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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
| þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
or
| o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 1-6776
PROFIT SHARING AND RETIREMENT PLAN OF CENTEX CORPORATION
(Full title of the plan)
CENTEX CORPORATION
2728 N. Harwood
Dallas, Texas 75201
Dallas, Texas 75201
(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)
Table of Contents
Financial Statements and Supplemental Schedule
Profit Sharing and Retirement Plan of Centex Corporation
As of December 31, 2006 and 2005, and for the Year Ended December 31, 2006
Profit Sharing and Retirement Plan of Centex Corporation
As of December 31, 2006 and 2005, and for the Year Ended December 31, 2006
Table of Contents
Profit Sharing and Retirement Plan of Centex Corporation
Financial Statements and Supplemental Schedule
As of December 31, 2006 and 2005,
and for the Year Ended December 31, 2006
and for the Year Ended December 31, 2006
Contents
| 1 | ||||||||
Audited Financial Statements |
||||||||
| 2 | ||||||||
| 3 | ||||||||
| 4 | ||||||||
| 12 | ||||||||
| Consent of Ernst & Young LLP | ||||||||
| Certification Pursuant to Section 906 | ||||||||
Table of Contents
Report of Independent Registered Public Accounting Firm
The Administrative Committee
Profit Sharing and Retirement Plan of Centex Corporation
Profit Sharing and Retirement Plan of Centex Corporation
We have audited the accompanying statements of net assets available for benefits of the Profit
Sharing and Retirement Plan of Centex Corporation as of December 31, 2006 and 2005, and the related
statement of changes in net assets available for benefits for the year ended December 31, 2006.
These financial statements are the responsibility of the Plan’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. We were not engaged to perform an audit of the Plan’s internal control over
financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
and 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 net assets available for benefits of the Plan at December 31, 2006 and 2005, and the
changes in its net assets available for benefits for the year ended December 31, 2006, in
conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December
31, 2006, is presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department of Labor’s Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental
schedule has been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
Dallas, Texas
June 25, 2007
June 25, 2007
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Profit Sharing and Retirement Plan of Centex Corporation
Statements of Net Assets Available for Benefits
| December 31, | ||||||||
| 2006 | 2005 | |||||||
Assets |
||||||||
Investments in the Profit Sharing and Retirement Plan
of Centex Corporation Master Trust |
$ | 631,724,063 | $ | 596,530,180 | ||||
Participant loans |
7,093,657 | 7,262,282 | ||||||
Employer contribution receivable |
772,231 | 806,449 | ||||||
Net assets available for benefits, at fair value |
639,589,951 | 604,598,911 | ||||||
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts
held in common collective trust |
333,723 | 350,050 | ||||||
Net assets available for benefits |
$ | 639,923,674 | $ | 604,948,961 | ||||
See accompanying notes.
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Profit Sharing and Retirement Plan of Centex Corporation
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2006
Additions: |
||||
Employer contributions |
$ | 42,715,544 | ||
Participant contributions |
52,612,839 | |||
Rollovers |
4,663,849 | |||
Interest in the Profit Sharing and Retirement Plan of Centex |
||||
Corporation Master Trust investment income |
45,046,348 | |||
Interest income on participant loans |
530,452 | |||
Total additions |
145,569,032 | |||
Deductions: |
||||
Distributions to participants |
91,127,618 | |||
Distributions to participants of the Nationstar Mortgage 401(k) Retirement Plan |
19,303,108 | |||
Administrative expenses |
93,137 | |||
Total deductions |
110,523,863 | |||
Net transfers to Centex Ventures Profit Sharing and Retirement Plan |
(70,456 | ) | ||
Net increase in net assets available for benefits |
34,974,713 | |||
Net assets available for benefits: |
||||
Beginning of year |
604,948,961 | |||
End of year |
$ | 639,923,674 | ||
See accompanying notes.
3
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements
December 31, 2006
1. Description of the Plan
The following description of the Profit Sharing and Retirement Plan of Centex Corporation (the
Plan) provides only general information. Participants should refer to the Plan document for a more
complete description of the Plan’s provisions.
General
The Plan, established March 1, 1954 and amended and restated effective January 1, 2001, is a
defined contribution retirement plan covering eligible employees of Centex Corporation (the
Company) and eligible employees of certain subsidiaries of the Company, which have adopted the Plan
with the Company’s consent. The Company and certain subsidiaries collectively comprise the
“Participating Employers.” The Plan is administered by an Administrative Committee (the Committee)
appointed by the Board of Directors of the Company. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended (ERISA).
The Plan has two distinct types of eligible employees, (1) employees eligible to participate in
employer profit sharing contributions or (2) employees eligible to participate in employer matching
contributions. Eligible employees may not participate in both employer profit sharing and matching
contributions. Certain salaried employees of the Participating Employers participate in profit
sharing the first day of the month following one year of service, as defined. One year of service,
for purposes of eligibility, is defined as the 12 consecutive month period during which the
employee worked at least 1,000 hours, ending on the first anniversary of the employee’s date of
hire. Commission and certain salaried employees of the Participating Employers participate in
matching contributions on the date the employee first performs for the employer an hour of service,
as defined.
A member of a group or class of employees covered by a collective bargaining agreement is not
eligible to participate in the Plan unless such agreement extends the Plan to such group or class
of employees.
Net transfers between the Plan and the Centex Ventures Profit Sharing and Retirement Plan were due
to transfers of employment between the Company and entities that qualify as Affiliated Business
Arrangements, as defined.
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements
Contributions
The Plan permits participants to contribute pre-tax up to 70% of their compensation, as
defined, (up to a statutory limit) to a 401(k) account beginning on the date of hire. Matching and
profit sharing contributions are made by certain of the Participating Employers on a discretionary
basis as determined by their respective Boards of Directors. The Plan also permits participant
voluntary (after-tax) contributions of up to 10% of compensation, as defined. Total contributions
to a participant’s account are limited to a maximum of 100% of compensation (or $44,000, whichever
is less) for 401(k) contributions, Participating Employers’ contributions and voluntary (after-tax)
contributions on a combined basis.
Participating Employer discretionary profit sharing contributions are allocated to participant
accounts on a
pro rata basis determined by each participant’s length of service and compensation. Participating
Employer discretionary matching contributions are allocated to eligible participant accounts based
on the percentage of each participant’s eligible contributions. The Participating Employers, at
their sole discretion, may make qualified non-elective contributions to the Plan. No such
contributions were made for the 2006 Plan year. Forfeitures may be used to reduce Participating
Employer matching contributions, Participating Employer profit sharing contributions or
administrative expenses of the Plan. During the year ended December 31, 2006, participants
forfeited $5,568,248, which will be used to reduce employer contributions paid during the year
ended December 31, 2007. During the year ended December 31, 2005, participants forfeited
$4,954,738, which was used to reduce employer contributions paid during the year ended December 31,
2006.
Participants direct the investment of their accounts into various registered investment company
funds, common collective trusts or the Centex Common Stock Fund (the CCSF), a unitized stock fund.
Participants may allocate up to 15% of Participating Employer and participant (before- and
after-tax) contributions to the CCSF, whereas up to 100% may be allocated to any other investment
option offered by the Plan.
Vesting
The Plan has several vesting provisions based upon a participant’s Participating Employer.
Participants should refer to the Plan document for a more complete description of these provisions.
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements
Participant Loans
Active participants may borrow up to 50% of the vested portion of their accounts, subject to a
$50,000 maximum, with Committee authorization and for approved events, as defined. Loans are
collateralized by participant accounts. Such loans bear interest at prime plus 2.0% and are
repayable to the Plan within five years. Interest rates on outstanding participant loans as of
December 31, 2006 ranged from 6.0% to 10.8%.
Distributions to Participants
Distribution of an active participant’s entire account balance is permitted upon a participant’s
retirement, death or disability. A participant is eligible for early retirement upon the
attainment of age 55 and the completion of at least 15 years of service, as defined. In the event
of termination of service of any participant for any reason other than retirement, death or
disability, a participant shall, subject to further provisions of the Plan, be entitled to receive
the vested portion of his or her account balance. A participant may also receive a distribution to
satisfy a financial hardship meeting the requirements of Internal Revenue Service (IRS)
regulations.
Distributions to participants are paid in a lump sum, a direct rollover or in certain instances in
installment payments. A participant who retires and has 10 years of service, as defined, may elect
to receive a distribution of his or her account in quarterly, semi-annual or annual installment
payments over a specified term of 10 years or less, as elected by the participant.
On July 11, 2006, the Company sold Centex Home Equity Company, LLC (Home Equity) to an unrelated
third party. Prior to the sale, the Home Equity operations were part of the Company’s financial
services segment. Pursuant to the sales agreement, all participant account balances related to
employees of Home Equity became fully vested. Participants were given the option to elect a
rollover distribution to the Nationstar Mortgage 401(k) Retirement Plan (the Nationstar Plan) or
remain with the Plan as a terminated employee. As a result of the election provisions contained in
the agreement, all amounts transferred to the Nationstar Plan are treated as a deduction from the
Plan in the Statement of Changes in Net Assets Available for Benefits.
Administrative Expenses
Certain administrative expenses of the Plan are paid by the Company. The Plan is not required to
reimburse the Company for any administrative expenses paid by the Company. Expenses not paid by the
Company are paid by the Plan.
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements
Plan Termination
Although there is no intention to do so, the Company has the right to discontinue contributions and
terminate the Plan subject to the provisions of ERISA. The Plan provides that, in the event of Plan
termination, participants will become fully vested in their Participating Employer contributions,
and the method of distribution of assets will be in accordance with the provisions of ERISA.
2. Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on the accrual basis of accounting.
New Accounting Pronouncement
The Financial Accounting Standards Board (FASB) released Staff Position AAG INV-1 and SOP 94-4-1
(the FSP), effective for annual periods ending after December 15, 2006, addressing new accounting
rules for defined contribution plan stable value investment options. Under the FSP, only assets
that are attributable to “fully benefit-responsive” investment contracts are eligible for contract
value accounting treatment. Contract value is considered the relevant accounting measurement
because it is the amount participants in the fund will receive when they initiate permitted
transactions under the terms of the underlying plan. The Fidelity Managed Income Portfolio (MIP),
a common collective trust held in the Master Trust, qualifies as a stable value fund defined under
the FSP as its underlying investments are fully benefit-responsive investment contracts. The Plan
adopted the provisions of the FSP at December 31, 2006. As required by the FSP, the Statement of
Net Assets Available for Benefits presents the fair value of the MIP with a corresponding
adjustment to reflect the MIP at contract value. Prior year balances have been reclassified to
conform to current year presentation. The Statement of Changes in Net Assets Available for
Benefits is prepared on a contract value basis which is consistent with prior year presentation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements
Valuation of Investments
The Profit Sharing and Retirement Plan of Centex Corporation Master Trust (the Master Trust) holds
the assets of the Plan, as well as the assets of other plans sponsored by Centex Corporation
(Affiliate Plans). The Plan and Affiliate Plans have an undivided interest in the Master Trust.
The Master Trust is governed by a trust agreement with Fidelity Management Trust Company (the
Trustee), which is held accountable by and reports to the Committee.
Investments included in the Master Trust are valued at fair value with the exception of the MIP
(see Note 3). The registered investment company shares are valued based on published market prices,
which represent the net asset value of shares held by the Plan at year-end. The fair value of
investments in
common collective trusts, except for the MIP (see Note 3), is based on the value of their
underlying assets determined by quoted market prices when available or the Trustee’s estimates of
fair value when quoted market prices are not available. The investment in the CCSF is determined
by the value of the underlying common stock combined with the short-term cash position. The fair
value of the common stock portion of the funds is based on the closing price of the common stock on
its primary exchange. The short-term cash position of the CCSF is recorded at cost, which
approximates fair value. Participant loans are recorded at carrying value.
Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded
on an accrual basis. Dividends are recorded on the ex-dividend date.
The Master Trust allocates investment income to the Plan based on the Plan’s ownership interest in
Master Trust assets. Investment income is then allocated to participants on a pro rata basis.
Administrative expenses for the year ended December 31, 2006, include Trustee and recordkeeper
fees. Fund management fees are charged directly to the Master Trust and therefore are included in
the net change in fair value of investments. Administrative expenses are allocated on a pro rata
basis to the Plan and Affiliate Plans.
Distributions to Participants
Distributions to participants are recorded when paid.
3. Investment in Stable Value Fund
The MIP’s objective is to seek preservation of capital and a competitive level of income over time
by investing in underlying assets including, but not limited to, fixed-income securities and bond
funds. In order to minimize risk of loss to the investors, the fund will invest in synthetic wraps
whereby the underlying assets are “wrapped” by a synthetic investment contract issued by a bank or
insurance company that insures that participant-initiated withdrawals from the fund will be paid at
contract value. Gains or losses associated with the synthetic wrap are recognized over time by
adjusting the interest rate
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements
credited to the fund. The fair value of investments in synthetic wraps
is calculated using a discounted cash flow model which considers recent fee bids as determined by
recognized dealers, discount rate and the duration of the underlying portfolio securities. The
fair value of underlying portfolio securities is determined using the most recent bid price in the
principal market that the Trustee believes accurately reflects fair value. The MIP’s fair value is
then adjusted to contract value. Contract value represents contributions made to the fund, less
earnings, less participant withdrawals, and less administrative expenses.
4. Interest in the Master Trust
The Plan’s interest in the net assets of the Master Trust was 99.7% and 99.8% as of December 31,
2006 and 2005, respectively. Investments held in the Master Trust were as follows:
| December 31, | ||||||||
| 2006 | 2005 | |||||||
Registered Investment Companies |
$ | 316,863,573 | $ | 274,106,511 | ||||
Common Collective Trusts |
243,583,512 | 210,577,289 | ||||||
Centex Common Stock Fund |
55,705,668 | 82,177,469 | ||||||
Cash equivalents |
17,192,796 | 31,054,887 | ||||||
Total assets, at fair value |
633,345,549 | 597,916,156 | ||||||
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts
held in common collective trust |
334,423 | 350,316 | ||||||
| $ | 633,679,972 | $ | 598,266,472 | |||||
Investment income in the Master Trust for the year ended December 31, 2006, was as follows:
Net appreciation in Registered Investment Companies |
$ | 16,811,284 | ||
Net appreciation in Common Collective Trusts |
22,911,035 | |||
Net depreciation in Centex Common Stock Fund |
(17,559,349 | ) | ||
Dividend and interest income |
23,024,384 | |||
| $ | 45,187,354 | |||
The Plan invests in various investment securities, which in general are exposed to various
risks, such as interest rate, credit and overall market volatility risks. Further, due to the level
of risk associated with certain investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near term and that such changes
could materially affect participants’ account balances and the amounts reported in the Statements
of Net Assets Available for Benefits.
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements (continued)
5. Income Tax Status
The Plan has received a determination letter from the IRS dated August 26, 2003, stating that the
Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the
related trust is exempt from taxation. Subsequent to the issuance of this determination letter,
certain provisions of the Plan were amended. However, the Company and the Plan’s counsel believe
that the Plan is being operated in compliance with the applicable requirements of the Code and,
therefore, believe the Plan, as amended, is qualified and the related trust is tax-exempt.
6. Related Party Transactions
Plan investments of $483,624,629 and $434,811,427 at December 31, 2006 and 2005, respectively,
are cash, shares of registered investment companies and common collective trusts managed by the
Trustee and, therefore, these transactions qualify as party-in-interest transactions.
Additionally, certain of the Plan’s assets are invested in the CCSF. Transactions involving the
Company’s common stock qualify as party-in-interest transactions. All of these transactions are
exempt from the prohibited transaction rules.
7. Reconciliation to Form 5500
As of December 31, 2006 and 2005, the Plan had $171,733 and $199,213, respectively, of pending
distributions to participants. These amounts are recorded as a liability in the Plan’s Form 5500;
however, in accordance with U.S. generally accepted accounting principles, these amounts are not
recorded as a liability in the accompanying Statements of Net Assets Available for Benefits. The
following reconciles net assets available for benefits per the financial statements to Form 5500 to
be filed by the Company:
| December 31, | ||||||||
| 2006 | 2005 | |||||||
Net assets available for benefits per the financial
statements |
$ | 639,923,674 | $ | 604,948,961 | ||||
Adjustment from contract value to fair value
for fully benefit-responsive investment contracts
held in common collective trust |
(333,723 | ) | — | |||||
Amounts allocated to withdrawing participants |
(171,733 | ) | (199,213 | ) | ||||
Net assets available for benefits per Form 5500 |
$ | 639,418,218 | $ | 604,749,748 | ||||
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Profit Sharing and Retirement Plan of Centex Corporation
Notes to Financial Statements (continued)
The
following reconciles total additions to net assets available for benefits per the financial statements to Form 5500 to be filed
by the Company for the year ended December 31, 2006:
Total additions per the financial statements |
$ | 145,569,032 | ||
Adjustment from contract value to fair value for
fully benefit-responsive investment contracts held in
common collective trust |
(333,723 | ) | ||
Total income per Form 5500 |
$ | 145,235,309 | ||
The following reconciles total deductions to net assets available for benefits per the financial statements to Form 5500 to be filed by
the Company for the year ended December 31, 2006:
Total deductions per the financial statements |
$ | 110,523,863 | ||
Less: Amounts allocated to withdrawing participants
at December 31, 2005 |
(199,213 | ) | ||
Add: Amounts allocated to withdrawing participants
at December 31, 2006 |
171,733 | |||
Total expenses per Form 5500 |
$ | 110,496,383 | ||
8. Subsequent Events
On May 10, 2007, the Board of Directors of the Company approved an employee profit sharing
contribution to the Plan in the amount of $4,656,920, net of forfeitures applied, which was
remitted to the Master Trust on June 12, 2007.
On March 30, 2007, the Company finalized the sale of Centex Construction Group, Inc. (CCG). Prior
to the sale, CCG comprised the Company’s construction services segment. Pursuant to the sales
agreement, during March 2007 the Company transferred from the Plan participant account balances of
approximately $123 million.
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Profit Sharing and Retirement Plan of Centex Corporation
Schedule H; Line 4i – Schedule of Assets (Held at End of Year)
EIN#: 75-0778259
Plan #: 001
Plan #: 001
December 31, 2006
| (c) | ||||||||
| (b) | Description of Investment | |||||||
| Identity of Issue, | Including Maturity Date, | |||||||
| Borrower, Lessor, | Rate of Interest, Collateral, | (d) | (e) | |||||
| (a) | or Similar Party | Par, or Maturity Value | Cost | Current Value | ||||
*
|
Participant loans | Interest rates from 6.0% to 10.8% | $ — | $7,093,657 | ||||
| * | Party-in-interest |
12
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee which administers the Profit Sharing and Retirement Plan of Centex
Corporation has duly caused this Annual Report to be signed on its behalf by the undersigned,
hereunto duly authorized.
| PROFIT SHARING AND RETIREMENT PLAN OF CENTEX CORPORATION | ||||
| Date: June 28, 2007 | By: | /s/ MICHAEL S. ALBRIGHT | ||
| Michael S. Albright | ||||
| Member, Administrative Committee | ||||
Table of Contents
INDEX TO EXHIBITS
Profit Sharing and Retirement Plan of Centex Corporation
| Exhibit | Filed Herewith or | |||
| Number | Exhibit | Incorporated by Reference | ||
23
|
Consent of Ernst & Young LLP | Filed herewith | ||
32
|
Certification of the Administrative Committee Member of the Plan pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith |