Exhibit 99.1
NEWS BULLETIN [GRAPHIC OMITTED]
M.D.C. HOLDINGS, INC. RICHMOND AMERICAN HOMES
HOMEAMERICAN MORTGAGE
FOR IMMEDIATE RELEASE
MONDAY, JANUARY 12, 2004
- -------------------------------------------------------------------------------
Contacts: Paris G. Reece III Rachel L. Neumann
Chief Financial Officer Communications Director
(303) 804-7706 (303) 804-7729
greece@mdch.com rlneumann@mdch.com
M.D.C. HOLDINGS REPORTS RECORD FOURTH
QUARTER AND ANNUAL RESULTS FOR 2003
o EPS of $2.18 and $7.00, up 15% and 28%, respectively
o Annual revenues rise 26% to $2.92 billion
o Fourth quarter home gross margins of 25%, up 240 basis points
o Year-end backlog and fourth quarter home orders both increase 39%
o Net debt-to-capital ratio reduced to .24 from .27 a year ago
o Return on average equity of 24% exceeds 20% for sixth consecutive year
o Company anticipates record profits and 15% growth in home closings in 2004
DENVER, Monday, January 12, 2004 - M.D.C. Holdings, Inc. (NYSE/PCX:
MDC) today announced net income for the quarter ended December 31, 2003 of
$67.0 million, or $2.18 per share - the highest quarterly net income in the
Company's history and 17% higher than net income of $57.1 million, or $1.90 per
share, for the same period in 2002. Net income for the year ended December 31,
2003 was a record $212.2 million, or $7.00 per share, compared with $167.3
million, or $5.48 per share, for 2002. MDC achieved record revenues for the
quarter and year ended December 31, 2003 of $862.1 million and $2.92 billion,
increases of 12% and 26%, respectively, from the same periods in 2002.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We
are pleased to announce the completion of the most successful year in our 32
years in business, culminated by the most profitable quarter in our history. In
the process, we posted record annual net income and revenues for the sixth and
tenth consecutive years, respectively. These outstanding results, which were
achieved despite the economic and geopolitical challenges facing our industry
and our nation throughout much of 2003, validate the success of our operating
strategy. This strategy encompasses both a conservative capital management
policy and an objective to maximize risk-adjusted returns on invested capital.
As a result of achieving these objectives, stockholders' equity exceeded $1
billion for the first time, and we ended the year with a net debt-to-capital
-more-
[GRAPHIC OMITTED]
M.D.C. HOLDINGS, INC.
Page 2
ratio of .24 and $780 million in cash and borrowing capacity. In the process, we
generated more than a 24% net return on average stockholders' equity, 140 basis
points above our 2002 return and exceeding 20% for the sixth year in a row. And
our home gross margins and the net return on our assets in 2003 rank among the
highest in the industry. We especially are proud to report that Standard &
Poor's, Moody's and Fitch Ratings recognized our successes in 2003 through
ratings upgrades, all at the investment grade level, placing MDC among an elite
group of only five homebuilders with investment grade ratings from all three
major rating agencies."
Mizel continued, "We made tremendous progress in 2003 toward our stated
goals of geographically diversifying and growing our homebuilding operations.
Our strategic entry into six new markets, significant expansion in the Salt Lake
City and Dallas/Fort Worth markets that we entered in 2002, and continued growth
in most of our existing markets enabled us to increase substantially our active
subdivisions and inventory of controlled lots. These expansion activities, aided
by record low interest rates and strong demand for new homes in most of our
markets, contributed to the 28% year-over-year increase in our total year home
orders, including a 39% increase in the fourth quarter."
Mizel concluded, "As our new market operations come online and our
controlled lot positions evolve into additional active subdivisions, we
anticipate capitalizing on the apparent improving economic conditions, strong
demographic trends and the competitive advantages available to large,
well-capitalized homebuilders to meet our three-year objective to increase home
closings and revenues an average of 15% each year. With our record year-end
backlog of almost 5,600 homes, solid contributions expected from our new markets
in Houston and Jacksonville, and an expanded presence in most of our other
markets, we are well-positioned to meet these volume and top-line objectives in
2004 and produce record earnings for the seventh consecutive year."
Highest Homebuilding Profits in Company History
Operating profits from the Company's homebuilding operations reached
record levels in the quarter and year ended December 31, 2003, increasing 25%
and 33% to $126.0 million and $393.9 million, respectively, from the same
periods in 2002. The increases in 2003 primarily were attributable to record
home closings and improved home gross margins. As previously reported, the
Company closed 3,374 homes and 11,211 homes, respectively, in the fourth quarter
and year ended December 31, 2003, representing increases of 13% and 26% from the
same periods in 2002. Home gross margins were 25.0% and 24.1%, respectively, for
the quarter and year ended December 31, 2003, compared with 22.6% and 23.0% for
the same periods in 2002.
Paris G. Reece III, MDC's executive vice president and chief financial
officer, said, "Increases in home closings in each of our markets except
Colorado and California contributed to
-more-
[GRAPHIC OMITTED]
M.D.C. HOLDINGS, INC.
Page 3
improved quarterly operating performances by most of our homebuilding divisions.
Home closings were lower in Colorado and California primarily due to a temporary
reduction in the average number of active subdivisions in these two states. In
California, higher home gross margins more than offset the impact of lower home
closings. In fact, all of our homebuilding divisions that have been operational
for at least two years reported home gross margins in excess of 20%. The
strength of our home gross margins this quarter reflects our ability to raise
home prices in most of our markets over the last several quarters, along with
the success of corporate initiatives aimed at reducing construction costs. Among
other things, these initiatives helped delay until 2004 the margin impact of the
significant rise in lumber costs that began in May. In addition, we benefited
from particularly strong margins in a number of relatively mature subdivisions
in California, Las Vegas, Virginia and Maryland, many of which have closed out
recently, or will be closing out in the near future."
Reece continued, "Looking forward to 2004, our average selling price
should be consistent with the current level, as we expect selling price
increases and an increased volume of homes closed in higher-priced markets in
California, Virginia and Maryland to be offset by relatively greater growth in
home closings in our new lower-priced markets in Texas, Salt Lake City and
Jacksonville, and our more-affordable existing markets in Las Vegas and Arizona.
We expect our active subdivisions to grow on a net basis throughout the year at
a rate that, by year-end, should approximate our growth in home closings for
2004. Consistent with our discussions each quarter over the last couple of
years, our home gross margins in 2004 will be challenged by ongoing increases in
the cost of land and certain building materials, including lumber. In addition,
the sources of our growth in 2004 will result in closing a large number of homes
in new and existing markets that may produce home gross margins below our
Company average. These factors will be mitigated by recent price increases and
the benefits of our cost saving initiatives. Maintaining or increasing home
gross margins in 2004 relative to record levels realized in 2003 also may depend
on continued home price increases that are reflective of the strong demand for
homes we are experiencing currently in most of our markets."
The Company received orders, net of cancellations, for 2,690 homes and
12,630 homes, respectively, during the 2003 fourth quarter and total year, the
highest for any fourth quarter and year in MDC's history. These home order
levels represent increases of 39% and 28%, respectively, from the net home
orders received in the same periods in 2002. Generally, the demand for new homes
remained strong throughout the quarter, despite fluctuations in certain economic
indicators, mortgage interest rates and weather conditions in several markets.
An 11% increase in the number of active subdivisions and a reduced rate of order
cancellations to 26.5% from 32.1% a year ago also contributed to the Company's
relative net home order strength in the fourth quarter of 2003.
-more-
[GRAPHIC OMITTED]
M.D.C. HOLDINGS, INC.
Page 4
Strong Financial Services Results
Operating profits from the Company's financial services operations were
$4.9 million and $28.3 million for the quarter and year ended December 31, 2003,
respectively, compared with $8.1 million and $24.2 million, for the same periods
in 2002. Record quarterly revenues from mortgage loan origination fees in the
2003 fourth quarter, driven by the record home closings from the homebuilding
segment, were more than offset by a reduction in gains on sales of mortgage
loans and higher general and administrative expenses incurred to handle the
higher volume of mortgage loans. The decline in gains on sales of mortgage loans
in the 2003 fourth quarter largely was due to year-over-year differences in the
volatility of mortgage interest rates, and the more competitive pricing
environment for mortgage loans that resulted from the significant decline in
refinancing activity in the marketplace. This competitive environment
contributed to the Company originating a higher percentage of less-valuable
adjustable rate mortgage loans in the fourth quarter of 2003, as well as
brokering a higher percentage of total loans processed in the quarter to third
party mortgage companies, for which no gains on sales are realized by the
Company. The Company originated and brokered $383.6 million and $165.2 million,
respectively, in mortgage loans in the quarter ended December 31, 2003, compared
with $455.1 million and $59.8 million, respectively, in the same period in 2002.
All earnings per share amounts discussed above are on a diluted basis.
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, suburban Maryland, Phoenix, Tucson,
Las Vegas and Salt Lake City; and among the top ten homebuilders in Northern
California and Southern California. MDC also has a growing presence in
Dallas/Fort Worth and has recently entered the Houston, San Antonio,
Philadelphia/Delaware Valley, West Florida, Jacksonville and Chicago markets.
For more information, please visit www.richmondamerican.com.
-more-
[GRAPHIC OMITTED]
M.D.C. HOLDINGS, INC.
Page 5
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.
-more-
M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
----------------------------- ------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
REVENUES
Homebuilding................................. $ 848,028 $ 755,877 $ 2,859,086 $ 2,272,195
Financial Services........................... 13,868 14,919 60,216 45,356
Corporate.................................... 184 226 768 973
------------ ------------ ------------ ------------
Total Revenues........................... $ 862,080 $ 771,022 $ 2,920,070 $ 2,318,524
============ ============ ============ ============
NET INCOME
Homebuilding................................. $ 125,956 $ 101,073 $ 393,879 $ 295,604
Financial Services........................... 4,869 8,074 28,277 24,194
------------ ------------ ------------ ------------
Operating Profit......................... 130,825 109,147 422,156 319,798
Expenses related to debt redemption.......... - - - - (9,315) - -
Other corporate expense, net................. (20,735) (15,509) (64,618) (45,754)
------------ ------------ ------------ ------------
Income before income taxes................... 110,090 93,638 348,223 274,044
Provision for income taxes................... (43,068) (36,564) (135,994) (106,739)
------------ ------------ ------------ ------------
Net Income............................... $ 67,022 $ 57,074 $ 212,229 $ 167,305
============ ============ ============ ============
EARNINGS PER SHARE
Basic.................................... $ 2.28 $ 1.95 $ 7.31 $ 5.68
============ ============ ============ ============
Diluted.................................. $ 2.18 $ 1.90 $ 7.00 $ 5.48
============ ============ ============ ============
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic.................................... 29,422 29,289 29,035 29,443
============ ============ ============ ============
Diluted.................................. 30,798 30,117 30,303 30,529
============ ============ ============ ============
DIVIDENDS PAID PER SHARE $ .125 $ .073 $ .405 $ .282
============ ============ ============ ============
-more-
M.D.C. HOLDINGS, INC.
Information on Business Segments
(Dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------------- -------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Homebuilding
Home sales............................................. $ 845,857 $ 750,067 $ 2,851,328 $ 2,260,291
Land sales............................................. - - 3,791 1,298 6,022
Other revenues......................................... 2,171 2,019 6,460 5,882
----------- ----------- ----------- -----------
Total Homebuilding Revenues....................... 848,028 755,877 2,859,086 2,272,195
----------- ----------- ----------- -----------
Home cost of sales..................................... 634,139 580,294 2,163,696 1,741,449
Land cost of sales..................................... - - 2,859 842 4,600
Marketing.............................................. 46,470 39,921 162,148 125,060
General and administrative............................. 41,463 31,730 138,521 105,482
----------- ----------- ----------- -----------
722,072 654,804 2,465,207 1,976,591
----------- ----------- ----------- -----------
Homebuilding Operating Profit..................... 125,956 101,073 393,879 295,604
----------- ----------- ----------- -----------
Financial Services
Interest revenues...................................... 1,319 1,354 4,616 4,348
Origination fees....................................... 6,539 5,987 22,245 18,771
Gains on sales of mortgage servicing................... 365 413 1,972 1,773
Gains on sales of mortgage loans, net.................. 4,601 6,944 28,622 19,587
Mortgage servicing and other........................... 1,044 221 2,761 877
----------- ----------- ----------- -----------
Total Financial Services Revenues................. 13,868 14,919 60,216 45,356
General and administrative............................. 8,999 6,845 31,939 21,162
----------- ----------- ----------- -----------
Financial Services Operating Profit................ 4,869 8,074 28,277 24,194
----------- ----------- ----------- -----------
Total Operating Profit........................................ 130,825 109,147 422,156 319,798
----------- ----------- ----------- -----------
Corporate
Expenses related to debt redemption.................... - - - - (9,315) - -
Interest and other revenues............................ 184 226 768 973
Other general and administrative expenses.............. (20,919) (15,735) (65,386) (46,727)
----------- ----------- ----------- -----------
Net Corporate Expenses............................. (20,735) (15,509) (73,933) (45,754)
----------- ----------- ----------- -----------
Income Before Income Taxes.................................... $ 110,090 $ 93,638 $ 348,223 $ 274,044
=========== =========== =========== ===========
-more-
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
December 31,
-------------------------------------------
2003 2002 2001
------------ ------------ ------------
BALANCE SHEET DATA
Stockholders' Equity Per Share Outstanding................................... $ 34.40 $ 27.54 $ 22.36
Stockholders' Equity......................................................... $ 1,015,920 $ 800,567 $ 653,831
Homebuilding and Corporate Debt.............................................. 500,179 322,990 174,503
------------ ------------ ------------
Capital (excluding mortgage lending debt)................................ $ 1,516,099 $ 1,123,557 $ 828,334
============ ============ ============
Ratio of Homebuilding and Corporate Debt to Equity........................... .49 .40 .27
Ratio of Homebuilding and Corporate Debt to Capital.......................... .33 .29 .21
Ratio of Homebuilding and Corporate Debt to Capital (net of cash)............ .24 .27 .17
Cash and Cash Equivalents.................................................... $ 173,565 $ 28,942 $ 36,600
Unrestricted Cash and Available Borrowing Capacity Under Lines of Credit..... $ 779,407 $ 618,774 $ 491,770
Housing Completed or Under Construction Inventories.......................... $ 732,744 $ 578,475 $ 456,752
Land and Land Under Development Inventories.................................. $ 763,569 $ 656,843 $ 450,502
Corporate and Homebuilding Interest Capitalized
Interest Capitalized in Inventory at Beginning of Year..................... $ 17,783 $ 17,358 $ 19,417
Interest Incurred During the Year........................................ 26,779 21,116 22,498
Interest in Home and Land Cost of Sales for the Year..................... (24,519) (20,691) (24,557)
------------ ------------ ------------
Interest Capitalized in Inventory at End of Year........................... $ 20,043 $ 17,783 $ 17,358
============ ============ ============
Interest Capitalized as a Percent of Inventories............................. 1.3% 1.4% 1.9%
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2003 2002 2003 2002
--------- ---------- ---------- ----------
OPERATING DATA
Interest in Home and Land Cost of Sales as a Percent of
Home Sales Revenues................................................ .8% .9% .9% .9%
Homebuilding and Corporate SG&A as a Percent of Home Sales Revenues..
12.9% 11.7% 12.8% 12.3%
Depreciation and Amortization........................................ $ 9,814 $ 9,541 $ 35,677 $ 26,907
Home Gross Margins................................................... 25.0% 22.6% 24.1% 23.0%
Excluding Interest in Home Cost of Sales...................... 25.8% 23.5% 25.0% 23.9%
Cash Provided by (Used in) Operating Activities...................... $ 81,448 $ (166,429)
Cash Used in Investing Activities.................................... $ (6,785) $ (12,441)
Cash Provided by Financing Activities................................ $ 69,960 $ 171,212
-more-
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
December 31,
------------------------------------------
2003 2002 2001
----------- ----------- -----------
LOTS OWNED AND CONTROLLED
Lots Owned................................................................... 16,351 16,962 13,524
Lots Under Option............................................................ 12,251 6,995 6,059
Homes Under Construction (including models).................................. 4,754 3,751 2,783
LOTS OWNED AND CONTROLLED BY MARKET
(excluding homes under construction)
Colorado..................................................................... 5,206 5,760 6,940
California................................................................... 3,512 3,456 3,006
Nevada ..................................................................... 5,359 4,391 1,897
Arizona ..................................................................... 5,258 3,940 4,657
Utah 1,220 861 - -
Texas 2,203 841 - -
Virginia..................................................................... 3,202 3,257 2,422
Maryland 1,767 1,451 661
Florida...................................................................... 875 - - - -
----------- ----------- -----------
Total Company............................................................ 28,602 23,957 19,583
=========== =========== ===========
ACTIVE SUBDIVISIONS
Colorado..................................................................... 49 61 61
California................................................................... 26 24 26
Nevada ..................................................................... 17 18 7
Arizona ..................................................................... 38 44 27
Utah 11 4 - -
Texas 11 1 - -
Virginia..................................................................... 28 20 11
Maryland 9 6 5
Florida...................................................................... 9 - - - -
----------- ----------- -----------
Total Company............................................................ 198 178 137
=========== =========== ===========
Three Months Ended Year Ended
December 31, December 31,
---------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ -----------
AVERAGE SELLING PRICE PER HOME CLOSED
Colorado.................................................... $ 251.2 $ 252.3 $ 254.2 $ 250.5
California.................................................. 393.0 366.2 390.0 390.4
Nevada...................................................... 190.1 186.1 186.3 188.8
Arizona..................................................... 182.1 173.9 184.3 167.0
Utah........................................................ 175.8 181.6 174.5 166.0
Texas....................................................... 164.5 176.8 161.4 176.8
Virginia.................................................... 393.7 343.0 375.1 330.3
Maryland.................................................... 416.7 376.0 388.2 345.2
Florida..................................................... 166.2 - - 168.3 - -
Company Average......................................... $ 250.7 $ 250.5 $ 254.3 $ 254.0
-more-
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
Three Months Ended Year Ended
December 31, December 31,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Orders For Homes, net (Units)
Colorado.................................... 425 382 2,433 2,681
California.................................. 635 387 2,116 2,086
Nevada...................................... 534 283 2,595 1,260
Arizona..................................... 562 573 3,229 2,669
Utah........................................ 86 34 378 111
Texas....................................... 95 15 289 17
Virginia.................................... 234 194 1,160 798
Maryland.................................... 64 63 372 277
Florida..................................... 55 - - 58 - -
------------ ------------ ------------ ------------
Total................................... 2,690 1,931 12,630 9,899
============ ============ ============ ============
Homes Closed (Units)
Colorado.................................... 686 814 2,656 2,919
California.................................. 501 606 1,919 1,654
Nevada...................................... 700 510 2,059 1,204
Arizona..................................... 905 784 2,972 2,218
Utah........................................ 84 38 277 102
Texas....................................... 67 1 162 1
Virginia.................................... 273 188 782 556
Maryland.................................... 77 53 291 246
Florida..................................... 81 - - 93 - -
------------ ------------ ------------ ------------
Total................................... 3,374 2,994 11,211 8,900
============ ============ ============ ============
December 31,
----------------------------
2003 2002
------------ ------------
Backlog (Units)
Colorado................................................................... 734 957
California................................................................. 1,119 922
Nevada..................................................................... 886 350
Arizona.................................................................... 1,333 1,076
Utah....................................................................... 151 50
Texas...................................................................... 143 16
Virginia................................................................... 854 476
Maryland................................................................... 269 188
Florida.................................................................... 104 - -
------------ ------------
Total.................................................................. 5,593 4,035
============ ============
Backlog Estimated Sales Value (in thousands)................................... $ 1,600,000 $ 1,120,000
============ ============
-###-