Exhibit 99.1
M.D.C. HOLDINGS, INC.NEWS BULLETIN
M.D.C. HOLDINGS, INC.
FOR IMMEDIATE RELEASE
FRIDAY, FEBRUARY 11, 2011
| | |
| Contact: | | Robert N. Martin
Investor Relations
(720) 977-3431
bob.martin@mdch.com |
M.D.C. HOLDINGS ANNOUNCES FOURTH QUARTER AND
FULL YEAR 2010 RESULTS
2010 FOURTH QUARTER
| | • | | Loss before taxes of $35.1 million vs. $15.4 million in Q4 2009 |
| |
| | • | | Asset impairments of $17.9 million vs. $14.0 million in Q4 2009 |
| |
| | • | | Net loss of $30.0 million or $0.65 per share |
| |
| | • | | Closings decreased 22% to 865 homes |
| |
| | • | | Net orders decreased 19% to 519 homes |
| |
| | • | | Backlog increased 2% to 842 homes at 12/31/10 |
| |
| | • | | Secured control of 1,448 lots; 26 new communities |
| |
| | • | | Active subdivisions increased 11% to 148 |
2010 FULL YEAR
| | • | | Loss before taxes of $70.6 million vs. $107.3 million in 2010 |
| |
| | • | | Asset impairments of $21.6 million vs. $31.0 million in 2010 |
| |
| | • | | Net loss of $64.8 million; $1.40 per share |
| |
| | • | | Closings increased 8% to 3,245 homes |
| |
| | • | | Net orders decreased 1% to 3,261 homes |
| |
| | • | | Secured control of 7,861 lots; 130 new communities |
DENVER, Friday, February 11, 2011 — M.D.C. Holdings, Inc. (NYSE: MDC) today reported a net loss for the 2010 fourth quarter of $30.0 million, or $0.65 per share, compared with net income for the 2009 fourth quarter of $127.2 million, or $2.68 per share. The fourth quarter 2009 net income reflected the positive impact of a non-recurring $142.6 million income tax benefit due to a change in federal tax law.
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M.D.C. HOLDINGS, INC. For the year ended December 31, 2010, net loss was $64.8 million, or $1.40 per share, compared with net income for the year ended December 31, 2009 of $24.7 million, or $0.52 per share.
Management Comments
Larry A. Mizel, MDC’s chairman and chief executive officer, stated, “While difficult conditions persisted for the homebuilding industry in 2010, we are proud to highlight a number of our achievements. After securing control of 130 new communities across the country, including 26 in the fourth quarter, we increased our active subdivision count for the first time in four years. In addition, on the strength of an increase in home closings, our revenue increased for the first time in five years, and we improved our loss before tax for the third consecutive year.”
Mizel continued, “We also made improvements to our operations that will help our business for the long-term, although the benefits are not readily apparent in our 2010 financial statements. We successfully implemented our new enterprise resource planning system in both our corporate office and two divisional offices. When fully implemented, this technology platform is expected to drive consistency to core processes across divisions and improve coordination between departments, thereby increasing business efficiencies and reducing operating costs. We also expect our new system to provide better accessibility to real-time operating data, giving our management team enhanced tools for making decisions on a day-to-day basis. While the implementation of this system has caused us to incur higher overhead costs for the short-term, we believe that it will help us to achieve improved operating leverage in the long-term.”
Mizel concluded, “We are committed to expediting our Company’s return to profitability. In the fourth quarter of 2010, the Company eliminated more than 100 positions from our operating structure, which should result in significant savings to our Company. In addition, we are focused on maximizing gross margin through the continued deployment of our new product across the country, combined with an increased focus on inventory management. Coupled with our increased community count, these investments and decisions form a strong foundation for our goal of substantially improving our operating results.”
Fourth Quarter Highlights
Home closings for the fourth quarter ended December 31, 2010 declined to 865 homes with an average selling price of $291,700, compared with home closings of 1,109 homes with an average selling price of $268,400 during the same period in 2009. The decrease in closings is attributable to a year-over-year decrease in beginning backlog and an increase in the number of cancellations received for the fourth quarter of 2010.
Total revenue for the fourth quarter of 2010 was $259.6 million, compared with revenue of $323.9 million for the same period in 2009. The decrease in revenue was driven primarily by the 22% decrease in home closings and a decrease in land sales revenue, which partially was offset by the 9% year-over-year increase in average selling price.
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M.D.C. HOLDINGS, INC. Net orders for the fourth quarter ended December 31, 2010 decreased to 519 homes with an estimated sales value of $150 million, compared with net orders for 637 homes with an estimated sales value of $183 million during the same period in 2009. The decrease in net orders is attributable to an increase in our cancellation rate for the quarter, which rose to 46% from 30% during the fourth quarter of 2009. The increased cancellation rate was driven primarily by an increase in cancellations from buyers who were unable to sell an existing home or had difficulty qualifying for a mortgage.
We ended the 2010 fourth quarter with 842 homes under contract with an estimated sales value of $269 million, compared with a backlog of 826 homes with an estimated sales value of $265 million at December 31, 2009.
Home gross margin in the 2010 fourth quarter was 17.0% as compared with 18.8% in the 2009 fourth quarter. Excluding interest expense and warranty adjustments, home gross margin decreased to 16.5% in the fourth quarter of 2010 as compared with 20.3% in the fourth quarter of 2009. The decrease is primarily the result of sizeable incentives used during the last half of the year to drive a higher sales velocity, especially for older homes in our inventory, combined with an increase in land costs relative to home sales revenue from 18% in the 2009 fourth quarter to 23% in the 2010 fourth quarter. The increase in incentives and land costs was partially offset by an increase in revenue from options and a decrease in construction costs, both relative to home sales revenue.
The estimated home gross margin in backlog at the end of the fourth quarter was roughly equal to the estimated home gross margin in backlog to start the quarter, reflecting our ongoing use of elevated incentives, with a continued focus on selling older homes in our inventory.
General and administrative expenses increased to $42.9 million for the quarter ended December 31, 2010, compared with $40.5 million for the same period in the prior year. The increase was driven primarily by a $4.1 million increase in insurance reserves during the fourth quarter of 2010, compared with a $3.1 million decrease in insurance reserves during the fourth quarter of 2009, partially offset by a $4.5 million decrease in legal expense.
Marketing and commissions costs were $21.0 million in the fourth quarter of 2010, compared with $20.9 million in the fourth quarter of 2009, as a $1.4 million decrease in commissions expense was offset by a $1.5 million increase in costs related to signage. The Company also recognized $17.9 million of asset impairments during the quarter, compared with $14.0 million incurred in the fourth quarter of 2009.
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M.D.C. HOLDINGS, INC. Full Year Highlights
Home closings for the year ended December 31, 2010 totaled 3,245 homes with an average selling price of $283,800, compared with home closings of 3,013 homes with an average selling price of $277,800 during the same period in 2010.
Total revenue for the 2010 full year was $958.7 million, compared with $898.3 million in 2009. The improvement was driven by the 8% increase in home closings and the 2% increase in average selling price, partially offset by a decrease in land sales revenue.
Net orders for the year ended December 31, 2010 decreased to 3,261, compared with net orders of 3,306 during 2009.
About MDC
Since 1972, MDC’s subsidiary companies have built and financed the American dream for more than 165,000 families. MDC’s commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. MDC is one of the largest homebuilders in the United States. Its subsidiaries have homebuilding operations across the country, including Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, California, Northern Virginia, Maryland, Philadelphia/Delaware Valley and Jacksonville. The Company’s subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol “MDC.” For more information, visit www.mdcholdings.com.
Forward-Looking Statements
Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic conditions, including changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, and land and home values; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) changes in the market value of the Company’s investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican’s sale of mortgage loans (6) the relative stability of debt and equity markets; (7) competition; (8) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (9) the
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M.D.C. HOLDINGS, INC. availability and cost of performance bonds and insurance covering risks associated with our business; (10) shortages and the cost of labor; (11) weather related slowdowns; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including the interpretation of tax, labor and environmental laws; (15) changes in consumer confidence and preferences; (16) terrorist acts and other acts of war; and (17) other factors over which the Company has little or no control.Additional information about the risks and uncertainties applicable to the Company’s business is contained in the Company’s Form 10-K for the fiscal year ended December 31, 2010, which is scheduled to be filed with the Securities and Exchange Commission today.All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or webcasts should be consulted.
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M.D.C. HOLDINGS, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months | | | Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
REVENUE | | | | | | | | | | | | | | | | |
| Home sales revenue | | $ | 252,302 | | | $ | 297,702 | | | $ | 921,022 | | | $ | 837,054 | |
| Land sales revenue | | | (735 | ) | | | 16,744 | | | | 5,883 | | | | 30,730 | |
| Other revenue | | | 7,999 | | | | 9,433 | | | | 31,750 | | | | 30,519 | |
| | | | | | | | | | | | | |
| Total Revenue | | | 259,566 | | | | 323,879 | | | | 958,655 | | | | 898,303 | |
| | | | | | | | | | | | | |
COSTS AND EXPENSES | | | | | | | | | | | | | | | | |
| Home cost of sales | | | 209,434 | | | | 241,815 | | | | 745,085 | | | | 686,854 | |
| Land cost of sales | | | (617 | ) | | | 12,764 | | | | 5,366 | | | | 25,038 | |
| Asset impairments | | | 17,929 | | | | 13,977 | | | | 21,647 | | | | 30,986 | |
| Marketing expenses | | | 11,596 | | | | 9,978 | | | | 41,322 | | | | 36,371 | |
| Commission expenses | | | 9,437 | | | | 10,883 | | | | 34,255 | | | | 31,002 | |
| General and administrative expenses | | | 42,933 | | | | 40,504 | | | | 166,993 | | | | 162,485 | |
| Other operating expenses | | | 1,310 | | | | 1,492 | | | | 3,147 | | | | 5,643 | |
| Related party expenses | | | 6 | | | | 1,004 | | | | 15 | | | | 1,018 | |
| | | | | | | | | | | | | |
| Total Operating Costs and Expenses | | | 292,028 | | | | 332,417 | | | | 1,017,830 | | | | 979,397 | |
| | | | | | | | | | | | | |
LOSS FROM OPERATIONS | | | (32,462 | ) | | | (8,538 | ) | | | (59,175 | ) | | | (81,094 | ) |
| | | | | | | | | | | | | |
| Other income (expense) | | | | | | | | | | | | | | | | |
| Interest income | | | 7,060 | | | | 2,394 | | | | 26,573 | | | | 12,157 | |
| Interest expense | | | (9,813 | ) | | | (9,244 | ) | | | (38,623 | ) | | | (38,582 | ) |
| Gain on sale of other assets | | | 149 | | | | 7 | | | | 624 | | | | 184 | |
| | | | | | | | | | | | | |
LOSS BEFORE TAXES | | | (35,066 | ) | | | (15,381 | ) | | | (70,601 | ) | | | (107,335 | ) |
| Benefit from (provision for) income taxes, net | | | 5,092 | | | | 142,543 | | | | 5,831 | | | | 132,014 | |
| | | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | (29,974 | ) | | $ | 127,162 | | | $ | (64,770 | ) | | $ | 24,679 | |
| | | | | | | | | | | | | |
EARNINGS (LOSS) PER SHARE | | | | | | | | | | | | | | | | |
| Basic | | $ | (0.65 | ) | | $ | 2.71 | | | $ | (1.40 | ) | | $ | 0.52 | |
| | | | | | | | | | | | | |
| Diluted | | $ | (0.65 | ) | | $ | 2.68 | | | $ | (1.40 | ) | | $ | 0.52 | |
| | | | | | | | | | | | | |
DIVIDENDS DECLARED PER SHARE | | $ | 0.25 | | | $ | 0.25 | | | $ | 1.00 | | | $ | 1.00 | |
| | | | | | | | | | | | | |
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M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | |
| | | December 31, | |
| | | 2010 | | | 2009 | |
| Assets | | | | | | | | |
| Cash and cash equivalents | | $ | 572,225 | | | $ | 1,234,252 | |
| Marketable securities | | | 968,729 | | | | 327,944 | |
| Restricted cash | | | 420 | | | | 476 | |
| Receivables | | | | | | | | |
| Home sales receivables | | | 8,530 | | | | 10,056 | |
| Income taxes receivable | | | 2,048 | | | | 145,144 | |
| Other receivables | | | 9,432 | | | | 5,844 | |
| Mortgage loans held-for-sale, net | | | 65,114 | | | | 62,315 | |
| Inventories, net | | | | | | | | |
| Housing completed or under construction | | | 372,422 | | | | 260,324 | |
| Land and land under development | | | 415,237 | | | | 262,860 | |
| Property and equipment, net | | | 40,826 | | | | 38,421 | |
| Deferred tax asset, net of valuation allowance of $231,379 and $208,144 at December 31, 2010 and 2009, respectively | | | — | | | | — | |
| Related party assets | | | 7,393 | | | | 7,856 | |
| Prepaid expenses and other assets, net | | | 85,393 | | | | 73,816 | |
| | | | | | | |
| Total Assets | | $ | 2,547,769 | | | $ | 2,429,308 | |
| | | | | | | |
| Liabilities | | | | | | | | |
| Accounts payable | | $ | 35,018 | | | $ | 36,087 | |
| Accrued liabilities | | | 260,729 | | | | 291,969 | |
| Related party liabilities | | | 90 | | | | 1,000 | |
| Mortgage repurchase facility | | | 25,434 | | | | 29,115 | |
| Senior notes, net | | | 1,242,815 | | | | 997,991 | |
| | | | | | | |
| Total Liabilities | | | 1,564,086 | | | | 1,356,162 | |
| | | | | | | |
| Commitments and Contingencies | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
| Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding | | | — | | | | — | |
| Common stock, $0.01 par value; 250,000,000 shares authorized; 47,198,000 and 47,142,000 issued and outstanding, respectively, at December 31, 2010 and 47,070,000 and 47,017,000 issued and outstanding, respectively, at December 31, 2009 | | | 472 | | | | 471 | |
| Additional paid-in-capital | | | 820,237 | | | | 802,675 | |
| Retained earnings | | | 158,749 | | | | 270,659 | |
| Accumulated other comprehensive income | | | 4,884 | | | | — | |
| Treasury stock, at cost; 56,000 and 53,000 shares at December 31, 2010 and December 31, 2009, respectively | | | (659 | ) | | | (659 | ) |
| | | | | | | |
| Total Stockholders’ Equity | | | 983,683 | | | | 1,073,146 | |
| | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 2,547,769 | | | $ | 2,429,308 | |
| | | | | | | |
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M.D.C. HOLDINGS, INC.
Information on Segments
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
REVENUE | | | | | | | | | | | | | | | | |
| Homebuilding | | | | | | | | | | | | | | | | |
| West | | $ | 87,183 | | | $ | 156,638 | | | $ | 333,746 | | | $ | 407,157 | |
| Mountain | | | 106,536 | | | | 83,617 | | | | 352,441 | | | | 247,337 | |
| East | | | 50,119 | | | | 63,382 | | | | 212,585 | | | | 176,386 | |
| Other Homebuilding | | | 12,060 | | | | 16,377 | | | | 45,197 | | | | 54,086 | |
| | | | | | | | | | | | | |
| Total Homebuilding | | | 255,898 | | | | 320,014 | | | | 943,969 | | | | 884,966 | |
| Financial Services and Other | | | 7,778 | | | | 9,171 | | | | 30,474 | | | | 28,318 | |
| Corporate | | | — | | | | (40 | ) | | | — | | | | 10 | |
| Inter-company adjustments | | | (4,110 | ) | | | (5,266 | ) | | | (15,788 | ) | | | (14,991 | ) |
| | | | | | | | | | | | | |
| Consolidated | | $ | 259,566 | | | $ | 323,879 | | | $ | 958,655 | | | $ | 898,303 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
(LOSS) INCOME BEFORE INCOME TAXES | | | | | | | | | | | | | | | | |
| Homebuilding | | | | | | | | | | | | | | | | |
| West | | $ | (3,702 | ) | | $ | 13,335 | | | $ | 9,909 | | | $ | 19,144 | |
| Mountain | | | (5,593 | ) | | | (6,886 | ) | | | 1,059 | | | | (15,686 | ) |
| East | | | (1,866 | ) | | | (1,085 | ) | | | 91 | | | | (9,789 | ) |
| Other Homebuilding | | | (1,243 | ) | | | (459 | ) | | | (3,140 | ) | | | (4,691 | ) |
| | | | | | | | | | | | | |
| Total Homebuilding | | | (12,404 | ) | | | 4,905 | | | | 7,919 | | | | (11,022 | ) |
| Financial Services and Other | | | 38 | | | | 6,061 | | | | 10,299 | | | | 5,953 | |
| Corporate | | | (22,700 | ) | | | (26,347 | ) | | | (88,819 | ) | | | (102,266 | ) |
| | | | | | | | | | | | | |
| Consolidated | | $ | (35,066 | ) | | $ | (15,381 | ) | | $ | (70,601 | ) | | $ | (107,335 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
INVENTORY IMPAIRMENTS | | | | | | | | | | | | | | | | |
| West | | $ | 14,338 | | | $ | 1,605 | | | $ | 17,971 | | | $ | 14,955 | |
| Mountain | | | 1,519 | | | | 10,114 | | | | 1,519 | | | | 10,559 | |
| East | | | 990 | | | | — | | | | 990 | | | | 2,475 | |
| Other Homebuilding | | | 715 | | | | 334 | | | | 715 | | | | 1,147 | |
| | | | | | | | | | | | | |
| Consolidated | | $ | 17,562 | | | $ | 12,053 | | | $ | 21,195 | | | $ | 29,136 | |
| | | | | | | | | | | | | |
| |
| | | December 31, | | | | | | | | | |
| | | 2010 | | | 2009 | | | | | | | | | |
TOTAL ASSETS | | | | | | | | | | | | | | | | |
| Homebuilding | | | | | | | | | | | | | | | | |
| West | | $ | 300,652 | | | $ | 190,204 | | | | | | | | | |
| Mountain | | | 311,833 | | | | 237,702 | | | | | | | | | |
| East | | | 188,693 | | | | 112,964 | | | | | | | | | |
| Other Homebuilding | | | 40,554 | | | | 26,778 | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Total Homebuilding | | | 841,732 | | | | 567,648 | | | | | | | | | |
| Financial Services and Other | | | 135,286 | | | | 133,957 | | | | | | | | | |
| Corporate | | | 1,573,408 | | | | 1,773,660 | | | | | | | | | |
| Inter-company adjustments | | | (2,657 | ) | | | (45,957 | ) | | | | | | | | |
| | | | | | | | | | | | | | | |
| Consolidated | | $ | 2,547,769 | | | $ | 2,429,308 | | | | | | | | | |
| | | | | | | | | | | | | | | |
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M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | | | | | Year Ended | | | | |
| | | December 31, | | | Change | | | December 31, | | | Change | |
| | | 2010 | | | 2009 | | | Amount | | | % | | | 2010 | | | 2009 | | | Amount | | | % | |
SELECTED FINANCIAL DATA | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| General and Administrative Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Homebuilding | | $ | 15,149 | | | $ | 20,020 | | | $ | (4,871 | ) | | | -24 | % | | $ | 69,475 | | | $ | 66,284 | | | $ | 3,191 | | | | 5 | % |
| Financial Services and Other | | | 8,623 | | | | 3,561 | | | | 5,062 | | | | 142 | % | | | 22,890 | | | | 24,207 | | | | (1,317 | ) | | | -5 | % |
Corporate (1) | | | 19,167 | | | | 17,927 | | | | 1,240 | | | | 7 | % | | | 74,643 | | | | 73,012 | | | | 1,631 | | | | 2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 42,939 | | | $ | 41,508 | | | $ | 1,431 | | | | 3 | % | | $ | 167,008 | | | $ | 163,503 | | | $ | 3,505 | | | | 2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SG&A as a % of Home Sales Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Homebuilding Segments | | | 6.0 | % | | | 6.7 | % | | | -0.7 | % | | | | | | | 7.5 | % | | | 7.9 | % | | | -0.4 | % | | | | |
Corporate Segment (1) | | | 7.6 | % | | | 6.0 | % | | | 1.6 | % | | | | | | | 8.1 | % | | | 8.7 | % | | | -0.6 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and Amortization(2) | | $ | 5,137 | | | $ | 4,329 | | | $ | 808 | | | | 19 | % | | $ | 16,943 | | | $ | 14,457 | | | $ | 2,486 | | | | 17 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Gross Margins (3) | | | 17.0 | % | | | 18.8 | % | | | -1.8 | % | | | | | | | 19.1 | % | | | 17.9 | % | | | 1.2 | % | | | | |
| Interest in Home Cost of Sales as a % of Home Sales Revenue | | | -2.7 | % | | | -2.3 | % | | | -0.4 | % | | | | | | | -2.6 | % | | | -3.7 | % | | | 1.1 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash Provided by (Used in) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating Activities | | $ | (71,490 | ) | | $ | (42,052 | ) | | $ | (29,438 | ) | | | 70 | % | | $ | (209,081 | ) | | $ | 202,454 | | | $ | (411,535 | ) | | | -203 | % |
| Investing Activities | | $ | (47,340 | ) | | $ | (178,054 | ) | | $ | 130,714 | | | | -73 | % | | $ | (644,466 | ) | | $ | (224,992 | ) | | $ | (419,474 | ) | | | -186 | % |
| Financing Activities | | $ | 2,494 | | | $ | 5,483 | | | $ | (2,989 | ) | | | 55 | % | | $ | 191,520 | | | $ | (47,938 | ) | | $ | 239,458 | | | | 500 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corporate and Homebuilding Interest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest capitalized, net of interest expense | | $ | 9,064 | | | $ | 5,456 | | | $ | 3,608 | | | | 66 | % | | $ | 33,919 | | | $ | 19,810 | | | $ | 14,109 | | | | 71 | % |
| Previously capitalized interest included in home cost of sales | | $ | 6,827 | | | $ | 6,874 | | | $ | (47 | ) | | | -1 | % | | $ | 23,812 | | | $ | 30,710 | | | $ | (6,898 | ) | | | -22 | % |
| Interest capitalized in homebuilding inventory, end of year | | $ | 38,446 | | | $ | 28,339 | | | $ | 10,107 | | | | 36 | % | | $ | 38,446 | | | $ | 28,339 | | | $ | 10,107 | | | | 36 | % |
| | |
| (1) | | Includes related party expenses. |
| |
| (2) | | Includes depreciation and amortization of long-lived assets and amortization of deferred marketing costs. |
| |
| (3) | | Home sales revenue less home cost of sales (excluding commissions, amortization of deferred marketing, project cost write offs and asset impairments) as a percent of home sales revenue. During the three months ended December 31, 2010 and December 31, 2009, we closed homes on lots for which we had previously recorded $18.2 million and $74.9 million, respectively, of asset impairments. During the year ended December 31, 2010 and December 31, 2009, we closed homes on lots for which we had previously recorded $124.1 million and $211.3 million, respectively, of asset impairments. |
9
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | | | | Year Ended | | |
| | | December 31, | | Change | | December 31, | | Change |
| | | 2010 | | 2009 | | Amount | | % | | 2010 | | 2009 | | Amount | | % |
HOMEAMERICAN OPERATING ACTIVITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Principal amount of mortgage
loans originated | | $ | 192,831 | | | $ | 226,483 | | | $ | (33,652 | ) | | | -15 | % | | $ | 699,951 | | | $ | 633,171 | | | $ | 66,780 | | | | 11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal amount of mortgage loans brokered | | $ | 828 | | | $ | 8,021 | | | $ | (7,193 | ) | | | -90 | % | | $ | 6,711 | | | $ | 33,152 | | | $ | (26,441 | ) | | | -80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capture Rate | | | 87 | % | | | 86 | % | | | 1 | % | | | | | | | 81 | % | | | 81 | % | | | 0 | % | | | | |
| Including brokered loans | | | 87 | % | | | 88 | % | | | -1 | % | | | | | | | 82 | % | | | 85 | % | | | -3 | % | | | | |
| Mortgage products (% of mortgage loans originated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed rate | | | 98 | % | | | 99 | % | | | -1 | % | | | | | | | 97 | % | | | 99 | % | | | -2 | % | | | | |
| Adjustable rate — other | | | 2 | % | | | 1 | % | | | 1 | % | | | | | | | 3 | % | | | 1 | % | | | 2 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Prime loans (4) | | | 31 | % | | | 24 | % | | | 7 | % | | | | | | | 28 | % | | | 29 | % | | | -1 | % | | | | |
| Government loans (5) | | | 69 | % | | | 76 | % | | | -7 | % | | | | | | | 72 | % | | | 71 | % | | | 1 | % | | | | |
| | |
| (4) | | Prime loans generally are defined as loans with Fair, Isaac and Company (“FICO”) scores greater than 620 and that comply with the documentation standards of the government sponsored enterprise guidelines. |
| |
| (5) | | Government loans are loans either insured by the Federal Housing Administration or guaranteed by the Department of Veteran Affairs. |
10
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | |
| | | December 31, | | December 31, |
| | | 2010 | | 2009 |
HOMES COMPLETED OR UNDER CONSTRUCTION | | | | | | | | |
| Unsold Home Under Construction — Final | | | 119 | | | | 41 | |
| Unsold Home Under Construction — Frame | | | 722 | | | | 389 | |
| Unsold Home Under Construction — Foundation | | | 103 | | | | 109 | |
| | | | | | | | | |
| Total Unsold Homes Under Construction | | | 944 | | | | 539 | |
| Sold Homes Under Construction | | | 609 | | | | 570 | |
| Model Homes | | | 242 | | | | 212 | |
| | | | | | | | | |
| Homes Completed or Under Construction | | | 1,795 | | | | 1,321 | |
| | | | | | | | | |
| | | | | | | | | |
LOTS OWNED(excluding homes completed or under construction) | | | | | | | | |
| | | | | | | | | |
| Arizona | | | 1,257 | | | | 1,075 | |
| California | | | 1,201 | | | | 581 | |
| Nevada | | | 991 | | | | 966 | |
| | | | | | | | | |
| West | | | 3,449 | | | | 2,622 | |
| | | | | | | | | |
| | | | | | | | | |
| Colorado | | | 2,919 | | | | 2,514 | |
| Utah | | | 594 | | | | 545 | |
| | | | | | | | | |
| Mountain | | | 3,513 | | | | 3,059 | |
| | | | | | | | | |
| | | | | | | | | |
| Maryland | | | 319 | | | | 182 | |
| Virginia | | | 414 | | | | 241 | |
| | | | | | | | | |
| East | | | 733 | | | | 423 | |
| | | | | | | | | |
| | | | | | | | | |
| Florida | | | 210 | | | | 138 | |
| Illinois | | | 130 | | | | 141 | |
| | | | | | | | | |
| Other Homebuilding | | | 340 | | | | 279 | |
| | | | | | | | | |
| Total | | | 8,035 | | | | 6,383 | |
| | | | | | | | | |
11
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | |
| | | 2010 | | | 2009 | |
LOTS CONTROLLED UNDER OPTION | | | | | | | | |
| Arizona | | | 408 | | | | 328 | |
| California | | | 222 | | | | 113 | |
| Nevada | | | 838 | | | | 222 | |
| | | | | | | |
| West | | | 1,468 | | | | 663 | |
| | | | | | | |
| | | | | | | | | |
| Colorado | | | 688 | | | | 537 | |
| Utah | | | 393 | | | | 117 | |
| | | | | | | |
| Mountain | | | 1,081 | | | | 654 | |
| | | | | | | |
| | | | | | | | | |
| Maryland | | | 745 | | | | 575 | |
| Virginia | | | 132 | | | | 192 | |
| | | | | | | |
| East | | | 877 | | | | 767 | |
| | | | | | | |
| | | | | | | | | |
| Florida | | | 733 | | | | 500 | |
| Illinois | | | — | | | | — | |
| | | | | | | |
| Other Homebuilding | | | 733 | | | | 500 | |
| | | | | | | |
| | | | | | | | | |
| Total | | | 4,159 | | | | 2,584 | |
| | | | | | | |
| | | | | | | | | |
| Total Lots Owned and Controlled | | | 12,194 | | | | 8,967 | |
| | | | | | | |
| | | | | | | | | |
NON-REFUNDABLE OPTION DEPOSITS | | | | | | | | |
| Cash | | $ | 9,019 | | | $ | 7,654 | |
| Letters of Credit | | | 4,467 | | | | 2,134 | |
| | | | | | | |
| Total Non-Refundable Option Deposits | | $ | 13,486 | | | $ | 9,788 | |
| | | | | | | |
12
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | | | | | Year Ended | | | | |
| | | December 31, | | | Change | | | December 31, | | | Change | |
| | | 2010 | | | 2009 | | | Amount | | | % | | | 2010 | | | 2009 | | | Amount | | | % | |
HOMES CLOSED (UNITS) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Arizona | | | 110 | | | | 273 | | | | (163 | ) | | | -60 | % | | | 571 | | | | 778 | | | | (207 | ) | | | -27 | % |
| California | | | 122 | | | | 102 | | | | 20 | | | | 20 | % | | | 298 | | | | 293 | | | | 5 | | | | 2 | % |
| Nevada | | | 117 | | | | 227 | | | | (110 | ) | | | -48 | % | | | 544 | | | | 521 | | | | 23 | | | | 4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| West | | | 349 | | | | 602 | | | | (253 | ) | | | -42 | % | | | 1,413 | | | | 1,592 | | | | (179 | ) | | | -11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Colorado | | | 243 | | | | 202 | | | | 41 | | | | 20 | % | | | 789 | | | | 565 | | | | 224 | | | | 40 | % |
| Utah | | | 106 | | | | 94 | | | | 12 | | | | 13 | % | | | 383 | | | | 230 | | | | 153 | | | | 67 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mountain | | | 349 | | | | 296 | | | | 53 | | | | 18 | % | | | 1,172 | | | | 795 | | | | 377 | | | | 47 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maryland | | | 46 | | | | 68 | | | | (22 | ) | | | -32 | % | | | 231 | | | | 200 | | | | 31 | | | | 16 | % |
| Virginia | | | 70 | | | | 70 | | | | — | | | | 0 | % | | | 236 | | | | 190 | | | | 46 | | | | 24 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| East | | | 116 | | | | 138 | | | | (22 | ) | | | -16 | % | | | 467 | | | | 390 | | | | 77 | | | | 20 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Florida | | | 51 | | | | 73 | | | | (22 | ) | | | -30 | % | | | 193 | | | | 214 | | | | (21 | ) | | | -10 | % |
| Illinois | | | — | | | | — | | | | — | | | | N/M | | | | — | | | | 22 | | | | (22 | ) | | | N/M | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Homebuilding | | | 51 | | | | 73 | | | | (22 | ) | | | -30 | % | | | 193 | | | | 236 | | | | (43 | ) | | | -18 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 865 | | | | 1,109 | | | | (244 | ) | | | -22 | % | | | 3,245 | | | | 3,013 | | | | 232 | | | | 8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AVERAGE SELLING PRICES PER CLOSED HOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
West | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Arizona | | $ | 193.3 | | | $ | 193.5 | | | $ | (0.2 | ) | | | 0 | % | | $ | 195.6 | | | $ | 194.3 | | | $ | 1.3 | | | | 1 | % |
| California | | | 350.3 | | | | 430.9 | | | | (80.6 | ) | | | -19 | % | | | 377.3 | | | | 417.5 | | | | (40.2 | ) | | | -10 | % |
| Nevada | | | 197.6 | | | | 194.5 | | | | 3.1 | | | | 2 | % | | | 190.4 | | | | 201.2 | | | | (10.8 | ) | | | -5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mountain | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Colorado | | | 323.2 | | | | 285.7 | | | | 37.5 | | | | 13 | % | | | 313.9 | | | | 316.5 | | | | (2.6 | ) | | | -1 | % |
| Utah | | | 270.9 | | | | 275.4 | | | | (4.5 | ) | | | -2 | % | | | 272.3 | | | | 287.1 | | | | (14.8 | ) | | | -5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
East | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maryland | | | 407.5 | | | | 447.5 | | | | (40.0 | ) | | | -9 | % | | | 439.4 | | | | 422.4 | | | | 17.0 | | | | 4 | % |
| Virginia | | | 446.0 | | | | 469.3 | | | | (23.3 | ) | | | -5 | % | | | 469.6 | | | | 482.8 | | | | (13.2 | ) | | | -3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other Homebuilding | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Florida | | | 236.5 | | | | 207.8 | | | | 28.7 | | | | 14 | % | | | 232.1 | | | | 214.5 | | | | 17.6 | | | | 8 | % |
| Illinois | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | 313.0 | | | | N/A | | | | N/A | |
| Company Average | | $ | 291.7 | | | $ | 268.4 | | | $ | 23.0 | | | | 9 | % | | $ | 283.8 | | | $ | 277.8 | | | $ | 6.0 | | | | 2 | % |
13
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months | | | | | | | | | | | Year Ended | | | | |
| | | Ended December 31, | | | Change | | | December 31, | | | Change | |
| | | 2010 | | | 2009 | | | Amount | | | % | | | 2010 | | | 2009 | | | Amount | | | % | |
ORDERS FOR HOMES, NET (UNITS) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Arizona | | | 81 | | | | 124 | | | | (43 | ) | | | -35 | % | | | 552 | | | | 723 | | | | (171 | ) | | | -24 | % |
| California | | | 65 | | | | 58 | | | | 7 | | | | 12 | % | | | 301 | | | | 320 | | | | (19 | ) | | | -6 | % |
| Nevada | | | 61 | | | | 94 | | | | (33 | ) | | | -35 | % | | | 532 | | | | 556 | | | | (24 | ) | | | -4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| West | | | 207 | | | | 276 | | | | (69 | ) | | | -25 | % | | | 1,385 | | | | 1,599 | | | | (214 | ) | | | -13 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Colorado | | | 133 | | | | 163 | | | | (30 | ) | | | -18 | % | | | 855 | | | | 700 | | | | 155 | | | | 22 | % |
| Utah | | | 50 | | | | 53 | | | | (3 | ) | | | -6 | % | | | 358 | | | | 282 | | | | 76 | | | | 27 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mountain | | | 183 | | | | 216 | | | | (33 | ) | | | -15 | % | | | 1,213 | | | | 982 | | | | 231 | | | | 24 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maryland | | | 55 | | | | 51 | | | | 4 | | | | 8 | % | | | 231 | | | | 241 | | | | (10 | ) | | | -4 | % |
| Virginia | | | 31 | | | | 49 | | | | (18 | ) | | | -37 | % | | | 233 | | | | 227 | | | | 6 | | | | 3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| East | | | 86 | | | | 100 | | | | (14 | ) | | | -14 | % | | | 464 | | | | 468 | | | | (4 | ) | | | -1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Florida | | | 42 | | | | 45 | | | | (3 | ) | | | -7 | % | | | 198 | | | | 238 | | | | (40 | ) | | | -17 | % |
| Illinois | | | 1 | | | | — | | | | 1 | | | | N/A | | | | 1 | | | | 19 | | | | (18 | ) | | | -95 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Homebuilding | | | 43 | | | | 45 | | | | (2 | ) | | | -4 | % | | | 199 | | | | 257 | | | | (58 | ) | | | -23 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 519 | | | | 637 | | | | (118 | ) | | | -19 | % | | | 3,261 | | | | 3,306 | | | | (45 | ) | | | -1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Value of Orders for Homes, net | | $ | 150,000 | | | $ | 183,000 | | | | (33,000 | ) | | | -18 | % | | $ | 920,000 | | | $ | 935,000 | | | | (15,000 | ) | | | -2 | % |
| Estimated Average Selling Price of Orders for Homes, net | | $ | 289.0 | | | $ | 287.3 | | | | 1.7 | | | | 1 | % | | $ | 282.1 | | | $ | 282.8 | | | | (0.7 | ) | | | 0 | % |
| Cancellation Rate(6) | | | 46 | % | | | 30 | % | | | 16 | % | | | | | | | 30 | % | | | 24 | % | | | 6 | % | | | | |
| | |
| (6) | | We define “Cancellation Rate” as the approximate number of cancelled home order contracts during a reporting period as a percent of total home orders received during such reporting period. |
14
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | |
| | | December 31, | | | December 31, | |
| | | 2010 | | | 2009 | |
BACKLOG (UNITS) | | | | | | | | |
| Arizona | | | 84 | | | | 103 | |
| California | | | 79 | | | | 76 | |
| Nevada | | | 76 | | | | 88 | |
| | | | | | | |
| West | | | 239 | | | | 267 | |
| | | | | | | |
| | | | | | | | | |
| Colorado | | | 273 | | | | 207 | |
| Utah | | | 69 | | | | 94 | |
| | | | | | | |
| Mountain | | | 342 | | | | 301 | |
| | | | | | | |
| | | | | | | | | |
| Maryland | | | 126 | | | | 126 | |
| Virginia | | | 70 | | | | 73 | |
| | | | | | | |
| East | | | 196 | | | | 199 | |
| | | | | | | |
| | | | | | | | | |
| Florida | | | 64 | | | | 59 | |
| Illinois | | | 1 | | | | — | |
| | | | | | | |
| Other Homebuilding | | | 65 | | | | 59 | |
| | | | | | | |
| | | | | | | | | |
| Total | | | 842 | | | | 826 | |
| | | | | | | |
| | | | | | | | | |
| Backlog Estimated Sales Value | | $ | 269,000 | | | $ | 265,000 | |
| | | | | | | |
| Estimated Average Selling Price of Homes in Backlog | | $ | 319.5 | | | $ | 320.8 | |
| | | | | | | |
| | | | | | | | | |
ACTIVE SUBDIVISIONS | | | | | | | | |
| Arizona | | | 26 | | | | 28 | |
| California | | | 13 | | | | 3 | |
| Nevada | | | 18 | | | | 18 | |
| | | | | | | |
| West | | | 57 | | | | 49 | |
| | | | | | | |
| | | | | | | | | |
| Colorado | | | 39 | | | | 42 | |
| Utah | | | 19 | | | | 16 | |
| | | | | | | |
| Mountain | | | 58 | | | | 58 | |
| | | | | | | |
| | | | | | | | | |
| Maryland | | | 14 | | | | 9 | |
| Virginia | | | 8 | | | | 7 | |
| | | | | | | |
| East | | | 22 | | | | 16 | |
| | | | | | | |
| | | | | | | | | |
| Florida | | | 11 | | | | 10 | |
| Illinois | | | — | | | | — | |
| | | | | | | |
| Other Homebuilding | | | 11 | | | | 10 | |
| | | | | | | |
| |
| Total | | | 148 | | | | 133 | |
| | | | | | | |
15
M.D.C. HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measure
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months | | | Year Ended | |
| | | Ended December 31, | | | Ended December 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Home Sales Revenue — As reported | | $ | 252,302 | | | $ | 297,702 | | | $ | 921,022 | | | $ | 837,054 | |
| | | | | | | | | | | | | | | | | |
| Home Cost of Sales — As reported | | $ | 209,434 | | | $ | 241,815 | | | $ | 745,085 | | | $ | 686,854 | |
| Warranty Adjustments | | | (8,042 | ) | | | (2,422 | ) | | | (20,845 | ) | | | (27,783 | ) |
| Interest in Cost of Sales | | | 6,827 | | | | 6,874 | | | | 23,812 | | | | 30,710 | |
| | | | | | | | | | | | | |
| Home Cost of Sales — Excluding Warranty Adjustments and Interest | | $ | 210,649 | | | $ | 237,363 | | | $ | 742,118 | | | $ | 683,927 | |
| | | | | | | | | | | | | |
| Home Gross Margins — Excluding Warranty Adjustments and Interest (7) | | | 16.5 | % | | | 20.3 | % | | | 19.4 | % | | | 18.3 | % |
| | |
| (7) | | Home Gross Margins excluding the impact of warranty adjustments and interest in cost of sales is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that warranty adjustments and interest have on our Home Gross Margins. |
16
