NEWS BULLETIN
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M.D.C. HOLDINGS, INC. | | RICHMOND AMERICAN HOMES |
| | | HOMEAMERICAN MORTGAGE |
FOR IMMEDIATE RELEASE
WEDNESDAY, JULY 25, 2007
| | | | | | | |
| Contacts: | | Paris G. Reece III | | Robert N. Martin | | Joëlle Lipski-Rockwood |
| | | Chief Financial Officer | | Investor Relations | | Corporate Communications |
| | | (303) 804-7706 | | (720) 977-3431 | | (720) 977-3204 |
| | | greece@mdch.com | | bob.martin@mdch.com | | joelle.lipski-rockwood@mdch.com |
M.D.C. HOLDINGS ANNOUNCES SECOND QUARTER 2007 RESULTS
| | • | | Net loss of $106.1 million; diluted loss per share of $2.32 |
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| | • | | Pre-tax loss of $171.0 million; includes asset impairments and project cost write-offs of $167.5 million |
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| | • | | Cash flow from operations of $50.0 million; $674.6 million over last 12 months |
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| | • | | Quarter-end cash of $668 million; no borrowings on homebuilding line of credit |
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| | • | | Ending cash and available borrowing capacity of $1.89 billion |
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| | • | | Only 423 finished speculative homes in inventory at quarter-end |
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| | • | | Total revenue of $716.7 million; $1.23 billion in 2006 |
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| | • | | Closed 2,031 homes at an average selling price of $338,700 |
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| | • | | Net orders for 1,970 homes with an estimated value of $653.0 million |
DENVER, Wednesday, July 25, 2007 — M.D.C. Holdings, Inc. (NYSE: MDC) today announced a net loss for the quarter ended June 30, 2007 of $106.1 million, or $2.32 per diluted share, which included pre-tax charges of $161.1 million for asset impairments and $6.4 million for write-offs of deposits and pre-acquisition costs associated with land option contracts the Company does not intend to pursue. Net income for the second quarter of 2006 was $76.5 million, or $1.66 per diluted share, including pre-tax charges of $12.1 million for write-offs of deposits and pre-acquisition costs. Total revenue for the second quarter was $716.7 million, compared with revenue of $1.23 billion for the same period in 2006.
Net loss for the six months ended June 30, 2007 was $200.5 million, or $4.40 per diluted share, which included pre-tax charges of $302.5 million for asset impairments and $10.5 million for write-offs of deposits and pre-acquisition costs associated with land option contracts the Company does not intend to pursue. Net income for the first six months of 2006 was $171.9 million, or $3.74 per diluted share, including pre-tax charges of $15.8 million for write-
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M.D.C.HOLDINGS, INC.
offs of deposits and pre-acquisition costs. Total revenue for the 2007 first six months was $1.46 billion, compared with revenue of $2.38 billion for the same period in 2006.
Larry A. Mizel, MDC’s chairman and chief executive officer, stated, “While industry conditions deteriorated further in all of our markets throughout the 2007 second quarter, we made significant strides, both operationally and financially, in positioning our Company to take advantage of opportunities that may be presented when these markets begin to stabilize and recover.”
Mizel concluded, “Our continuing focus on conforming our operating and administrative infrastructure to changes in demand levels in each of our markets resulted in a year-over-year reduction in our total second quarter general and administrative expense of more than $35 million. Adding to the strength of our investment grade balance sheet, we reduced our lot supply by 15% in the second quarter alone, which enabled us to generate almost $160 million in cash flow from a decrease in our land inventory. At the same time, we minimized our incremental investment in work-in-process inventory by closely monitoring our supply of unsold homes. The combination of these efforts enabled us to generate $50 million in operating cash flow this quarter, raising our cumulative total over the last twelve months to $675 million. As a result, we ended the quarter with $668 million in cash and no borrowings under our $1.25 billion homebuilding line of credit, contributing to a 44% year-over-year increase in our cash and available borrowing capacity.”
Homebuilding Results
Homebuilding loss before taxes for the quarter and six months ended June 30, 2007 was $171.3 million and $310.3 million, respectively, compared with income before taxes of $132.5 million and $303.4 million for the same periods in 2006. The pre-tax differences were driven in large part by the asset impairment charges discussed above, as well as significant declines in home closings and home gross margins from the second quarter and six month levels achieved during the same periods in 2006. These income decreases were offset partially by the impact of reduced homebuilding commissions, marketing, general and administrative expense (“SG&A”).
The Company closed 2,031 homes and produced home gross margins of 14.1% in the 2007 second quarter, compared with 3,376 home closings and home gross margins of 23.3% for the comparable period in 2006. For the six months ended June 30, 2007, the Company closed 4,032 homes and produced home gross margins of 15.0%, compared with 6,574 home closings and 25.1% home gross margins for the six months ended June 30, 2006. Average selling prices were $338,700 and $347,100, respectively, for the quarter and six months ended June 30, 2007, down $13,400 and $3,600 from the same periods in 2006. Homebuilding SG&A decreased to $111.6 million and $224.9 million, respectively, for the three and six months ended June 30, 2007, compared with $147.8 million and $281.3 million for the same periods in the prior year.
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M.D.C.HOLDINGS, INC.
Paris G. Reece III, MDC’s executive vice president and chief financial officer, said, “In the 2007 second quarter, we recognized impairments to land inventory and work-in-process inventory of $123 million and $38 million, respectively, as the high level of competition for new home orders caused us to reduce prices, increase incentives and, as a result, decrease our performance expectations with respect to certain subdivisions. As in the prior three quarters, the largest impairments occurred in California, which accounted for almost 50% of the total charge. Outside of California, the impairments occurred primarily in Arizona, Nevada, Florida and Colorado. In total, more than 4,400 lots in 83 subdivisions were impaired. The quarter-end book value of the impaired subdivisions after the impairments was $448 million, including $190 million of land and $258 million of work-in-process. Over the last twelve months, we have impaired approximately 40% of the 21,000 lots we owned at the end of our 2007 second quarter.”
Financial Services and Other Results
Income before taxes from the Company’s Financial Services and Other segment for the quarter and six months ended June 30, 2007 was $4.2 million and $11.8 million, respectively, compared with $11.0 million and $22.2 million for the same periods in the previous year. The decrease for both periods primarily resulted from lower gains on sales of mortgage loans, as the dollar volumes of mortgage loan originations and mortgage loans sold declined in line with builder home closings. Additionally, in an effort to reduce its exposure to the risks inherent in holding mortgage loans, the Company shifted to a less profitable loan sales strategy during the quarter.
Home Orders and Backlog
MDC received orders, net of cancellations, for 1,970 homes with an estimated sales value of $653 million during the 2007 second quarter, compared with net orders for 2,738 homes with an estimated sales value of $914 million during the same period in 2006. For the six months ended June 30, 2007, the Company received net orders for 4,528 homes with a sales value of $1.56 billion, compared with 6,538 homes with a sales value of $2.27 billion for the six months ended June 30, 2006. Net home orders in the 2007 second quarter declined year-over-year in all of the Company’s markets except Illinois, with the largest unit decreases occurring in the Mountain and West homebuilding segments. During the second quarter and first six months of 2007, the Company’s approximate order cancellation rates of 44% and 39%, respectively, were consistent with the 43% and 37% rates experienced during the same periods in 2006. The Company ended the second quarter of 2007 with a backlog of 4,134 homes with an estimated sales value of $1.48 billion, compared with a backlog of 6,496 homes with an estimated sales value of $2.44 billion at June 30, 2006.
MDC, whose subsidiaries build homes under the name “Richmond American Homes,” is one of the top ten homebuilders in the United States, based on 2006 revenue. The Company also provides mortgage financing, primarily for MDC’s homebuyers, through its wholly owned
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M.D.C.HOLDINGS, INC.
subsidiary HomeAmerican Mortgage Corporation. MDC, a Fortune 500 Company, is a major regional homebuilder with a significant presence in Colorado, Jacksonville, Las Vegas, Maryland, Northern California, Northern Virginia, Phoenix, Salt Lake City, Southern California and Tucson. MDC also has established operating divisions in Chicago, Philadelphia/Delaware Valley and West Florida. For more information about our Company, please visit RichmondAmerican.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 and business conditions, including changes in cancellation rates, net home orders, home gross margins, and land and home values; (2) changes in interest rates and mortgage lending programs; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) the availability and cost of performance bonds and insurance covering risks associated with our business; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow growth initiatives; (10) building moratoria; (11) governmental regulation, including the interpretation of tax, labor and environmental laws; (12) changes in consumer confidence and preferences; (13) required accounting changes; (14) terrorist acts and other acts of war; and (15) 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 Annual Report on Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter ended March 31, 2007, which were filed with the Securities and Exchange Commission. 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 publicly update 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 presentations should be consulted.
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M.D.C. HOLDINGS, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
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| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
REVENUE | | | | | | | | | | | | | | | | |
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| Home sales revenue | | $ | 687,813 | | | $ | 1,188,561 | | | $ | 1,399,613 | | | $ | 2,305,716 | |
| Land sales revenue | | | 3,417 | | | | 13,639 | | | | 9,451 | | | | 15,476 | |
| Other revenue | | | 25,478 | | | | 29,781 | | | | 52,768 | | | | 56,214 | |
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| Total Revenue | | | 716,708 | | | | 1,231,981 | | | | 1,461,832 | | | | 2,377,406 | |
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COSTS AND EXPENSES | | | | | | | | | | | | | | | | |
| Home cost of sales | | | 590,564 | | | | 911,707 | | | | 1,189,763 | | | | 1,726,557 | |
| Land cost of sales | | | 2,181 | | | | 13,140 | | | | 7,288 | | | | 14,914 | |
| Asset impairments | | | 161,050 | | | | 260 | | | | 302,472 | | | | 860 | |
| Marketing expenses | | | 29,371 | | | | 31,568 | | | | 58,450 | | | | 60,603 | |
| Commission expenses | | | 24,380 | | | | 37,394 | | | | 47,630 | | | | 70,237 | |
| General and administrative expenses | | | 80,090 | | | | 115,551 | | | | 170,747 | | | | 226,816 | |
| Related party expenses | | | 100 | | | | 127 | | | | 191 | | | | 2,704 | |
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| Total Costs and Expenses | | | 887,736 | | | | 1,109,747 | | | | 1,776,541 | | | | 2,102,691 | |
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| (Loss) income before income taxes | | | (171,028 | ) | | | 122,234 | | | | (314,709 | ) | | | 274,715 | |
| Benefit from (provision for) income taxes | | | 64,956 | | | | (45,743 | ) | | | 114,239 | | | | (102,803 | ) |
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NET (LOSS) INCOME | | $ | (106,072 | ) | | $ | 76,491 | | | $ | (200,470 | ) | | $ | 171,912 | |
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(LOSS) EARNINGS PER SHARE | | | | | | | | | | | | | | | | |
| Basic | | $ | (2.32 | ) | | $ | 1.70 | | | $ | (4.40 | ) | | $ | 3.83 | |
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| Diluted | | $ | (2.32 | ) | | $ | 1.66 | | | $ | (4.40 | ) | | $ | 3.74 | |
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WEIGHTED-AVERAGE SHARES | | | | | | | | | | | | | | | | |
| Basic | | | 45,722 | | | | 44,939 | | | | 45,612 | | | | 44,880 | |
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| Diluted | | | 45,722 | | | | 45,972 | | | | 45,612 | | | | 45,967 | |
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DIVIDENDS DECLARED PER SHARE | | $ | 0.25 | | | $ | 0.25 | | | $ | 0.50 | | | $ | 0.50 | |
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M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)
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| | | June 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 668,379 | | | $ | 507,947 | |
| Restricted cash | | | 2,176 | | | | 2,641 | |
| Home sales and other receivables | | | 87,823 | | | | 143,936 | |
| Mortgage loans held in inventory, net | | | 125,717 | | | | 212,903 | |
| Inventories | | | | | | | | |
| Housing completed or under construction | | | 1,273,042 | | | | 1,178,671 | |
| Land and land under development | | | 1,061,884 | | | | 1,575,158 | |
| Property and equipment, net | | | 38,983 | | | | 44,606 | |
| Deferred income taxes | | | 229,291 | | | | 124,880 | |
| Prepaid expenses and other assets, net | | | 98,406 | | | | 119,133 | |
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| | | | | | | | | |
| Total Assets | | $ | 3,585,701 | | | $ | 3,909,875 | |
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LIABILITIES | | | | | | | | |
| Accounts payable | | $ | 161,208 | | | $ | 171,005 | |
| Accrued liabilities | | | 361,154 | | | | 418,953 | |
| Income taxes payable | | | — | | | | 28,485 | |
| Related party liabilities | | | 701 | | | | 2,401 | |
| Homebuilding line of credit | | | — | | | | — | |
| Mortgage line of credit | | | 99,411 | | | | 130,467 | |
| Senior notes, net | | | 996,883 | | | | 996,682 | |
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| Total Liabilities | | | 1,619,357 | | | | 1,747,993 | |
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COMMITMENTS AND CONTINGENCIES | | | — | | | | — | |
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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; 45,866,000 and 45,841,000 issued and outstanding, respectively, at June 30, 2007 and 45,179,000 and 45,165,000 issued and outstanding, respectively, at December 31, 2006 | | | 458 | | | | 452 | |
| Additional paid-in capital | | | 788,316 | | | | 760,831 | |
| Retained earnings | | | 1,179,232 | | | | 1,402,261 | |
| Accumulated other comprehensive loss | | | (1,003 | ) | | | (1,003 | ) |
| Less treasury stock, at cost; 25,000 and 14,000 shares, respectively, at June 30, 2007 and December 31, 2006 | | | (659 | ) | | | (659 | ) |
| | | | | | | |
| Total Stockholders’ Equity | | | 1,966,344 | | | | 2,161,882 | |
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| Total Liabilities and Stockholders’ Equity | | $ | 3,585,701 | | | $ | 3,909,875 | |
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M.D.C. HOLDINGS, INC.
Information on Segments
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
REVENUE | | | | | | | | | | | | | | | | |
| Homebuilding | | | | | | | | | | | | | | | | |
| West | | $ | 433,049 | | | $ | 720,530 | | | $ | 887,703 | | | $ | 1,407,776 | |
| Mountain | | | 134,670 | | | | 187,724 | | | | 279,861 | | | | 350,914 | |
| East | | | 71,800 | | | | 160,534 | | | | 133,155 | | | | 307,715 | |
| Other Homebuilding | | | 58,971 | | | | 142,859 | | | | 123,831 | | | | 268,746 | |
| | | | | | | | | | | | | |
| Total Homebuilding | | | 698,490 | | | | 1,211,647 | | | | 1,424,550 | | | | 2,335,151 | |
| Financial Services and Other | | | 13,614 | | | | 26,673 | | | | 33,184 | | | | 50,315 | |
| Corporate | | | 9,029 | | | | 183 | | | | 14,462 | | | | 615 | |
| Inter-company Adjustments | | | (4,425 | ) | | | (6,522 | ) | | | (10,364 | ) | | | (8,675 | ) |
| | | | | | | | | | | | | |
| Consolidated | | $ | 716,708 | | | $ | 1,231,981 | | | $ | 1,461,832 | | | $ | 2,377,406 | |
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(LOSS) INCOME BEFORE INCOME TAXES | | | | | | | | | | | | | | | | |
| Homebuilding | | | | | | | | | | | | | | | | |
| West | | $ | (139,239 | ) | | $ | 98,817 | | | $ | (264,630 | ) | | $ | 220,880 | |
| Mountain | | | (6,828 | ) | | | 7,228 | | | | 4,143 | | | | 15,863 | |
| East | | | (6,784 | ) | | | 26,462 | | | | (11,170 | ) | | | 61,780 | |
| Other Homebuilding | | | (18,487 | ) | | | 15 | | | | (38,618 | ) | | | 4,897 | |
| | | | | | | | | | | | | |
| Total Homebuilding | | | (171,338 | ) | | | 132,522 | | | | (310,275 | ) | | | 303,420 | |
| Financial Services and Other | | | 4,241 | | | | 10,988 | | | | 11,758 | | | | 22,172 | |
| Corporate | | | (3,931 | ) | | | (21,276 | ) | | | (16,192 | ) | | | (50,877 | ) |
| | | | | | | | | | | | | |
| Consolidated | | $ | (171,028 | ) | | $ | 122,234 | | | $ | (314,709 | ) | | $ | 274,715 | |
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ASSET IMPAIRMENTS | | | | | | | | | | | | | | | | |
| West | | $ | 132,730 | | | $ | — | | | $ | 254,634 | | | $ | — | |
| Mountain | | | 9,123 | | | | — | | | | 9,777 | | | | — | |
| East | | | 5,865 | | | | — | | | | 8,432 | | | | — | |
| Other Homebuilding | | | 13,332 | | | | 260 | | | | 29,629 | | | | 860 | |
| | | | | | | | | | | | | |
| Total Homebuilding | | $ | 161,050 | | | $ | 260 | | | $ | 302,472 | | | $ | 860 | |
| | | | | | | | | | | | | |
| Realized Benefit of Prior-Period | | | | | | | | | | | | | | | | |
| Asset Impairments | | $ | 18,793 | | | $ | — | | | $ | 28,006 | | | $ | — | |
| | | | | | | | | |
| | | June 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
TOTAL ASSETS | | | | | | | | |
| West | | $ | 1,438,028 | | | $ | 1,869,442 | |
| Mountain | | | 545,487 | | | | 535,554 | |
| East | | | 313,380 | | | | 333,902 | |
| Other Homebuilding | | | 208,654 | | | | 266,326 | |
| | | | | | | |
| Total Homebuilding | | | 2,505,549 | | | | 3,005,224 | |
| Financial Services and Other | | | 196,655 | | | | 284,791 | |
| Corporate | | | 924,354 | | | | 657,917 | |
| Inter-company | | | (40,857 | ) | | | (38,057 | ) |
| | | | | | | |
| Consolidated | | $ | 3,585,701 | | | $ | 3,909,875 | |
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M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | | | | Six Months Ended | | |
| | | June 30, | | Change | | June 30, | | Change |
| | | 2007 | | 2006 | | Amount | | % | | 2007 | | 2006 | | Amount | | % |
SELECTED FINANCIAL DATA | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| General and Administrative Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Homebuilding Operations | | $ | 57,859 | | | $ | 78,821 | | | $ | (20,962 | ) | | | -27 | % | | $ | 118,858 | | | $ | 150,503 | | | $ | (31,645 | ) | | | -21 | % |
| Financial Services and Other Operations | | $ | 9,367 | | | $ | 15,397 | | | $ | (6,030 | ) | | | -39 | % | | $ | 21,425 | | | $ | 27,525 | | | $ | (6,100 | ) | | | -22 | % |
| Corporate (1) | | $ | 12,964 | | | $ | 21,459 | | | $ | (8,495 | ) | | | -40 | % | | $ | 30,655 | | | $ | 51,492 | | | $ | (20,837 | ) | | | -40 | % |
| SG&A as a % of Home Sales Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Homebuilding Operations | | | 16.2 | % | | | 12.4 | % | | | 3.8 | % | | | | | | | 16.1 | % | | | 12.2 | % | | | 3.9 | % | | | | |
| Corporate (1) | | | 1.9 | % | | | 1.8 | % | | | 0.1 | % | | | | | | | 2.2 | % | | | 2.2 | % | | | 0.0 | % | | | | |
| Depreciation and Amortization | | $ | 10,397 | | | $ | 14,881 | | | $ | (4,484 | ) | | | -30 | % | | $ | 22,217 | | | $ | 28,509 | | | $ | (6,292 | ) | | | -22 | % |
| Home Gross Margins (2) | | | 14.1 | % | | | 23.3 | % | | | -9.2 | % | | | | | | | 15.0 | % | | | 25.1 | % | | | -10.1 | % | | | | |
| Cash Provided by (Used in) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating Activities | | $ | 49,999 | | | $ | (3,828 | ) | | $ | 53,827 | | | | | | | $ | 199,322 | | | $ | (112,271 | ) | | $ | 311,593 | | | | | |
| Cash Used in Investing Activities | | $ | (1,345 | ) | | $ | (2,693 | ) | | $ | 1,348 | | | | | | | $ | (2,055 | ) | | $ | (4,331 | ) | | $ | 2,276 | | | | | |
| Cash Used in Financing Activities | | $ | (10,956 | ) | | $ | (67,734 | ) | | $ | 56,778 | | | | | | | $ | (36,835 | ) | | $ | (6,445 | ) | | $ | (30,390 | ) | | | | |
| Ending Unrestricted Cash and Available Borrowing Capacity | | $ | 1,888,793 | | | $ | 1,311,515 | | | $ | 577,278 | | | | 44 | % | | | | | | | | | | | | | | | | |
| Corporate and Homebuilding Interest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Capitalized During the Period | | $ | 14,435 | | | $ | 15,006 | | | $ | (571 | ) | | | -4 | % | | $ | 28,876 | | | $ | 29,843 | | | $ | (967 | ) | | | -3 | % |
| Interest Included in Home Cost of Sales for the Period | | $ | 12,258 | | | $ | 13,659 | | | $ | (1,401 | ) | | | -10 | % | | $ | 25,543 | | | $ | 23,273 | | | $ | 2,270 | | | | 10 | % |
| Interest in Home Cost of Sales as a % of Home Sales Revenue | | | 1.8 | % | | | 1.2 | % | | | 0.6 | % | | | | | | | 1.8 | % | | | 1.0 | % | | | 0.8 | % | | | | |
| Interest Capitalized in Inventories at End of Period | | $ | 53,988 | | | $ | 48,569 | | | $ | 5,419 | | | | 11 | % | | | | | | | | | | | | | | | | |
| | |
| (1) | | Includes related party expenses. |
| |
| (2) | | 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. |
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M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | | | | Six Months Ended | | |
| | | June 30, | | Change | | June 30, | | Change |
| | | 2007 | | 2006 | | Amount | | % | | 2007 | | 2006 | | Amount | | % |
HOMEAMERICAN OPERATING ACTIVITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal Amount of Mortgage Loans Originated | | $ | 293,544 | | | $ | 604,419 | | | $ | (310,875 | ) | | | -51 | % | | $ | 644,577 | | | $ | 1,130,650 | | | $ | (486,073 | ) | | | -43 | % |
| Principal Amount of Mortgage Loans Brokered | | $ | 127,892 | | | $ | 171,847 | | | $ | (43,955 | ) | | | -26 | % | | $ | 246,233 | | | $ | 329,090 | | | $ | (82,857 | ) | | | -25 | % |
| Capture Rate | | | 52 | % | | | 59 | % | | | -7 | % | | | | | | | 55 | % | | | 57 | % | | | -2 | % | | | | |
| Including Brokered Loans | | | 72 | % | | | 75 | % | | | -3 | % | | | | | | | 74 | % | | | 73 | % | | | 1 | % | | | | |
| Mortgage Products (% of Loans Originated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed Rate | | | 83 | % | | | 49 | % | | | 34 | % | | | | | | | 76 | % | | | 49 | % | | | 27 | % | | | | |
| Adjustable Rate — Interest Only | | | 14 | % | | | 43 | % | | | -29 | % | | | | | | | 20 | % | | | 44 | % | | | -24 | % | | | | |
| Adjustable Rate — Other | | | 3 | % | | | 8 | % | | | -5 | % | | | | | | | 4 | % | | | 7 | % | | | -3 | % | | | | |
| Prime Loans (3) | | | 86 | % | | | 61 | % | | | 25 | % | | | | | | | 73 | % | | | 64 | % | | | 9 | % | | | | |
| Alt-A Loans (4) | | | 5 | % | | | 33 | % | | | -28 | % | | | | | | | 20 | % | | | 30 | % | | | -10 | % | | | | |
| Government Loans (5) | | | 9 | % | | | 4 | % | | | 5 | % | | | | | | | 7 | % | | | 4 | % | | | 3 | % | | | | |
| Sub-Prime Loans (6) | | | 0 | % | | | 2 | % | | | -2 | % | | | | | | | 0 | % | | | 2 | % | | | -2 | % | | | | |
| | |
| (3) | | Prime loans are defined as loans with Fair, Isaac and Company (“FICO”) scores greater than 620 and that comply in all ways with the documentation standards of the government sponsored enterprise guidelines. |
| |
| (4) | | Alt-A loans are defined as loans that would otherwise qualify as prime loans except that they do not comply in all ways with 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. |
| |
| (6) | | Sub-prime loans are loans that have FICO scores of less than or equal to 620. |
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M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | |
| | | June 30, | | | December 31, | | | June 30, | |
| | | 2007 | | | 2006 | | | 2006 | |
HOMES COMPLETED OR UNDER CONSTRUCTION | | | | | | | | | | | | |
| Unsold Homes Under Construction — Final | | | 423 | | | | 476 | | | | 279 | |
| Unsold Homes Under Construction — Frame | | | 690 | | | | 573 | | | | 781 | |
| Unsold Homes Under Construction — Foundation | | | 382 | | | | 400 | | | | 395 | |
| | | | | | | | | | |
| Total Unsold Homes Under Construction | | | 1,495 | | | | 1,449 | | | | 1,455 | |
| Sold Homes Under Construction | | | 3,095 | | | | 2,430 | | | | 4,699 | |
| Model Homes | | | 764 | | | | 757 | | | | 720 | |
| | | | | | | | | | |
| Homes Completed or Under Construction | | | 5,354 | | | | 4,636 | | | | 6,874 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
LOTS OWNED(excluding homes completed or under construction) | | | | | | | | | | | | |
| Arizona | | | 4,771 | | | | 6,368 | | | | 7,477 | |
| California | | | 2,182 | | | | 2,802 | | | | 3,391 | |
| Nevada | | | 2,038 | | | | 2,747 | | | | 3,619 | |
| | | | | | | | | | |
| West | | | 8,991 | | | | 11,917 | | | | 14,487 | |
| | | | | | | | | | |
| Colorado | | | 3,052 | | | | 3,479 | | | | 3,390 | |
| Utah | | | 933 | | | | 1,185 | | | | 1,159 | |
| | | | | | | | | | |
| Mountain | | | 3,985 | | | | 4,664 | | | | 4,549 | |
| | | | | | | | | | |
| Maryland | | | 389 | | | | 528 | | | | 558 | |
| Virginia | | | 542 | | | | 643 | | | | 822 | |
| | | | | | | | | | |
| East | | | 931 | | | | 1,171 | | | | 1,380 | |
| | | | | | | | | | |
| Delaware Valley | | | 212 | | | | 265 | | | | 372 | |
| Florida | | | 907 | | | | 1,093 | | | | 1,307 | |
| Illinois | | | 233 | | | | 287 | | | | 312 | |
| Texas | | | — | | | | 13 | | | | 77 | |
| | | | | | | | | | |
| Other Homebuilding | | | 1,352 | | | | 1,658 | | | | 2,068 | |
| | | | | | | | | | |
| Total | | | 15,259 | | | | 19,410 | | | | 22,484 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
LOTS UNDER OPTION | | | | | | | | | | | | |
| Arizona | | | 548 | | | | 744 | | | | 2,506 | |
| California | | | 157 | | | | 387 | | | | 1,510 | |
| Nevada | | | 4 | | | | 250 | | | | 568 | |
| | | | | | | | | | |
| West | | | 709 | | | | 1,381 | | | | 4,584 | |
| | | | | | | | | | |
| Colorado | | | 312 | | | | 801 | | | | 1,785 | |
| Utah | | | 93 | | | | 91 | | | | 553 | |
| | | | | | | | | | |
| Mountain | | | 405 | | | | 892 | | | | 2,338 | |
| | | | | | | | | | |
| Maryland | | | 925 | | | | 960 | | | | 1,156 | |
| Virginia | | | 1,894 | | | | 2,381 | | | | 2,642 | |
| | | | | | | | | | |
| East | | | 2,819 | | | | 3,341 | | | | 3,798 | |
| | | | | | | | | | |
| Delaware Valley | | | 741 | | | | 683 | | | | 966 | |
| Florida | | | 1,073 | | | | 1,800 | | | | 2,367 | |
| Illinois | | | — | | | | — | | | | 139 | |
| Texas | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| Other Homebuilding | | | 1,814 | | | | 2,483 | | | | 3,472 | |
| | | | | | | | | | |
| Total | | | 5,747 | | | | 8,097 | | | | 14,192 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Non-refundable Option Deposits | | | | | | | | | | | | |
| Cash | | $ | 11,009 | | | $ | 20,228 | | | $ | 37,993 | |
| Letters of Credit | | | 11,850 | | | | 14,224 | | | | 17,640 | |
| | | | | | | | | | |
| Total Non-refundable Option Deposits | | $ | 22,859 | | | $ | 34,452 | | | $ | 55,633 | |
| | | | | | | | | | |
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M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | | | | | Six Months Ended | | | | |
| | | June 30, | | | Change | | | June 30, | | | Change | |
| | | 2007 | | | 2006 | | | Amount | | | % | | | 2007 | | | 2006 | | | Amount | | | % | |
HOMES CLOSED (UNITS) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Arizona | | | 645 | | | | 843 | | | | (198 | ) | | | -23 | % | | | 1,297 | | | | 1,621 | | | | (324 | ) | | | -20 | % |
| California | | | 266 | | | | 405 | | | | (139 | ) | | | -34 | % | | | 594 | | | | 869 | | | | (275 | ) | | | -32 | % |
| Nevada | | | 405 | | | | 738 | | | | (333 | ) | | | -45 | % | | | 718 | | | | 1,413 | | | | (695 | ) | | | -49 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| West | | | 1,316 | | | | 1,986 | | | | (670 | ) | | | -34 | % | | | 2,609 | | | | 3,903 | | | | (1,294 | ) | | | -33 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Colorado | | | 200 | | | | 421 | | | | (221 | ) | | | -52 | % | | | 364 | | | | 820 | | | | (456 | ) | | | -56 | % |
| Utah | | | 178 | | | | 201 | | | | (23 | ) | | | -11 | % | | | 406 | | | | 374 | | | | 32 | | | | 9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mountain | | | 378 | | | | 622 | | | | (244 | ) | | | -39 | % | | | 770 | | | | 1,194 | | | | (424 | ) | | | -36 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maryland | | | 61 | | | | 112 | | | | (51 | ) | | | -46 | % | | | 110 | | | | 186 | | | | (76 | ) | | | -41 | % |
| Virginia | | | 76 | | | | 171 | | | | (95 | ) | | | -56 | % | | | 144 | | | | 348 | | | | (204 | ) | | | -59 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| East | | | 137 | | | | 283 | | | | (146 | ) | | | -52 | % | | | 254 | | | | 534 | | | | (280 | ) | | | -52 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Delaware Valley | | | 35 | | | | 41 | | | | (6 | ) | | | -15 | % | | | 81 | | | | 72 | | | | 9 | | | | 13 | % |
| Florida | | | 138 | | | | 255 | | | | (117 | ) | | | -46 | % | | | 266 | | | | 507 | | | | (241 | ) | | | -48 | % |
| Illinois | | | 13 | | | | 37 | | | | (24 | ) | | | -65 | % | | | 27 | | | | 73 | | | | (46 | ) | | | -63 | % |
| Texas | | | 14 | | | | 152 | | | | (138 | ) | | | -91 | % | | | 25 | | | | 291 | | | | (266 | ) | | | -91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Homebuilding | | | 200 | | | | 485 | | | | (285 | ) | | | -59 | % | | | 399 | | | | 943 | | | | (544 | ) | | | -58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 2,031 | | | | 3,376 | | | | (1,345 | ) | | | -40 | % | | | 4,032 | | | | 6,574 | | | | (2,542 | ) | | | -39 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVERAGE SELLING PRICES PER HOME CLOSED | | | | | | | | | | | | | | | | | | | | |
| Arizona | | $ | 253.1 | | | $ | 313.6 | | | $ | (60.5 | ) | | | -19 | % | | $ | 257.8 | | | $ | 300.0 | | | $ | (42.2 | ) | | | -14 | % |
| California | | | 534.6 | | | | 574.5 | | | | (39.9 | ) | | | -7 | % | | | 537.6 | | | | 552.5 | | | | (14.9 | ) | | | -3 | % |
| Colorado | | | 326.5 | | | | 308.3 | | | | 18.2 | | | | 6 | % | | | 338.2 | | | | 302.6 | | | | 35.6 | | | | 12 | % |
| Delaware Valley | | | 439.9 | | | | 387.5 | | | | 52.4 | | | | 14 | % | | | 468.1 | | | | 398.0 | | | | 70.1 | | | | 18 | % |
| Florida | | | 260.1 | | | | 293.5 | | | | (33.4 | ) | | | -11 | % | | | 270.1 | | | | 295.6 | | | | (25.5 | ) | | | -9 | % |
| Illinois | | | 412.0 | | | | 374.5 | | | | 37.5 | | | | 10 | % | | | 359.8 | | | | 369.0 | | | | (9.2 | ) | | | -2 | % |
| Maryland | | | 513.4 | | | | 573.9 | | | | (60.5 | ) | | | -11 | % | | | 521.2 | | | | 572.5 | | | | (51.3 | ) | | | -9 | % |
| Nevada | | | 304.2 | | | | 320.9 | | | | (16.7 | ) | | | -5 | % | | | 304.7 | | | | 321.9 | | | | (17.2 | ) | | | -5 | % |
| Texas | | | 126.3 | | | | 166.8 | | | | (40.5 | ) | | | -24 | % | | | 130.4 | | | | 167.9 | | | | (37.5 | ) | | | -22 | % |
| Utah | | | 369.2 | | | | 291.5 | | | | 77.7 | | | | 27 | % | | | 358.4 | | | | 277.3 | | | | 81.1 | | | | 29 | % |
| Virginia | | | 497.8 | | | | 573.3 | | | | (75.5 | ) | | | -13 | % | | | 495.1 | | | | 584.9 | | | | (89.8 | ) | | | -15 | % |
| Company Average | | $ | 338.7 | | | $ | 352.1 | | | $ | (13.4 | ) | | | -4 | % | | $ | 347.1 | | | $ | 350.7 | | | $ | (3.6 | ) | | | -1 | % |
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M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | | | | | Six Months Ended | | | | |
| | | June 30, | | | Change | | | June 30, | | | Change | |
| | | 2007 | | | 2006 | | | Amount | | | % | | | 2007 | | | 2006 | | | Amount | | | % | |
ORDERS FOR HOMES, NET (UNITS) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Arizona | | | 611 | | | | 679 | | | | (68 | ) | | | -10 | % | | | 1,365 | | | | 1,598 | | | | (233 | ) | | | -15 | % |
| California | | | 282 | | | | 392 | | | | (110 | ) | | | -28 | % | | | 697 | | | | 936 | | | | (239 | ) | | | -26 | % |
| Nevada | | | 365 | | | | 519 | | | | (154 | ) | | | -30 | % | | | 745 | | | | 1,298 | | | | (553 | ) | | | -43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| West | | | 1,258 | | | | 1,590 | | | | (332 | ) | | | -21 | % | | | 2,807 | | | | 3,832 | | | | (1,025 | ) | | | -27 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Colorado | | | 224 | | | | 291 | | | | (67 | ) | | | -23 | % | | | 524 | | | | 742 | | | | (218 | ) | | | -29 | % |
| Utah | | | 139 | | | | 326 | | | | (187 | ) | | | -57 | % | | | 349 | | | | 665 | | | | (316 | ) | | | -48 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mountain | | | 363 | | | | 617 | | | | (254 | ) | | | -41 | % | | | 873 | | | | 1,407 | | | | (534 | ) | | | -38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maryland | | | 92 | | | | 98 | | | | (6 | ) | | | -6 | % | | | 191 | | | | 250 | | | | (59 | ) | | | -24 | % |
| Virginia | | | 82 | | | | 113 | | | | (31 | ) | | | -27 | % | | | 194 | | | | 307 | | | | (113 | ) | | | -37 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| East | | | 174 | | | | 211 | | | | (37 | ) | | | -18 | % | | | 385 | | | | 557 | | | | (172 | ) | | | -31 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Delaware Valley | | | 19 | | | | 35 | | | | (16 | ) | | | -46 | % | | | 81 | | | | 74 | | | | 7 | | | | 9 | % |
| Florida | | | 117 | | | | 177 | | | | (60 | ) | | | -34 | % | | | 296 | | | | 449 | | | | (153 | ) | | | -34 | % |
| Illinois | | | 31 | | | | 18 | | | | 13 | | | | 72 | % | | | 72 | | | | 62 | | | | 10 | | | | 16 | % |
| Texas | | | 8 | | | | 90 | | | | (82 | ) | | | -91 | % | | | 14 | | | | 157 | | | | (143 | ) | | | -91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Homebuilding | | | 175 | | | | 320 | | | | (145 | ) | | | -45 | % | | | 463 | | | | 742 | | | | (279 | ) | | | -38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 1,970 | | | | 2,738 | | | | (768 | ) | | | -28 | % | | | 4,528 | | | | 6,538 | | | | (2,010 | ) | | | -31 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Value of Orders for Homes, net | | $ | 653,000 | | | $ | 914,000 | | | $ | (261,000 | ) | | | -29 | % | | $ | 1,555,000 | | | $ | 2,274,000 | | | $ | (719,000 | ) | | | -32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Average Selling Price of Orders for Homes, net | | $ | 331.5 | | | $ | 333.8 | | | $ | (2.3 | ) | | | -1 | % | | $ | 343.4 | | | $ | 347.8 | | | $ | (4.4 | ) | | | -1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Approximate Order Cancellation Rate (7) | | | 44 | % | | | 43 | % | | | 1 | % | | | | | | | 39 | % | | | 37 | % | | | 2 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| (7) | | Gross number of cancellations divided by gross number of orders received. |
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M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | |
| | | June 30, | | | December 31, | | | June 30, | |
| | | 2007 | | | 2006 | | | 2006 | |
BACKLOG (UNITS) | | | | | | | | | | | | |
| Arizona | | | 1,572 | | | | 1,504 | | | | 2,076 | |
| California | | | 530 | | | | 427 | | | | 832 | |
| Nevada | | | 342 | | | | 315 | | | | 908 | |
| | | | | | | | | | |
| West | | | 2,444 | | | | 2,246 | | | | 3,816 | |
| | | | | | | | | | |
| Colorado | | | 413 | | | | 253 | | | | 499 | |
| Utah | | | 408 | | | | 465 | | | | 629 | |
| | | | | | | | | | |
| Mountain | | | 821 | | | | 718 | | | | 1,128 | |
| | | | | | | | | | |
| Maryland | | | 268 | | | | 187 | | | | 315 | |
| Virginia | | | 186 | | | | 136 | | | | 340 | |
| | | | | | | | | | |
| East | | | 454 | | | | 323 | | | | 655 | |
| | | | | | | | | | |
| Delaware Valley | | | 119 | | | | 119 | | | | 183 | |
| Florida | | | 227 | | | | 197 | | | | 541 | |
| Illinois | | | 68 | | | | 23 | | | | 69 | |
| Texas | | | 1 | | | | 12 | | | | 104 | |
| | | | | | | | | | |
| Other Homebuilding | | | 415 | | | | 351 | | | | 897 | |
| | | | | | | | | | |
| Total | | | 4,134 | | | | 3,638 | | | | 6,496 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Backlog Estimated Sales Value | | $ | 1,480,000 | | | $ | 1,300,000 | | | $ | 2,440,000 | |
| | | | | | | | | | |
| Estimated Average Selling Price of Homes in Backlog | | $ | 358.0 | | | $ | 357.3 | | | $ | 375.6 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
ACTIVE SUBDIVISIONS | | | | | | | | | | | | |
| Arizona | | | 69 | | | | 67 | | | | 61 | |
| California | | | 44 | | | | 45 | | | | 45 | |
| Nevada | | | 43 | | | | 41 | | | | 35 | |
| | | | | | | | | | |
| West | | | 156 | | | | 153 | | | | 141 | |
| | | | | | | | | | |
| Colorado | | | 50 | | | | 47 | | | | 45 | |
| Utah | | | 25 | | | | 22 | | | | 20 | |
| | | | | | | | | | |
| Mountain | | | 75 | | | | 69 | | | | 65 | |
| | | | | | | | | | |
| Maryland | | | 16 | | | | 19 | | | | 18 | |
| Virginia | | | 23 | | | | 19 | | | | 23 | |
| | | | | | | | | | |
| East | | | 39 | | | | 38 | | | | 41 | |
| | | | | | | | | | |
| Delaware Valley | | | 5 | | | | 8 | | | | 7 | |
| Florida | | | 27 | | | | 30 | | | | 28 | |
| Illinois | | | 6 | | | | 6 | | | | 7 | |
| Texas | | | — | | | | 2 | | | | 4 | |
| | | | | | | | | | |
| Other Homebuilding | | | 38 | | | | 46 | | | | 46 | |
| | | | | | | | | | |
| Total | | | 308 | | | | 306 | | | | 293 | |
| | | | | | | | | | |
| Average for Quarter Ended | | | 311 | | | | 299 | | | | 300 | |
| | | | | | | | | | |
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M.D.C. HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | |
| | | June 30, | | | December 31, | | | June 30, | |
| | | 2007 | | | 2006 | | | 2006 | |
CORPORATE AND HOMEBUILDING DEBT-TO-CAPITAL, NET OF CASH | | | | | | | | | | | | |
| Total Debt | | $ | 1,096,294 | | | $ | 1,127,149 | | | $ | 1,164,649 | |
| Less Mortgage Line of Credit | | | (99,411 | ) | | | (130,467 | ) | | | (168,163 | ) |
| | | | | | | | | | |
| Total Corporate and Homebuilding Debt | | | 996,883 | | | | 996,682 | | | | 996,486 | |
| Less Cash (Including Restricted Cash) | | | (670,555 | ) | | | (510,588 | ) | | | (98,339 | ) |
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| Total Corporate and Homebuilding Debt, Net of Cash | | | 326,328 | | | | 486,094 | | | | 898,147 | |
| Stockholders’ Equity | | | 1,966,344 | | | | 2,161,882 | | | | 2,126,233 | |
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| Total Corporate and Homebuilding Capital, Net of Cash | | $ | 2,292,672 | | | $ | 2,647,976 | | | $ | 3,024,380 | |
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| Ratio of Corporate and Homebuilding Debt to Capital, Net of Cash | | | 0.14 | | | | 0.18 | | | | 0.30 | |
NOTE: From time to time, MDC discloses selected non-GAAP financial measures. While non-GAAP financial measures are not a substitute for the comparable GAAP measures, we believe that certain non-GAAP information is useful to investors and management in comparing current results to historical periods and to competitor results, and that it provides additional information on the performance of MDC’s businesses. The above is a presentation of and reconciliation of a selected non-GAAP measure with the most directly comparable GAAP financial measure.
“Ratio of corporate and homebuilding debt to capital, net of cash” is a non-GAAP financial measure. MDC’s management and investors use this ratio to help assess the risk associated with debt in the Company’s capital structure. It excludes debt incurred under MDC’s mortgage line of credit from both the numerator and denominator, as this debt is directly collateralized by mortgage loans held in inventory, which are typical liquidated within 45 days of origination, thereby reducing the risk associated with this type of debt. The ratio’s numerator and denominator are also reduced by MDC’s cash position, as this balance could be used to reduce MDC’s exposure to debt outstanding.
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