Exhibit 99.1
NEWS BULLETIN [GRAPHIC OMITTED]
M.D.C. HOLDINGS, INC. RICHMOND AMERICAN HOMES
HOMEAMERICAN MORTGAGE
FOR IMMEDIATE RELEASE
TUESDAY, JULY 15, 2003
- ------------------------------------------------------------------------------
Contacts: Paris G. Reece III Robert Solomon
Chief Financial Officer Rubenstein Associates, Inc.
(303) 804-7706 (212) 843-8050
greece@mdch.com rsolomon@rubenstein.com
M.D.C. HOLDINGS REPORTS 24% INCREASE
IN SECOND QUARTER EARNINGS
o Record second quarter net income of $42.7 million
o Earnings per share of $1.43 vs. $1.11 a year ago
o Highest second quarter home closings, quarterly home orders and
quarter-end backlog in Company history
o Record second quarter homebuilding profits of $85.3 million, up 39%
o Quarterly high for financial services profits, a 66% increase
o Debt-to-capital ratio of .36
DENVER, Tuesday, July 15, 2003 - M.D.C. Holdings, Inc. (NYSE/PCX: MDC;
www.richmondamerican.com) today announced net income for the three months ended
June 30, 2003 of $42.7 million, or $1.43 per share, 24% higher than net income
of $34.3 million, or $1.11 per share, for the same period in 2002. Net income
for the 2003 second quarter was reduced by pre-tax expenses of $9.3 million, or
$5.7 million net of taxes, related to MDC's redemption of its $175 million
8 3/8% senior notes due 2008. Without these redemption expenses, earnings per
share would have exceeded 2002 second quarter earnings per share by 46%. Total
revenues for the second quarter of 2003 were $689 million, 35% higher than
revenues of $509 million for the same period in 2002.
Net income for the six months ended June 30, 2003 was $79.7 million, or
$2.66 per share, 20% higher than the $66.7 million, or $2.17 per share, for the
same period in 2002. Total revenues for the six months ended June 30, 2003
reached a record $1.259 billion, representing an increase of 30% from revenues
of $966 million for the first six months of 2002.
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M.D.C. HOLDINGS, INC.
Page 2
Larry A. Mizel, MDC's chairman and chief executive officer, stated,
"Our operating results in the 2003 second quarter are among the strongest for
any quarter in our history. Home closings, revenues and homebuilding and
financial services operating profits reached new second quarter highs. Without
the debt redemption expenses mentioned earlier, our net income and earnings per
share would have ranked as our second-best among all prior quarters. In
addition, we received more home orders during the last three months than for any
quarter in our history, contributing to our record backlog at June 30th of 6,341
homes with a future sales value of more than $1.6 billion. Despite ongoing
economic challenges and concerns surrounding the global war on terrorism, the
continued strength in demand for housing, low interest rates and our successful
growth strategy in most of our markets enabled us to produce these outstanding
results. In view of our performance through the first six months and the
visibility inherent in our strong backlog, we now believe that we will close
more than 10,800 homes in 2003, which should produce new Company highs for
revenues and profits."
Mizel continued, "Equal in importance to our operating successes are
the steps we made in the second quarter to enhance our capital structure and
further our primary objective of maximizing shareowner value. Our
debt-to-capital ratio at June 30th of .36 remains one of the lowest in the
homebuilding industry. While continuing to maintain a relatively liquid balance
sheet, we ended the quarter with $430 million in unrestricted cash and available
borrowing capacity under our lines of credit, almost 40% above levels a year
ago. In May, we distributed a 10% stock dividend to our shareowners and
increased our quarterly cash dividend by 13%. Also in May, we redeemed our $175
million of 8 3/8% senior notes and completed the issuance of $150 million of new
10-year senior notes with an interest rate of 5 1/2%, the lowest rate for a
10-year note issued in the public market by a homebuilder."
Record Homebuilding and Financial Services Results
Homebuilding operating profits for the quarter and six months ended
June 30, 2003 were $85.3 million and $149.8 million, respectively, representing
increases of 39% and 26% over profits of $61.2 million and $119.1 million,
respectively, for the same periods in 2002. The increases in the 2003 periods
primarily are the result of the record levels of home closings and, for the
second quarter, higher home gross margins. The Company closed 2,624 homes and
4,724 homes, respectively, in the second quarter and first six months of 2003,
34% and 30% higher, respectively, than home closings in the same periods in
2002. Home sales revenues for the three and six months ended June 30, 2003
increased to $672 million and $1.226 billion, respectively, compared with home
sales revenues of $497 million and $942 million for the same periods in 2002.
For the second quarter and first six months of 2003, the Company's average
selling prices were $256,300 and $259,500, respectively, compared with $254,000
and $259,500 for the same periods in 2002, and home gross margins increased to
23.3% and 23.0%, respectively, compared with 22.5% and 22.9%.
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M.D.C. HOLDINGS, INC.
Page 3
Paris G. Reece III, MDC's executive vice president and chief financial
officer, said, "Each of our homebuilding divisions outside of Colorado posted
improved results compared with the 2002 second quarter, evidencing the success
of our efforts to diversify our operations geographically. We realized
particularly strong earnings growth in Las Vegas, Phoenix, Southern California
and Virginia, primarily due to improved home gross margins in Las Vegas and
Southern California and increases in active subdivisions that produced
substantially more home closings in each of these markets. Our total of 190
active subdivisions at June 30th is 15% higher than a year ago. The slight
decline over the last 90 days primarily is the result of selling out of a number
of active subdivisions earlier than expected due to our strong orders received
year-to-date. The impact of this order strength may cause an earlier sell-out of
additional subdivisions over the balance of this year. As a result, when
combined with anticipated delays in opening certain new subdivisions, the number
of our active subdivisions should remain relatively consistent with current
levels for the balance of this year, with more substantial growth anticipated in
the 2004 first quarter."
Reece continued, "As anticipated, average selling prices in the 2003
second quarter declined from the first quarter, primarily due to a greater
relative number of homes closed in our lower-priced Phoenix and Las Vegas
markets, as well as lower average selling prices in Southern California
resulting from our increased emphasis on providing more-affordable homes in the
Inland Empire. These factors, as well as increased closings from our divisions
in Salt Lake City and Dallas/Fort Worth, should cause average selling prices to
decline further by as much as 5% in the 2003 third quarter."
Operating profits from the Company's financial services operations
increased to $8.6 million and $16.2 million, respectively, for the quarter and
six months ended June 30, 2003, compared with profits of $5.2 million and $10.2
million, respectively, for the same periods in 2002. The profit improvements in
2003 primarily resulted from increased gains on sales of mortgage loans due to a
higher volume of mortgage loan originations and the favorable mortgage interest
rate environment. Reported gains on sales of mortgage loans may vary
significantly from period to period depending on the volatility in the interest
rate market. The Company received a record $5.2 million in mortgage loan
origination income in the 2003 second quarter on $456 million in mortgage loans
originated, 31% higher than the $4.0 million received on $338 million of
originations for the same period in 2002.
All earnings per share amounts discussed above are on a diluted basis.
Earnings per share, book value per share, weighted average shares outstanding
and dividends paid per share have been restated for the effects of the Company's
May 2003 10% stock dividend.
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M.D.C. HOLDINGS, INC.
Page 4
MDC, whose subsidiaries build homes under the name "Richmond American
Homes," is one of the largest homebuilders in the United States. The Company
also provides mortgage financing, primarily for MDC's homebuyers, through its
wholly owned subsidiary, HomeAmerican Mortgage Corporation. MDC is a major
regional homebuilder with a significant presence in some of the country's best
housing markets. The Company is the largest homebuilder in Colorado; among the
top five homebuilders in Northern Virginia, Phoenix, Tucson and Las Vegas; and
among the top ten homebuilders in suburban Maryland, Northern California,
Southern California and Salt Lake City. MDC also has a growing presence in
Dallas/Fort Worth and has recently entered the Houston and Philadelphia/Delaware
Valley markets.
Forward-Looking Statements
Certain statements in this release 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; (2) interest rate changes; (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.
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M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------ ------------ ------------ -------------
REVENUES
Homebuilding............................ $ 673,420 $ 499,171 $ 1,228,332 $ 945,932
Financial Services...................... 15,813 9,896 30,326 19,277
Corporate............................... 209 363 426 595
------------ ------------ ------------ ------------
Total Revenues...................... $ 689,442 $ 509,430 $ 1,259,084 $ 965,804
============ ============ ============ ============
NET INCOME
Homebuilding............................ $ 85,344 $ 61,215 $ 149,802 $ 119,059
Financial Services...................... 8,599 5,185 16,166 10,215
------------ ------------ ------------ ------------
Operating Profit.................... 93,943 66,400 165,968 129,274
Expenses related to debt redemption..... (9,315) - - (9,315) - -
Other corporate expense, net............ (14,623) (10,071) (25,882) (19,899)
------------ ------------ ------------ ------------
Income before income taxes.............. 70,005 56,329 130,771 109,375
Provision for income taxes.............. (27,311) (21,993) (51,040) (42,703)
------------ ------------ ------------ ------------
Net Income.......................... $ 42,694 $ 34,336 $ 79,731 $ 66,672
============ ============ ============ ============
EARNINGS PER SHARE
Basic............................... $ 1.49 $ 1.16 $ 2.77 $ 2.26
Diluted............................. $ 1.43 $ 1.11 $ 2.66 $ 2.17
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic............................... 28,688 29,701 28,823 29,544
============ ============ ============ ============
Diluted............................. 29,917 30,912 29,926 30,744
============ ============ ============ ============
DIVIDENDS PAID PER SHARE $ .082 $ .073 $ .155 $ .136
============ ============ ============ ============
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M.D.C. HOLDINGS, INC.
Information on Business Segments
(In thousands)
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Homebuilding
Home sales..................................... $ 672,439 $ 496,862 $ 1,226,014 $ 942,029
Land sales..................................... - - 746 123 746
Other revenues................................. 981 1,563 2,195 3,157
----------- ----------- ----------- -----------
Total Homebuilding Revenues................ 673,420 499,171 1,228,332 945,932
----------- ----------- ----------- -----------
Home cost of sales............................. 515,985 385,053 943,587 726,114
Land cost of sales............................. - - 504 87 504
Marketing...................................... 39,625 27,682 73,225 53,345
General and administrative..................... 32,466 24,717 61,631 46,910
----------- ----------- ----------- -----------
588,076 437,956 1,078,530 826,873
----------- ----------- ----------- -----------
Homebuilding Operating Profit.............. 85,344 61,215 149,802 119,059
----------- ----------- ----------- -----------
Financial Services
Interest revenues.............................. 1,025 941 2,033 1,949
Origination fees............................... 5,234 3,992 9,894 8,221
Gains on sales of mortgage servicing........... 329 481 1,163 952
Gains on sales of mortgage loans, net.......... 8,755 4,280 16,097 7,741
Mortgage servicing and other................... 470 202 1,139 414
----------- ----------- ----------- -----------
Total Financial Services Revenues.......... 15,813 9,896 30,326 19,277
----------- ----------- ----------- -----------
General and administrative....................... 7,214 4,711 14,160 9,062
----------- ----------- ----------- -----------
Financial Services Operating Profit........ 8,599 5,185 16,166 10,215
----------- ----------- ----------- -----------
Total Operating Profit.............................. 93,943 66,400 165,968 129,274
----------- ----------- ----------- -----------
Corporate
Expenses related to debt redemption............ (9,315) - - (9,315) - -
Interest and other revenues.................... 209 363 426 595
Other general and administrative expenses...... (14,832) (10,434) (26,308) (20,494)
----------- ----------- ----------- -----------
Income Before Income Taxes.......................... $ 70,005 $ 56,329 $ 130,771 $ 109,375
=========== =========== =========== ===========
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M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
June 30, December 31, June 30,
2003 2002 2002
------------ ------------ ------------
BALANCE SHEET DATA
Stockholders' Equity Per Share Outstanding................................. $ 30.01 $ 27.54 $ 24.55
Stockholders' Equity....................................................... $ 869,374 $ 800,567 $ 730,328
Homebuilding and Corporate Debt............................................ 497,075 322,990 339,652
------------ ------------ ------------
Capital (excluding mortgage lending debt)................................ $ 1,366,449 $ 1,123,557 $ 1,069,980
============ ============ ============
Ratio of Homebuilding and Corporate Debt to Equity......................... .57 .40 .47
Ratio of Homebuilding and Corporate Debt to Capital........................ .36 .29 .32
Cash and Cash Equivalents.................................................. $ 29,863 $ 28,942 $ 22,621
Unrestricted Cash and Available Borrowing Capacity Under Lines of Credit... $ 429,758 $ 618,774 $ 308,201
Housing Completed or Under Construction Inventories........................ $ 718,297 $ 578,475 $ 587,568
Land and Land Under Development Inventories................................ $ 725,311 $ 656,843 $ 582,385
Corporate and Homebuilding Interest Capitalized
Interest Capitalized in Inventory at Beginning of Period................. $ 17,783 $ 17,358 $ 17,358
Interest Incurred.................................................... 14,415 21,116 8,956
Interest in Home and Land Cost of Sales.............................. (11,608) (20,691) (8,710)
------------ ------------ ------------
Interest Capitalized in Inventory at End of Period....................... $ 20,590 $ 17,783 $ 17,604
============ ============ ============
Interest Capitalized as a Percent of Inventories........................... 1.4% 1.4% 1.5%
Lots Owned................................................................. 16,273 16,962 16,773
Lots Under Option.......................................................... 6,608 6,995 6,403
Homes Under Construction (including models)................................ 5,126 3,751 4,118
Active Subdivisions........................................................ 190 178 165
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
OPERATING DATA
Interest in Home and Land Cost of Sales as a Percent of Home
Sales Revenues.............................................. 1.0% .9% 1.0% .9%
Homebuilding and Corporate SG&A as a Percent of Home Sales
Revenues.................................................... 12.9% 12.7% 13.2% 12.8%
Depreciation and Amortization................................. $ 9,447 $ 5,569 $ 16,475 $ 10,818
Average Selling Price Per Home Closed......................... $ 256.3 $ 254.0 $ 259.5 $ 259.5
Home Gross Margins............................................ 23.3% 22.5% 23.0% 22.9%
Excluding Interest in Home Cost of Sales................ 24.2% 23.4% 23.9% 23.8%
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M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Orders For Homes, Net (Units)
Colorado.................................... 812 757 1,483 1,758
California.................................. 511 633 1,041 1,224
Nevada...................................... 774 411 1,357 618
Arizona..................................... 986 671 1,910 1,341
Utah........................................ 93 31 186 31
Texas....................................... 69 - - 119 - -
Virginia.................................... 305 176 708 418
Maryland.................................... 115 74 226 139
------------ ------------ ------------ ------------
Total................................... 3,665 2,753 7,030 5,529
============ ============ ============ ============
Homes Closed (Units)
Colorado.................................... 625 706 1,234 1,315
California.................................. 487 362 915 654
Nevada...................................... 508 247 781 388
Arizona..................................... 663 446 1,234 884
Utah........................................ 69 25 109 25
Texas....................................... 29 - - 39 - -
Virginia.................................... 166 104 268 234
Maryland.................................... 77 66 144 130
------------ ------------ ------------ ------------
Total................................... 2,624 1,956 4,724 3,630
============ ============ ============ ============
June 30, December 31, June 30,
2003 2002 2002
------------ ------------ ------------
Backlog (Units)
Colorado.................................... 1,206 957 1,638
California.................................. 1,048 922 1,060
Nevada...................................... 926 350 524
Arizona..................................... 1,752 1,076 1,082
Utah........................................ 127 50 47
Texas....................................... 96 16 - -
Virginia.................................... 916 476 418
Maryland.................................... 270 188 166
------------ ------------ ------------
Total................................... 6,341 4,035 4,935
============ ============ ============
Backlog Estimated Sales Value.................... $ 1,630,000 $ 1,120,000 $ 1,300,000
============ ============ ============
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