M.D.C. (MDC) 8-K M.D.C. Holdings Announces 2012 Second Quarter Results

Exhibit 99.1

News Release

M.D.C. HOLDINGS ANNOUNCES 2012 SECOND QUARTER RESULTS

DENVER, COLORADO, Tuesday, July 31, 2012. M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended June 30, 2012.

2012 Second Quarter Highlights and Comparisons to 2011 Second Quarter

• Net income of $10.6 million, or $0.22 per diluted share, vs. net loss of $28.0 million, or $0.60 per diluted share

• 1,402 net new orders, up 32%

• Backlog of 2,028 homes, up 42%; backlog dollar value up 52% to $657.5 million

• Home sale revenues of $256.5 million, up 24%

• 861 homes closed, up 21%

• Gross margin from home sales of 14.2% vs. 8.9%

• No inventory impairment charges versus $8.6 million for the 2011 second quarter

• Home gross margin before impairment charges, interest and warranty adjustments improved 200 basis points to 16.9%*

• Homebuilding SG&A expenses of $39.2 million, a decrease of $9.9 million, or 20%

• SG&A as a percentage of home sale revenues of 15.3%, an 850 basis point improvement

• G&A expense included $3.8 million in litigation recoveries

Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “I am pleased to announce a second quarter profit of $0.22 per share, with net income improving by nearly $40 million over the prior year. We believe that our favorable results are largely attributable to our implementation of several key strategic initiatives, which we announced over the past few quarters, combined with modest improvements in homebuilding and overall market conditions.”

Mizel continued, “We dramatically improved our operating leverage in the second quarter by accelerating our sales absorption pace and reducing overhead costs. These efforts drove a 21% year-over-year increase in new home deliveries and a 20% year-over-year reduction in our homebuilding SG&A costs. In addition, our interest expense decreased by $7.3 million for the second quarter, largely due to the debt reduction we undertook during the last half of 2011, and our impairment charges fell $8.6 million against a backdrop of stabilizing new home prices. As a result, our homebuilding segment achieved an operating profit for the first time in five years.”

Mr. Mizel concluded, “As the overall housing market has continued to show signs of recovery over the last several quarters, our efforts to improve our sales process, product offering and cancellation rate have helped us improve sales results. During the second quarter, net new orders

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increased 32% year-over-year to a five-year second quarter high, driven by a 24% improvement in our absorption pace per community and a 900 basis point reduction in our cancellation rate. With our quarter-end backlog up 42% over the prior year, we are well-positioned to achieve continued gains in operating leverage during the second half of 2012 and achieve our goal of reaching profitability for 2012.”

Homebuilding

Home sale revenues for the 2012 second quarter increased 24% to $256.5 million compared to $206.2 million for the prior year period. The increase in revenues resulted primarily from a 21% increase in homes closed to 861 homes as compared to 709 in the prior year. The Company’s average selling price for homes closed was $297,900, up 2% year-over-year compared to $290,800 for the prior year period, due to increases in most markets.

Gross margin from home sales for the 2012 second quarter was 14.2% versus 8.9% for the year earlier period. The 2012 second quarter did not include any inventory impairments or benefits related to warranty accrual adjustments. However, the 2011 second quarter included $8.6 million in inventory impairments and a $1.8 million benefit related to a warranty accrual reduction.

Excluding inventory impairments, warranty accrual adjustments and previously capitalized interest in cost of sales, adjusted gross margin from home sales was 16.9%* for the 2012 second quarter, compared to 14.9%* for the 2011 second quarter and up marginally compared to 16.7%* for the 2012 first quarter. The 200 basis point year-over-year improvement in the Company’s adjusted gross margin from home sales was driven by closing a significantly higher percentage of homes started with buyers under contract, which historically have been more profitable than homes started without a buyer under contract. In addition, our gross margin percentage benefited from a meaningful year-over-year reduction in incentives, partially offset by reduced customer spending on home upgrades, as we are including a higher level of upgrades in our base home price in communities across the country.

The Company’s 2012 second quarter homebuilding selling, general and administrative (“SG&A”) expenses decreased 20% to $39.2 million, compared to $49.2 million for 2011 second quarter, down 850 basis points as a percentage of home sale revenues to 15.3% versus 23.8% for the 2011 second quarter. The lower level of SG&A expenses and SG&A rate was primarily attributable to various cost reduction efforts, including lower compensation expense due to lower headcount, higher operating leverage from increased revenues and $3.8 million in legal recoveries.

Net new orders for the 2012 second quarter increased 32% to 1,402 homes, compared to 1,064 homes during the same period in 2011. The Company’s monthly sales absorption rate for the 2012 second quarter was 2.6 per community, compared to 2.1 per community for the 2011 second quarter. The Company’s cancellation rate for the 2012 second quarter was 20% versus 29% in the prior year second quarter.

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The Company ended the 2012 second quarter with 2,028 homes in backlog, its highest backlog level since the 2007 third quarter, with an estimated sales value of $657.5 million, compared with a backlog of 1,424 homes with an estimated sales value of $433.5 million at June 30, 2011.

Financial Services

Income before taxes from our financial services segment for the 2012 second quarter was $6.7 million, compared to $3.1 million for the 2011 second quarter. The increase in pretax income primarily reflected a $4.4 million increase in our mortgage operations pretax income from $1.3 million in the 2011 second quarter to $5.7 million for the 2012 second quarter. The improvement in our mortgage profitability was driven largely by a $4.1 million increase in the gains on sales of mortgage loans due to favorable mortgage market conditions and a decrease in the level of special financing programs that we offered our homebuyers.

About MDC

Since 1972, MDC’s subsidiary companies have built and financed the American dream for more than 165,000 homebuyers. 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 the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Francisco Bay Area, Washington D.C., Baltimore, Philadelphia, Jacksonville and Seattle. 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

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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 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) terrorist acts and other acts of war; and (16) 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-Q for the quarter ended June 30, 2012, 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.

Contact: Robert N. Martin

Vice President of Finance

(720) 977-3431

bob.martin@mdch.com

* Please see “Reconciliation of Non-GAAP Financial Measures” on page 12.

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(Dollars in thousands, except per share amounts) (Unaudited)
Homebuilding:
Home sale revenues	$	256,532		$	206,163		$	441,210		$	369,546
Land sale revenues		1,815			2,565			3,405			2,769
Total home sale and land revenues		258,347			208,728			444,615			372,315
Home cost of sales		(220,220	)		(179,097	)		(378,874	)		(320,078	)
Land cost of sales		(1,718	)		(1,741	)		(3,208	)		(1,758	)
Inventory impairments		—			(8,633	)		—			(8,633	)
Total cost of sales		(221,938	)		(189,471	)		(382,082	)		(330,469	)
Gross margin		36,409			19,257			62,533			41,846
Selling, general and administrative expenses		(39,223	)		(49,158	)		(73,347	)		(96,811	)
Interest income		5,373			6,986			11,286			13,474
Interest expense		—			(7,334	)		(808	)		(16,001	)
Other income (expense)		418			(2,643	)		576			(884	)
Homebuilding pretax income (loss)		2,977			(32,892	)		240			(58,376	)
Financial Services:
Revenues		10,587			6,731			18,306			12,434
Expenses		(3,909	)		(3,642	)		(6,766	)		(7,565	)
Financial services pretax income		6,678			3,089			11,540			4,869
Income (loss) before income taxes		9,655			(29,803	)		11,780			(53,507	)
Benefit (provision) for income taxes		983			1,823			1,123			5,648
Net income (loss)	$	10,638		$	(27,980	)	$	12,903		$	(47,859	)
Other comprehensive income (loss):
Unrealized gain related to available-for-sale securities		(698	)		(1,971	)		5,850			1,332
Comprehensive income (loss)	$	9,940		$	(29,951	)	$	18,753		$	(46,527	)
Earnings (loss) per share:
Basic	$	0.22		$	(0.60	)	$	0.27		$	(1.03	)
Diluted	$	0.22		$	(0.60	)	$	0.26		$	(1.03	)
Weighted Average Common Shares Outstanding:
Basic		47,398,088			46,719,233			47,367,051			46,717,408
Diluted		47,752,729			46,719,233			47,677,067			46,717,408
Dividends declared per share	$	0.25		$	0.25		$	0.50		$	0.50

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M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

	June 30, 2012			December 31, 2011
	(Dollars in thousands, except per share amounts) (Unaudited)
ASSETS
Homebuilding:
Cash and cash equivalents	$	298,274		$	316,418
Marketable securities		454,775			485,434
Restricted cash		2,260			667
Trade and other receivables		40,341			21,593
Inventories:
Housing completed or under construction		437,287			300,714
Land and land under development		414,466			505,338
Property and equipment, net		34,471			36,277
Deferred tax asset, net of valuation allowance of $273,828 and $281,178 at June 30, 2012 and December 31, 2011, respectively		—			—
Prepaid expenses and other assets		44,272			50,423
Total homebuilding assets		1,726,146			1,716,864
Financial Services:
Cash and cash equivalents		27,850			26,943
Marketable securities		32,256			34,509
Mortgage loans held-for-sale, net		65,687			78,335
Prepaid expenses and other assets		3,975			2,074
Total financial services assets		129,768			141,861
Total Assets	$	1,855,914		$	1,858,725
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	42,829		$	25,645
Accrued liabilities		111,730			119,188
Senior notes, net		744,470			744,108
Total homebuilding liabilities		899,029			888,941
Financial Services:
Accounts payable and accrued liabilities		52,965			52,446
Mortgage repurchase facility		32,660			48,702
Total financial services liabilities		85,625			101,148
Total Liabilities		984,654			990,089
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; 47,990,975 issued and outstanding at June 30, 2012 and 48,017,108 and 47,957,196 issued and outstanding, respectively, at December 31, 2011		480			480
Additional paid-in-capital		870,331			863,128
Retained earnings		1,839			12,927
Accumulated other comprehensive income (loss)		(1,390	)		(7,240	)
Treasury stock, at cost; no shares at June 30, 2012 and 59,912 at December 31, 2011		—			(659	)
Total Stockholders’ Equity		871,260			868,636
Total Liabilities and Stockholders’ Equity	$	1,855,914		$	1,858,725

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M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(Dollars in thousands) (Unaudited)
Operating Activities:
Net income (loss)	$	10,638		$	(27,980	)	$	12,903		$	(47,859	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation expense		5,110			3,559			7,721			6,680
Depreciation and amortization		1,349			1,627			2,656			3,217
Inventory impairments and write-offs of land option deposits		229			11,244			311			12,305
Amortization of (premium) discount on marketable debt securities		1			476			(151	)		912
Net changes in assets and liabilities:
Restricted cash		(1,180	)		(185	)		(1,593	)		(184	)
Trade and other receivables		(7,283	)		19,717			(18,345	)		18,935
Mortgage loans held-for-sale		(10,697	)		(1,503	)		12,648			25,914
Housing completed or under construction		(90,512	)		24,618			(136,387	)		51,590
Land and land under development		74,048			(35,115	)		91,048			(108,622	)
Prepaid expenses and other assets		562			(2,220	)		3,956			(1,376	)
Accounts payable		9,377			5,935			17,169			(5,910	)
Accrued liabilities		11,581			(11,729	)		(7,526	)		(24,859	)
Net cash provided by (used in) operating activities		3,223			(11,556	)		(15,590	)		(69,257	)
Investing Activities:
Purchase of marketable securities		(107,178	)		(142,997	)		(292,788	)		(258,423	)
Maturity of marketable securities		54,500			305,000			106,000			451,000
Sale of marketable securities		95,180			54,727			225,701			129,677
Purchase of property and equipment and other		(304	)		(28,812	)		(668	)		(29,295	)
Net cash provided by (used in) investing activities		42,198			187,918			38,245			292,959
Financing Activities:
Payments on mortgage repurchase facility		(36,784	)		(21,681	)		(90,409	)		(47,115	)
Advances on mortgage repurchase facility		43,604			23,933			74,367			30,669
Dividend payments		(11,996	)		(11,868	)		(23,990	)		(23,692	)
Proceeds from exercise of stock options		140			46			140			46
Net cash provided by (used in) financing activities		(5,036	)		(9,570	)		(39,892	)		(40,092	)
Net increase (decrease) in cash and cash equivalents		40,385			166,792			(17,237	)		183,610
Cash and cash equivalents:
Beginning of period		285,739			589,043			343,361			572,225
End of period	$	326,124		$	755,835		$	326,124		$	755,835

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M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

New Home Deliveries:

	Three Months Ended June 30,
	2012						2011						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		127	$	27,086	$	213.3		98	$	18,299	$	186.7		30	%		48	%		14	%
California		133		43,195		324.8		62		19,704		317.8		115	%		119	%		2	%
Nevada		155		28,460		183.6		80		14,731		184.1		94	%		93	%		0	%
Washington		59		17,170		291.0		51		13,779		270.2		16	%		25	%		8	%
West		474		115,911		244.5		291		66,513		228.6		63	%		74	%		7	%
Colorado		185		66,254		358.1		182		60,047		329.9		2	%		10	%		9	%
Utah		46		13,142		285.7		66		17,876		270.8		-30	%		-26	%		5	%
Mountain		231		79,396		343.7		248		77,923		314.2		-7	%		2	%		9	%
Maryland		47		19,777		420.8		49		20,267		413.6		-4	%		-2	%		2	%
Virginia		70		32,171		459.6		72		30,573		424.6		-3	%		5	%		8	%
East		117		51,948		444.0		121		50,840		420.2		-3	%		2	%		6	%
Florida		37		8,726		235.8		48		10,594		220.7		-23	%		-18	%		7	%
Illinois		2		551		275.5		1		293		293.0		100	%		88	%		-6	%
Other Homebuilding		39		9,277		237.9		49		10,887		222.2		-20	%		-15	%		7	%
Total		861	$	256,532	$	297.9		709	$	206,163	$	290.8		21	%		24	%		2	%
	Six Months Ended June 30,
	2012						2011						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		215	$	45,043	$	209.5		175	$	31,911	$	182.3		23	%		41	%		15	%
California		188		61,188		325.5		110		34,671		315.2		71	%		76	%		3	%
Nevada		261		50,056		191.8		146		27,763		190.2		79	%		80	%		1	%
Washington		103		29,166		283.2		51		13,777		270.1		102	%		112	%		5	%
West		767		185,453		241.8		482		108,122		224.3		59	%		72	%		8	%
Colorado		310		111,217		358.8		348		115,022		330.5		-11	%		-3	%		9	%
Utah		98		27,242		278.0		120		32,473		270.6		-18	%		-16	%		3	%
Mountain		408		138,459		339.4		468		147,495		315.2		-13	%		-6	%		8	%
Maryland		91		38,571		423.9		106		44,486		419.7		-14	%		-13	%		1	%
Virginia		129		58,326		452.1		115		48,791		424.3		12	%		20	%		7	%
East		220		96,897		440.4		221		93,277		422.1		0	%		4	%		4	%
Florida		83		19,850		239.2		91		20,359		223.7		-9	%		-3	%		7	%
Illinois		2		551		275.5		1		293		293.0		100	%		88	%		-6	%
Other Homebuilding		85		20,401		240.0		92		20,652		224.5		-8	%		-1	%		7	%
Total		1,480	$	441,210	$	298.1		1,263	$	369,546	$	292.6		17	%		19	%		2	%

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M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Net New Orders:

	Three Months Ended June 30,
	2012						2011						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Dollar Homes			Average Value			Price
	(Dollars in thousands)
Arizona		246	$	56,108	$	228.1		164	$	32,465	$	198.0		50	%		73	%		15	%
California		217		78,895		363.6		117		34,358		293.7		85	%		130	%		24	%
Nevada		225		50,163		222.9		154		29,138		189.2		46	%		72	%		18	%
Washington		69		19,346		280.4		26		6,727		258.7		165	%		188	%		8	%
West		757		204,512		270.2		461		102,688		222.8		64	%		99	%		21	%
Colorado		311		108,045		347.4		232		76,945		331.7		34	%		40	%		5	%
Utah		69		21,467		311.1		109		30,948		283.9		-37	%		-31	%		10	%
Mountain		380		129,512		340.8		341		107,893		316.4		11	%		20	%		8	%
Maryland		113		50,441		446.4		74		29,011		392.0		53	%		74	%		14	%
Virginia		98		52,828		539.1		95		41,429		436.1		3	%		28	%		24	%
East		211		103,269		489.4		169		70,440		416.8		25	%		47	%		17	%
Florida		53		12,450		234.9		91		19,813		217.7		-42	%		-37	%		8	%
Illinois		1		315		315.0		2		580		290.0		-50	%		-46	%		9	%
Other		54		12,765		236.4		93		20,393		219.3		-42	%		-37	%		8	%
Total		1,402	$	450,058	$	321.0		1,064	$	301,414	$	283.3		32	%		49	%		13	%

	Six Months Ended June 30,
	2012						2011						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Dollar Homes			Average Value			Price
	(Dollars in thousands)
Arizona		433	$	94,282	$	217.7		286	$	54,880	$	191.9		51	%		72	%		13	%
California		338		119,026		352.2		194		56,815		292.9		74	%		109	%		20	%
Nevada		391		83,879		214.5		242		46,036		190.2		62	%		82	%		13	%
Washington		145		42,042		289.9		26		6,727		258.7		458	%		525	%		12	%
West		1,307		339,229		259.5		748		164,458		219.9		75	%		106	%		18	%
Colorado		546		192,192		352.0		413		138,748		336.0		32	%		39	%		5	%
Utah		137		40,271		293.9		176		48,550		275.9		-22	%		-17	%		7	%
Mountain		683		232,463		340.4		589		187,298		318.0		16	%		24	%		7	%
Maryland		196		85,048		433.9		120		50,448		420.4		63	%		69	%		3	%
Virginia		188		94,186		501.0		163		70,083		430.0		15	%		34	%		17	%
East		384		179,234		466.8		283		120,531		425.9		36	%		49	%		10	%
Florida		89		20,584		231.3		142		31,960		225.1		-37	%		-36	%		3	%
Illinois		2		550		275.0		7		2,041		291.6		-71	%		-73	%		-6	%
Other		91		21,134		232.2		149		34,001		228.2		-39	%		-38	%		2	%
Total		2,465	$	772,060	$	313.2		1,769	$	506,288	$	286.2		39	%		52	%		9	%

9

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Active Subdivisions:

	June 30,
	2012		2011		% Change
Arizona		17		30		-43	%
California		19		16		19	%
Nevada		19		17		12	%
Washington		11		9		22	%
West		66		72		-8	%
Colorado		47		40		18	%
Utah		17		21		-19	%
Mountain		64		61		5	%
Maryland		19		13		46	%
Virginia		12		12		0	%
East		31		25		24	%
Florida		12		17		-29	%
Illinois		—		1		-100	%
Other Homebuilding		12		18		-33	%
Total		173		176		-2	%
Average for quarter ended		180		167		8	%

Backlog:

	June 30,
	2012						2011						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		346	$	76,564	$	221.3		195	$	39,644	$	203.3		77	%		93	%		9	%
California		268		92,161		343.9		163		48,420		297.1		64	%		90	%		16	%
Nevada		286		63,283		221.3		172		35,382		205.7		66	%		79	%		8	%
Washington		96		30,438		317.1		51		13,778		270.2		88	%		121	%		17	%
West		996		262,446		263.5		581		137,224		236.2		71	%		91	%		12	%
Colorado		469		171,862		366.4		338		118,124		349.5		39	%		45	%		5	%
Utah		107		30,116		281.5		125		34,518		276.1		-14	%		-13	%		2	%
Mountain		576		201,978		350.7		463		152,642		329.7		24	%		32	%		6	%
Maryland		218		90,570		415.5		140		61,170		436.9		56	%		48	%		-5	%
Virginia		162		82,723		510.6		118		53,098		450.0		37	%		56	%		13	%
East		380		173,293		456.0		258		114,268		442.9		47	%		52	%		3	%
Florida		76		19,734		259.7		115		27,203		236.5		-34	%		-27	%		10	%
Illinois		—		—		N/A		7		2,138		305.4		-100	%		-100	%		N/A
Other Homebuilding		76		19,734		259.7		122		29,341		240.5		-38	%		-33	%		8	%
Total		2,028	$	657,451	$	324.2		1,424	$	433,475	$	304.4		42	%		52	%		7	%

10

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Homes Completed or Under Construction (WIP lots):

	June 30,
	2012		2011		% Change
Unsold
Completed		138		42		229	%
Under construction—frame		264		353		-25	%
Under construction—foundation		215		101		113	%
Total unsold started homes		617		496		24	%
Sold homes under construction or completed		1,392		843		65	%
Model homes		221		231		-4	%
Total homes completed or under construction		2,230		1,570		42	%

Lots Owned and Optioned (including homes completed or under construction):

	June 30, 2012						June 30, 2011
	Lots Owned		Lots Optioned		Total		Lots Owned		Lots Optioned		Total
Arizona		774		108		882		1,292		108		1,400
California		1,196		—		1,196		1,568		—		1,568
Nevada		966		27		993		1,366		398		1,764
Washington		397		161		558		324		42		366
West		3,333		296		3,629		4,550		548		5,098
Colorado		3,236		584		3,820		3,626		602		4,228
Utah		492		13		505		689		298		987
Mountain		3,728		597		4,325		4,315		900		5,215
Maryland		607		399		1,006		514		795		1,309
Virginia		596		121		717		713		234		947
East		1,203		520		1,723		1,227		1,029		2,256
Florida		285		133		418		381		480		861
Illinois		123		—		123		133		—		133
Other		408		133		541		514		480		994
Total		8,672		1,546		10,218		10,606		2,957		13,563

11

M.D.C. HOLDINGS, INC.

Reconciliation of Non-GAAP Financial Measures

Adjusted gross margin from home sales is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that inventory impairments, warranty adjustments and interest have on our Gross Margin from Home Sales and permits investors to make better comparisons with our competitors, who also break out and adjust gross margins in a similar fashion.

	Three Months Ended												Six Months Ended
	June 30, 2012			Gross Margin %			June 30, 2011			Gross Margin %			June 30, 2012			Gross Margin %			June 30, 2011			Gross Margin %
	(Dollars in thousands)
Gross Margin	$	36,409			14.1	%	$	19,257			9.2	%	$	62,533			14.1	%	$	41,846			11.2	%
Less: Land Sales Revenue		(1,815	)					(2,565	)					(3,405	)					(2,769	)
Add: Land Cost of Sales		1,718						1,741						3,208						1,758
Gross Margin from Home Sales	$	36,312			14.2	%	$	18,433			8.9	%	$	62,336			14.1	%	$	40,835			11.1	%
Add: Inventory Impairments		—						8,633						—						8,633
Add: Interest in Cost of Sales		7,105						5,454						11,999						9,657
Less: Warranty Adjustments		—						(1,832	)					—						(2,263	)
Adjusted Gross Margin from Home Sales	$	43,417			16.9	%	$	30,688			14.9	%	$	74,335			16.8	%	$	56,862			15.4	%

12