centex Transcript_11/11/2008

FINAL TRANSCRIPT

CTX - Centex Corporation at UBS Building and Building Products Sixth
Annual CEO Conference
Event Date/Time: Nov. 11. 2008 / 2:00PM ET

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Nov. 11. 2008 / 2:00PM, CTX - Centex Corporation at UBS Building and Building Products Sixth Annual CEO Conference

CORPORATE PARTICIPANTS
David Goldberg
UBS - Analyst
Tim Eller
Centrex Corporation - Chairman, CEO
Cathy Smith
Centex Corporation - EVP, CFO

PRESENTATION
David Goldberg - UBS - Analyst
Welcome Centex. Tim Eller, Cathy Smith and Matt Moyer are here. Thank you guys so much for coming. I won't take any time
from you, so take it away.

Tim Eller - Centrex Corporation - Chairman, CEO
Thank you, David, and welcome to all of you and on the webcast as well. I understand you had just an uplifting presentation
on mortgages and I know you're really pumped after that. So I'll try to do an appropriate encore here.

Let me start by saying maybe somewhat provocatively that I think that the depth and duration of this housing and financial
correction make this a game-changer for homebuilders like no cycle that has come before. And I believe that this is going to
dramatically change the competitive landscape for homebuilders for years to come. So I'm going to talk a little bit about the
market in general. You've had plenty of that already today, but I'll give you some perspectives from my point of view anyway.

Cathy is going to talk about a number of the things that we're doing at Centex, not only to prepare for this period of time in
this cycle, which is going to be a pretty deep trough, if you will, but also how we're preparing to come out of this cycle and the
things that we've done over the last period of time in preparation for that. And then I'll have some concluding remarks.

Let me start by saying that we both will be making forward-looking-statements and that those forward-looking-statements are
subject to risks and uncertainties, and I'd like to refer you to our most recently filed 10-Q and 10-K for a description of those
risks and uncertainties.

So we will break this up into three pieces here and talk about how we're effectively navigating the cycle, what that means and
what this cycle looks like. You've seen a lot of data already on that, I'm sure. That we're making the right strategic choices to go
through this cycle. I've been through five of these before. This is my sixth cycle and the accumulative learnings from all of those
previous cycles are being applied in this one like in no other way I would have thought.

And finally, that Centex is prepared and we're preparing further with strengths to come out of this cycle and take advantage
of what I think is going to be historic opportunities in land and otherwise.

So how are we effectively navigating this cycle? First of all, these are unprecedented economic times and the environment is
unprecedented. When I look back at previous cycles for Centex, it kind of troughed out at what I would call 3 sales per
neighborhood. Our neighborhoods are the fundamental building blocks of our business. Sales per neighborhood is really the
key leverage point on those neighborhoods. We're now at 1.7 sales per neighborhood, so certainly far below our previous
trough, and we're heading lower. Every indication is that sales per neighborhood for us will continue to decline. We're currently
in 500 neighborhoods. So you can do the math yourself and see kind of where we're going.

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But I also believe that some and actually maybe most, if not all elements of a bottom are now in place. I'm not calling the bottom.
I'm not predicting when we'll hit the bottom, nor for how long we'll be there. All I'm saying is that if you just look at the classic
elements of what is a housing bottom -- housing trough, most of those, if not all of those are in place. But I do believe that
things will get worse before they get better in that sense.

The actions that we take have been very consistent in the cycle, from the very beginning and completely based on what was
going on in the markets at that time. But we're always fundamentally focused on adjusting our organization to the current sales
realities, lowering our costs as quickly as we possibly could, generating cash to be able to weather the cycle and to be able to
take advantage of the opportunities. That's still what we're doing, continues to be what we do.

We have consolidated divisions, lowered our costs, shortened our land supply. We now have one of the shortest land supplies
on a last 12-month basis in the industry, so we're well positioned, again, to take advantage of the cycle and we have a very
strong cash position. But make no mistake about this cycle, in my view this cycle will test the best and eliminate the rest.

So what are the elements of a bottom? Certainly they're the more classic things you would think of; unemployment rising,
economic softness if not a recession -- and this is going to be a very classic recession, but a deep recession. And declining
consumer confidence and declining interest rates. We basically have all of those. In addition, we have very high foreclosures,
historically high foreclosures, housing starts that are dropping precipitously. I'll get into that in a minute.

Another element of a classic bottom for homebuilders is that land prices begin to soften broadly. Land prices are beginning to
soften not quite yet broadly, but that will begin and I think 2009 will be the year when we'll see land prices and land come back
to market at prices where homebuilders can really take advantage of that vast supply, over 1 million lots developed on the
ground today across the United States. But again, I think conditions will get worse before they get better, as we work through
this winter.

Hopefully you saw John Burns earlier this morning, in terms of how he was looking at the overall housing economy and
foreclosures, by any measure, at historic levels, continuing to rise, more foreclosures coming. This is going to continue to put
a lot of pressure on a lot of builders. Now, I'm often asked, how are you responding to foreclosures? And the way we respond
to foreclosures is we let them take the share. We don't try to compete with them on price. We don't compete with them on
price. So our volumes have been declining over the course of the last several years, more recently more dramatically, because
foreclosures are becoming more a factor in the market. You see it in the resale prices and the resale volumes, that's where you
see foreclosures.

For new homes, there are many, many homeowners -- homebuyers who want to buy a new home and have their home built,
who don't want a foreclosure because of all the risk and issues that entails. So we continue to have traffic to our neighborhoods.
We continue to have people who want to purchase our homes. The challenge for our customers today is that they need a down
payment today, whereas they did not just even six months ago. They need better credit today than they needed six months
ago or certainly much better than two years ago.

So those are the issues that our customers are dealing with, as well as concerns about their jobs and their security. So they're
working on their credit, they're saving their down payment and they're thinking about their jobs and that's the environment
that's really impacting our purchasers today.

Their confidence is shaken. If we look at consumer confidence, it's now below the trough of the last cycle, in fact I think again,
these are historic numbers. But what's interesting in consumer confidence if you look on the chart which is in blue here, the
red line reflects home buying sentiment, which is kind of a corollary measure to the work that the conference board at the
University of Michigan does. And again, look at past cycles. Homebuyer sentiment generally starts to increase fairly dramatically
near or at the trough of a cycle. And so our customers are pretty savvy. They're pretty savvy shoppers. They know that buying
a home -- the best time to buy a home is when times kind of are the worst. They'll get the best value, the best interest rates, the
best long-term value appreciation when they do.


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So you can see that homebuyer sentiment is really trying to breakout right now. It's kind of above the index of 100, and if we
get some elements of good news at some point here in the future, I think you're going to see home buying sentiment rise again
dramatically like it has in past cycles and that manifests itself over the next following several months into actual home purchases.
So for the homebuilders that remain, when that begins to happen times are going to start feeling pretty good, even in a stable
environment.

And finally, at least from my point of view -- let me move on to housing starts first and then onto inventories. Housing starts is
another element of a bottom that we're starting to see. Again, housing starts now, single family, below the levels of the last
cycle, the trough of the last cycle. So they're declining rapidly and they're going to decline further. So just think about this. I
don't know how long housing starts are going to remain -- single family -- this low or probably lower. I don't think that we're
going to see the kind of rebound this cycle -- the dramatic uplift this cycle that we saw last cycle. I think it's going to take longer.

But we are not building new houses to add to the inventory. In fact, if I turn to inventories you can see that in the inventory
number, new home inventories are coming down on a per-month basis. Existing home inventories are starting to flatten. We
know there's a couple of million empty houses out there that still need to be worked off. They are being worked off. They're
coming through in the resales. That needs to happen. So, we're getting our inventories in place. Again, all these are elements
of a housing bottom that is on the horizon now and for those of us that remain, the uplift is going to be, I think, fairly significant
when it does turn.

So, with that, let me have Cathy come up here, chat a little bit about Centex and then I'll conclude with some remarks.

Cathy Smith - Centex Corporation - EVP, CFO
Good afternoon. You know, I think the best way for me to characterize maybe some of our results is to say that the last couple
of quarters are maybe a little bit more -- I'm a little bit more optimistic in that they're starting to really reflect our -- you can see
the reflection of our priorities, because the evidence is starting to come through. And what I mean by that is our priorities are
to accumulate and preserve our cash. Cash and liquidity have a premium today. To continue to strengthen our balance sheet
and to improve our profitability. And as I said, I think you start seeing now the evidence in our last couple of quarters where
we're starting to see all of the hard work we've been doing inside of Centex for the last 1.5 years of really structuring our business
model to be very asset efficient and to be really the most efficient homebuilder, are starting to show up in some of the results.

So let me share that with you. On recent results, you can see that we have been cash flow positive now from homebuilding
operations for the last five quarters. That's pretty tremendous when you think about it, given what we've seen in volumes. We're
currently sitting on $1.3 billion of cash and we shared with you all at the end of our last conference call that we expect to have
that cash balance grow by the end of our fiscal year, which is in March.

We continue to improve our balance sheet. We're now at a net debt to cap at below 48% and it's improved about 700 basis
points in the last six months. We continue to pull down debt. We open market purchased debt two quarters ago a little bit. This
last quarter we had a debt maturity that we retired of $150 million of senior notes. So our balance sheet does continue to
strengthen. Along with helping that strength though is our improving gross margins. And you can see gross margins have
improved. We ended this last quarter at 15%. Granted, still lots of room for improvements, but it's going in the right direction
and it has sequentially over the last several months. The last six months we've seen doubling of that gross margin.

In addition, our discounts and incentives have come down to about half of their peak levels. We're at 7.9% this last quarter. And
again, that's a strong reflection on our business model that says we're going to get our production efficiencies by selling to a
backlog and building to a cadence. We transparently price, which means we look at what the consumer can afford of payments,
you know, people buy on payments and where they can qualify for a mortgage. And that's how we price and so we don't have
those wild incentives or discounts and you're seeing the evidence of that coming through.


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And then our relentless focus on cost structure. This has been a non-changing focus for two solid years of continually adjusting
our cost structure down to meet the realities of the volume that we're seeing, but in addition, all of the process improvement
we're doing is allowing us to have a more efficient cost structure by centralizing, standardizing and simplifying our business.
And by doing that we're going to have a sustainable, scaleable, very efficient cost structure through the cycles.

And so as we start to see the ramp-up, you'll see much less of having to add heads to be able to achieve that volume. And then
vice versa, we are in a cyclic business, when you see a cycle again, we'll be far more scaleable and sustainable and efficient. So
I believe we're making the right choices and as I showed you, it's showing up in results. The evidence is starting to show through.

Let me share with you a little bit about those choices of cash accumulation and preservation. On the cash accumulation side,
about making those right strategic choices, if you think about our strategic choices, they're really around our value proposition
to our shareholders, which for us is we're going to have a good solid homebuilding margin and a very high asset efficiency and
that's our value proposition. Now we're not all the way there. As Tim mentioned, we have one of the lowest lot positions of our
peer group, but we still have room to go to reduce that asset position and they're not in all the right perfect places, but again,
we're continuing to work on that, at a slower pace today at the volumes we are, but we're still working on that.

But if you think about that as kind of the basis of many of our strategic choices, around gaining the production efficiencies so
that we can have that solid homebuilding margin and thinking about asset efficiency, that is now, as I said to you guys, showing
up in results. But let's talk a little bit about how I have some great competence around some of the decisions we're making.

Tim and I look at every single asset, every single quarter and we know -- I have high confidence that we sell every single home
that is cash flow positive. Now, I'm not sure if everyone can say that. But we know that we look at every home and say are we
returning a positive cash flow? Are we unlocking some of the value sitting in the land and we can return at least our vertical
costs when we sell that home.

We may have a gap loss on that home, but we fundamentally have always believed that as long as well can keep moving to
through those assets, it's better and a faster pass through, more normalized margins if we can move through the assets we have
now and re-up in really what are going to be historic opportunities moving forward.

So we have continued to move through our assets. When we get to a neighborhood or a house that we can't return a positive
cash flow, we stop and then we know that. So with very high competence I know our focus on priorities, accumulating cash is
real, because we do see it literally in every house basis. And we know that we can be cash flow positive, even at substantially
lower volumes. We shared that with you in our last earnings conference call. And what we said was basically at about half of
our closing volumes we could still be cash flow positive. So, we do recognize that the volumes have continued to be a challenge
and that we can be cash flow positive there.

We continue to reduce our cost footprint, which I shared with you. Our SG&A was down 39% year-over-year this last quarter
combining homebuilding and corporate. Land is also another big use of our cash, so you think about land acquisition and
development, and our land spending, both combining acquisition development has come down dramatically over the last
several years. We shared with you in our last conference call that we expect that number to be about $300 million for the total
year this year, of which about $100 million is in front of us for the next six months. So, in other words, $200 million is behind us.

And at these volumes, we know that that land spending will a about that or less next year. That confidence around what our
land spend is, is because we know with our production model now of selling to a backlog and building to a cadence, exactly
where and when we need those lots to be done. And by the way, 50% of our lots in production are finished. They don't require
anymore development costs. They require property taxes and maybe HOAs, [depth of] funding type things, but that's it.

So that's why I have fairly high confidence around that land spend number, which again is a use of cash.

All of this is to help support our priorities of accumulating and preserving our cash.


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We talked about much of this on this page about the choices are yielding the right results and I'm more confident now over
the last two quarters of watching the evidence start to show up in our results. With our gross margins improving and seeing
that happen and where it's improving, if you look at the pieces of the homebuilding gross margin, it's improving in our direct
construction costs. And that's really, again, because of all the work we've done on our production efficiencies, that's where I'd
want to see it start showing up and it is. So we're starting to see our direct construction costs continually come down. And then
we talked about the incentives and discounts coming down as well.

I think with that, I've covered most everything else on this chart. With that, I'll turn it over to Tim to talk to you about what we're
doing now as we prepare to emerge out of the cycle and to emerge with strength.

Thanks, Cathy. So as we think about it and think about kind of a couple of things that Cathy mentioned, we do have a sufficient
supply of owned lots, half of those finished. We're not going to have to invest in developing other lots. So for our near-term
needs and even medium term needs in many markets, we have a sufficient lot supply. But we also see the opportunity and will
and are supplementing that with finished lots that are coming on the market.

So every month we are putting under option more lots than we did the previous month at very good economic returns. And
every month we are acquiring more lots through those options than we did the previous month. So we're beginning to see
that flow start. It's a dribble now, but it will be a much more dramatic flow at the banks deal with their capitalization issues, deal
with their TARP issues and then ultimately deal with their land asset issues, which I think again, is a 2009 calendar opportunity.

The other opportunity that we're going to see is to gain market share. Again, the severity of this cycle is going to be a
game-changer like no other cycle before it and it's driving a majority of the small players out of the industry. Historically they've
returned at some point. This cycle will be a little more of a question as to what capital will actually be available and how much
of it will be available to enable the small builders and the developers to actually take advantage of this cycle like they have in
past cycles. So, I think the playing field for the large builders who have liquidity is going to be vast. And as I said before, the
opportunities fairly historic. And our ability to gain scale in the most attractive markets are again, front and center in our thinking
and we're structuring for that.

So let me turn to our Centex business processes. We have been focusing on standardizing across the enterprise our core business
processes and frankly, standardizing all of the processes, support processes and inner price processes in Centex. But let me just
focus on the core business processes. We're going to ask our operators to do a few things very well. That's acquire land, procure,
sell and build. All of the other things that used to be handled in a division, from accounting to mortgage and title to HR will be
a centralized process. So, we'll be able to scale our operations up very quickly during a recovery, because we're going to have
a standardized set of processes common across the enterprises, interlinked with our support processes.

We're seeing those efficiencies now. We call this effort within Centex, ACE, Achieving Competitive Excellence, and in a very
simple form -- in its most simple form it's selling to a backlog, creating a backlog of sales and then building to a cadence. So we
build to a cadence in order to harvest efficiencies from the supply chain.

Let me just go through these real quick. So, we sell to a backlog. By selling to a backlog we're able to emphasize our lower cost
channels. So you think about low-cost channels; internet, other low-cost media, mine those, create leads, take those leads, turn
them into prospects, prospects into sales. So we're spending a lot of time focusing on how to generate the lowest cost leads.
It gives us the opportunity to make really good price volume trade off decisions in terms of how should we price. We know that
speculative inventory homes, homes under construction that are not sold carry about a 400 to 500 basis point discount in price
through incentives, finance and otherwise.


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You've seen part of our margin improvement be just a move away from inventory homes and a move towards to-be-built homes.
The bulk of our backlog now has been presold to be built. What that gives us is the ability to work with our trade partners in
terms of a reliable set of homes to build and build those homes to a schedule in cadence, that is one a day, two a day, three a
day, some cadence over time that they can structure their operations to. So it allows them and us both to achieve the highest
possible efficiency in the utilization of labor and also they and their supply chains are able to sequence these homes in the
proper order in the proper way to build geographically, again, to optimize our trade vendors and trade partners.

So we're seeing the results. We're seeing it show up in our gross margins. It will lead to higher margins, higher returns, not only
now, but certainly as the market recovers and it allows us, more importantly, to scale up very quickly in the recovery.

So let me just finish with the key messages that I'd like you to take away, which is we have the experience of previous cycles
that we're applying this cycle. We're making Centex better. We are improving our operations. We are standardizing across the
enterprise. We are creating efficiencies that will take us through this trough but more importantly, give us the ability to take
advantage of the upturn. And with that, I just want to say thank you and open it for questions, David.

QUESTIONS AND ANSWERS
See if there are any questions in the audience first, and if not, I certainly have a few.

Unidentified Speaker
On the lot option lots that you guys are adding, can you talk about the terms under those contracts, what kind of deposits and
take down schedules?

Yes, you know, everything is very soft right now, so our deposit requirements are fairly soft, 5% or so, 3 to 5% typically, take
down requirements are fairly soft, basically we'll take down the lots when we sell the house. There are minimums, but those
are easily renegotiated if something happens. So classically in this stage of the cycle, the terms become very, very soft. And I
think that will continue.

I was wondering if you can talk about, with the idea of selling to a backlog, building to a cadence, what do you do with higher
cancellation rates, which seem to be persistent in the industry right now? It seems to take away some of the benefit of that.
And then on the flipside, where you do have an existing homeowner who's moving into one of your houses, difficult to get the
timing down to know when they're actually going to be able to sell their house, closing the transaction and like that, does that
mean the business just moves pretty much -- I don't want to say slowly, but much more heavily focused on the entry level than
it's been?

Well, first of all, 40% of what we do is entry level and it's probably closer to 50% now. So we've typically been, historically, an
entry level builder. At least half of what we've done is entry level and most of the other half is first time move-up. So we're not
inconsistent at all with our previous businesses or product mix, nor are we inconsistent with how we've run the business in the


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past. So if we look at past years, take the last couple certainly out of the picture, we've typically been a presell builder. And all
those things you described are very manageable.

Working with customers on the sale of their home is very manageable. Working with customers to get them qualified during
that period of time where they're in our backlog is very workable. During that period of time they may be saving their down
payment as well. So this is a model that we're very used to and actually we're returning to that model after a period of a lot of
inventory issues that the whole industry had to work with. So we know and believe that the cancellations on presold homes
will generally be lower.

I don't think we should look at the last two or three months, September and October, even August as predictors of what
cancellation rates will be in the future, because these have been very unusual months in the whole scheme of things. So,
ultimately we'll settle down into a more predictable economic environment and we'll be able to manage our backlog very
effectively.

I think my next question was about, you guys have made this great transition. You have the model in place. What's the next
step of development? Does it eventually get into more supply and logistics? Does it get into warehousing distribution ever?
Do you become a supply and logistics company?

No, we don't. I mean, we can outsource everything to build a house. We're looking and believe we can outsource the development
of our lots, at least to a large extent -- not in every market, but in many markets. There are providers out there. There is capital
out there. So, when the opportunities come, if you think about it, regardless of whether we buy the lots from the banks, whether
third parties buy the lots from the banks, we are the ultimate take out. We are the ones who will monetize that asset through
the construction of a home. We are focused on becoming the best builders of homes, the most efficient builder of homes,
improving the manufacturing, if you will, of the homebuilding process and in that, I would think that gives us advantages in
this environment.

I guess the follow-up question would be, what are the barriers to entry if you don't have that kind of process in place? Because
I understand centralization versus other national builders gives you an advantage, but versus local builders as most of the
economies of scale are on a local basis anyways, when things do start to improve and you see a lot of land come on the market,
why should the big builders or Centex for that matter keep market share gains that they get in the next couple of years?

Well a couple of things. First of all, I think the first thing is capital. In past cycles, capital has come back into the industry after
having been withdrawn from the industry during a recession, fairly quickly. I think this cycle may be different and capital may
be a differentiator. Second is it's not so easy to standardize your business processes. It's not too easy to come up with that chart
that we showed you in terms of business processes. Catalog and standardize those business processes across the enterprise,
create playbooks to manage that, create the structure to manage it and then execute it on a very, very consistent and repetitive
basis. It's not so easy. Centex has the benefit of having a brand called Fox & Jacobs that did just that for years and years and
years in Texas. So we have some DNA, if you will, of the ability to do that. Cathy comes from a background where that was really
pretty much the order of the day and you might just talk about it, Cathy.


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I heard you asked earlier -- I was expecting you to ask us is there a future of national builders and/or local builders or are there
advantages. And you could make lots of arguments that maybe in the past there were probably less advantages or harder to
articulate or understand. I would submit that in the future there's I think a huge advantage to being a national builder and then
a Centex national builder. And that is the first barrier is going to be capital and access to capital. And then the second one is
clearly going to be those production efficiencies. Efficiencies are granted in local scale, you're absolutely right.

What we're learning is a different definition of local. And that it's really around your trade bases and so it's really how far those
trade bases go. In Texas we have many -- I think about a dozen trades that now service the entire state. So that definition of
local is changing as well. And then the amount of efficiencies we're gaining in our production environment, if you think about
the amount of waste in building a home, the waste is in the lean or Six Sigma terms of waste of nonproductive time. We're
taking that out.

And so at Centex we've been focused for the last 1.5 or two years of removing all the waste in producing and building a home,
so we can be consistent and repeatable and predictable and very efficient. A local guy is not going to be able to compete there.
So when they get past the capital barrier, which is going to be for a while, when that goes away and that's no longer a barrier,
I think production efficiencies that Centex has are going to be tremendous. So, I would make a huge argument that nationals
are really going to be the real efficiencies.

You mentioned that all elements of a housing bottom are in place, except maybe for land prices. So would you agree with one
of your peers that started off their presentation by saying that the only way this housing issue will be resolved is through some
form of government intervention?

Listen, I think that for all the data that you've seen in terms of foreclosures, keeping people in houses, if at all possible, will be
good broadly for the economy in many, many sectors. If you just think about a whole generation almost that has been conditioned
to spend is now becoming conditioned to save, which we think is and I think most everybody would agree is a good thing, the
transition is wrenching. And that's what we're going through is a transition process. From easy credit to tight credit. From
spending to saving. So, I think having some help in that transition process, as wrenching as this one is, and I think you have to
go back to the depression to see something that was as wrenching as this one, is probably the right thing. So we have someone
who studied this far more than I have, Fed Chairman Bernanke, calling for stimulus. So, if he's calling for stimulus, I'm right there
with him.

And just another question. Given what I think is an asset like model that you're following, would you look to establish a partnership
with a land fund similar to what it sounds like Lennar is incubating right now, so as not to be caught short on developed lots?

We think there will be multiple channels of land acquisition opportunities. Direct to the bank is certainly one. Through third
parties who buy from the banks or buy from others, will be another. Those third parties may be a land fund, they may be a
regional or even national developers, and there are some. Or maybe a local developer and there are still lots of good local
developers who have access to capital, mostly private. So the channels will be multiple and we're working all channels.


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Tim, somebody asked me a question once and I want to put it to you, because I thought it was a great question. One of your
competitors said, Centex wants to be on the asset light model and where they're moving their business and they're cutting the
land supply down and focusing on buying finished lots. What if you got offered a great deal for raw dirt, undeveloped land, but
you thought it was homerun land, does Centex go back to buying raw land if there's great deals in the market for it?

I think because we'll be working multiple channels, we will have the opportunities to make that work. We're clearly retaining
development expertise in Centex. We're retaining our key development talent. We know that not all opportunities will be
finished lots. We just think that most of the opportunities will be finished lots. Now why add to lot supply of already 1 million
developed lots when they're already out there? And frankly, there's another 6 million that are entitled lots that will come after
the vacant developed lots. So they will have to be developed. Asset light doesn't mean absolutely pure and simple finished lots
on take downs, but it does mean that we can do most of what we need to in a much more asset light way than we have over
the past seven or eight years.

You know, at the end of the day I think of it as a key input to our process of building a great home. And if you think about it that
way, some markets have great reliable suppliers for finished lots. There are great development capabilities and are very reliable
in providing finished lots. For those markets all day long that's how we'll access our land. Some markets don't have, but we'll
develop good reliable sources and to the extent we can help them develop those that's great. But, because it's such a critical
input to our production process, having the right lot in the right place, that it would be not wise to completely eliminate that
capability. So what we've done is we've standardized it and centralized it so that we can have our best development capability
in the center to be able to deploy when needed. But our first choice is going to be on an asset light basis and there's going to
be lots of opportunity for that.

Are there any additional questions?

Could you give that vacant lot number again? Did you say 1 million or did I mishear that?

One million vacant developed lots in across the markets of the United States, another 6 million that are entitled. Okay, thank
you very much.

Thank you.


FINAL TRANSCRIPT

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©2008, Thomson Financial. All Rights Reserved. 2012210-2008-11-25T16:25:32.510


centex Transcript_11/11/2008

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centex Transcript_11/11/2008