May 23, 2006
Room 7010
Paris G. Reece III
Executive Vice President, Chief Financial Officer and Principal
Accounting Officer
M.D.C. Holdings, Inc.
4350 South Monaco Street, Suite 500
Denver, Colorado 80237
Re: M.D.C. Holdings, Inc.
Form 10-K for Fiscal Year Ended December 31, 2005
Forms 10-Q for the Fiscal Quarters Ended March 31, 2006
File No. 001-08951
Dear Mr. Reece:
We have reviewed the above referenced filing and have the
following comments. Please note that we have limited our review
to
the matters addressed in the comments below. We may ask you to
provide us with supplemental information so we may better
understand
your disclosure. Please be as detailed as necessary in your
explanation. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for Fiscal Year Ended December 31, 2005
Warranty Costs, page F-12
1. We note your rollforward of warranty activity for the years
ended
December 31, 2005, 2004 and 2003 which includes your warranty
expense
provision recorded during each of those years. Revise your
disclosure in future filings to separately present the amount of
the
provision recorded that represents the aggregate changes in the
liability for accruals related to preexisting warranties
(including
adjustments related to changes in estimates) for each of the years
presented. Refer to paragraph 14b of FIN45. Please make similar
revisions to your disclosure related to insurance reserves on page
F-
13.
2. You indicate that if warranty payments for an individual house
exceed the related reserve, then payments in excess of the reserve
are evaluated in the aggregate to determine if an adjustment to
home
cost of goods sold should be recorded. We assume you mean that an
adjustment to the warranty reserve would be recorded, resulting in
an
adjustment to home cost of sales. Please confirm our assumptions
or
supplementally explain your accounting for warranty costs. Also
confirm that the warranty reserve presented in the table on page
F-17
relates to the general and structural reserve as well as the
reserve
for known, unusual warranty-related expenditures not covered by
the
general and structural warranty reserve.
3. Tell us more about your Estimates-to-Complete reserves. If
changes to these reserves could materially impact your results of
operations, provide a table summarizing this reserve activity for
each period presented. The table should be similar to that
required
by in the same form and content required by 14b of FIN45.
Note 3. Information of Business Segments, page F-18
4. You disclose that you operate in two segments, Homebuilding and
Financial Services, however, we note in your business section and
MD&A you separately discuss markets by state. Please clarify
whether
your regions or states are operating segments as defined by
paragraph
10 of SFAS 131. If so, tell us how you have met the aggregation
criteria of paragraph 17 of SFAS 131. Specifically address how
you
have determined that your operating segments have similar economic
characteristics. Provide for us the sales and gross margin trends
for each operating segment and address any inconsistencies in the
trends that they depict. Please identify your chief operating
decision maker (CODM) and provide us with representative copies of
the discrete financial information that is regularly reviewed by
your
CODM.
Note 18. Supplemental Guarantor Information, page F-33
5. Your disclosure regarding your guarantor subsidiaries does not
indicate whether or not these subsidiaries are 100% owned. Note
that
Rule 3-10 of Regulation S-X states that each guarantor subsidiary
must be "100% owned" by the parent issuer as defined by Rule 3-
10(h)
of Regulation S-X. Revise your disclosures in future filings to
clarify whether or not the guarantor subsidiaries are 100% owned.
To
the extent they are not 100% owned, tell us how your current
disclosure complies with Rule 3-10 of Regulation S-X.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Melissa Rocha at (202) 551-3854, Jeanne
Baker,
Assistant Chief Accountant at (202) 551-3691 or me at (202) 551-
3255
if you have questions regarding comments on the financial
statements
and related matters.
Sincerely,
Nili N. Shah
Branch Chief
Paris G. Reece
M.D.C. Holdings, Inc.
May 23, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE