect of the Projects or their Contribution
Exhibit G	Claim Procedures

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CONTRIBUTION AGREEMENT

     This Contribution Agreement (this “Agreement”) is entered into as of March 29, 2008 (the "Effective Date”) by and between Corona Real Estate Holding Company, L.L.C., a Delaware limited liability company (the “Company”), and Centex Homes, a Nevada general partnership (“Centex”) with reference to the following facts:

     A. Prior to the Asset Transfer, Centex owned or owns the Assets other than Plant 51 and Eastgate.

     B. Plant 51 is owned by Plant 51 LLC (“Plant 51 Sub”) and Eastgate is owned by EG Development LLC (“Eastgate Sub”).

     C. Centex has formed the Newly Formed Transferred Subsidiaries for the purposes of acquiring the Assets (other than Plant 51 Sub and Eastgate Sub and other related Assets) from Centex and developing the Properties.

     D. Centex has formed the Company to, among other things, acquire all of the Transferred Subsidiary Member Interests.

     E. Centex wishes to (1) first, contribute to each Newly Formed Transferred Subsidiary a Property and related other Assets and (2) second, contribute to the Company all of the Transferred Subsidiary Member Interests on the terms and conditions set forth in this Agreement. The Company wishes to acquire from Centex all of the member interests in the Transferred Subsidiaries, on the terms and conditions set forth in this Agreement.

     F. As of the Effective Date, Centex and Corona Associates, LLC, a Delaware limited liability company (“Investor”), have entered or will enter into that certain Amended and Restated Limited Liability Company Agreement (the “Purchaser LLC Agreement”) for Corona Land Company, LLC (“Purchaser”). As of the Effective Date, Purchaser is entering into the Member Interests Purchase Agreement with Centex pursuant to which Centex agrees to sell, and Purchaser agrees to buy, all of the member interests in the Company at the Member Interests Purchase Closing. At the Member Interests Purchase Closing, pursuant to the terms of the Purchaser LLC Agreement, Centex and Investor will contribute sufficient funds to Purchaser to acquire 100% of the member interests in the Company for the Contribution Date Member Interests Purchase Price.

     G. At the Member Interest Purchase Closing immediately following the contribution of the Transferred Subsidiary Member Interests by Centex to the Company, Purchaser will make a cash payment to Centex pursuant to the terms of the Member Interests Purchase Agreement equal to the Contribution Date Member Interests Purchase Price to acquire all of the member interests in the Company.

1

AGREEMENT

     NOW THEREFORE, for and in consideration of the covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound, agree as follows:

     1. Definitions.

     (a) “Adjustments” is defined in the Member Interests Purchase Agreement.

     (b) “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such Person; provided, however, that for purposes of this Agreement, Purchaser shall not be deemed an Affiliate of Centex.

     (c) “Agreement” is defined in the preamble.

     (d) “Assets” means, collectively, as of the Contribution Date, but excluding the Retained Assets, (a) the Projects; (b) the right, title and interest of Centex in and to all utilities, sewage treatment capacity and water capacity, if any, which will serve the Projects; (c) rights to prepaid expenditures and deposits and reimbursements from Governmental Authorities, Financing Districts and other Persons related to the Projects, including in respect of utilities and connection fees; (d) the Assigned Contracts; and (e) any other tangible or intangible personal property related to the Projects.

     (e) “Asset Transfer” is defined in Section 2(a).

     (f) “Asset Transfer Date” is defined in Section 2(a).

     (g) “Assigned Contracts” is defined in Section 10(a).

     (h) “Association” means, as to each Project where applicable, the legal Entity formed to control aspects of the development, management and operation of a subdivision in which a Project is located, (including where applicable a master association and the applicable Sub-Association).

     (i) “Association Document” is defined in Section 16(l).

     (j) “Authorized Action” is defined in Section 11(a).

     (k) “Baseline Date” means February 29, 2008.

     (l) “Bill of Sale” is defined in Section 12(a).

     (m) “Business Day” means any day that is not a Saturday, Sunday or a legal holiday on which commercial banks are closed in Dallas, Texas.

     (n) “Centex” is defined in the preamble.

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     (o) “Centex Indemnification Basket” is defined in Exhibit G.

     (p) “Centex Indemnification Cap” is defined in Exhibit G.

     (q) “Centex Security Instruments” means performance bonds and standby letters of credit for various obligations in connection with the development of the Projects.

     (r) “Claim” means any suit, proceeding, investigation, demand, claim, cause of action or chose in action, right of recovery or right of set-off.

     (s) “Claim Notice” is defined in Exhibit G.

     (t) “Closing” is defined in Section 2(b).

     (u) “Company” is defined in the preamble.

     (v) “Condition” and “Conditions” are defined in Section 6(a).

     (w) “Condition Indemnity” is defined in Section 6(a).

     (x) “Condition Not Satisfied Notice” is defined in Section 6(d).

     (y) “Condition Satisfaction Period” is defined in Section 6(c).

     (z) “Consents” means any material consent, authorization or approval required in connection with the contribution of the Assets to the Transferred Subsidiaries, the contribution of the Transferred Subsidiary Member Interests to the Company or the sale of the member interests in the Company to the Purchaser under any Entitlement or any Assigned Contract.

     (aa) “Contract” means any binding agreement, contract, instrument, lease or undertaking of any kind or character, oral or written, to which an Owner is a party that creates rights or obligations with respect to a Project.

     (bb) “Contributed Lots” means the Lots that are part of the Properties that are being contributed as part of the Assets, the number of which for each Property is set forth in Exhibit A-7.

     (cc) “Contribution Date” is defined in Section 2(b).

     (dd) “Contribution Date Member Interests Purchase Price” is defined in Section 3(b).

     (ee) “Contribution Date Representations Certificate” is defined in Section 17.

     (ff) “Control” (including its correlative meanings “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an Entity, whether through the ownership of interests, by contract or otherwise.

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     (gg) “Cost-Sharing Arrangements” is defined in Section 16(s).

     (hh) “Data Site” means the “Project Corona” Workspace on Intralinks.com, as last updated on or before noon, CST, March 24, 2008, except (1) as to Title Commitments (and related title documents), Surveys and Environmental Reports, which may be uploaded at any time prior to the Closing and (2) all documents on the Data Site under the heading “Additional Documents Requested During Due Diligence” will be deemed to have been not included on the Data Site.

     (ii) “Deeds” is defined in Section 12(a).

     (jj) “Disclosure Schedule” means that disclosure schedule delivered by Centex to the Company concurrently with the execution of this Agreement, setting forth items for which disclosure is necessary or appropriate as an exception to one or more representations or warranties contained herein; provided, however, that the inclusion of an item in the Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by Centex that such item represents a material exception or fact, event or circumstance with respect to Centex. A disclosure against any representation or warranty is a disclosure against all representations and warranties.

     (kk) “Dwelling” means a single family home, town home, condominium unit or other residential unit that is permitted by the Entitlements to be constructed within a Project.

     (ll) “Eastgate” means the Project known to Centex as Eastgate, located in Loudon County, Virginia.

     (mm) “Eastgate Sub” is defined in the Recitals.

     (nn) “Effective Date” is defined in the preamble.

     (oo) “Encumbrance” means any lien (statutory or otherwise), mortgage, deed of trust, pledge, lease, hypothecation, assignment, charge, security interest, option to purchase, easement, restrictive covenant, right of first refusal, deposit arrangement, preemptive right, adverse claim or right, restriction on transfer, encroachment, conditional sale or other title retention agreement, or any other encumbrance or restriction, whether voluntarily incurred or arising by operation of law.

     (pp) “Entity” means any partnership (including any limited partnership, limited liability limited partnership and limited liability partnership), corporation, limited liability company, trust, joint venture, association, joint stock company, trustee, estate, unincorporated organization, real estate investment trust, business trust, Governmental Authority or other legal entity.

     (qq) “Entitlements” means discretionary material approvals, consents, certificates, licenses, permits, entitlements (including required easements) and other authorizations from each Governmental Authority or other Person having or asserting jurisdiction as are necessary for the (a) ownership, use and operation of the existing improvements located at the Properties, and (b) the development of the Properties in accordance with the Development Plans including (to the

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extent falling within the foregoing definition) zoning, land use and environmental entitlements and permits, flood plain map amendments, preliminary/tentative plats or maps, final plats or maps.

     (rr) “Environmental Law” means any applicable Law in effect and, in each case, as amended as of or prior to the Contribution Date relating to or concerning the protection of the environment, natural resources, human health, or environmental quality including those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls or radiation (including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9106 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 ester.), the Clean Water Act (33 U.S.C. § 1251 ester.), the Clean Air Act (42 U.S.C. § 7401 ester.), the Toxic Substances Control Act (15 U.S.C. § 2601 ester.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 ester.), as each has been amended and regulations promulgated pursuant thereto).

     (ss) “Environmental Reports” means the most recent “Phase 1” and if applicable other environmental reports for each Project that have been posted on the Data Site prior to the Effective Date and any environmental report provided by Centex pursuant to Section 6.

     (tt) “Financing District” means any public or quasi-public body that is established to finance utility, road, transportation, school and certain other infrastructure and improvement costs through the sale of bonds which are repaid through assessments on land within the Financing District.

     (uu) “Future LD Spend Schedule” means for each Project, the “Future LD Spend” cash flow schedule posted to the Data Site on February 24, 2008.

     (vv) “Governmental Authority” means any court, government (federal, state, local, foreign or multinational), department, commission, board, bureau, agency, official or other regulatory, administrative, authority or political subdivision thereof.

     (ww) “Governmental Order” means any order, writ, injunction, decree, award, judgment or ruling entered by or with any Governmental Authority.

     (xx) “Hazardous Materials” means any substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Environmental Law.

     (yy) “Improvements” means, for each Project to the extent applicable, storm water drainage, wastewater and sewer, other utilities, roads, paving, landscaping and other infrastructure, and any recreation center, pool, park, playground or other amenity or entry gates and other entrance improvements from time to time constructed within a Project and that are owned by Centex prior to the Contribution Date or by the Company following the Contribution Date. With respect to the Project identified on Exhibit A-1 as Plant 51, Improvements also

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include the Dwellings listed for Plant 51 as listed on Exhibit A-1 in their state of completion as of the relevant date.

     (zz) “Incurred Ownership Development Costs” is defined in the Member Interests Purchase Agreement.

     (aaa) “Indebtedness” means promissory notes, bonds, indentures and any other obligation to repay borrowed money that is secured in whole or in part by the Assets, other than indebtedness with respect to the Centex Security Instruments and other indebtedness with respect to Financing Districts.

     (bbb) “Indemnified Party” is defined in Section 19(c).

     (ccc) “Indemnifying Party” is defined in Section 19(c).

     (ddd) “Individual Claim Threshold” is defined in Exhibit G.

     (eee) “Interest Rate” means annual rate of interest published in The Wall Street Journal from time to time as the “Prime Rate” for JPMorgan Chase, N.A., plus 2%. If The Wall Street Journal ceases to publish the “Prime Rate” for JPMorgan Chase, N.A., but publishes the “Prime Rate” for another financial institution, the “Prime Rate” shall be such rate as published in The Wall Street Journal. If The Wall Street Journal ceases to publish a “Prime Rate”, the parties shall select an equivalent publication that publishes such “Prime Rate.”

     (fff) “Investor” is defined in the Recitals.

     (ggg) “Investor Knowledge Persons” means Chris Mahowald, Steve Millham, Steve Heath, Josh Dapice, Tony Koeijmans and Ryland Lucie.

     (hhh) “Investor Representative” means Chris Mahowald.

     (iii) “IRC” means the Internal Revenue Code.

     (jjj) “Knowledge of Centex,” “Centex’s Knowledge” and words of similar import mean the current actual knowledge of David Barclay and Donald Westfall and as to each Project, the corresponding person listed on Exhibit D-3 listed for such Project, and shall not be construed, by imputation or otherwise, to refer to the knowledge of any Affiliate or to any other officer, manager, or employee of Centex or any Affiliate thereof or to impose upon such individuals any duty to investigate the matter to which such actual knowledge or absence thereof pertains.

     (kkk) “Law” means any federal, state or local statute, code, regulation, rule or ordinance applicable to a Person or its assets, liabilities or business.

     (lll) “Lompoc Seller” means LD/L-DS Venture Lompoc, LLC.

     (mmm) “Lompoc Sub” means Lompoc Seabreeze LLC, one of the Transferred Subsidiaries.

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     (nnn) “Loss” means any damage, injury, loss, debt, penalty, fine, award, judgment, liability, cost and/or expenses resulting from any Claim (including damages, injuries, losses, debts, penalties, fines, awards, judgments, fees, liabilities, costs and expenses (including reasonable attorneys’, accountants’ and other professionals’ fees, costs and expenses incurred in investigating, preparing and/or defending any Claim). “Loss” includes actual damages only and does not include any lost profit, consequential, special, punitive or exemplary damage.

     (ooo) “Lots” means individually platted lots within a Project on which individual Dwellings are permitted or intended to be constructed.

     (ppp) “Material Adverse Effect” means any change, event, effect, fact or circumstance that is or is reasonably likely to be material and adverse to the ownership, use, value and/or development of, as applicable, any individual Project or to the Projects taken as a whole, provided, however, that “Material Adverse Effect” does not include the impact of (a) changes in the economy or residential property market of, as applicable, the United States or the competitive market area in which a Project is located, (b) changes in generally accepted accounting principles, (c) changes in Law, and/or (d) Authorized Actions.

     (qqq) “Material Contract” means any Contract that (1) obligates an Owner to make payments, or obligates an Owner to perform work or provide services in either case requiring a total expenditure by the Owner in excess of $100,000; (2) provides for total payment to an Owner in excess of $100,000; or (3) which is an Option.

     (rrr) “Member Interests Purchase Agreement” means the Agreement dated as of the Effective Date between the Purchaser, as purchaser, and Centex, as seller, pursuant to which the Purchaser will acquire 100% of the member interests in the Company at the Member Interests Purchase Closing.

     (sss) “Member Interests Purchase Closing” means the consummation of the purchase by the Purchaser of 100% of the member interests in the Company from Centex in consideration of paying in cash in the amount of the Contribution Date Member Interests Purchase Price.

     (ttt) “Miramonte Barker Tracts” is defined in Exhibit A-3.

     (uuu) “Miramonte Construction License” is defined in Exhibit A-3.

     (vvv) “Miramonte Option Agreement” is defined in Exhibit A-3. - -

     (www) “Newly Formed Transferred Subsidiaries” means all of the Transferred Subsidiaries other than Plant 51 Sub and Eastgate Sub.

     (xxx) “Obtained Entitlements” is defined in Section 16(i).

     (yyy) “Option Agreements” means those certain Option Agreements dated as of the Effective Date between certain of the Transferred Subsidiaries as Developer and Centex as Builder.

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     (zzz) “Organizational Documents” means, with respect to any Entity, its certificate or articles of incorporation, certificate or articles of limited partnership or organization and bylaws, charter, operating agreement, shareholder agreements, regulations, partnership agreement, trust agreement and similar organizational charter or agreement and all other organizational documents, in each case, as amended and/or restated as of the Contribution Date.

     (aaaa) “Other Transaction Documents” means the Purchaser LLC Agreement, the Member Interests Purchase Agreement, the Property Services Agreement and the Option Agreements.

     (bbbb) “Owner” means Centex and the Transferred Subsidiaries.

     (cccc) “Parties” means Centex and the Company, with each sometimes being referred to as a "Party.”

     (dddd) “Permitted Encumbrances” means, with respect to each Property, (a) all matters shown as exceptions in the Title Commitment for such Property; (b) other exceptions shown on the Survey for such Property, or recorded subdivision maps and or plats that are referenced in the Title Commitment for such Property; (c) and Permitted Tax Liens.

     (eeee) “Permitted Tax Liens” means (a) liens securing the payment of taxes other than income taxes which are either not delinquent or those disclosed in the Disclosure Schedule as being contested in good faith by appropriate proceedings for which the Company has received proration credit pursuant to Section 14(c), and (b) liens for current taxes not yet payable.

     (ffff) “Person” means any individual or any Entity.

     (gggg) “Planned Community Names” is defined in Section 11(e).

     (hhhh) “Plant 51” means the Project known to Centex as “Plant 51” or “Fifty-One” located in San Jose, California.

     (iiii) “Plant 51 Sub” is defined in the Recitals.

     (jjjj) “Prevailing Party” is defined in Section 21.

     (kkkk) “Project” means a Property, together with (a) all Improvements from time to time located thereon that are owned by Centex (prior to the Contribution Date) or the Company (after the Contribution Date); and (b) the Entitlements pertaining to such Property and Improvements.

     (llll) “Project Summaries” means the “Supplemental Questionnaires” for the Projects that are referenced on Exhibit C.

     (mmmm) “Property” means the land within each of the residential subdivision projects is listed on Exhibit A-1 that is owned (in the case of Plant 51 and Eastgate) or is being contributed to a Transferred Subsidiary, as more fully described by metes and bounds in the corresponding Title Commitment, together with the right, title and interest in Centex in and to all

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strips, gores, easements, streets, alleys and other rights-of-way adjacent to such land, and rights appurtenant to such land, other than Retained Assets.

     (nnnn) “Property Services Agreement” means that certain Property Services Agreement entered into between the Company on behalf of itself and the Transferred Subsidiaries and Centex as Service Provider dated as of the Effective Date.

     (oooo) “Purchaser” is defined in the Recitals.

     (pppp) “Purchaser LLC Agreement” is defined in the Recitals.

     (qqqq) “Recognized Environmental Condition” is defined by ASTM Standard E 1527-05.

     (rrrr) “Reserve at Mayflower” means the Project known to Centex as the “Mayflower” project located in Thousand Oaks, California.

     (ssss) “Reserve at Mayflower SPA” is defined in Exhibit A-5.

     (tttt) “Retained Assets” is defined in Section 2(d). Exhibit A-2 states the Retained Assets.

     (uuuu) “Retained Liabilities” means Claims (actual or potential) that Centex retains for its own account and are not assumed by the Company. Exhibit A-3 states the Retained Liabilities of Centex.

     (vvvv) “Riverpark” means the Project included in the master planned community known as Riverpark located in Oxnard, California.

     (wwww) “Riverpark Development Agreement” means that certain Development Agreement dated as of August 27, 2002, by and between the City of Oxnard, Riverpark A, LLC and Riverpark B, LLC.

     (xxxx) “Riverpark JV Agreement” means the limited liability company agreement for the Riverpark Joint Venture, as amended.

     (yyyy) “Riverpark Joint Venture” means Riverpark Legacy LLC.

     (zzzz) “Riverpark LD Date” is defined in Section 11(f).

     (aaaaa) “Riverpark Purchase Agreement” means that certain Purchase and Sale Agreement dated as of June 23, 2005, among Centex Homes, Riverpark A, L.L.C., Riverpark B, L.L.C. and Riverpark Legacy LLC, as amended by that certain First Amendment to Purchase and Sale Agreement dated as of November 28, 2005, that certain Second Amendment to Purchase and Sale Agreement dated as of April 26, 2006, that certain Third Amendment to Purchase and Sale Agreement dated as of November 27, 2006, that certain Fourth Amendment to Purchase and Sale Agreement dated as of December 22, 2006, that certain Fifth Amendment to Purchase and Sale

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Agreement dated as of August 29, 2007, that certain Sixth Amendment to Purchase and Sale Agreement dated as of January 10, 2008 and as the same may be further amended, subject to and in accordance with the limitations of Section 11(f).

     (bbbbb) “Riverpark Sub” means Corona Riverpark LLC, one of the Transferred Subsidiaries.

     (ccccc) “Shea” means Shea Properties II, LLC.

     (ddddd) “Survival Period” is defined in Section 19(a).

     (eeeee) “Survey Standard” means (i) with respect to all Properties a survey that satisfies, in all material respects, the 2005 Minimum Standard Detail Requirements for Class A ALTA/ACSM Land Title Surveys, as adopted by the American Land Title Association and National Society of Professional Surveyors, certified with the Table A items as set forth for each Property in Exhibit D-4.

     (fffff) “Surveys” is defined in Section 9(a).

     (ggggg) “Tierra Del Rio Joint Development Agreement” is defined in Exhibit A-2.

     (hhhhh) “Third Party Claim” is defined in Exhibit G.

     (iiiii) “Title Commitment” means the commitment for the issuance of an ALTA Form B Owner’s Title Insurance Policy, with extended coverage (or other form as required based on state law requirements with respect to the applicable Property) issued by the Title Company as of the Contribution Date relating to a Property as most recently marked by Investor’s counsel prior to the Effective Date provided such markups reflect commercially reasonable positions consistent with understandings agreed between the Parties.

     (jjjjj) “Title Company” means Commerce Title Insurance Company, 2828 N. Harwood, 11th Floor, Dallas, Texas 75201, Attention: Andy Lydick, Phone: (214) 758-7444, E-mail: andy.lydick@titlemail.com.

     (kkkkk) “Title Policies” is defined in Section 9(d).

     (lllll) “Title Policy Underwriter” means the underwriter for the Title Policy applicable to each Project as referenced on Exhibit D-1.

     (mmmmm) “Transferred Centex Property” is defined in Section 11(c).

     (nnnnn) “Transferred Subsidiaries” means the Entities referenced on Exhibit A-6.

     (ooooo) “Transferred Subsidiary Member Interests” means as to each Transferred Subsidiary, one hundred percent (100%) of the member interests in such Transferred Subsidiary.

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     (ppppp) “Transferred Subsidiary Member Interest Assignment” is defined in Section 12(a);

     (qqqqq) “Unadjusted Contributed Stipulated Value” is defined in Section 3(a).

     (rrrrr) “Unsatisfied Condition Property” is defined in Section 6(a).

     (sssss) “Unsatisfied Condition Property Member Interests Re-transfer Date” is defined in Section 6(e).

     (ttttt) “Warranty Claim” is defined in Exhibit G.

     2. Asset Transfer; Contribution of Transferred Subsidiary Member Interests; Retained Assets.

     (a) On or prior to the Contribution Date, Centex will cause the Assets constituting a Project and any other Assets pertaining to such Project to be conveyed and transferred to the corresponding Newly Formed Transferred Subsidiaries listed on Exhibit A-5 other than Plant 51 and any other Assets pertaining to Plant 51 and Eastgate and any other Assets pertaining to Eastgate, which will not be transferred (the “Asset Transfer”; the date on which the Asset Transfer occurs is called herein the “Asset Transfer Date”). Centex will perform the acts and deliver the documents, and will cause the Newly Formed Subsidiaries to perform the acts and deliver the documents, specified in Section 12 in connection with the Asset Transfer.

     (b) Subject to Section 5(d) and other terms and conditions of this Agreement, on a date selected by the Parties, which date (the “Contribution Date”) will be on or prior to March 31, 2008, Centex shall contribute (or cause to be contributed) to the Company and the Company shall acquire the Transferred Subsidiary Member Interests. The closing of the contribution (the "Closing”) will, unless otherwise agreed by the Parties, take place at the offices of Baker Botts L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, at 11:00 A.M. on the Contribution Date.

     (c) Whether or not such assets would otherwise fall within the definition of Assets under this Agreement, the Assets contributed to the Newly Formed Transferred Subsidiaries will include the rights specified on Exhibit A-4.

     (d) Centex is to retain, and the Assets contributed will not include, cash, bank accounts, certain cash escrows, certain reimbursement rights and certain other assets and rights pertaining to certain of the Projects if and to the extent as listed on Exhibit A-2 (the “Retained Assets”).

     3. Contributed Stipulated Value.

     (a) The stipulated value of the Assets as of the Baseline Date is $161,162,117 (the "Unadjusted Contributed Stipulated Value”). The Unadjusted Contributed Stipulated Value will be adjusted for the prorations to be made pursuant to Section 14. The Unadjusted Contributed Stipulated Value, adjusted by the prorations, is called herein the “Contribution Date Member Interests Purchase Price.”

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     (b) Pursuant to the Member Interests Purchase Agreement, the Purchaser will acquire 100% of the member interests from Centex for the Contribution Date Member Interests Purchase Price. The Member Interests Purchase Agreement provides for adjustments in the Contribution Date Member Interests Purchase Price for reconciliation of the March, 2008, projected Incurred Ownership Development Costs compared to the actual Incurred Ownership Development Costs for March, 2008.

     4. Assumed Liabilities; Retained Liabilities.

     (a) The Retained Liabilities will be and remain the sole responsibility of Centex.

     (b) Without limiting Centex’s express indemnification obligations under Section 19, Section 6 and other provisions of this Agreement, the Transferred Subsidiaries shall assume all Claims and obligations of the Owners with respect to the Assets, fixed or contingent, liquidated or unliquidated, and whether arising before or after the Contribution Date.

     (c) Without limiting the generality of Section 4(b), the liabilities assumed by the Transferred Subsidiaries include those items specifically listed on Exhibit A-5.

     5. Conditions to the Company’s Acceptance of the Contribution of the Transferred Subsidiary Member Interests.

     The Company’s obligation to accept the contribution of the Transferred Subsidiary Member Interests on the Contribution Date is subject to the following conditions, which may be waived by Investor, on behalf of the Company in its sole discretion:

     (a) Centex’s representations contained in Section 16 of this Agreement being correct in all material respects as of the Contribution Date;

     (b) The Asset Transfer having taken place;

     (c) Centex being prepared to deliver all of the items required to be delivered by it pursuant to Section 13(a);

     (d) Centex performance in all material respects of all of its covenants under this Agreement that are to be performed at or before Closing;

     (e) The Title Company being irrevocably and unconditionally committed to issue the Title Policies on the Contribution Date, subject only to the Permitted Encumbrances;

     (f) Surveys meeting the Survey Standard being delivered for each of the Properties;

     (g) Centex delivering an Environmental Report for each Property on or before the Effective Date;

     (h) No order or injunction restraining or preventing the transactions contemplated by this Agreement shall be in effect, and no action, suit or proceeding challenging the transactions contemplated by this Agreement shall be pending before any court or government agency or be overtly threatened by any government agency; and

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     (i) At no time on or before the Contribution Date has any of the following been done by, against or with respect to Centex: (1) the commencement of a case under Title 11 of the U.S. Code, as now constituted or hereafter amended, or under any other applicable federal or state bankruptcy law or other similar law; (2) the appointment of (or a proceeding to appoint) a trustee or receiver for the benefit of creditors with respect to any of the Properties; (4) a general assignment for the benefit of creditors for any of the Properties; or (5) a dissolution or liquidation.

     6. Indemnity for Failure to Satisfy the Conditions; Put.

     (a) If not all of the conditions set forth in Section 5 (collectively, the "Conditions” and, each, a “Condition”) are satisfied as to one or more of the Projects, then, except with respect to the Condition in Section 5(c), 5(d) (but only with respect to Section 13(a)(i) and (ii)), 5(i) and 5(j), as to which the following provisions do not apply, (i) any Project and related Assets as to which Conditions are not satisfied on the Contribution Date (each such Property, an “Unsatisfied Condition Property”) will, nonetheless be contributed on the Contribution Date, (ii) there shall be no adjustment to the Adjusted Contributed Stipulated Value based on the failure to satisfy any Condition and (iii) subject to Section 6(d), Centex shall indemnify, defend and hold the Company harmless (the "Condition Indemnity”) from any Claims and Losses arising from the facts and circumstances resulting in the applicable Condition not being satisfied, as more particularly defined with respect to certain types of Conditions in Section 6(b).

     (b) If the unsatisfied Condition relates to the failure of Centex to:

      (i) provide a Title Policy and/or a Survey meeting the Survey Standard for a Property, then the Condition Indemnity will apply until a Title Policy reasonably satisfactory to Investor and Survey meeting the Survey Standard is delivered to the Company that is subject only to Permitted Encumbrances for such Property. The Condition Indemnity will provide indemnification against Claims or Losses arising from any Encumbrance in respect of such Property that have a significant adverse impact on an Owner’s ability to execute its business plan with respect to that Property that is not a Permitted Encumbrance unless such Encumbrance is disclosed pursuant to the Disclosure Schedule.

      (ii) deliver an Environmental Report for the Property on or before the Effective Date, then the Condition Indemnity will apply until an Environmental Report for the Property is delivered that does not indicate a Recognized Environmental Condition on that Property. The Condition Indemnity will provide indemnification against Claims or Losses arising from Recognized Environmental Conditions that have a significant adverse impact on an Owner’s ability to execute its business plan with respect to that Property, unless such Recognized Environmental Condition is disclosed pursuant to the Disclosure Schedule.

     (c) Centex will use commercially reasonable efforts to satisfy the Conditions within ninety (90) days after the Contribution Date (the “Condition Satisfaction Period”) and will immediately notify the Company in writing when a Condition is satisfied. If the Conditions are satisfied within the Condition Satisfaction Period as to an Unsatisfied Condition Property, or such Conditions are waived by the Company, then the Condition Indemnity with respect to such applicable Condition is satisfied or waived but shall continue in full force and effect as to any

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Claim or Loss that is covered by the Condition Indemnity and is asserted prior to the date that the condition is satisfied or waived.

     (d) If, at the expiration of the Condition Satisfaction Period the Condition is not satisfied, or on such earlier date when Centex determines that the Condition will not be satisfied within the Condition Satisfaction Period, any of the Conditions remain unsatisfied, then Centex shall so notify the Company (the “Condition Not Satisfied Notice”). The Company shall have the option, by written notice to Centex given within ten (10) days after Centex’s delivery of the Condition Not Satisfied Notice or if no Conditioned Not Satisfied Notice is given, then within five (5) days after the expiration of the Condition Satisfaction Period to either (i) waive the Condition or (ii) obligate Centex to purchase from the Company 100% of the Transferred Subsidiary Member Interests for the Transferred Subsidiary that owns the Unsatisfied Condition Property. If the Company fails to timely make an election, it will be deemed to have elected the option in clause (i). If the Company timely elects to obligate Centex to purchase the Transferred Subsidiary Member Interests for a Transferred Subsidiary that owns an Unsatisfied Condition Property, then the Company will sell and Centex will buy such Transferred Subsidiary Member Interests on the date which is fifteen (15) days after the Company’s delivery of its election notice, or such earlier or later date as the Parties may agree (the “Unsatisfied Condition Property Member Interests Re-transfer Date”). Centex will pay to the Company, on the Unsatisfied Condition Property Member Interests Re-transfer Date, by wire transfer in immediately available funds, an amount equal to (1) the stipulated value of such Unsatisfied Condition Property, as such value is set forth on Exhibit A-1, subject to adjustment for (A) the Final Investment Adjustments, as such term is defined in the Member Interests Purchase Agreement and (B) the prorations applicable to such Unsatisfied Condition Property made on the Contribution Date pursuant to Section 14 increased, in the case of both (A) and (B), by an interest factor equal to 17.5% per annum, compounded quarterly. The Company will deliver to Centex on the Unsatisfied Condition Member Interests Re-transfer Date a Transferred Subsidiary Member Interest Assignment with respect to such Transferred Subsidiary Member Interests, which will warrant that all such member interests are sold free and clear of any encumbrance. Centex will be responsible for any transfer taxes and all third-party closing costs related to such transfer.

     (e) This Section 6 shall survive Closing. The provisions of Section 19 (other than those related to time limitations as set forth in Section 19(a)) and Exhibit G (other than the provisions of Paragraph 3 thereof relating to Warranty Claims) shall apply to the Condition Indemnity. If the existence of the unsatisfied Condition also gives rise to a breach of representation or warranty under Article 16, the Company may assert a Warranty Claim with respect to such matter (subject to all conditions and limitations of this Agreement) in addition to is rights under this Section 6. This Section 6(e) does not limit Centex’s liability for breach of covenant under this Agreement.

     7. Condition to Centex’s Contribution of the Transferred Subsidiary Member Interests.

     (a) Centex’s obligation to contribute the Transferred Subsidiary Member Interests is subject to there being no order or injunction restraining or preventing the transactions contemplated by this Agreement shall be in effect, and no action, suit or proceeding challenging

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the transactions contemplated by this Agreement shall be pending before any court or government agency or be overtly threatened by any government agency.

     (b) Centex has no obligation to proceed with the transactions contemplated hereby if the Contribution Date would occur after March 31, 2008 for any reason, including Centex’s failure to satisfy any condition precedent for either Party.

     8. Inspection Rights of the Company; Condition of the Properties.

     (a) The Company on behalf of itself and the Transferred Subsidiaries, acknowledges that, except for the representations of Centex expressly stated in Section 16 and as such representations are updated on the Contribution Date pursuant to the Contribution Date Representation Certificate (but without limiting representations of Centex made in the Other Transaction Documents), neither the Company nor any Transferred Subsidiary has relied upon and will not rely upon any statements, representations or warranties by Centex in connection with this Agreement or the Asset Transfer or transfer of the Transferred Subsidiary Member Interests. Except for the representations of Centex expressly stated in Section 16, Centex does not make any representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by Centex to the Company or the Investor or its constituent owners or investors in connection with the transactions contemplated hereby. The Company acknowledges and agrees on behalf of itself and the Transferred Subsidiaries that all materials, data and information delivered by Centex to the Company in connection with the transactions contemplated hereby are provided to the Company as a convenience only and that any reliance on or use of such materials, data or information by the Company and the Transferred Subsidiaries shall be at their sole risk, except as otherwise expressly stated herein or in the Other Transaction Documents. Except for the representations of Centex expressly stated herein, Centex shall not have any liability to the Company or the Transferred Subsidiaries for any inaccuracy in or omission from any report or reports delivered by Centex to the Company.

     (b) The Company has had an opportunity to conduct, and has conducted, its own studies, investigations and assessments of the Properties prior to the Effective Date. The Company may continue with studies, tests, investigations and assessments up to the Contribution Date. Without limiting the foregoing, the Company agrees that it has conducted its own assessment of the market value of the Projects and acknowledges that the market value of Projects may be greater than or less than the Unadjusted Contributed Stipulated Value, that the market value of the Properties may positively or negatively change after the Effective Date and that the Company shall not be entitled to an adjustment of the Unadjusted Contributed Stipulated Value or any other remedy against Centex as a result of market value or market conditions.

     (c) The Company agrees that, except as specifically provided in this Agreement, the Assets shall be conveyed to the Company and the Company shall accept possession of the Assets on the Contribution Date strictly on an “AS IS, WHERE IS” AND “WITH ALL FAULTS, LIABILITIES, AND DEFECTS, LATENT OR OTHERWISE, KNOWN OR UNKNOWN” basis, with no right of set-off or reduction in the Adjusted Contributed Stipulated Value, and that, such conveyance shall be without representation or warranty of any kind, express or implied, including any warranty of income potential, operating expenses, uses, merchantability or fitness

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for a particular purpose, and Centex hereby disclaims and renounces any such representation or warranty, except to the extent specifically provided in this Agreement.

     9. Title.

     (a) Centex has procured the Title Commitments from the Title Policy Underwriters for each of the Projects addressed to the relevant Transferred Subsidiary.

     (b) Centex has provided the Company with new or updated surveys for the Properties (the "Surveys”), the most recent version of which are contained on the Data Site.

     (c) If the Properties or any part thereof shall be subject to any monetary lien created by any action or inaction by Centex that is not a Permitted Encumbrance, Centex shall on or prior to the Asset Transfer Date pay the same or make other arrangements reasonably satisfactory to the Company and Title Company to remove such lien as an exception to title.

     (d) At Closing, the respective Title Policy Underwriter will furnish to each of the Transferred Subsidiaries, at Centex’s cost, 2006 ALTA Owner’s Title Insurance Policies (or other such reasonably comparable form of policy as required by the laws of the State in which a Property is located), with extended coverage, and where available a customary non-imputation endorsement and customary creditors’ rights endorsement in both cases reasonably satisfactory to Investor, based on the Title Commitments (the “Title Policies”). Each Title Policy will be issued by the respective Title Policy Underwriter and will insure an amount equal to the allocation of the Unadjusted Purchase Price as set forth on Exhibit A-7 for each Project. Each Title Policy will insure the Transferred Subsidiary’s fee simple title to the Properties subject to no Encumbrances other than the Permitted Encumbrances, except that with respect to any Property in Texas (i) the printed exception relating to restrictions will be amended to describe the specific recording information of any restrictive covenants affecting the Properties as shown on the Title Commitment or deleted, (ii) any exception as to the rights of parties in possession will be deleted, at Centex’s expense, (iii) the exception relating to survey matters (if a Survey has been delivered to the Company in accordance with Section 9(b)) shall be limited to “shortages in area”, at Centex’s expense, and (iv) the exception as to the lien for taxes and standby and similar fees will be limited to calendar year 2008 and subsequent years, and subsequent assessments for prior years due to change in land usage or ownership (where property taxes are paid in arrears).

     (e) Centex shall deliver such standard title related affidavits (which shall be to its Knowledge) and indemnities (which shall be limited to the acts of Centex) as are reasonably requested by the Title Policy Underwriters in order to issue the Title Policies consistent with the intent of the Parties and the terms of this Agreement.

     10. Assignment of Contracts; Consents.

     (a) At Closing, subject to the following provisions of this Section 10, the Assets of the Transferred Subsidiaries include, and the Transferred Subsidiaries will assume, all Contracts and Obtained Entitlements that the Owners entered into in the ordinary course of business, and all permits and licenses, in connection with the ownership and development of the Projects (collectively, the “Assigned Contracts”). Except as identified in the Disclosure Schedule as Contracts of this type that will be Assigned Contracts, Centex shall not be obligated to assign

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and the Company shall not be obligated to assume (absent mutual agreement of the Parties) the following types of Contracts:

     (i) any Contract under which Centex has incurred, assumed or guaranteed any Indebtedness or any capitalized lease obligation (provided, however, this clause (i) does not apply to any obligation evidenced by a Centex Security Instrument, any governmental tax or assessment, assessment of any Association or Financing District, obligations to Governmental Authorities in respect of development agreements, subdivision improvement agreements or other obligations in connection with the Projects, cost sharing or joint construction obligations or other financial obligations relating to the ownership, operation or development of the Projects);

     (ii) any Contract with any Affiliate of Centex; and

     (iii) for Centex Security Instruments that secure obligations with respect to a Project and other property retained by Centex, the obligations under any development agreement or subdivision improvement agreements as they pertain to the property retained by Centex are not Assigned Contracts but instead are Retained Liabilities.

Centex will be responsible for the payment of any costs incurred to assign the Contracts or obtain Consents for same (other than internal costs of the Transferred Subsidiaries, Company and Investor). Centex shall be solely responsible for the costs to perform and/or terminate Contracts of the type that are described in clauses (i) and (ii) of this Section 10(a).

     (b) For all Entitlements, and for Contracts, that require a Consent to be transferred to a Transferred Subsidiary or to effect the other transactions contemplated by this Agreement or the Member Interests Purchase Agreement, the Entitlement or Contract will not be assigned to the Transferred Subsidiary pending obtaining such Consent, and the failure to obtain a Consent will not be a failure of a condition to Closing for either the Company, any Transferred Subsidiary or Centex and following the contribution of the Assets to the Transferred Subsidiaries, the Company will, upon Closing, assume all liabilities and obligations with respect to same and pending obtaining Consents, Centex will hold and perform such Entitlement or Contract for the benefit, cost, liability and risk of the Company and at the direction of the Company. Centex will use diligent, commercially reasonable efforts at Centex’s cost to obtain the Consent of any such third party as soon as practicable, whether before or after Closing; and will cooperate with the Company in any reasonable and lawful arrangements designed to provide all of the intended benefits to the Company pending obtaining a Consent. When a Consent is obtained following the Contribution Date, the Contract or Entitlement in question automatically will be assigned to the Company, and each Party following the request of the other Party will evidence such assignment in writing. This Section 10(b) shall survive Closing.

     11. Operating Covenants; Other Covenants.

     (a) From the Effective Date to the Contribution Date, the Owners will own and operate, and may, to the extent Centex so elects, continue to develop, the Projects in the ordinary course of business, in a manner consistent in all material respects with the Development Plans and the Future LD Spend Schedules except as to deferral of development activity contemplated

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thereby that Centex chooses to defer provided such deferral does not have a Material Adverse Effect on the respective Project. Centex will not incur any Indebtedness that is secured by any interest (direct or indirect) in the Assets. Centex may from time to time request in writing to the address for the Investor Representative included in the “notices” section of this Agreement that the Investor Representative authorize certain actions, or the incurrence of certain expenditures, that would bind the Company following the Contribution Date. Centex will provide an explanation of the proposed action, the rationale for the action and other information as the Investor Representative may reasonably require to evaluate the request. All actions for which a request to proceed is made in writing and is expressly granted in writing are called herein “Authorized Actions.”

     (b) At any time or from time to time after the Closing, each of the Parties shall, at the request of the other Party execute and deliver any further instruments or documents and take all such further action as such requesting Party may reasonably request in order to evidence or effect the consummation of the transactions contemplated hereby on the Asset Transfer Date. If Centex or the Company determines that any Asset has not been fully and effectively transferred to the Newly Formed Transferred Subsidiaries on the Asset Transfer Date, then in addition to the provisions of Section 10(b) hereof in respect of Consents, the Parties will take, and the Company will cause the Newly Formed Transferred Subsidiaries to take, whatever commercially reasonable steps are necessary to fully and effectively transfer such Asset to the relevant Newly Formed Transferred Subsidiary, including in respect of any portion of a Property that is part of other land owed by Centex and cannot be conveyed without creating a separate subdivision parcel, taking all steps necessary to create a lawful subdivision parcel. Pending the completion of all steps necessary to transfer an Asset to the Newly Formed Transferred Subsidiary, Centex will hold such Asset in trust for the benefit, cost, liability and risk of the Newly Formed Transferred Subsidiary.

     (c) If any Retained Asset or other land, tangible asset or intangible asset (“Transferred Centex Property”) that is not an Asset as defined in this Agreement is transferred to or held by a Transferred Subsidiary, then upon request by either Party, the Parties will take whatever commercially reasonable steps are necessary to fully and effectively re-transfer the Transferred Centex Property to Centex, including in respect of any portion of the Transferred Centex Property that is part of other land owned by a Transferred Subsidiary that cannot be conveyed to Centex without creating a separate subdivision parcel, taking all steps necessary to create a lawful subdivision parcel. Pending the completion of all steps necessary to re-transfer Transferred Centex Property to Centex, the Company will cause the relevant Transferred Subsidiary to hold such Transferred Centex Property in trust for the benefit, cost, liability and risk of Centex.

     (d) Subject to the provisions of Section 14, all third party costs incurred by Centex, the Company or a Transferred Subsidiary in effecting the transfers contemplated by Section 11(b) and Section 11(c) will be paid by Centex.

     (e) With respect to certain of the master planned communities in which the Properties are located, Centex has limited rights to use the name (a “Planned Community Name”) of such master planned community in connection with marketing of the Projects. To the extent Centex’s rights to use the Planned Community Names are assignable:

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     (i) Where the number of Lots transferred to or held by the Transferred Subsidiary exceeds the number of Lots retained by Centex in such master planned community, Centex will assign its rights, title and interests in the Planned Community Name (other than any part of any such name that contains the word Centex) to the relevant Transferred Subsidiary, subject to all required approvals and restrictions on use held by the owner of the Planned Community Name. Where the rights to use the Planned Community Name are assigned to the relevant Transferred Subsidiary, then the Company on behalf of each relevant Transferred Subsidiary grants to Centex a royalty-free, non-exclusive license to use the Planned Community Name in connection with the Lots retained by Centex.

     (ii) Where the number of Lots transferred to the Transferred Subsidiary does not exceed the number of Lots retained by Centex in such master planned community, then Centex grants to the relevant Transferred Subsidiary a royalty-free, non-exclusive license to use the Planned Community Name (other than any part of any such name that contains the word Centex) in connection with the development and sale of the Lots transferred to the Transferred Subsidiary. The license granted pursuant to this Section 11(e)(ii) shall not be assignable without the express written consent of Centex.

Centex makes no representation or warranty, expressed or implied, regarding the extent of Centex’s rights to any Planned Community Name, whether Centex’s current use infringes on the rights of any other Person or the need of the Company to obtain the Planned Community Name owner’s consent to assignment or a new license right. Centex shall have no liability whatsoever for any damages, injuries, losses, debts, penalties, fines, awards, judgments, fees, liabilities, costs or expenses resulting from or arising out of such names or the use thereof.

     (f) With respect to the “Veranda” Contributed Lots located in Riverpark:

     (i) If the Riverpark Joint Venture fails to:

               (A) Subject to minor punch list items, finish grading of all Veranda lots and the installation of Oxnard Boulevard (including all underground utilities stubbed to the street connection within the Veranda planning area and surface improvements related thereto, but excluding Veranda in tract improvements, consistent with the cost codes for the Future LD Spend Schedule) through and around the north end of Crescent Park by January 1, 2009,

               (B) File of record the final map of Tract 5644 (which includes all of the Veranda lots and approximately 204 lots owned by Shea) by January 1, 2009; or

               (C) Commence or complete the improvement of Crescent Park in a time and manner so as to not delay or prevent the issuance of either building permits for the homes to be constructed on the Veranda lots, or upon completion of construction of a home on a Veranda lot, a certificate of occupancy for that home,

(January 1, 2009 as to clauses (i) and (ii) above, and any date on which commencement or completion of improvement of Crescent Park is not timely performed so as to delay or prevent Corona’s ability to obtain building permits or certificates of occupancy, as to clause (iii) above, is called a “Riverpark LD Date”), then from and after the Riverpark LD Date until the relevant Riverpark Joint Venture work with respect to the relevant portion of the “Veranda”

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neighborhood is complete (subject to minor punch list items) Centex shall pay to Riverpark Sub as liquidated damages an amount equal to the following formula:

          $62,000.00 per lot X 25% per annum, compounded quarterly.

If the relevant Riverpark Joint Venture work is not complete (subject to minor punch-list items) by the date that is six (6) months following the applicable Riverpark LD Date, then upon demand by the Company, Centex will pay to the Company the remaining cost to complete the relevant work, and Centex, under its rights of entry, will proceed to engage contractors to complete the work. The Company will pay all invoices related to the work upon presentation by Centex. If the total cost of the work exceeds the amount paid by Centex to the Company, then within five (5) Business Days of written demand, Centex will fund the overage. If the total cost is less than the amount paid by Centex to the Company, then the Company will return the excess funds to Centex within five (5) Business Days following written demand. The cost to complete the work will be determined by a licensed engineer jointly appointed by both the Company and Centex. Liquidated damages as provided above will continue to accrue until such work is complete (i.e., not only for the first six (6) months), net of any interest earned on the money delivered by Centex to the Company to complete the work pursuant to this paragraph.

     (ii) Centex as the “Builder” under the Riverpark Purchase Agreement and Centex as a member in the Riverpark Joint Venture will use reasonable efforts to cause the Riverpark Joint Venture to enter into an amendment of the Riverpark Purchase Agreement to properly reflect (1) the new allocation of work responsibilities between “Builder” and the Riverpark Joint Venture that has been agreed by the Executive Committee of the Riverpark Joint Venture but not documented, in a manner consistent with the representation of Centex contained in Section 16(y) and (2) the schedule for completion of the Riverpark Joint Venture Work as provided in Section 11(f)(i) above.

     (iii) Centex will retain all rights and obligations under the Riverpark Purchase Agreement and the rights, benefits, obligations and liabilities under that Riverpark Purchase Agreement will not be treated as having been assigned to and assumed by the Company and the relevant Transferred Subsidiary pursuant to Section 10.

     (iv) Centex shall instruct its Voting Representative on the Executive Committee, as such terms are defined in the Riverpark JV Agreement, to vote in accordance with the Company’s instructions respecting: enforcement of (i) the commercial development obligations arising out of Section 10 of the Riverpark Development Agreement, which obligations have been assigned to and assumed by Shea, (ii) the Riverpark Joint Venture’s affordable housing development requirements arising out of Section 11 of the Riverpark Development Agreement, which obligations have been assigned to and assumed by an affordable housing developer, and (iii) the Riverpark Joint Venture’s continuing land development obligations arising out of Section 8 of the Riverpark Development Agreement in respect of the “Corona” Riverpark Property, as reasonably necessary so that delays in such obligations under the Riverpark Development Agreement do not impact the development of the “Corona” Riverpark Property in accordance with the Company’s business plan. In addition, Centex will instruct its Voting Representative on the Executive Committee to vote not to amend or modify the land development schedule to the extent that such amendment or

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modification would affect the “Corona” Riverpark Property, unless the Company provides Centex with written instructions to the contrary or for the Riverpark Joint Venture to agree to an amendment to the commercial development obligations of Shea and the affordable housing obligations described in this clause, each as described above in this clause (iv). The Company acknowledges and agrees that Centex does not control the Riverpark Joint Venture and that the Riverpark Joint Venture must rely on its contractual rights to enforce the commercial development obligations of Shea and the affordable housing development obligations of the affordable housing developer and Centex is not ensuring that such obligations will be performed in a timely manner.

     (g) For a period beginning on the Contribution Date and ending on a date, not exceeding sixty (60) days following the Contribution Date, when the Company and its Affiliates have obtained their own commercial general liability insurance coverage, Centex will agree to cause the Company, Purchaser and the Transferred Subsidiaries to be named as additional insureds on Centex’s primary commercial general liability insurance policy with respect to the business of the Transferred Subsidiaries. The Company agrees that it will be fully responsible for the self-retention limit (which is $2,000,000 for premises liability and $25,000,000 for completed operations) and any claims fees, and for any Claims and Losses of Centex resulting from the Company, Purchaser and the Transferred Subsidiaries being named as additional insureds for such interim period. Coverage under such policy as to each Project is predicated on the Property Services Agreement being in effect for such Project and the Project being developed in a manner substantially consistent with Centex’s development plans for the Project prior to the Effective Date.

     (h) The Company will pay the additional premiums required to cause the existing “WRAP” insurance policies covering the construction of the Plant 51 units to remain following the Contribution Date and survive the transactions contemplated herein (notwithstanding the change of control with respect to Plant 51, LLC), including commercial general liability with completed operations coverage, naming Centex as an additional insured and be maintained throughout the development and during the completed operations coverage term. The Company will be responsible for all self insurance retention limits and for all premium costs with respect to such “WRAP” insurance policies incurred in this arrangement both for Closing and during the coverage term. Additionally, the Company will maintain the existing Builder’s Risk policy with respect to Plant 51 through completion of the Project, naming Centex as an additional insured. The Company will be responsible for all self insurance retention limits and for all premium costs with respect to such Builder’s Risk policy incurred in this arrangement following Closing and during the coverage term.

     (i) The parties shall cooperate with each other so that the Party to which a Reimbursement (or portion thereof) is allocated will receive the benefit of such Reimbursement when it is received from or available for use by the applicable entity giving the Reimbursement. With respect to impact and other fee credits which are available when a dwelling building permit is issued, (1) the Parties will use reasonable efforts to effect an assignment to the Transferred Subsidiary, as to the Transferred Subsidiary’s share and to Centex, as to Centex’s share, of such impact and other fee credits and failing such assignment shall co-operate with homebuilders purchasing lots to endeavor to have such fee credits made available to such homebuilders and (2) with respect to Tierra Del Rio and any other Project where Centex is retaining impact and

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other fee credits as set forth in Exhibit A-2 that otherwise would be allocable to the Corona lots, the Company will require homebuilders to purchase such fee credits from Centex, rather than from the applicable Governmental Authority, up to the amount of the fee credits retained by Centex as Retained Assets. If a Party receives any Reimbursement to which the other Party is entitled, the receiving party shall promptly pay such Reimbursements to the entitled Party, and, if not paid within thirty (30) days, the amount unpaid will bear interest at the Interest Rate from such date until paid.

     (j) This Section 11 shall survive Closing.

     12. Closing of the Asset Transfer.

     (a) Centex Deliverables. At least one (1) business day before the Asset Transfer Date, Centex shall execute, acknowledge, where appropriate, and deposit with the Title Company, the following:

     (i) Special warranty deeds for the Properties (the “Deeds”) (other than for Plant 51 and Eastgate), substantially in the form provided by the Title Company for each jurisdiction, which provide that each Transferred Subsidiary takes its applicable Property subject to all matters of record.

     (ii) Two counterparts of an assignment and bill of sale, substantially in the form attached hereto as Exhibit E-2, in which Centex assigns to the Newly Formed Transferred Subsidiary all of Centex’s right, title and interest in all of Assets corresponding to the relevant Property constituting personal property (the “Bill of Sale”).

     (iii) An affidavit to each Newly Formed Transferred Subsidiary, in substantially the form attached hereto as Exhibit E-3, in accordance with Section 1445 of the IRC and regulations promulgated thereunder, signed by Centex stating, under penalty of perjury, Centex’s United States taxpayer identification number and that Centex is not a foreign person as defined by IRC Section 1445 (f)(3) and any similar certificate required by any State in which a Property is located.

     (iv) Such documents as the Company or the Title Company may reasonably require, including those documents required by each state with respect to each corresponding Project as set forth in Exhibit F, and Centex can reasonably supply without material effort or cost in order to close this transaction and vest title to the Assets in the Newly Formed Transferred Subsidiaries in accordance with the terms of this Agreement.

     (b) Newly Formed Transferred Subsidiary Deliverables. At least one (1) business day before the Contribution Date, Centex will cause the Newly Formed Transferred Subsidiaries to execute, acknowledge, where appropriate, and deposit with the Title Company, the following:

     (i) Two (2) counterparts of the Bill of Sale.

     (ii) An agreement in favor of Centex in the form of Exhibit E-5 pursuant to which such Transferred Subsidiary (A) agrees to be bound by and perform its obligations as provided in this Agreement in all respects as to the Assets transferred to it and liabilities

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assumed by it pursuant to this Agreement and (B) jointly and severally with the Company and the other Transferred Subsidiaries indemnifies Centex pursuant to Section 19(b).

     (iii) Such documents, including those documents required by each state with respect to each corresponding Project as set forth in Exhibit F, as the Title Company may reasonably require and each Newly Formed Transferred Subsidiary can reasonably supply in order without material effort or cost to close this transaction and vest title to the relevant Assets in the Newly Formed Transferred Subsidiaries in accordance with the terms of this Agreement.

     13. Closing of the Transferred Subsidiary Member Interests Contribution; Closing Actions.

     (a) Centex Deliverables. At least one (1) business day before the Contribution Date, Centex shall execute, acknowledge and where appropriate deposit with the Title Company, the following:

     (i) Two (2) counterparts of a Transferred Subsidiary Member Interests assignment, substantially in the form attached hereto as Exhibit E-4, with respect to each Transferred Subsidiary, assigning to the Company all of the member interests in such Transferred Subsidiary to the Company (each being a “Transferred Subsidiary Member Interests Assignment”).

     (ii) The Contribution Date Representations Certificate.

     (iii) Any material Consents received by Centex since the Effective Date.

     (b) Company Deliverables. At least one (1) business day before the Contribution Date, the Company shall execute and acknowledge, where appropriate, and deposit with the Title Company

     (i) Two (2) counterparts of the Transferred Subsidiary Member Interest Assignments for each Transferred Subsidiary.

     (ii) Two (2) originals of a Pledge Agreement (the “Pledge”) of all of the member interests in each of the Transferred Subsidiaries, securing Investor’s indemnification obligations under Section 3.4(c) of the Purchaser LLC Agreement, and two (2) original UCC-1 financing statements for Delaware and each state in which a Project is based.

     (c) Recordation of Deeds, Issuance of Title Policies and Distribution of Documents. At least one (1) business day before the Contribution Date, the Parties will use reasonable efforts to cause the Title Company to prepare and submit to each of Centex and the Company for their approval (not to be unreasonably withheld) a pro forma of the Title Policies and pro forma escrow settlement statements. As soon as (but not until) each of the following has occurred: (1) Centex has delivered to the Title Company all of the documents described in Sections 12(a) and 13(a), as well as Centex’s share of closing costs; (2) the Transferred Subsidiaries have delivered to the Title Company the documents described in Section 12(b); and (3) the Company has delivered to the Title Company the documents described in Section 13(b),

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as well as the Company’s share of closing costs; and (3) the Parties have notified the Title Company in writing that all conditions and requirements to the Closing as provided in this Agreement have been satisfied or properly waived as herein provided, the Parties shall jointly instruct the Title Company to date all undated documents as of the Contribution Date and shall:

     (i) Record the Deeds;

     (ii) Cause the Title Policy Underwriters to issue the Title Policies;

     (iii) Deliver to Centex one fully executed copy of the Bill of Sale and Transferred Subsidiary Member Interest Assignments and the Pledge, and both originals of the UCC-1 financing statements referenced in Section 13(b)(ii) , the agreements specified in Section 12(b)(ii) and copies of all other closing documents;

     (iv) Deliver to the Company unrecorded but endorsed Deeds; and

     (v) Deliver to the Company one fully executed copy of the Bill of Sale, Transferred Subsidiary Member Interest Assignments and the Pledge and copies of all other closing documents.

     14. Closing Costs and Prorations.

     (a) Closing Costs. At Closing, Centex shall pay costs of (i) recording of any lien releases and the Deeds, (ii) the cost of the Title Commitments and Title Policies (iii) the Surveys, (iv) one-half (1/2) of any City, County or State transfer taxes, and (v) the Title Company escrow fees. The Company on behalf of the Transferred Subsidiaries shall pay one-half (1/2) of any City, County or State transfer taxes.

     (b) Non-Tax Prorations. The following items shall be prorated between Centex and the Company on behalf of the Transferred Subsidiaries as of 12:01 a.m. on the Contribution Date, to the extent not included in the Future LD Spend Schedule: (i) utilities; (ii) charges imposed by Associations, Financing Districts and other quasi-governmental organizations; and (iii) such other items which are customarily apportioned in similar transactions. Such prorations will take place on a mutually-agreed date, not later than thirty (30) days following the Contribution Date. If such items and charges are later determined to be higher or lower than those that are apportioned, a subsequent adjustment shall be made between Centex and the Company on behalf of the Transferred Subsidiary within ten (10) days after receipt of such determination.

     (c) Tax Prorations. Ad valorem taxes for the Properties and Improvements and personal property taxes for personal property included in the Assets shall be prorated as of 12:01 a.m. on the Contribution Date based on (where ad valorem taxes are paid in arrears and the assessed value for the current tax year is unknown) the application of the preceding year’s rates to the latest assessed valuation or statements issued to Centex for the current year’s assessment, if available, with Centex being responsible for the period prior to such time, and the Company on behalf of the Transferred Affiliates being responsible for the period from and after such time. For any Property where ad valorem taxes are paid in advance or the assessed value for the current year is known, the proration mechanism will be adjusted accordingly in accordance with

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industry practice in the locality in which the Property is located. Centex shall be responsible for real estate taxes on the Properties that are payable with respect to the years prior to the year in which the Contribution Date occurs, including such taxes which are payable in arrears and/or are not yet due and payable. The Company acknowledges that as of the proration time, the Properties may not have been assessed as separately described parcels of real estate and that real property taxes for such Properties might be assessed under a tax bill in the name of Centex which covers additional property. If that is the case, the Company on behalf of the Transferred Subsidiaries shall be responsible for that portion of the tax determined by multiplying the total tax bill by a fraction, the numerator of which shall be the acreage of the applicable Property and the denominator of which shall be the total acreage of all property covered by the tax bill, and then prorating the product of such multiplication as of such proration time. The Company agrees to pay to Centex on behalf of the Transferred Subsidiary at the Closing the Transferred Subsidiary’s portion of the tax bill for the applicable Property. Centex agrees to pay the entire tax bill before it becomes delinquent. If real estate taxes for the year covered by the apportionment are later determined to be higher or lower than those that are apportioned, a post-Closing adjustment shall be made between Centex and the Company on behalf of the Transferred Subsidiary within ten (10) days after receipt of notice of the actual tax bill.

     (d) Change-of-Use Taxes. Any increased taxes payable for the tax year that contains the Contribution Date and any subsequent tax year as a result of a change of use on or after the Contribution Date and/or reduced taxes or exemptions will be paid by the relevant Transferred Subsidiary.

     (e) Special Assessments and Interest and Penalties. Any special assessments and interest and penalties levied against each Property shall be prorated between Centex and the Company on behalf of the Transferred Subsidiary as of the period prior to 12:01 a.m. on the date of the Contribution Date.

     (f) This Section 14 shall survive Closing.

     15. Condemnation.

     If any portion of a Property is taken by condemnation or eminent domain or is the subject of a threatened or pending condemnation or eminent domain proceeding following the Effective Date, such condemnation will not affect the obligations of the Parties to proceed to close the contribution or affect the Unadjusted Contributed Stipulated Value or the Adjusted Contributed Stipulated Value, but Centex shall assign to the relevant Transferred Subsidiary all of Centex’s rights to all awards for the condemnation or taking and if condemnation occurs prior to the Contribution Date, the condemned portion of the Property will be omitted from the contribution.

     16. Centex Representations. Except as set forth in the Disclosure Schedule, Centex represents to the Company and the Transferred Subsidiaries that as of the Effective Date:

     (a) Organization and Qualification. Centex is duly formed and validly existing under the laws of the state of Nevada and each Transferred Subsidiary is duly formed and validly existing under the laws of the state of Delaware. Centex has all requisite partnership power and authority to own, operate and develop the Projects (other than Plant 51 and Eastgate) and to carry on its business as it is presently being conducted. Plant 51 Sub and Eastgate Sub have all

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requisite limited liability company power and authority to own operate and develop, respectively, Plant 51 and Eastgate and to carry on their business as it is presently being conducted. The Newly Formed Transferred Subsidiaries have all requisite limited liability company power and authority to acquire the Assets being contributed to them by Centex and to own, operate and develop the Project transferred or to be transferred to them. No Owner is in violation of, in conflict with, or in default under any of its Organizational Documents and the entering into of this Agreement by Centex and the consummation of the transactions contemplated by this Agreement will conflict with or violate or breach any provision of its Organizational Documents. Centex is duly qualified or licensed to do business and in good standing in each jurisdiction in which the nature of its business or the ownership of its properties makes such qualification or licensing necessary. Each Transferred Subsidiary is qualified to do business in the state in which its respective Project is located. No Owner is a foreign person as defined in Section 1445 of the IRC.

     (b) Authorization; Enforceability. Centex has all requisite partnership power to execute and deliver this Agreement and the other agreements and instruments contemplated hereby and to perform its obligations hereunder and thereunder and, subject to the conditions set forth herein to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the other agreements and instruments contemplated hereby have been duly authorized by all requisite action on behalf of Centex. This Agreement has been duly executed and delivered by Centex and, assuming the due authorization, execution and delivery of this Agreement by the Company, constitutes the valid and binding obligation of Centex, enforceable against Centex, in accordance with its terms subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights and remedies generally, and (ii) the effect of general equitable principles, regardless of whether asserted in a proceeding in equity or at law.

     (c) No Conflict or Violation. The execution, delivery and performance by the Centex of its obligations under this Agreement do not and will not: to Centex’s Knowledge, violate, or result in a material default or breach under, or require any consent, approval or authorization under, any Contract to which an Owner is a party so as to cause a Material Adverse Effect to any Project; or (3) to Centex’s Knowledge, contravene or violate in any material respect any material Law applicable to any Owner or any of the Assets, or any Governmental Order to which an Owner is a party or by which any of the Assets is bound so as to cause a Material Adverse Effect to any Project. To Centex’s Knowledge, the acquisition by Purchaser of all of the member interests of the Company, and the acquisition by Investor of a majority of the interests in Purchaser will not (i) violate, or result in a material default or breach under, or require any consent, approval or authorization under, any Contract to which an Owner is a party so as to cause a Material Adverse Effect to any Project; or (ii) contravene or violate in any material respect any material Law applicable to it or any of the Assets, or any Governmental Order to which an Owner is a party or by which any of the Assets is bound so as to cause a Material Adverse Effect to any Project.

     (d) No Bankruptcy Proceedings. Centex has not made any voluntary filings for relief as debtor under any state receivership Laws or federal bankruptcy Laws, nor, to Centex’s Knowledge, has any involuntary filing with respect to Centex been made under any state receivership Laws or federal bankruptcy Laws. Centex is not entering into the transactions

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contemplated by this Agreement with the actual intent of hindering, delaying or defrauding any Person, including any creditor. Centex is solvent, able to pay its debts as and when they become due and the transactions contemplated hereby will not render Centex insolvent.

     (e) Governmental Consents and Approvals. The execution, delivery and performance by Centex of this Agreement and the other instruments contemplated hereby and the consummation by Centex of the transactions contemplated hereby and thereby, and the acquisition by Purchaser of all of the member interests of the Company, and the acquisition by the Investors of a majority of the interests in Purchaser, do not and will not require any approval, consent, authorization or act of, or the making by Centex of any declaration, filing or registration with, or notification to, any Governmental Authority as to which the failure to obtain such approval, consent, authorization or act of, or to make such declaration, filing or registration with, or notification to, any Governmental Authority would cause a Material Adverse Effect to any Project.

     (f) Litigation. There are no pending, or to the Knowledge of Centex, threatened in writing, judicial, municipal or administrative proceedings affecting the Assets, or in which an Owner, is or, to Centex’s Knowledge, will be, a party by reason of such Owner’s ownership of the of the Assets or any portion thereof and in each case are material to the ownership, development or value of a Project. No Governmental Orders, injunctions, attachments, execution proceedings or other proceedings by any Governmental Authority, are pending, or, to the Knowledge of Centex, threatened in writing, against an Owner relating to or against the Projects. There are no judgments, orders, decrees or injunctions imposed on or against the Projects.

     (g) Compliance with Laws. To Centex’s Knowledge, Centex is and has been in compliance with all applicable Laws, Governmental Orders and Obtained Entitlements with respect to the Projects except as to each Project as to such non-compliance that would not have a Material Adverse Effect with respect to such Project. Except as set forth in the Disclosure Schedule, no written notices have been received by Centex within the twelve (12) months prior to the Effective Date alleging a violation of any such Laws, Governmental Orders or Obtained Entitlements which if true would result in a Material Adverse Effect with respect to a Project.

     (h) Indebtedness. There is no Indebtedness secured by the Assets. For avoidance of doubt, the Centex Security Instruments, liens for ad valorem taxes and assessments, Association assessments and Financing District assessments in no event will be deemed to violate the representation of this Section 16(h).

     (i) Entitlements. To Centex’s Knowledge: A general description of the material Entitlements that have been obtained by Centex as of the Contribution Date for each Project are included in the Project Summaries, including required environmental impact review and permits (the “Obtained Entitlements”). Material development agreements and subdivision improvement agreements for the Obtained Entitlements that contain material continuing obligations have been included in the Data Site. Except as otherwise disclosed in the Project Summaries, the Obtained Entitlements are in full force and effect except for the lapse or termination of Obtained Entitlements that would not have a Material Adverse Effect on a Project. No Obtained Entitlements are terminable as a result of the contribution of the Assets to the

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Company or by the acquisition by Purchaser of all of the member interests of the Company, and the acquisition by the Investor of a majority of the interests in Purchaser, except for terminations that would not have a Material Adverse Effect on any Project. No challenge to any Obtained Entitlement is pending. Except as otherwise disclosed in the Project Summaries, Centex is not in violation of the provisions of any of the Obtained Entitlements except for violations that would not have a Material Adverse Effect with respect to the relevant Project. The Project Summaries sets forth, to Centex’s Knowledge, the material Entitlements that need to be obtained in order to develop the Projects consistent with the Project Summaries but that have not yet been obtained as of the Effective Date. Except as disclosed in the Project Summaries, to Centex’s Knowledge, the Properties are not reliant on other property in order to satisfy the requirements of all Entitlements where the failure to satisfy such requirements would have a Material Adverse Effect with respect to the relevant Project, except for obtaining offsite easements as described in thee Project Summaries.

     (j) Options. The Owners have sole ownership and possession of the Properties and, except for the Company, no Owner has granted or agreed to grant to any Person, and no Owner is a party to, any option, contract, right of first refusal, right of first offer, charitable housing agreement, profit participation, anti-speculation option, joint venture or similar agreement or any other agreement or understanding with respect to a purchase or sale of the Properties or any portion thereof or any interest therein or pursuant to which any sales proceeds relating to any Project are required to be paid to any other Person (each, an “Option”). All agreements pertaining to the Options are as disclosed in the Disclosure Schedule and included in the Data Site. There are no third parties in possession of any portion of the Properties as lessees, licensees or tenants at sufferance except for Centex in connection with its homebuilding activities.

     (k) Condemnation. No written notices of any condemnation proceedings by a Governmental Authority having the power of eminent domain to condemn any part of any of the Properties have been received by any Owner within the 12 months preceding the Effective Date.

     (l) Associations. There are no material unpaid sums due and payable by Centex to any Association (each an “Association Document”), other than amounts in the ordinary course of business or being contested in good faith with adequate reserves maintained therefor (the Parties agree that any reserve will be prorated pursuant to Section 14), and Centex is not in material default under any of the Association Documents. All material Association Documents are contained in the Data Site.

     (m) Financing Districts. To Centex’s Knowledge, all instruments with respect to each Financing District formed by Centex that materially affect the respective Project have been included in the Data Site.

     (n) Centex Security Instruments. To Centex’s Knowledge, the schedule of the Centex Security Instruments contained in Exhibit D-2 is accurate in all material respects as of the Effective Date.

     (o) Access Rights. Each parcel of Property either (i) abuts and has actual vehicular and pedestrian access to and from a public right of way or (ii) has an insurable appurtenant easement for vehicular and pedestrian access over and across adjacent land which provides such

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access to and from the Property and a public right of way; provided, however, that for any Project that is comprised of more than one parcel, it shall not be considered a breach if not all of such parcels are benefited with such access rights so long as the parcels that are not directly benefited with such access rights can indirectly obtain the benefit of such access rights over one or more contiguous parcels included in the Property.

     (p) Future LD Spend Schedules. The Future LD Spend Schedules were prepared in good faith and were as of February 24, 2008 the projected future cash flow spending projection for land development for each Project as prepared by the relevant Centex division in accordance with its land development cash flow spending forecast procedures. Centex makes no representation or warranty whatsoever regarding the Future LD Spend Schedules other than as provided in the prior sentence, including any representation or warranty that they represent achievable goals or that any assumptions upon which they are based are true, accurate or reasonable.

     (q) Contracts. All Assigned Contracts have been entered into in connection with the ownership, use, operation and development of the Projects. Except as otherwise described in the Project Summaries, with respect to each Assigned Contract, Centex is not in breach of or in default under such Assigned Contract and to the Knowledge of Centex, no counterparty is in breach of or default under such Assigned Contract, where such breach or default would have a Material Adverse Effect on any Project. Each Assigned Contract is in full force and effect and is a legal, valid, binding and enforceable obligation of Centex, subject to (a) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights and remedies generally, and (b) the effect of general, equitable principles, regardless of whether asserted in a proceeding in equity or at law. To Centex’s Knowledge, all Material Contracts that could have a Material Adverse Effect on a Project are included in the Data Site.

     (r) Environmental Matters. Except as described in the Project Summaries or the Environmental Reports, to Centex’s Knowledge:

     (i) There have been no violations of Environmental Laws at the Properties that could result in a Material Adverse Effect on any Project; (ii) no Property contains a Recognized Environmental Condition in concentrations that require remediation under Environmental Laws; and (iii) there are no wetlands (as the term is defined in Section 404 of the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1254, and applicable state laws) at any Property that would reasonably be expected to have a Material Adverse Effect on the development of the Property in accordance with the Project Summary for that Property.

     (ii) There are no pending or threatened in writing, Claims against any Owner under Environmental Laws. No Owner has not received written notice that the Property is subject to any private or governmental lien or judicial or administrative notice of violation, action or inquiry, investigation or claim relating to Hazardous Materials. No Property is subject to, any judgment, decree or judicial or administrative order relating to compliance with Environmental Laws or the investigation, sampling, monitoring, treatment, remediation,

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removal or cleanup of Hazardous Materials and no investigation, litigation or other proceeding is pending or threatened in writing with respect thereto.

     (iii) Notwithstanding anything to the contrary herein, this Section 16(r) shall constitute the sole representations and warranties in this Agreement relating to compliance with Environmental Laws and/or in connection with Hazardous Materials.

     (s) Taxes. All ad valorem taxes assessed or payable with respect to the Properties and personal property taxes with respect to the remainder of the Assets have been paid, except for the 2008 taxes and assessments which are not yet delinquent. No Owner has received any written notice of any other special assessments, levies or taxes imposed or to be imposed affecting any portion of the Properties or Assets or of any action regarding the potential formation of any other district or authority empowered to so assess a tax or levy.

     (t) Lots. The information contained in the Project Summaries relating to status of Lots as finished, partially finished or undeveloped, and number of Lots for which there are Obtained Entitlements permitting Dwellings to be built thereon has been prepared by Centex in good faith and in a manner consistent with Centex’s categorization of Lots in the ordinary course of the business of each Centex division in which a Property is located; provided, however, “finished Lots” does not imply that no further work is required and Centex shall have no liability under this Agreement if any development costs exceeds any budgeted or projected amounts. The number of finished Lots as of the Contribution Date will differ from the Baseline Date Lot count and the Adjustment procedures of Exhibit B will apply. Without limiting other representations contained in this Section 16, Centex does not make any representations under this Section 16(t) as to any matter contained in the Project Summaries, including, without limitation, with respect to Entitlements or Future LD Spend Schedules, except the representations as to Lots as expressly provided in this Section 16(t).

     (u) Cost-Sharing Arrangements. Other than as described in the Project Summaries, there are no material contracts, agreements or arrangements with any third party other than with an Association to jointly share costs or construction work related to the Properties or the Projects.

     (v) Utilities. The general status as to obtaining utilities for each Project is as described in the Project Summaries.

     (w) Archaeological Sites, etc. Except as described in the Project Summaries, to the Knowledge of Centex, no Owner has received reports or other reliable information indicating that any Project contains archeological sites, paleontological sites, historical sites, artifacts, burial grounds or other similar conditions the existence of which would have a Material Adverse Effect on the development or use of the Project.

     (x) Transferred Subsidiaries. Centex has been the sole member of each of the Transferred Subsidiaries since their formation. True and correct copies of the Organizational Documents for each Transferred Subsidiary are included in the Data Site. No Transferred Subsidiary has any liabilities other than (1) those assumed by it pursuant to the terms of this

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Agreement; and (2) customary filing and other obligations pertaining generally to limited liability companies in Delaware.

     (y) Riverpark Purchase Agreement. The Riverpark Joint Venture and Centex have orally agreed to an amendment to the work scope between the Riverpark Joint Venture and Centex in connection with a corresponding purchase price reduction and an accelerated closing by Centex (and the other Riverpark Joint Venture members) of their respective parcels of land from that originally contemplated under the Riverpark JV Agreement and the Riverpark Purchase Agreement. This agreement is not formally documented. Under this new agreement, the Riverpark Joint Venture is to deliver “blue-topped” lots to Centex with respect to the “Veranda” neighborhood. For “Veranda”, the Riverpark Joint Venture is obligated to perform the land development work, other than the work that is within the cost codes of the Future LD Spend Schedule, which is the responsibility of Riverpark Sub.

     (z) Plant 51 Deposits. Plant 51 Sub holds deposits from prospective purchasers of units in Plant 51 as shown on Exhibit D-5.

     17. Contribution Date Representations Certificate. On the Contribution Date, Centex shall deliver to the Company a certificate updating the representations and warranties of Centex set forth in Section 16 above (the “Contribution Date Representations Certificate”). The Contribution Date Representations Certificate shall be updated only for (1) changes in circumstance or matters which arise after the Effective Date and (2) which do not arise out of a breach of Centex’s covenants under this Agreement.

     18. Assignment; Successors and Assigns. Neither the Company nor Centex nor any of their respective members shall assign their rights under this Agreement. Subject to the foregoing, this Agreement, and the terms, covenants and conditions herein contained, shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs and permitted assigns.

     19. Survival; Indemnification.

     (a) Survival of Representations and Covenants. All of the representations of Centex set forth in Section 16 and in the Contribution Date Representations Certificate shall survive until the date that is twelve (12) months following the Contribution Date (the “Survival Period”). As and to the extent specifically provided in this Agreement, certain covenants set forth in this Agreement survive the Closing and subject to Exhibit G, such covenants shall survive indefinitely.

     (b) Indemnification by the Company. Except for Centex Indemnification Claims (for so long as they remain Centex Indemnification Claims), the Company and the Transferred Subsidiaries shall jointly and severally indemnify, defend and hold harmless Centex against and in respect of all Claims and Losses actually and directly incurred by Centex in respect of Third Party Claims arising out of, in connection with or related to the ownership, operation or development of the Properties, including the liabilities and obligations assumed by the Transferred Subsidiaries in Section 4. THE INDEMNITY PROVIDED IN THIS SECTION 19(b) SHALL INCLUDE CLAIMS AND LOSSES ARISING OUT OF CENTEX’S

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NEGLIGENCE (BUT NOT ITS BREACHES OF THIS AGREEMENT, FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) THAT OTHERWISE FALL WITHIN THE SCOPE OF THIS INDEMNITY.

     (c) Indemnification by Centex. Subject to the provisions of Exhibit G, Centex shall indemnify, defend and hold harmless the Transferred Subsidiaries, the Company and Purchaser (the Transferred Subsidiaries, the Company and the Purchaser for purposes of this Section 19(c), and Centex for purposes of Section 19(b), are referred to in such indemnified capacities as an “Indemnified Party” and the Company and the Transferred Subsidiaries, for purposes of Section 19(b), and Centex for purposes of this Section 19(c), are referred to in such indemnifying capacities as an “Indemnifying Party”) against and in respect of (1) all Losses actually and directly incurred by them arising out of any breach of any of Centex’s covenants under this Agreement, or any breach by Centex of any of its representations contained in Section 16, as updated pursuant to the Contribution Date Representations Certificate and (2) all Claims and Losses in respect of Third Party Claims arising out of, in connection with or related to Retained Liabilities (collectively, “Centex Indemnification Claims”).

     (d) Exclusive Remedy for Warranty Claims; Additional Indemnification Matters.

     (i) The indemnification provided in this Section 19 shall constitute the sole and exclusive remedy and right of the Company and Purchaser for Warranty Claims, regardless of whether any claims or causes of action asserted with respect to such matters are brought in contract, tort or any other legal theory whatsoever or at law or in equity; it being understood and agreed that, except solely and only in the case of actual fraud by and as to a specific Party, the indemnification provisions in this Section 19 are in derogation of and replace in all respects as the sole and exclusive remedy and right any statutory, equitable or common law remedy and rights any Party may have for breach or default of any representation, warranty, covenant or agreement.

     (ii) Subject to Section 19(d)(iii), nothing in this Section 19(d) limits the remedies or enforcement rights of either Party (1) for breach by the other Party of such other Party’s obligations in respect of Closing; (2) for breach by the other Party of covenants under this Agreement that expressly survive Closing; and (3) to enforce the indemnification obligations of the other Party set forth in other provisions of this Agreement.

     (iii) No Indemnified Party shall seek or be entitled to punitive, exemplary or special, consequential damages or damages for lost profits in any claim for indemnification, nor shall it accept payment of any award or judgment for such indemnification to the extent that such award or judgment includes such party’s punitive, exemplary, special or consequential damages or damages for lost profits.

     (e) Recovery Limitations; Claims Procedures. Exhibit G contains, among other provisions, Claim limits for Centex Indemnification Claims other than in respect of Retained Liabilities and procedural requirements for an Indemnified Party to bring Claims under this Section 19.

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     20. Dispute Resolution. Any dispute arising out of or relating to this Agreement, including the breach, termination or validity thereof, which has not been resolved through good faith negotiations between the parties hereto, shall be finally resolved by arbitration administered by JAMS in accordance with its Comprehensive Arbitration Rules and Procedures then currently in effect, by a sole arbitrator. The arbitrator shall have the power to award specific performance and injunctive relief and award attorneys’ fees and costs. The judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. The place of arbitration shall be Dallas, Texas.

     21. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed to have been duly given or made (i) upon delivery, if hand delivered; (ii) one (1) Business Day after being sent by prepaid overnight courier with guaranteed delivery, with a record of receipt; or (iii) upon transmission with confirmed delivery if sent by cable, telegram, email, facsimile or telecopy, to the Parties at the following addresses (or at such other addresses as shall be specified by the Parties by like notice):

If to the Company:	Corona Associates, LLC
	c/o RSF Partners, Inc.
	2828 Routh Street
	Suite 500
	Dallas, Texas 75201
	Attn: Mr. Chris Mahowald
	Tel. (214) 849-9800
	Fax (214) 849-9807
With a copy to:	Farallon Capital Management, L.L.C.
	One Maritime Plaza
	Suite 2100
	San Francisco, California 94111
	Attn: Mr. Stephen L. Millham
	Tel. (415) 421-2151
	Fax (415) 956-8852
With a copy to:	Greenfield Corona, LLC
	50 North Water Street
	South Norwalk, Connecticut 06854
	Attention: Eugene A. Gorab and Barry P. Marcus
	Fax (203) 354-5060
With a copy to:	Pircher, Nichols & Meeks
	1925 Century Park East, Suite 1700
	Los Angeles, California 90067
	Attn: James L. Brat, Esq. (903382-1)

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With a copy to:	Katten Muchin Rosenman LLP
	525 West Monroe Street
	Chicago, Illinois 60661
	Attention: David J. Bryant
	Fax (312) 902-1061
If to Centex:	Centex Homes
	2728 North Harwood
	Dallas, TX 75201-1516
	Attn: Brian Woram
	Telephone: (214) 981-6544
	Fax: (214) 981-6855
With a copy to:	Centex Homes
	2728 North Harwood
	Dallas, TX 75201-1516
	Attn: Donald Westfall
	Telephone: (214) 981-6445
	Fax: (214) 981-6002
If to the Investor Representative:
	Corona Associates, LLC
	c/o RSF Partners, Inc.
	2828 Routh Street
	Suite 500
	Dallas, Texas 75201
	Attn: Mr. Chris Mahowald
	Tel. (214) 849-9800
	Fax (214) 849-9807

     22. Entire Agreement. This Agreement contains the entire agreement between the parties to this Agreement and shall not be modified in any manner except by an instrument in writing executed by the parties or their respective successors in interest.

     23. Severability. If any term or provision of this Agreement shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected.

     24. Waivers. A waiver or breach of a covenant or provision in this Agreement shall not be deemed a waiver of any other covenant or provision in this Agreement, and no waiver shall be valid unless in writing and executed by the waiving party. An extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act.

     25. Construction. The section headings and captions of this Agreement are, and the arrangement of this instrument is, for the sole convenience of the parties to this Agreement. The section headings, captions, and arrangement of this instrument do not in any way affect, limit, amplify, or modify the terms and provisions of this Agreement. Definitions contained in this

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Agreement apply to singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires. The terms “hereof,” “herein,” “hereby” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms “includes” and the word “including” and words of similar import shall be deemed to be followed by the words “without limitation.” This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties have prepared it. Unless otherwise indicated, all references to sections are to this Agreement. All exhibits referred to in this Agreement are attached to it and incorporated in it by this reference.

     26. Performance Due On Day Other Than Business Day. If the time period for the performance of any act called for under this Agreement expires on a day other than a Business Day, the act in question may be performed on the next succeeding Business Day.

     27. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

     28. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Texas. Notwithstanding the foregoing, if and to the extent that the laws of each state in which Properties are located are required to apply to any provisions of this Agreement (e.g. with respect to the conveyance of the Properties), then the laws of the applicable state shall apply with respect to such provisions. Exhibit F sets forth state-specific provisions which shall apply to the Projects located within each such state (as indicated in Exhibit A-1).

     29. Brokerage. Each Party agrees to indemnify and hold harmless the other from and against any losses (including without limitation any commissions, finder’s fees, and reasonable attorneys’ fees and costs) incurred by reason of any brokerage commission or finder’s fee alleged to be payable because of any act, omission or statement of the indemnifying Party in connection with the contribution of the Assets to the Company.

     30. Parties in Interest. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any Person other than the Parties and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third Person to any party or give any third Person any right of subrogation or action over against any Party, except that to the extent provided in this Agreement Purchaser may enforce its rights as an Indemnified Party against Centex as to Third Party Claims, subject to the limitations of this Agreement.

[BALANCE OF PAGE INTENTIONALLY BLANK]

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The parties have executed this Agreement as of the Effective Date.

COMPANY:
Corona Real Estate Holding Company, L.L.C., a Delaware limited liability company
By:	/s/ Brian J. Woram
Name:	Brian J. Woram
Title:	Senior Vice President and Secretary

[Signature Page to Contribution Agreement]

CENTEX:
Centex Homes, a Nevada general partnership
By:	Centex Real Estate Corporation, a Nevada corporation Its Managing Partner
	By:	/s/ Donald R. Westfall
	Name:	Donald R. Westfall
	Its:	Senior Vice President

[Signature Page to Contribution Agreement]

TITLE COMPANY: Commerce Title Insurance Company
By:	/s/ Melvin H. John
Name:	Melvin H. John
Title:	Vice President

[Signature Page to Contribution Agreement]

EX-10.29

Exhibit 10.29

MEMBER INTERESTS PURCHASE AGREEMENT

between

CENTEX HOMES, as Centex,

and

CORONA LAND COMPANY, LLC, as Purchaser

Dated as of March 31, 2008

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS		1
1.1 Definitions		1
1.2 Certain Interpretation Matters		3
ARTICLE II PURCHASE AND SALE OF MEMBER INTERESTS		3
2.1 Mutual Closing Obligations		3
2.2 Contribution Date Member Interests Purchase Price		3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CENTEX		4
3.1 Organization and Qualification		4
3.2 Capitalization and Ownership		4
3.3 Authorization; Enforceability		4
3.4 No Conflict or Violation		4
3.5 Employees		5
3.6 Assets and Liabilities		5
3.7 No Bankruptcy Proceedings		5
3.8 Organizational Documents		5
ARTICLE IV NO OTHER REPRESENTATIONS		5
4.1 No Other Representations		5
4.2 As-Is		5
ARTICLE V COVENANTS OF CENTEX BETWEEN THE EFFECTIVE DATE AND THE CLOSING DATE		6
5.1 Covenants of Centex		6
ARTICLE VI CONDITIONS TO CLOSING; DELIVERIES AT CLOSING		6
6.1 Conditions to Purchaser’s Obligations to Close		6
6.2 Conditions to Centex’s Obligations to Close		6
6.3 Centex Deliveries		6
6.4 Purchaser Deliveries		7
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND COVENANTS; INDEMNIFICATION		7
7.1 Survival of Covenants, Representations and Warranties		7
7.2 Indemnification by Centex		7
7.3 Exclusive Remedy; Additional Indemnification Matters; Limitation		7

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	Page
7.4 No Limitation of Other Claims		8
7.5 Survival		8
ARTICLE VIII OFAC CERTIFICATE AND INDEMNIFICATION		8
8.1 Purchaser’s OFAC Representation		8
8.2 Centex’s OFAC Representation		9
8.3 Survival		9
ARTICLE IX GENERAL PROVISIONS		9
9.1 Notices		9
9.2 Severability		10
9.3 Counterparts		11
9.4 Assignment; Successors and Assigns		11
9.5 Further Assurances		11
9.6 No Third Party Beneficiaries		11
9.7 Descriptive Headings		11
9.8 Reasonable Consent Required		11
9.9 Waivers		11
9.10 Dispute Resolution		11
9.11 Governing Law		12
9.12 Enforcement		12
9.13 Entire Agreement; Amendments		12
9.14 Construction; Joint Drafting		12
9.15 No Brokers, Finders, etc.		12
9.16 Tax Characterization		12
Exhibit A           Transferred Subsidiaries
Exhibit B            Form of Assignment of Member Interests
Exhibit C            Procedure for Post-Closing Adjustments
Exhibit D            Organizational Documents

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MEMBER INTERESTS PURCHASE AGREEMENT

          THIS MEMBER INTERESTS PURCHASE AGREEMENT (this “Agreement”) is effective as of March 31, 2008 (the “Effective Date”), by and between CENTEX HOMES, a Nevada general partnership (“Centex”), and CORONA LAND COMPANY, LLC, a Delaware limited liability company (“Purchaser”; each of Purchaser, on the one hand, and Centex, on the other hand, a “Party”; collectively, the “Parties”).

RECITALS:

          WHEREAS, Centex has formed the Company and is the sole owner of all right, title and interest in all of the equity ownership interests (the “Member Interests”) in Corona Real Estate Holding Company, L.L.C., a Delaware limited liability company (the “Company”);

          WHEREAS, the Company is the sole owner of all right, title and interest in all of the equity ownership interests in each of those certain entities (each, an “Transferred Subsidiary,” and collectively, the “Transferred Subsidiaries”), shown on Exhibit “A” that own the real estate projects described in Exhibit “A”;

          WHEREAS, prior to the Closing Date, Centex will have conveyed to each Transferred Subsidiary the Assets applicable to the respective Project (the “Contribution”), and, after the Contribution, each Transferred Subsidiary will own its, respective, Assets;

          WHEREAS, Centex desires to sell to Purchaser, and Purchaser desires to purchase from Centex, all of the Member Interests owned by Centex on the terms and subject to the conditions set forth in this Agreement; and

          WHEREAS, immediately after Purchaser’s acquisition of all of the Membership Interests from Centex, Purchaser desires to be admitted to the Company under an assignment of member interests in the form of Exhibit “B” attached hereto (the “Assignment”).

          NOW, THEREFORE, in consideration of the premises and the covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, do hereby agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions.

          (a) Unless otherwise defined herein, any capitalized term herein shall have the same meaning as set forth for it in the Contribution Agreement.

          (b) The following terms shall have the respective meanings specified or referred to below:

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          “Closing” means the settlement of the mutual obligations of Purchaser and Centex with respect to the sale of the Member Interests to Purchaser and the performance of their respective obligations hereunder to be performed at or prior to the Closing Date.

          “Contribution Agreement” means the Contribution Agreement, dated March 29, 2008, between Centex and the Company.

          “Incurred Ownership Development Costs” is the amount of all third party costs paid by Centex in March, 2008, in owning and developing the Properties (including costs paid related to obtaining and preserving the Entitlements, costs related to work conducted by consultants and contractors, costs incurred in obtaining utilities, costs paid in negotiating and entering into agreements with adjoining landowners, costs paid under purchase agreements for the Properties and Association-related costs) if and to the extent the Incurred Ownership Development Costs were for work that is included in the Future LD Spend Schedules.

          “Interest Rate” means annual rate of interest published in The Wall Street Journal from time to time as the “Prime Rate” for JPMorgan Chase, N.A., plus 3%. If The Wall Street Journal ceases to publish the “Prime Rate” for JPMorgan Chase, N.A., but publishes the “Prime Rate” for another financial institution, the “Prime Rate” shall be such rate as published in The Wall Street Journal. If The Wall Street Journal ceases to publish a “Prime Rate”, the parties shall select an equivalent publication that publishes such “Prime Rate.”

          “Liabilities” means indebtedness, damages, obligations, losses, debts, penalties, fines, awards, judgments, costs or expenses.

          Each of the following terms is defined in the Section of this Agreement set forth opposite such term:

Adjustments	Exhibit C
Agreement	Preamble
Blocked Person		8.1
Centex	Preamble
Closing Date		2.1	(a)
Closing Date Representations Certificate		6.3	(b)
Contribution	Recitals
Effective Date	Preamble
Executive Order		8.1
Final Adjustment Payment	Exhibit C
Final Member Interests Purchase Price	Exhibit C
Final Investment Adjustments	Exhibit C
Investment Objections Notice	Exhibit C
Investment Updated Schedule	Exhibit C
Member Interests	Recitals
Neutral Accountant	Exhibit C
OFAC		8.1
Parties	Preamble
Party	Preamble

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Purchaser	Preamble
Survival Period		7.3	(a)

     1.2 Certain Interpretation Matters.

          (a) Definitions contained in this Agreement apply to singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires. The terms “hereof,” “herein,” “hereby” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms “includes” and the word “including” and words of similar import shall be deemed to be followed by the words “without limitation.” Each Exhibit, Article, Section and paragraph reference is to the Exhibits, Articles, Sections and paragraphs to this Agreement, unless otherwise specified.

          (b) When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is not a Business Day, the period in question shall end on the next succeeding Business Day.

          (c) The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

ARTICLE II

PURCHASE AND SALE OF MEMBER INTERESTS

     2.1 Mutual Closing Obligations.

          (a) The “Closing Date” hereunder will be the Contribution Date (and in no event later than March 31, 2008). In no event will the Closing Date be a day that is not a Business Day.

          (b) Upon the terms and subject to the conditions set forth in this Agreement, at the Closing Centex shall sell, convey, transfer, assign and deliver to Purchaser and Purchaser shall purchase from Centex, all right, title and interest of Centex in and to the Member Interests free and clear of all Encumbrances. The Closing will take place on the Closing Date and be effective as of 11:59 p.m., Central time, at the offices of Baker Botts L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, unless another time and/or place is agreed to in writing by the Parties.

     2.2 Contribution Date Member Interests Purchase Price.

          (a) In consideration of the transfer of the Member Interests by Centex and the consummation of the transactions contemplated herein, Purchaser shall pay and deliver to Centex

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aggregate consideration in the amount of the Contribution Date Member Interest Purchase Price. The Contribution Date Member Interest Purchase Price shall be paid to Centex at the Closing by wire transfer of immediately available funds (in accordance with the wire instructions delivered by Centex to Purchaser).

          (b) Following the Closing Date, the Parties will reconcile difference between the actual and proposed Incurred Ownership Development Costs for March, 2008, in accordance with the procedure set forth in Exhibit C.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF CENTEX

          Centex hereby represents and warrants the following to Purchaser and Investor as of the Closing Date:

     3.1 Organization and Qualification. Centex is duly formed and validly existing under the Laws of the state of Nevada. The Company is duly formed and validly existing under the Laws of the state of Delaware.

     3.2 Capitalization and Ownership.

          (a) All of the Member Interests are and always have been held beneficially and of record by Centex, free and clear of all Encumbrances. All of the Member Interests were duly authorized and issued by the Company. The Member Interests constitute 100% of the equity interests in the Company.

          (b) Except for this Agreement and transactions contemplated hereby, there are no outstanding agreements, arrangements, warrants, options, puts, calls, rights, subscriptions or other commitments to which the Company is a party or by which the Company is bound, granting rights to any Person to purchase, acquire or vote any equity or debt interest or instrument in the Company.

     3.3 Authorization; Enforceability. Centex has all requisite partnership power to execute and deliver this Agreement and to perform its obligations under this Agreement and to sell the Member Interests to Purchaser. The execution, delivery and performance of this Agreement has been duly authorized by all requisite action on behalf of Centex. This Agreement has been duly executed and delivered by Centex and, assuming the due authorization, execution and delivery of this Agreement by Purchaser, constitutes the valid and binding obligation of Centex, enforceable against Centex, in accordance with its terms subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights and remedies generally, and (ii) the effect of general equitable principles, regardless of whether asserted in a proceeding in equity or at Law.

     3.4 No Conflict or Violation. The execution, delivery and performance by Centex of its obligations under this Agreement and the other agreements and instruments contemplated hereby and the consummation of the transactions contemplated hereby and thereby and the execution thereof do not and will not (a) conflict with, violate or breach any provision of its

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Organizational Documents, (b) conflict with, violate or breach any provision of any lease, note, bond, mortgage, license, indenture or loan or credit agreement or other binding agreement to which Centex is a party or by which Centex may be bound, or (c) violate any order or decree of any court, arbitrator or other governmental authority against or binding upon Centex.

     3.5 Employees. The Company does not have any employees.

     3.6 Assets and Liabilities.

          (a) As of the Closing Date, following the Contribution, the only assets and properties of the Company will be its member interests in the Transferred Subsidiaries.

          (b) The Company has not conducted any business activities prior to the Effective Date and will not conduct any business activities prior to the Contribution.

          (c) The Company is not liable for or subject to any Liabilities, except as of the Closing Date for those which will be assigned to, and assumed by, the Company or, as applicable, the Transferred Subsidiaries pursuant to the Contribution Agreement.

     3.7 No Bankruptcy Proceedings. None of Centex, the Company, or any Transferred Subsidiary has made any voluntary filings for relief as debtor under any state receivership Laws or federal bankruptcy Laws, nor, to Centex’s Knowledge, has any involuntary filing with respect to Centex, the Company or any of the Transferred Subsidiaries been made under any state receivership Laws or federal bankruptcy Laws.

     3.8 Organizational Documents. Attached as Exhibit “D” is a true and complete list of the organizational documents for the Company.

ARTICLE IV

NO OTHER REPRESENTATIONS

     4.1 No Other Representations. Purchaser acknowledges that, except for the representations of Centex expressly given in Article III, no other representations and warranties, express or implied, are made whatsoever by Centex in respect of the Member Interests and the Company. Without affecting any remedies that the Company may have in respect of the representations made by Centex in the Contribution Agreement or any of the other Transaction Documents, Purchaser has not relied upon any statements, representations or warranties by Centex other than the representations of Centex made in Article III. Without limiting the foregoing, Purchaser acknowledges and agrees that Purchaser will have no right of recovery under this Agreement under any theory for any Claim relating to the Assets or Liabilities related thereto, and that the sole basis for recovery for any such Claim will be pursuant to the Contribution Agreement if and to the extent a Claim is permitted thereunder.

     4.2 As-Is. Purchaser agrees that, except as specifically provided in this Agreement and the documents delivered by Centex at Closing in compliance with the provisions of this Agreement, the Member Interests are sold “AS IS”. Without limiting the foregoing, Purchaser agrees that it has conducted its own assessment of the value of the Member Interests and the

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underlying market value of the Projects and acknowledges that the value of the Member Interests may be greater than or less than the Final Member Interests Purchase Price and that the market value of the Projects may positively or negatively change after the Effective Date and that Purchaser shall not be entitled to an adjustment of the Final Member Interests Purchase Price or any other remedy against Centex as a result of market value or market conditions

ARTICLE V

COVENANTS OF CENTEX BETWEEN THE EFFECTIVE DATE
AND THE CLOSING DATE

     5.1 Covenants of Centex. Centex will exercise its rights as sole member of the Company so that between the Effective Date and the Closing Date, (a) the Company will not employ any person; and (b) the Company will not carry on any trade or business, enter into any Contracts, acquire any assets (other than the member interests in the Transferred Subsidiaries) or incur any Liabilities.

ARTICLE VI

CONDITIONS TO CLOSING; DELIVERIES AT CLOSING

     6.1 Conditions to Purchaser’s Obligations to Close. The obligation of Purchaser to acquire the Member Interests and pay the Contribution Date Member Interests Purchase Price is subject to the following conditions, which may be waived by Investor, on behalf of Purchaser, in its sole discretion:

          (a) Centex making the Asset Transfer to the Newly Formed Transferred Subsidiaries in accordance with the Contribution Agreement.

          (b) The Company acquiring all of the member interests in the Transferred Subsidiaries.

          (c) All of Centex’s representations under Article III, Section 8.2, and Section 9.15 are true and correct in all material respects as of the Closing Date.

          (d) Centex being ready to deliver all of the items required to be delivered by it pursuant to Section 6.3.

          (e) Centex performing in all material respects all of its other covenants under this Agreement to be performed on or before the Closing.

     6.2 Conditions to Centex’s Obligations to Close. The obligation of Centex to sell the Member Interests to Purchaser is subject to Purchaser being ready to pay the Contribution Date Member Interests Purchase Price and delivering an executed counterpart of the Assignment.

6.3 Centex Deliveries. At Closing, Centex shall deliver to Purchaser

          (a) A counterpart signed by Centex of the Assignment.

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          (b) A certificate updating the representations and warranties of Centex set forth in Article III, Section 8.2, and Section 9.15 (the “Closing Date Representations Certificate”). The Closing Date Representations Certificate may be updated only with respect to Section 3.6 and Section 3.7 and only with respect to such Sections for (1) changes in circumstance or matters which arise after the Effective Date and (2) which do not arise out of a breach of Centex’s covenants under this Agreement.

     6.4 Purchaser Deliveries. At Closing, Purchaser shall pay the Contribution Date Member Interests Purchase Price by wire transfer in immediately available funds and deliver to Centex a counterpart of the Assignment signed by Purchaser.

ARTICLE VII

SURVIVAL OF REPRESENTATIONS AND COVENANTS; INDEMNIFICATION

     7.1 Survival of Covenants, Representations and Warranties. All of the representations of Centex set forth in Article III, Section 8.2 and Section 9.15 of this Agreement and the other provisions of this Agreement which expressly survive Closing shall survive Closing; provided that no Claim for breach of any representation or covenant of Centex may be asserted after the date that is twelve (12) months following the Closing Date, except for any breach of the representation made in Sections 3.1, 3.2 and 3.3, which shall survive indefinitely (the period within which a Claim may be brought in accordance with this sentence is called herein the “Survival Period”).

     7.2 Indemnification by Centex. Centex shall indemnify, defend and hold harmless Purchaser and Investor against and in respect of all Losses actually and directly incurred by the Purchaser or Investor arising out of any breaches of any of Centex’s representations under Article III, Section 8.2, or Section 9.15 or covenants under this Agreement.

     7.3 Exclusive Remedy; Additional Indemnification Matters; Limitation.

          (a) Any notice of a Claim by the Purchaser for indemnification must be timely made by written notice to Centex within the Survival Period. Such notice shall contain a description in reasonable detail of the specific nature of such Claim, a good faith estimate of the amount of such Claim and other facts as Purchaser believes necessary to properly inform Centex of such Claim. The liability of Centex in respect of any such Claim shall terminate if proceedings in respect of it have not been commenced within three (3) months after the receipt of notice by Centex of a Claim.

          (b) The indemnification provided in this Article VII shall constitute the sole and exclusive remedy and right of Purchaser for any breach or default under this Agreement, regardless of whether any claims or causes of action asserted with respect to such matters are brought in contract, tort or any other legal theory whatsoever or at Law or in equity; it being understood and agreed that, except solely and only in the case of actual fraud by and as to Purchaser, the indemnification provisions in this Article VII are in derogation of and replace in all respects as the sole and exclusive remedy and right any statutory, equitable or common law

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remedy and rights Purchaser may have for breach or default of any representation, warranty, covenant or agreement.

          (c) Notwithstanding anything in this Article VII to the contrary, prior to Centex being required to make a payment hereunder to Purchaser, Centex shall have a period of thirty (30) days after it receives written notice from the Indemnified Party of such a breach to cure such breach which by its nature is capable of cure. Such thirty 30-day period shall be extended an additional sixty (60) days if Centex is continuing to make commercially reasonable efforts to so cure at the end of the initial 30-day period and it is reasonable to believe that the breach can be cured by the end of the additional 60-day period.

          (d) Centex’s total liability for any breach of any representation or covenant under this Agreement, or any Claim otherwise relating to or arising under this Agreement, will in no event, under any theory, exceed the Final Member Interest Purchase Price.

     7.4 No Limitation of Other Claims.

          (a) Subject to Section 7.3(d) and Section 7.4(b), nothing in this Article VII limits either Party’s remedies or rights of enforcement against the other Party (1) for breach by the other Party of such other Party’s obligations in respect of Closing; and (2) for breach by the other Party of covenants under this Agreement that expressly survive Closing.

          (b) Neither Party shall seek or be entitled to punitive, exemplary or special, consequential damages or damages for lost profits in any claim for indemnification, nor shall it accept payment of any award or judgment for such indemnification to the extent that such award or judgment includes such Party’s punitive, exemplary, special or consequential damages or damages for lost profits.

     7.5 Survival. This Article VII shall survive termination of this Agreement.

ARTICLE VIII

OFAC CERTIFICATE AND INDEMNIFICATION

     8.1 Purchaser’s OFAC Representation. Purchaser hereby represents and warrants to Centex that Purchaser is not determined by the U.S. Secretary of the Treasury to be acting on behalf of, a Person (i) described in Section 1 of United States Presidential Executive Order 13224 (“Executive Order”) or (ii) listed in the “Alphabetical Listing of Blocked Persons, Specially Designated Nationals, Specially Designated Terrorists, Specially Designated Global Terrorists, Foreign Terrorist Organizations, and Specially Designated Narcotics Traffickers” published by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), 31 C.F.R. Chapter V, Appendix A, as in effect from time, as a “Specially Designated National or Blocked Person,” (as to (i) and (ii), a “Blocked Person”). In addition, Purchaser is not located in, or operating from, a country subject to U.S. economic sanctions administered by OFAC. Purchaser hereby agrees to defend, indemnify and hold harmless Centex from and against any and all claims, damages, costs, fines, penalties, losses, risks, liabilities and expenses (including, without limitation, attorneys’ fees and costs) arising from or related to a breach of any of the foregoing representations, warranties, certifications and agreements.

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     8.2 Centex’s OFAC Representation. Centex hereby represents and warrants to Purchaser that Centex is not, and to Centex’s Knowledge, neither the Company nor any Transferred Subsidiary is, or has been determined by the U.S. Secretary of the Treasury to be acting on behalf of, a Blocked Person. In addition, none of Centex, the Company or any Transferred Subsidiary is located in, or operating from, a country subject to U.S. economic sanctions administered by OFAC. Centex hereby agrees to defend, indemnify and hold harmless Purchaser from and against any and all claims, damages, costs, fines, penalties, losses, risks, liabilities and expenses (including, without limitation, attorneys’ fees and costs) arising from or related to a breach of any of the foregoing representations, warranties, certifications and agreements.

     8.3 Survival. This Article VIII shall survive termination of this Agreement.

ARTICLE IX

GENERAL PROVISIONS

     9.1 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed to have been duly given or made (i) upon delivery, if hand delivered; (ii) one (1) Business Day after being sent by prepaid overnight courier with guaranteed delivery, with a record of receipt; or (iii) upon transmission with confirmed delivery if sent by cable, telegram, email, facsimile or telecopy, to the Parties at the following addresses (or at such other addresses as shall be specified by the Parties by like notice):

(a) if to Centex:

Centex Homes
2728 North Harwood
Dallas, TX 75201-1516
Attn: Brian Woram
Telephone: (214) 981-6544
Fax: (214) 981-6855

With a copy to:

Centex Homes
2728 North Harwood
Dallas, TX 75201-1516
Attn: Donald Westfall
Telephone: (214) 981-6445
Fax: (214) 981-6002

(b) if to Purchaser:

Corona Associates, LLC
c/o RSF Partners, Inc.

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2828 Routh Street
Suite 500
Dallas, Texas 75201
Attn: Mr. Chris Mahowald
Tel. (214) 849-9800
Fax (214) 849-9807

With copies to:

Farallon Capital Management, L.L.C.
One Maritime Plaza
Suite 2100
San Francisco, California 94111
Attn: Mr. Stephen L. Millham
Tel. (415) 421-2151
Fax (415) 956-8852

And:

Greenfield Corona, LLC
50 North Water Street
South Norwalk, Connecticut 06854
Attention: Eugene A. Gorab and Barry P. Marcus
Fax (203) 354-5060

And:

Pircher, Nichols & Meeks
1925 Century Park East, Suite 1700
Los Angeles, California 90067
Attn: James L. Brat, Esq. (903382-1)

And:

Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
Attention: David J. Bryant
Fax (312) 902-1061

     9.2 Severability. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable Law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein unless the

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deletion of such provisions or provisions would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable.

     9.3 Counterparts. The Agreement may be executed in separate counterparts, each of which shall be considered an original instrument, and all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been executed and delivered by each of the Parties.

     9.4 Assignment; Successors and Assigns. Neither this Agreement nor any of the rights, interest or obligations hereunder shall be assigned by any of the Parties without the prior written consent of the other Party. Any purported assignment not in compliance with this Section 9.4 shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors or assigns, heirs, legatees, distributees, executors, administrators and guardians.

     9.5 Further Assurances. At any time or from time to time after the Closing, each of the Parties shall, at the request of other Party and at no additional cost or expense, execute and deliver any further instruments or documents and take all such further action as such requesting Party may reasonably request in order to evidence or effect the consummation of the transactions contemplated hereby.

     9.6 No Third Party Beneficiaries. Except as to Investor, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person (including without limitation any Purchaser Indemnified Party that is not a Party to this Agreement) any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

     9.7 Descriptive Headings. Titles and headings to Articles and Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

     9.8 Reasonable Consent Required. Where any provision of this Agreement requires a Party to obtain the consent, approval or other acquiescence of any other Party, such consent, approval or other acquiescence shall not be unreasonably conditioned, withheld or delayed by such other Party, except as otherwise provided in this Agreement.

     9.9 Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

     9.10 Dispute Resolution. Any dispute arising out of or relating to this Agreement, including the breach, termination or validity thereof, which has not been resolved through good faith negotiations between the parties hereto, shall be finally resolved by arbitration administered by JAMS in accordance with its Comprehensive Arbitration Rules and Procedures then currently in effect, by a sole arbitrator. The arbitrator shall have the power to award specific performance

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and injunctive relief and award attorneys’ fees and costs. The judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. The place of arbitration shall be Dallas, Texas.

     9.11 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Texas, without regard to the laws that might be applicable under conflicts of laws principles.

     9.12 Enforcement. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement, in addition to any other remedy to which any Party is entitled at Law or in equity.

     9.13 Entire Agreement; Amendments. This Agreement, including the Disclosure Schedule and Exhibits annexed hereto, contains the entire understanding of the Parties with regard to the subject matter contained herein. This Agreement may only be amended, modified or supplemented by written agreement of the Parties.

     9.14 Construction; Joint Drafting. The Parties acknowledge that they have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed consistent with the joint drafting hereof by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

     9.15 No Brokers, Finders, etc. Each Party hereby represents to the other that no other broker(s) or agent(s) were or are involved in this transaction or the negotiations leading up to this transaction and no Party has incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or any transactions contemplated hereby. Purchaser and Centex agree to hold the other harmless and indemnify the other from and against any and all damages, costs or expenses (including, but not limited to, reasonable attorneys’ fees and disbursements) suffered by the other as a result of any claims by any other broker claimed to have acted on behalf of such Party.

          9.16 Tax Characterization. The Parties acknowledge that, for U.S. federal tax purposes, the Company is treated as a disregarded entity (within the meaning of U.S. Treasury Regulation Section 301.7701-3) and the Parties agree that the sale of the Member Interests are properly treated for U.S. federal tax purposes (and, where applicable, state income tax purposes) as a sale of the Assets by Centex to the Purchaser. Centex and the Purchaser shall report the sale hereunder on their respective U.S. federal (and, where applicable, state income) tax returns in a manner consistent with such treatment.

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     IN WITNESS WHEREOF, the Parties have caused this Member Interests Purchase Agreement to be executed to be effective as of the day and year first above written.

CENTEX:
CENTEX HOMES, a Nevada general partnership
By:	Centex Real Estate Corporation, a Nevada corporation, its managing general partner
	By:	/s/ Donald R. Westfall
	Name:	Donald R. Westfall
	Title:	Senior Vice President

[Signature Page to Member Interests Purchase Agreement]

PURCHASER CORONA LAND COMPANY, LLC, a Delaware limited liability company
By:	/s/ Brian J. Woram
Name:		Brian J. Woram
Title:		Senior Vice President and Secretary

[Signature Page to Member Interests Purchase Agreement]

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)
	2008			2007			2006			2005			2004
Total Enterprise:
Earnings
Earnings (Loss) from continuing operations (2)	$	(2,875,158	)	$	106,786		$	1,880,738		$	1,394,606		$	1,031,854
Minority interests in income of consolidated subsidiaries		1,333			2,587			3,469			2,467			3,723
Undistributed (income) loss from equity investments		104,479			79,615			6,298			(3,717	)		(16,023	)
Fixed charges		312,277			421,491			321,733			236,001			182,945
Interest capitalized		(238,203	)		(308,023	)		(232,860	)		(176,874	)		(115,186	)
Amortization of capitalized interest		314,017			246,579			171,189			131,937			89,144
Net Earnings (Loss)	$	(2,381,255	)	$	549,035		$	2,150,567		$	1,584,420		$	1,176,457
Fixed Charges
Interest expense including amortization of debt discount (3)	$	302,577		$	407,391		$	312,133		$	228,501		$	176,645
Interest factor attributable to rentals		9,700			14,100			9,600			7,500			6,300
Total Fixed Charges	$	312,277		$	421,491		$	321,733		$	236,001		$	182,945
Ratio of Earnings to Fixed Charges		(7.63	)		1.30			6.68			6.71			6.43
Total Enterprise (with financial services reflected on the equity method): (4)
Earnings
Earnings (Loss) from continuing operations (2)	$	(2,875,158	)	$	106,786		$	1,880,738		$	1,394,606		$	1,031,854
Undistributed (income) loss from equity investments		242,632			(4,915	)		(78,167	)		(99,689	)		(181,801	)
Fixed charges		255,297			326,663			252,929			201,252			158,020
Interest capitalized		(238,203	)		(308,023	)		(232,860	)		(176,874	)		(115,186	)
Amortization of capitalized interest		314,017			246,579			171,189			131,937			89,144
Net Earnings (Loss)	$	(2,301,415	)	$	367,090		$	1,993,829		$	1,451,232		$	982,031
Fixed Charges
Interest expense including amortization of debt discount (3)	$	248,197		$	317,063		$	246,229		$	196,352		$	154,720
Interest factor attributable to rentals		7,100			9,600			6,700			4,900			3,300
Total Fixed Charges	$	255,297		$	326,663		$	252,929		$	201,252		$	158,020
Ratio of Earnings to Fixed Charges		(9.01	)		1.12			7.88			7.21			6.21

(1)	The ratios presented in this table have been adjusted to reflect our Home Team Services (sold in April 2008), Construction Services (sold in March 2007), Home Equity (sold in July 2006), International Homebuilding (sold in September 2005), Construction Products (spun off in January 2004) and Manufactured Homes (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)	Excludes interest related to our unrecognized tax benefits as such interest is included as a component of the income tax provision.
(4)	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

CENTEX CORPORATION
Subsidiaries as of April 1, 2008

	Jurisdiction of
Subsidiaries and	Incorporation or
Assumed Names	Formation	Note
ALPINE INSURANCE COMPANY	Vermont
ARMOR ASSURANCE COMPANY	Vermont
CENTEX EMPLOYEE RELIEF FUND	Texas
CENTEX FINANCIAL SERVICES, LLC	Nevada
CENTEX MORTGAGE, TITLE AND INSURANCE GROUP, LLC	Delaware
CENTEX TITLE & ANCILLARY SERVICES, LLC	Nevada
COMMERCE APPRAISAL SERVICES, LLC	Delaware
COMMERCE ESCROW COMPANY, LLC	Delaware
COMMERCE LAND TITLE AGENCY, LLC	Ohio
Commerce Title Company
COMMERCE LAND TITLE, INC.	Nevada
Centex Title Company Commerce Company Commerce Title Company
COMMERCE TITLE COMPANY OF NEW MEXICO, LLC	Delaware
COMMERCE TITLE COMPANY	California
COMMERCE TITLE INSURANCE COMPANY	California
CTX INSURANCE AGENCY, INC.	Texas
Westwood Insurance Agency
METROPOLITAN TITLE & GUARANTY COMPANY	Florida
Commerce Title Agency Commerce Title Company Commerce Title Company of Virginia
WESTWOOD INSURANCE AGENCY	California
Centex Insurance Agency HomeAdvantage Insurance Agency Services HomeAdvantage Insurance Services Westwood Agency Westwood Insurance Agency of Denver, Inc. West Insurance Agency, Inc. WMC Insurance Agency WMC Insurance Agency Services WMC Insurance Services
CTX MORTGAGE COMPANY, LLC	Delaware
Centex Mortgage Company CTX Mortgage Company
66 WINDWARD COVE ACQUISITION COMPANY, LLC	Delaware
CTX MORTGAGE FUNDING III, LLC	Delaware
CTX MORTGAGE VENTURES, LLC	Delaware
AT-HOME MORTGAGE ASSOCIATES, LTD.	Florida
COPPER MOUNTAIN MORTGAGE, L.P.	Utah
DARDEN FINANCIAL SERVICES, L.P.	Texas
FOUR OAKS MORTGAGE COMPANY, L.P.	North Carolina
PRIME HOME MORTGAGE, L.P.	Washington
T.W. LEWIS MORTGAGE COMPANY, L.P.	Texas
HARWOOD STREET FUNDING I, LLC	Delaware		(1	)
MORTGAGE PORTFOLIO SERVICES, INC.	Delaware

- 1 -

	Jurisdiction of
Subsidiaries and	Incorporation or
Assumed Names	Formation	Note
CENTEX HOME SERVICES COMPANY, LLC	Nevada
Centex HomeTeam Services HomeTeam Services HomeTeam Services, Inc.
HOMETEAM PEST DEFENSE, INC.	Nevada
Garden Plus Pest & Termite Inspections HT Pest Defense M.D. Pest Management
HOMETEAM PEST DEFENSE, LLC	Delaware
Advanced Pest Control, LLC Callaghan’s Exterminating Callaghan’s Pest Defense Integrated Pest Defense North Country Pest Management Systems Stopke Pest Control Wilson Pest Control Wilson Pest Defense
CENTEX HOUSING RELIEF FUND	Texas
CENTEX INTERNATIONAL II, LLC	Nevada
Nevada Centex International Nevada Centex International, Inc.
CDMC HOLDING, INC.	Nevada
CENTEX DEVELOPMENT MANAGEMENT COMPANY	Nevada
CENTEX SCHAUMBURG INDUSTRIAL PARK, L.L.C.	Illinois		(3	)
CENTEX HOMES INTERNATIONAL LIMITED	United Kingdom
ABC HOMES LIMITED	United Kingdom		(2	)
CENTEX INTERNATIONAL, LLC	Delaware
CENTEX LATIN AMERICA, INC.	Nevada
EMPRESAS INMOBILIARIAS DE MEXICO, S. DE R.L. DE C.V.	Mexico
CENTEX MULTI-FAMILY COMPANY	Nevada
Centex Multi-Family Development Company
CENTEX REAL ESTATE CORPORATION	Nevada
Centex Centex Custom Homes Centex Homes Centex Homes, a Nevada general partnership CTX Builders Supply Fox & Jacobs Fox & Jacobs Homes Wayne Homes Wayne Homes by Centex Wayne Homes, a Division of Centex Homes
CDP CENTRAL REALTY, LLC	Texas
Pointe West Realty
CENTEX BUILDING SERVICES, INC.	Nevada

- 2 -

	Jurisdiction of
Subsidiaries and	Incorporation or
Assumed Names	Formation	Note
CENTEX HOMES	Nevada
At Home America Centex Centex Custom Homes Centex Destination Properties Centex Destination Properties d/b/a Marquis Homes Centex Destination Properties d/b/a Marquis Resort Homes Centex Destination Properties dba NorthShore Marina Centex Development Company Centex Pools & Spas CityHomes CTX Builders Supply 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 Palm Coast Resort Real Homes Riverwood Golf Club Teal Building Corporation Teal Homes Timbercreek Forest Products Trailside Point by Centex Homes Vista Properties Company Wayne Homes Wayne Homes by Centex Wayne Homes, a Division of Centex Homes
BATCHELLORS FOREST, LLC	Delaware		(2	)
BC STAFFORD, LLC	Delaware		(2	)
BENICIA CS DEVELOPERS, LLC	Delaware		(2	)
CDP WEST REALTY, INC.	Nevada
CDPWH ACQUISITION LLC	Delaware		(2	)
CENTEX CONSTRUCTION OF NEW MEXICO, LLC	Delaware
CENTEX DEVELOPMENT COMPANY, L.P.	Delaware
CDC, LP Centex Development Company, Limited Partnership
CENTEX MULTI-FAMILY COMMUNITIES, LLC	Delaware
CENTEX MULTI-FAMILY INVESTMENTS, L.P.	Delaware
CENTEX MULTI-FAMILY UPPER LANDING, LLC	Delaware
CENTEX HOMES CROWN LLC	Delaware
CROWN VILLAGE FARM, LLC	Delaware		(2	)
CROWN FARM DEVELOPMENT, LLC	Maryland		(2	)
CENTEX HOMES OF PORTLAND REALTY, INC.	Washington
CENTEX HOMES, LLC	Delaware
Centex Homes
CENTEX HOMES WESTSIDE URBAN RENEWAL I, LLC	New Jersey
CENTEX HOMES WESTSIDE URBAN RENEWAL II, LLC	New Jersey

- 3 -

	Jurisdiction of
Subsidiaries and	Incorporation or
Assumed Names	Formation	Note
CENTEX HOMES (continued)	Nevada
CENTEX HOSPITALITY GROUP, LLC	Delaware
Bear Lake Reserve Club Hali’I Kai Club Hali’l Kai Ocean Club Ocean Hammock Beach Club Ocean Hammock Real Estate Ocean Hammock Resort Ocean Hammock Yacht Club Palm Coast Marina The 19th Hole The Beach Club at Ocean Hammock The Club at Ocean Hammock The Club at South Peak The Club at Urban Village — Las Vegas The Harbor Course at Palm Coast Resort The Marina Club at Ocean Hammock Tidelands Club Tidelands Clubhouse Grille
CENTEX HOSPITALITY RENTALS, LLC	Delaware
LONG HOLLOW KAYAK CLUB, LLC	Delaware
NORTH FORK KAYAK CLUB, LLC	Delaware
THE HOLLOWS CANOE CLUB, LLC	Delaware
CENTEX MULTI-FAMILY ST. PETE HOLDING COMPANY, L.L.C.	Delaware
CENTEX/LENNAR AT MARTIN’S CROSSING, LLC	Florida		(2	)
CENTEX/LENNAR AT PORTOFINO ISLES, LLC	Florida		(2	)
CENTEX/LENNAR AT WOODFIELD, LLC	Delaware		(2	)
CENTEX/LENNAR NFL TOWN CENTER SOUTH, LLC	Delaware		(2	)
CENTEX/MERITAGE AT LANCASTER PARK, LLC	Delaware		(2	)
CENTEX/TAYLOR, LLC	Delaware
CENTEX/TOUSA AT WELLINGTON, LLC	Delaware		(2	)
CL OCEAN VILLAS, LLC	Delaware		(2	)
CLAREMONT HILLS LLC	Delaware		(2	)
CLEVENGERS VILLAGE UTILITY, INC.	Virginia
CORONA ALTA MIRA LLC	Delaware
CORONA LAND COMPANY, LLC	Delaware		(3	)
CORONA STERLING WH LLC	Delaware
CREEKSIDE II DEVELOPMENT, LLC	Delaware		(3	)
CTX BUILDERS SUPPLY SERVICES, LLC	Delaware
DOVE BARRINGTON DEVELOPMENT LLC	Delaware		(2	)
EAST FRANKLIN IMPLEMENTATION GROUP, LLC	California		(3	)
EUREKA ESCONDIDO, LLC	Delaware		(2	)
Eureka Escondido Partners, LLC
FAIR CHASE DEVELOPMENT LLC	Delaware		(2	)
FLORIDA CONSERVANCY AND DEVELOPMENT GROUP, LLC	Florida		(2	)
LANSDOWNE COMMUNITY DEVELOPMENT LLC	Virginia		(3	)
LCD COMMUNICATIONS LLC	Virginia		(3	)
OPENBAND AT LANSDOWNE L.L.C.	Virginia		(3	)
LANSDOWNE TOWN CENTER LLC	Delaware		(3	)
LTC COMMUNICATIONS, LLC	Virginia		(3	)
LENNAR CENTEX DEL RIO PARTNERS, LLC	Delaware		(2	)
LENNAR/CENTEX AT BAYHILL, LLC	Florida		(2	)

- 4 -

	Jurisdiction of
Subsidiaries and	Incorporation or
Assumed Names	Formation	Note
CENTEX HOMES (continued)	Nevada
LPC ONE DEVELOPMENT PARTNERS, LLC	Delaware		(3	)
MARINA COMMUNITY PARTNERS, LLC	Delaware		(3	)
MELROSE PARK JOINT VENTURE	Florida
NOVATO COMMUNITY PARTNERS, LLC	California		(2	)
BAY VISTA AT MEADOW PARK, L.P.	California		(3	)
CREEKSIDE AT MEADOW PARK, L.P.	California		(3	)
OAKDALE COMMUNITY PARTNERS, LLC	Delaware		(2	)
PL ROSEVILLE, LLC	California		(3	)
ROSEVILLE SCHOOLS, LLC	California		(3	)
PORTA D’ITALIA SOUTH BUILDING, LLC	Delaware		(2	)
POTOMAC YARD DEVELOPMENT SOLE MEMBER LLC	Delaware		(2	)
POTOMAC YARD DEVELOPMENT LLC	Delaware		(2	)
RIVERMARK PARTNERS, LLC	California		(1	)
RIVERPARK LEGACY, LLC	Delaware		(3	)
SANTA CLARITA 700, LLC	Delaware		(2	)
SEABREEZE, LLC	California
SELECTIVE — DELAWARE, L.L.C.	Delaware
Heritage Pointe
SILVER FALLS, LLC	Delaware		(2	)
SOUTHPORT DEVELOPMENT LLC	Delaware		(2	)
TECH VILLAGE PARTNERS II, LLC	Florida
THE JONES COMPANY HOMES REALTY, LLC	Nevada
THE JONES COMPANY HOMES, LLC	Nevada
Centex Homes Fox & Jacobs Homes Lexington Homes The Jones Company
FAIRFIELD, L.L.C.	Missouri		(2	)
HERKY, LLC	Missouri		(3	)
JBA EUREKA, L.L.C.	Missouri		(3	)
JMB NO. 2, L.L.C.	Missouri		(3	)
JMB TAPAWINGO, L.L.C.	Missouri		(3	)
LOWER MISSOURI RIVER, L.L.C.	Missouri
MEADOWBROOK DEVELOPMENT COMPANY, LLC	Delaware		(2	)
THE JONES COMPANY BUILDING SERVICES, LLC	Nevada
WESTLAND ACRES DEVELOPMENT, L.L.C.	Missouri		(3	)
THE RIDINGS DEVELOPMENT LLC	Delaware		(2	)
TRIPLE CREEK, LLC	Delaware		(2	)
WAYNE HOMES MID ATLANTIC, LLC	Delaware
Wayne Homes
WEST HYATTSVILLE METRO DEVELOPMENT LLC	Delaware
WEST SURPRISE LANDOWNERS GROUP LLC	Arizona		(3	)
WH ON YOUR LOT, LLC	Delaware
Wayne Homes Centex, LLC Wayne Homes Michigan, LLC
WINDEMERE BLC LAND COMPANY LLC	California		(3	)

- 5 -

	Jurisdiction of
Subsidiaries and	Incorporation or
Assumed Names	Formation	Note
CENTEX HOMES MARKETING, INC.	Georgia
CTX Realty
CENTEX HOMES REALTY COMPANY	Nevada
Centex Homes Centex Homes Realty Fox & Jacobs Fox & Jacobs Homes
CENTEX HOMES REALTY, INC.	Michigan
CENTEX HOMES, INC.	Texas
CENTEX REAL ESTATE CONSTRUCTION COMPANY	Nevada
CTX Builders Supply
CENTEX REAL ESTATE HOLDING, L.P.	Delaware
Centex Homes Centex Homes, a Nevada general partnership Fox & Jacobs Homes
CENTEX REALTY, INC.	Florida
Riverwood Properties The Plantation Realty The Quarry Realty
CITY HOMEBUILDERS, INC.	Texas
CityHomes
FOX & JACOBS, INC.	Texas
JOHN CROSLAND COMPANY	North Carolina
John Crosland Homes
CROSLAND ACCEPTANCE ASSOCIATES V	North Carolina
THE HOLLOWS UTILITIES LLC	Delaware
CTX HOLDING COMPANY	Nevada
GENBOND TWO, INC.	North Carolina
CROSLAND BOND COMPANY	North Carolina
MORTGAGE ACCEPTANCE ASSOCIATES NO. 2	North Carolina
MORTGAGE COLLATERAL ASSOCIATES NO. 1	North Carolina
MORTGAGE COLLATERAL ASSOCIATES NO. 3	North Carolina
LMC HOLDING COMPANY, LLC	Delaware
Delaware LMC Holding Company, LLC
NOMAS CORP.	Nevada
Centex Homes Centex Homes, a Nevada general partnership Fox & Jacobs Homes
CENTEX HOMES OF CALIFORNIA, LLC	Delaware
PK & RK, LLC	Delaware
SYCAMORE CREEK	California		(2	)
CENTEX SERVICE COMPANY, LLC	Nevada
M&W GENERAL CONSTRUCTION COMPANY	Nevada
CENTEX TRUST I	Delaware
CENTEX TRUST II	Delaware
INDEPENDENT GENERAL AGENCY, INC.	Texas

(1)	This entity has members or other owners unaffiliated with the registrant or its subsidiaries that together own a majority interest, however, the registrant or one of its subsidiaries is the managing entity.
(2)	This entity has members or other owners unaffiliated with the registrant or its subsidiaries that own a 50% interest.
(3)	The registrant and its subsidiaries own only a minority interest.

- 6 -

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. 333-72893		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 21, 2008, with respect to the consolidated financial statements of Centex Corporation and Subsidiaries 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, 2008.

/s/ ERNST & YOUNG LLP  

Dallas, Texas
May 21, 2008

EX-24.1

Exhibit 24.1

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/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 Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/s/ Matthew K. Rose  

Matthew K. Rose 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/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 Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/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 Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/s/ Frederick M. Poses  

Frederick M. Poses 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/s/ Ursula O. Fairbairn  

Ursula O. Fairbairn 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller and Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/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 Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/s/ Thomas M. Schoewe  

Thomas M. Schoewe 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Thomas J. Falk, 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, 2008, 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 7th day of May, 2008.

/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 Thomas J. Falk 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, 2008, 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 7th day of May, 2008.

/s/ James J. Postl  

James J. Postl 

Director
Centex Corporation 

CENTEX CORPORATION

POWER OF ATTORNEY

THE UNDERSIGNED hereby constitutes and appoints Timothy R. Eller, 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, 2008, 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 7th day of May, 2008.

/s/ Thomas J. Falk  

Thomas J. Falk 

Director
Centex Corporation 

EX-31.1

Exhibit 31.1

Certifications

I, Timothy R. Eller, certify that:

1. I have reviewed this report on Form 10-K of Centex Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 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 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 report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this 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 22, 2008

/s/ TIMOTHY R. ELLER Timothy R. Eller

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certifications

I, Catherine R. Smith, certify that:

1. I have reviewed this report on Form 10-K of Centex Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 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 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 report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this 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 22, 2008

/s/ CATHERINE R. SMITH Catherine R. Smith

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, 2008 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 22, 2008

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, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Catherine R. Smith, 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/ CATHERINE R. SMITH  

Catherine R. Smith 

Chief Financial Officer

Date:  May 22, 2008