In the midst of completing its quarterly valuation assessment of communities and land inventory, Centex this morning (Oct. 12) announced it intends to take nearly $1 billion in charges related to the housing slump as it released preliminary results for its second 2008 fiscal quarter ending Sept. 30, 2007.
Underscoring Centex Corp. CEO Tim Eller's analysis that "adjustments reflect the market's further deterioration over the quarter," the Dallas, Texas-based home builder said it expects to record an impairment of approximately $850 million for neighborhood and land inventory, and an impairment and option write-off of approximately $40 million for the Company's share of land holdings in joint ventures. In addition, the company warned of its expectation to write off option deposits and pre-acquisition costs of approximately $40 million and to record an impairment to goodwill of approximately $65 million.
Centex also said it anticipates its wholly-owned financial services subsidiary to report a provision of approximately $60 million for increased losses related to mortgage market and credit exposures.
On a somewhat brighter note, Centex reported that it generated positive cash flow from operations during the quarter ended Sept. 30, 2007, though it cut its estimates for cash flow in 2008 to $500 million from $750 million.
For the quarter, the company said closings fell 14% to 7,350; sales were down 13% to 5,953 units; and backlog was off 38% to 9,633 units, all compared to the same quarter in 2006.
Centex will release its earnings results for the second quarter of fiscal 2008 on Tuesday, Oct. 23.
