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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 1-8951
M.D.C. HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 84-0622967
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
3600 South Yosemite Street, Suite 900 80237
Denver, Colorado (Zip code)
(Address of principal executive offices)
(303) 773-1100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of July 30, 1999, 22,295,000 shares of M.D.C. Holdings,
Inc. common stock were outstanding.
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M.D.C. HOLDINGS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
INDEX
Page
No.
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Part I. Financial Information:
Item 1. Condensed Consolidated Financial Statements:
Balance Sheets as of June 30, 1999 (Unaudited)
and December 31, 1998........................ 1
Statements of Income (Unaudited) for the three
and six months ended June 30, 1999 and 1998.. 3
Statements of Cash Flows (Unaudited) for the
six months ended June 30, 1999 and 1998...... 4
Notes to Condensed Consolidated Financial
Statements (Unaudited)....................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................... 8
Part II. Other Information:
Item 1. Legal Proceedings.............................. 19
Item 4. Submission of Matters to a Vote of Shareowners. 19
Item 5. Other Information.............................. 19
Item 6. Exhibits and Reports on Form 8-K............... 19
(i)
M.D.C. HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
1999 1998
----------- -----------
ASSETS (Unaudited)
Corporate
Cash and cash equivalents................................................... $ 11,000 $ 2,460
Property and equipment, net................................................. 2,604 2,901
Deferred income taxes....................................................... 18,218 17,949
Deferred debt issue costs, net.............................................. 2,493 2,589
Other assets, net........................................................... 5,675 5,670
---------- -----------
39,990 31,569
Homebuilding
Cash and cash equivalents................................................... 8,145 7,279
Home sales and other accounts receivable.................................... 11,814 12,771
Inventories, net
Housing completed or under construction................................... 360,330 294,104
Land and land under development........................................... 254,605 217,180
Prepaid expenses and other assets, net...................................... 52,657 58,981
---------- -----------
687,551 590,315
Financial Services
Cash and cash equivalents................................................... 474 340
Mortgage loans held in inventory, net....................................... 83,401 84,548
Other assets, net........................................................... 5,296 7,241
---------- -----------
89,171 92,129
Total Assets.......................................................... $ 816,712 $ 714,013
========== ===========
See notes to condensed consolidated financial statements.
-1-
M.D.C. HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
June 30, December 31,
1999 1998
----------- -----------
LIABILITIES (Unaudited)
Corporate
Accounts payable and accrued expenses....................................... $ 35,671 $ 32,378
Income taxes payable........................................................ 18,237 14,568
Senior notes, net........................................................... 174,364 174,339
----------- -----------
228,272 221,285
Homebuilding
Accounts payable and accrued expenses....................................... 150,751 131,374
Line of credit.............................................................. 55,000 21,871
Notes payable............................................................... 1,044 866
----------- -----------
206,795 154,111
Financial Services
Accounts payable and accrued expenses....................................... 15,448 12,152
Line of credit.............................................................. 26,076 28,334
----------- -----------
41,524 40,486
Total Liabilities..................................................... 476,591 415,882
----------- -----------
COMMITMENTS AND CONTINGENCIES.................................................. - - - -
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 25,000,000 shares authorized; none issued.. - - - -
Common stock, $.01 par value; 100,000,000 shares authorized; 28,125,000 and
27,858,000 shares issued, respectively, at June 30, 1999 and
December 31, 1998......................................................... 281 279
Additional paid-in capital.................................................. 179,268 175,160
Retained earnings........................................................... 196,782 160,291
Accumulated comprehensive income............................................ 3,001 1,785
----------- -----------
379,332 337,515
Less treasury stock, at cost; 5,850,000 and 5,876,000 shares, respectively,
at June 30, 1999 and December 31, 1998.................................... (39,211) (39,384)
----------- -----------
Total Stockholders' Equity............................................ 340,121 298,131
----------- -----------
Total Liabilities and Stockholders' Equity............................ $ 816,712 $ 714,013
=========== ===========
See notes to condensed consolidated financial statements.
-2-
M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
REVENUES
Homebuilding.......................................... $ 391,130 $ 293,420 $ 681,010 $ 532,017
Financial services.................................... 7,011 10,149 13,925 14,820
Corporate............................................. 1,618 310 1,949 543
----------- ----------- ----------- -----------
Total Revenues.................................... 399,759 303,879 696,884 547,380
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Homebuilding.......................................... 347,134 276,513 611,860 500,966
Financial services.................................... 3,714 2,987 7,080 5,633
Corporate general and administrative.................. 7,659 4,040 13,964 7,552
----------- ----------- ----------- -----------
Total Costs and Expenses.......................... 358,507 283,540 632,904 514,151
----------- ----------- ----------- -----------
Income before income taxes and extraordinary
item.................................................. 41,252 20,339 63,980 33,229
Provision for income taxes............................... (16,295) (7,758) (25,272) (12,720)
----------- ----------- ----------- -----------
Income before extraordinary item......................... 24,957 12,581 38,708 20,509
Extraordinary loss from early extinguishment of debt, net
of income tax benefit of $9,587....................... - - - - - - (15,314)
----------- ----------- ----------- -----------
NET INCOME............................................... 24,957 12,581 38,708 5,195
Unrealized holding gains on securities arising during the
period, net........................................... 21 314 1,216 1,395
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME..................................... $ 24,978 $ 12,895 $ 39,924 $ 6,590
=========== =========== =========== ===========
EARNINGS PER SHARE
Basic
Income before extraordinary item.................. $ 1.12 $ .70 $ 1.74 $ 1.14
=========== =========== =========== ===========
Net Income........................................ $ 1.12 $ .70 $ 1.74 $ .29
=========== =========== =========== ===========
Diluted
Income before extraordinary item.................. $ 1.10 $ .58 $ 1.71 $ .95
=========== =========== =========== ===========
Net Income........................................ $ 1.10 $ .58 $ 1.71 $ .27
=========== =========== =========== ===========
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic................................................. 22,274 18,042 22,189 17,981
=========== =========== =========== ===========
Diluted............................................... 22,695 22,469 22,630 22,472
=========== =========== =========== ===========
DIVIDENDS PAID PER SHARE................................. $ .05 $ .04 $ .10 $ .07
=========== =========== =========== ===========
See notes to condensed consolidated financial statements.
-3-
M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months
Ended June 30,
--------------------------
1999 1998
----------- -----------
OPERATING ACTIVITIES
Net income........................................................... $ 38,708 $ 5,195
Adjustments to reconcile net income to net cash used in operating
activities
Loss from the early extinguishment of debt..................... - - 24,901
Depreciation and amortization.................................. 9,276 9,107
Homebuilding asset impairment charges.......................... - - 3,000
Deferred income taxes.......................................... (269) (3,824)
Gains on sales of mortgage-related assets...................... - - (4,509)
Net changes in assets and liabilities
Home sales and other accounts receivable.................. 957 (13,837)
Homebuilding inventories.................................. (102,942) (56,117)
Mortgage loans held in inventory.......................... 1,147 (24,165)
Accounts payable and accrued expenses and income taxes
payable................................................. 29,479 36,821
Prepaid expenses and other assets......................... 1,963 (11,584)
Other, net..................................................... 1,831 (2,885)
----------- -----------
Net cash used in operating activities................................ (19,850) (37,897)
----------- -----------
INVESTING ACTIVITIES
Net proceeds from sale of office building............................ - - 13,250
Net proceeds from mortgage-related assets and liabilities............ - - 4,636
Other, net........................................................... 529 (2,524)
----------- -----------
Net cash provided by investing activities............................ 529 15,362
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FINANCING ACTIVITIES
Lines of credit
Advances....................................................... 718,300 579,235
Principal payments............................................. (687,429) (532,254)
Notes payable
Principal payments............................................. (574) (12,614)
Senior notes
Proceeds from issuance......................................... - - 171,541
Repurchase and defeasance...................................... - - (152,000)
Premium on repurchase and defeasance........................... - - (17,592)
Retirement of subordinated notes..................................... - - (10,230)
Dividend payments.................................................... (2,217) (1,258)
Proceeds from stock issuance......................................... 781 1,414
----------- -----------
Net cash provided by financing activities............................ 28,861 26,242
----------- -----------
Net increase in cash and cash equivalents............................ 9,540 3,707
Cash and cash equivalents
Beginning of period............................................ 10,079 11,678
----------- -----------
End of period.................................................. $ 19,619 $ 15,385
=========== ===========
See notes to condensed consolidated financial statements.
-4-
M.D.C. HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
A. Presentation of Financial Statements
The condensed consolidated financial statements of M.D.C. Holdings,
Inc. ("MDC" or the "Company," which refers to M.D.C. Holdings, Inc. and its
subsidiaries) have been prepared, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. These statements reflect
all adjustments (including all normal recurring accruals) which, in the opinion
of management, are necessary to present fairly the financial position, results
of operations and cash flows of MDC as of June 30, 1999 and for all of the
periods presented. These statements are condensed and do not include all of the
information required by generally accepted accounting principles in a full set
of financial statements. These statements should be read in conjunction with
MDC's financial statements and notes thereto included in MDC's Annual Report on
Form 10-K for its fiscal year ended December 31, 1998.
B. Corporate and Homebuilding Interest Activity (in thousands)
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Interest capitalized in homebuilding
inventory, beginning of period....... $ 24,533 $ 35,546 $ 26,332 $ 37,991
Interest incurred....................... 5,231 5,727 9,951 11,499
Interest expensed....................... - - - - - - - -
Previously capitalized interest included
in cost of sales..................... (7,581) (7,957) (14,100) (16,174)
----------- ----------- ----------- -----------
Interest capitalized in homebuilding
inventory, end of period............. $ 22,183 $ 33,316 $ 22,183 $ 33,316
=========== =========== =========== ===========
C. Stockholders' Equity
In the fourth quarter of 1998, all $28,000,000 outstanding principal
amount of the Company's 8 3/4% convertible subordinated notes due 2005 (the
"Convertible Subordinated Notes") converted into approximately 3,612,900 shares
of MDC common stock at a conversion price of $7.75 per share.
D. Extraordinary Item
Net income for the first six months of 1998 included an extraordinary
loss of $15,314,000, net of an income tax benefit of $9,587,000, recognized in
connection with the Company's repurchase and defeasance of the remaining
$152,000,000 principal amount of 11 1/8% senior notes due 2003 (the "Old Senior
Notes").
-5-
E. Information on Business Segments
The Company operates in two business segments: homebuilding and
financial services. A summary of the Company's segment information is shown
below (in thousands).
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Homebuilding
Home sales......................... $ 389,144 $ 291,752 $ 677,228 $ 524,515
Land sales......................... 1,439 1,276 2,825 6,803
Other revenues..................... 547 392 957 699
----------- ----------- ----------- -----------
391,130 293,420 681,010 532,017
----------- ----------- ----------- -----------
Home cost of sales................. 312,065 243,253 546,813 439,522
Land cost of sales................. 984 1,179 2,023 4,285
Asset impairment charges........... - - 3,000 - - 3,000
Marketing.......................... 21,226 18,146 38,109 33,396
General and administrative......... 12,859 10,935 24,915 20,763
----------- ----------- ----------- -----------
347,134 276,513 611,860 500,966
----------- ----------- ----------- -----------
Homebuilding Operating Profit.. 43,996 16,907 69,150 31,051
----------- ----------- ----------- -----------
Financial Services
Mortgage Lending Revenues
Net interest income................ $ 616 $ 502 $ 1,277 $ 1,033
Origination fees................... 3,217 2,275 5,720 4,140
Gains on sales of mortgage servicing 1,026 692 2,289 927
Gains on sales of mortgage loans,
net.............................. 2,010 2,012 4,350 4,016
Mortgage servicing and other....... 142 72 289 102
Asset Management Revenues............ - - 4,596 - - 4,602
----------- ----------- ----------- -----------
7,011 10,149 13,925 14,820
General and Administrative Expenses.. 3,714 2,987 7,080 5,633
----------- ----------- ----------- -----------
Financial Services Operating
Profit....................... 3,297 7,162 6,845 9,187
----------- ----------- ----------- -----------
Total Operating Profit................. 47,293 24,069 75,995 40,238
----------- ----------- ----------- -----------
Corporate
Interest and other revenues........ (1,618) (310) (1,949) (543)
General and administrative......... 7,659 4,040 13,964 7,552
----------- ----------- ----------- -----------
Net Corporate Expenses......... 6,041 3,730 12,015 7,009
----------- ----------- ----------- -----------
Income Before Income Taxes and
Extraordinary Item................... $ 41,252 $ 20,339 $ 63,980 $ 33,229
=========== =========== =========== ===========
-6-
F. Earnings Per Share
Pursuant to Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," the computation of diluted earnings per share takes into
account the effect of dilutive stock options and for the quarter and six months
ended June 30, 1998, assumed the conversion into MDC common stock of all of the
$28,000,000 outstanding principal amount of the Convertible Subordinated Notes
at a conversion price of $7.75 per share of MDC common stock. The basic and
diluted earnings per share calculations are shown below (in thousands, except
per share amounts).
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Basic Earnings Per Share
Income before extraordinary item................. $ 24,957 $ 12,581 $ 38,708 $ 20,509
Extraordinary loss, net of taxes................. - - - - - - (15,314)
----------- ----------- ----------- -----------
Net income.................................. $ 24,957 $ 12,581 $ 38,708 $ 5,195
=========== =========== =========== ===========
Basic weighted-average shares outstanding........ 22,274 18,042 22,189 17,981
=========== =========== =========== ===========
Per share amounts
Income before extraordinary item............ $ 1.12 $ .70 $ 1.74 $ 1.14
Extraordinary loss, net of taxes............ - - - - - - (.85)
----------- ----------- ----------- ----------
Net income.................................. $ 1.12 $ .70 $ 1.74 $ .29
=========== =========== =========== ===========
Diluted Earnings Per Share
Income before extraordinary item................. $ 24,957 $ 12,581 $ 38,708 $ 20,509
Conversion of Convertible Subordinated Notes..... - - 392 - - 783
----------- ----------- ----------- -----------
Adjusted income before extraordinary item........ 24,957 12,973 38,708 21,292
Extraordinary loss, net of taxes................. - - - - - - (15,314)
----------- ----------- ----------- -----------
Adjusted net income......................... $ 24,957 $ 12,973 $ 38,708 $ 5,978
=========== =========== =========== ===========
Basic weighted-average shares outstanding........ 22,274 18,042 22,189 17,981
Stock options, net............................... 421 814 441 878
Conversion of Convertible Subordinated Notes..... - - 3,613 - - 3,613
----------- ----------- ----------- -----------
Diluted weighted-average shares outstanding. 22,695 22,469 22,630 22,472
=========== =========== =========== ===========
Per share amounts
Income before extraordinary item............ $ 1.10 $ .58 $ 1.71 $ .95
Extraordinary loss, net of taxes............ - - - - - - (.68)
----------- ----------- ----------- ----------
Net income.................................. $ 1.10 $ .58 $ 1.71 $ .27
=========== =========== =========== ===========
G. Supplemental Disclosure of Cash Flow Information (in thousands)
Six Months
Ended June 30,
---------------------------
1999 1998
----------- ------------
Cash paid during the period for
Interest.................................................. $ 8,324 $ 5,749
Income taxes.............................................. $ 23,734 $ 5,189
Non-cash investing and financing activities
Land purchases financed by seller......................... $ 752 $ - -
Land sales financed by MDC................................ $ 43 $ 744
-7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
INTRODUCTION
M.D.C. Holdings, Inc. is a Delaware corporation originally
incorporated in Colorado in 1972. We refer to M.D.C. Holdings, Inc. as the
"Company" or as "MDC" in this Form 10-Q. The "Company" or "MDC" includes our
subsidiaries unless we state otherwise. MDC's primary business is owning and
managing subsidiary companies that build and sell homes under the name "Richmond
American Homes." We also own and manage HomeAmerican Mortgage Corporation
("HomeAmerican"), which originates mortgage loans primarily for MDC's home
buyers.
RESULTS OF OPERATIONS
The table below summarizes MDC's results of operations (in thousands,
except per share amounts).
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Revenues.................................... $ 399,759 $ 303,879 $ 696,884 $ 547,380
Income Before Income Taxes and Extraordinary
Item...................................... $ 41,252 $ 20,339 $ 63,980 $ 33,229
Income Before Extraordinary Item............ $ 24,957 $ 12,581 $ 38,708 $ 20,509
Net Income.................................. $ 24,957 $ 12,581 $ 38,708 $ 5,195
Earnings Per Share
Basic
Income Before Extraordinary Item....... $ 1.12 $ .70 $ 1.74 $ 1.14
Net Income............................. $ 1.12 $ .70 $ 1.74 $ .29
Diluted
Income Before Extraordinary Item....... $ 1.10 $ .58 $ 1.71 $ .95
Net Income............................. $ 1.10 $ .58 $ 1.71 $ .27
Revenues for the second quarter and first half of 1999 increased
$95,880,000 and $149,504,000, respectively, compared with the same periods in
1998, primarily due to higher home sales revenues resulting from (1) record
levels of home closings; and (2) increases of more than 10% in the average
selling prices of homes closed.
Income before extraordinary item increased 98% and 89%, respectively,
in the second quarter and first half of 1999, compared with the same periods in
1998. These increases primarily were a result of increased operating profit from
the Company's homebuilding segment, due to the home sales revenue increases
described above and 320 and 310 basis point increases, respectively, in Home
Gross Margins (as hereinafter defined).
-8-
Net income for the first six months of 1998 included an extraordinary
loss of $15,314,000, net of an income tax benefit of $9,587,000, recognized in
connection with the Company's repurchase and defeasance of the then remaining
$152,000,000 principal amount of Old Senior Notes.
Homebuilding Segment
The tables below set forth information relating to the Company's
homebuilding segment (dollars in thousands).
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Home Sales Revenues......................... $ 389,144 $ 291,752 $ 677,228 $ 524,515
Operating Profit............................ $ 43,996 $ 16,907 $ 69,150 $ 31,051
Average Selling Price Per Home Closed..... $ 208.8 $ 186.8 $ 204.5 $ 185.2
Home Gross Margins.......................... 19.8% 16.6% 19.3% 16.2%
Excluding Interest in Home Cost of Sales 21.8% 19.3% 21.3% 19.0%
Orders For Homes, net (units)
Colorado............................. 759 687 1,604 1,597
California........................... 407 310 800 620
Arizona.............................. 413 430 938 951
Nevada............................... 146 163 274 305
Virginia............................. 194 163 461 427
Maryland............................. 110 96 198 225
----------- ----------- ----------- -----------
Total........................... 2,029 1,849 4,275 4,125
=========== =========== =========== ===========
Homes Closed (units)
Colorado............................. 691 631 1,193 1,111
California........................... 317 194 540 375
Arizona.............................. 469 365 855 691
Nevada............................... 115 106 256 196
Virginia............................. 190 163 310 285
Maryland............................. 82 103 157 174
----------- ----------- ----------- -----------
Total........................... 1,864 1,562 3,311 2,832
=========== =========== =========== ===========
June 30, December 31, June 30,
1999 1998 1998
----------- ------------ -----------
Backlog (units)
Colorado............................. 1,766 1,355 1,366
California........................... 586 326 515
Arizona.............................. 779 696 653
Nevada............................... 164 146 204
Virginia............................. 405 254 353
Maryland............................. 194 153 234
----------- ----------- -----------
Total........................... 3,894 2,930 3,325
=========== =========== ===========
Estimated Sales Value........... $ 800,000 $ 580,000 $ 640,000
=========== =========== ===========
-9-
June 30, December 31, June 30,
1999 1998 1998
----------- ------------ -----------
Active Subdivisions
Colorado............................. 46 45 46
California........................... 20 21 16
Arizona.............................. 22 24 27
Nevada............................... 9 9 9
Virginia............................. 17 20 20
Maryland............................. 8 11 14
----------- ----------- -----------
Total........................... 122 130 132
=========== =========== ===========
Home Sales Revenues - Home sales revenues in the second quarter and
first half of 1999 represented the highest revenue levels for comparable periods
in the Company's history and were 33% and 29% higher, respectively, than home
sales revenues for the same periods in 1998. The improved revenues were a result
of increased home closings and higher average selling prices per home closed, as
further discussed below.
Homes Closed - Home closings for the quarter and six months ended June
30, 1999, which were higher in all of the Company's markets except Maryland,
increased 19% and 17%, respectively, compared with the same periods in 1998.
Home closings in the second quarter and first half of 1999, compared with the
same periods in 1998, particularly were strong in (1) Phoenix (increases of 34%
and 24%, respectively), Southern California (increases of 33% and 27%,
respectively) and Colorado (increases of 10% and 7%, respectively) as a result
of the strong demand for homes in these markets; and (2) Northern California,
where the Company has opened six new active subdivisions in the San Francisco
Bay area. Home closings decreased in the second quarter and first half of 1999
in Maryland, compared with the same periods in 1998, primarily due to the
decreased number of active subdivisions in this market.
Looking forward, the Company's record Backlog (as hereinafter defined)
at June 30, 1999 and its strong orders for new homes in July 1999 have
positioned the Company to close more than 7,000 homes in 1999. See "Forward
Looking Statements" below.
Average Selling Price Per Home Closed - The average selling prices per
home closed in the second quarter and first half of 1999 increased $22,000 and
$19,300, respectively, compared with the same periods in 1998. Each of the
Company's markets realized higher average selling prices for the 1999 periods.
The increases primarily were due to (1) a greater number of homes closed in
higher-priced subdivisions in Southern and Northern California; (2) a higher
proportion of detached homes closed in Virginia, which generally have higher
selling prices than townhomes; (3) selling price increases in each of the
Company's markets, particularly in Colorado, Southern California and Phoenix;
and (4) increased sales volume per home from the Company's design centers in
Colorado, Phoenix, Las Vegas and Southern California.
Home Gross Margins - We define "Home Gross Margins" to mean home sales
revenues less cost of goods sold (which primarily includes land and construction
costs, capitalized interest, financing costs, and a reserve for warranty
expense) as a percent of home sales revenues. Home Gross Margins reached record
levels and increased by 320 and 310 basis points, respectively, during the
quarter and six months ended June 30, 1999, compared with the same periods in
1998. The increases largely were due to (1) in Colorado and Phoenix, selling
price increases and reduced incentives offered to home buyers due to the
-10-
continued strong demand for new homes in these markets; (2) in Maryland,
management's continued efforts to close out under-performing subdivisions and
improve profitability; (3) reduced levels of interest in home cost of sales, as
discussed below; (4) increases in higher-margin revenues generated through the
Company's design centers; (5) a higher proportion of presold homes closed, which
generally have higher Home Gross Margins than spec homes; and (6) initiatives
implemented in each of the Company's markets designed to improve operating
efficiency, control costs and increase rates of return.
Looking forward, the Company believes that Home Gross Margins for the
third and fourth quarters in 1999 will exceed 18%, which represent increases of
at least 50 basis points from the Home Gross Margins achieved by the Company for
the comparable periods in 1998. Future growth in Home Gross Margins may be
impacted adversely by (1) increased competition; (2) increases in the costs of
subcontracted labor, finished lots, building materials and other resources, to
the extent that market conditions prevent the recovery of increased costs
through higher selling prices; (3) adverse weather; and (4) shortages of
subcontractor labor. See "Forward Looking Statements" below.
Interest in Home Cost of Sales - Interest in home cost of sales as a
percent of home sales revenues in the second quarter and first half of 1999
decreased to 2.0%, compared with 2.7% and 2.8% for the same periods in 1998.
These reductions primarily resulted from lower levels of capitalized interest in
homebuilding inventories at the beginning of 1999, compared with the beginning
of 1998. Despite increases in the amount of the Company's homebuilding
inventories, interest capitalized in homebuilding inventories at June 30, 1999
decreased to $22,183,000, compared with $33,316,000 at June 30, 1998. This
reduction in interest capitalized in homebuilding inventories primarily was due
to lower levels of interest incurred over the last year resulting from (1) lower
effective interest rates on the Company's outstanding debt primarily resulting
from the January 1998 refinancing of the Old Senior Notes; and (2) the continued
reduction in homebuilding and corporate debt levels.
Orders for Homes and Backlog - Orders for homes in the second quarter
and six months ended June 30, 1999 increased 10% and 4%, respectively, compared
with the same periods in 1998, despite a decrease in the number of active
subdivisions to 122 at June 30, 1999 from 132 at June 30, 1998. As a result,
1999 second quarter and first half home orders were approximately 20% and 13%
higher, respectively, on a "same store" basis than home orders for the same
periods in 1998. The strong 1999 second quarter and first half home orders
compared favorably with the same periods in 1998 despite difficult
year-over-year comparisons as 1998 second quarter and first half home orders
increased 23% and 36%, respectively, compared with home orders received in the
same periods in 1997. Home orders in the second quarter of 1999 particularly
were strong in (1) Virginia and Colorado, as a result of the continued strong
demand for homes in these markets; and (2) Northern California, where second
quarter 1999 home orders increased by 100, compared with second quarter 1998,
due to the addition of six new active subdivisions in this market. On a
same-store basis, orders for new homes increased by more than 50% in Maryland,
primarily due to improving market conditions and the close-out of
under-performing projects.
The increased orders for homes in the second quarter and first half of
1999 contributed to a 17% increase in the Company's homes under contract but not
yet delivered ("Backlog") at June 30, 1999 to 3,894 units with an estimated
sales value of $800,000,000, compared with a Backlog of 3,325 units with an
estimated sales value of $640,000,000 at June 30, 1998. Assuming no significant
change in market conditions or mortgage interest rates, the Company expects
approximately 75% of its June 30, 1999 Backlog to close under existing sales
contracts during the second half of 1999 and first quarter of 2000. The
remaining 25% of the homes in Backlog are not expected to close under existing
contracts due to cancellations. See "Forward-Looking Statements" below.
-11-
The Company received approximately 645 orders for homes in July 1999,
compared with 525 orders for July 1998. The July 1999 year-over-year increase of
23% (33% on a same-store basis) is attributable to improved home orders in most
of the Company's markets, with particular strength in Southern California and
Colorado, which were up 53% and 39%, respectively, on a same-store basis.
Northern California, which is now selling in six new subdivisions, recorded 54
more home orders than in July 1998. The Company is unable to predict whether
higher year-over-year home orders in 1999, compared with 1998, will continue in
the future. See "Forward-Looking Statements" below.
Marketing - Marketing expenses (which include amortization of deferred
marketing, model home expenses, sales commissions and other costs) totalled
$21,226,000 and $38,109,000, respectively, for the quarter and six months ended
June 30, 1999, compared with $18,146,000 and $33,396,000, respectively, for the
same periods in 1998. The increases in 1999 primarily were volume related,
resulting from higher (1) marketing-related salaries and benefits; (2) sales
commissions; (3) deferred marketing costs amortized in connection with the
increased number of home closings; and (4) product advertising and other costs
incurred in connection with the Company's expanded operations. These expenses
declined as a percentage of home sales revenues to 5.5% and 5.6%, respectively,
for the second quarter and first half of 1999, compared with 6.2% and 6.4%,
respectively, for the same periods in 1998.
General and Administrative - General and administrative expenses
increased to $12,859,000 and $24,915,000, respectively, during the second
quarter and first half of 1999, compared with $10,935,000 and $20,763,000,
respectively, for the same periods in 1998, primarily due to increased
compensation costs resulting from MDC's increased profitability and expanded
homebuilding operations. These expenses declined as a percentage of home sales
revenues to 3.3% and 3.7%, respectively, for the second quarter and first half
of 1999, compared with 3.7% and 4.0%, respectively, for the same periods in
1998.
Asset Impairment Charges
No asset impairment charges were recorded during the first half of
1999. Operating results during the second quarter and first half of 1998 were
reduced by asset impairment charges of $3,000,000 related to certain of the
Company's homebuilding assets in suburban Maryland. The asset impairment charges
resulted from (1) the recognition of losses anticipated from the closing of
certain homes in Backlog and from the reduction of selling prices and the
offering of increased incentives to stimulate sales of certain completed unsold
homes in inventory; and (2) the write-down to fair value of certain subdivisions
which experienced slow sales and negative Home Gross Margins.
-12-
Land Inventory
The table below shows the carrying value of land and land under
development, by market, the total number of lots owned and lots controlled under
option agreements, and total option deposits (dollars in thousands).
June 30, December 31, June 30,
1999 1998 1998
----------- ----------- -----------
Colorado................................ $ 54,012 $ 53,720 $ 47,986
California.............................. 132,838 100,754 53,304
Arizona................................. 17,358 25,178 27,068
Nevada.................................. 31,771 20,027 19,722
Virginia................................ 8,734 11,292 14,032
Maryland................................ 9,892 6,209 10,788
----------- ----------- -----------
Total.............................. $ 254,605 $ 217,180 $ 172,900
=========== =========== ===========
Total Lots Owned........................ 9,191 8,925 8,358
Total Lots Controlled Under Option...... 7,950 7,729 6,198
----------- ----------- -----------
Total Lots Owned and Controlled... 17,141 16,654 14,556
=========== =========== ===========
Total Option Deposits................... $ 8,677 $ 12,504 $ 8,770
=========== =========== ===========
Financial Services Segment
Operating profits from the financial services segment were $3,297,000
and $6,845,000, respectively, for the second quarter and first half of 1999,
compared with $7,162,000 and $9,187,000, respectively, for the same periods in
1998. The 1998 periods benefited from the recognition of a $4,450,000 pre-tax
gain related to the sale of the Company's asset management business.
The table below summarizes the results of HomeAmerican's operations (in
thousands).
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Origination Fees............................ $ 3,217 $ 2,275 $ 5,720 $ 4,140
Gains on Sales of Mortgage Loans, net....... $ 2,010 $ 2,012 $ 4,350 $ 4,016
Gains on Sales of Mortgage Servicing, net... $ 1,026 $ 692 $ 2,289 $ 927
Operating Profit............................ $ 3,297 $ 2,572 $ 6,845 $ 4,596
Principal Amount of Originations and
Purchases
MDC home buyers.......................... $ 225,694 $ 173,205 $ 387,417 $ 314,329
Spot..................................... 10,239 16,563 22,526 28,553
Correspondent............................ - - 35,997 12,074 76,674
----------- ----------- ----------- -----------
Total.............................. $ 235,933 $ 225,765 $ 422,017 $ 419,556
=========== =========== =========== ===========
Capture Rate................................ 71% 71% 70% 72%
=========== =========== =========== ===========
Including Brokered Loans................. 83% 78% 81% 78%
=========== =========== =========== ===========
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HomeAmerican's operating profits for the second quarter and first half
of 1999 increased, compared with the same periods in 1998, primarily due to
increases of (1) $942,000 and $1,580,000, respectively, in origination fees; and
(2) $334,000 and $1,362,000, respectively, in gains from sales of mortgage
servicing. These increases partially were offset by higher general and
administrative expenses resulting from the increased mortgage lending activity.
HomeAmerican continues to benefit from the Company's homebuilding growth as MDC
home buyers were the source of approximately 96% and 92%, respectively, of the
principal amount of mortgage loans originated by HomeAmerican in the second
quarter and first half of 1999.
Mortgage loans originated by HomeAmerican for MDC home buyers as a
percentage of total MDC home closings ("Capture Rate") remained approximately
the same for the quarter and six months ended June 30, 1999, compared with the
Capture Rate for the same periods in 1998. However, the number of mortgage loans
brokered by HomeAmerican for origination by outside lending institutions for MDC
home buyers with non-agency-qualified credit has increased. These brokered
mortgage loans, for which HomeAmerican receives a fee, have been excluded from
the computation of the Capture Rate. Mortgage loans brokered by HomeAmerican as
a percentage of total MDC home closings increased to approximately 12% and 11%,
respectively, for the second quarter and first half of 1999, compared with
approximately 6% for the same periods in 1998.
Forward Sales Commitments - HomeAmerican's operations are affected by,
among other things, changes in mortgage interest rates. HomeAmerican utilizes
forward mortgage securities contracts to manage the interest rate risk on its
fixed-rate mortgage loans owned and rate-locked mortgage loans in the pipeline.
Such contracts are the only significant financial derivative instrument utilized
by MDC.
Other Operating Results
Corporate Other Revenues - In the second quarter of 1999, the Company
recognized income of approximately $1,500,000 related to its share of a gain
from the sale of substantially all of the assets of a partnership in which it
was an investor. The Company does not anticipate earning income or receiving
distributions from this partnership in the future.
Interest Expense - The Company capitalizes interest on its homebuilding
inventories during the period of active development and through the completion
of construction. Corporate and homebuilding interest incurred but not
capitalized is reflected as interest expense and totalled zero for both the
second quarter and first half of 1999 and 1998.
Corporate and homebuilding interest incurred decreased 9% and 13%,
respectively, to $5,231,000 and $9,951,000, respectively, for the second quarter
and first half of 1999, compared with $5,727,000 and $11,499,000, respectively,
for the same periods in 1998, primarily due to lower levels of outstanding debt
and more favorable effective interest rates in 1999.
For a reconciliation of interest incurred, capitalized and expensed,
see Note B to the Company's Condensed Consolidated Financial Statements.
Corporate General and Administrative Expenses - Corporate general and
administrative expenses increased to $7,659,000 and $13,964,000, respectively,
during the second quarter and first half of 1999, compared with $4,040,000 and
$7,552,000, respectively, for the same periods in 1998, primarily due to (1)
greater compensation expense in 1999 related to the Company's increased
profitability and expanding operations; (2) the recognition in the first six
months of 1998 of an $836,000 credit to health
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insurance expense related to a reduction in incurred but not reported
liabilities of the employee medical plan sponsored by the Company; and (3)
approximately $200,000 and $1,000,000, respectively, for the quarter and six
months ended June 30, 1999 in expenses primarily resulting from the development
of new processes, controls and computer systems relative to the Company's "best
practices" endeavors.
"Year 2000" Issue - The Company began assessing the possible impact of
the Year 2000 ("Y2K") issue on its business operations in 1997. The issue arises
because of information technology ("IT") which utilizes a two digit date field.
Y2K introduces the potential for errors and miscalculations related to IT and
non-IT systems which were not designed to accommodate a date of year 2000 and
beyond.
The Company has identified the following six phases in its Y2K
remediation program: (1) assessment of the Y2K capabilities of its IT and non-IT
systems; (2) acquisition of new IT and non-IT systems or modification of
existing IT and non-IT systems to meet Y2K requirements; (3) testing; (4)
evaluation of efforts to meet Y2K requirements; (5) adjustments as identified in
the evaluation phase; and (6) implementation and integration of modified IT and
non-IT systems into the Company's business operations.
The Company has completed all six phases with respect to its
homebuilding information system and believes this system has been Y2K compliant
since the third quarter of 1998. Management information systems for the
Company's financial services activities are now in the implementation phase.
Implementation of these systems is expected to be completed in the third quarter
of 1999. Given the nature of the homebuilding industry, the Company is only
minimally dependent upon non-IT systems such as telephone, security systems and
time clocks. With respect to such non-IT systems, the Company has completed the
implementation phase and believes these systems to be Y2K compliant.
The Company is presently evaluating other potential Y2K issues. As part
of this evaluation, the Company has requested and received representations from
certain financial institutions and third party vendors which indicate their
progress toward Y2K compliance. The Company has sent Y2K compliance surveys to
certain significant subcontractors, vendors and municipalities and has received
responses to approximately 70% of the surveys. To date, the survey responses
have not indicated any Y2K compliance issues that would result in a material
adverse effect on the Company's financial position or results of operations.
The Company incurred costs for outside consultants and internal costs
in the first half of 1999 and all of 1998 and 1997 related to Y2K which
aggregated approximately $800,000, and future consulting and internal costs are
expected to be approximately $50,000 during the balance of 1999. These costs,
which are expensed as incurred, have been and will continue to be funded from
operations. The costs incurred through June 30, 1999 did not have a material
adverse effect on the Company's financial position or results of operations.
The Company could be impacted materially by widespread economic or
financial market disruptions or by Y2K computer system failures at government
agencies on which the Company is dependent for utilities, zoning, building
permits and related items. However, the most likely worst-case Y2K scenario
would include instances of construction delays caused by the Company's inability
to secure building permits, zoning and utilities as well as closing delays
caused by the inability of home buyers to obtain financing. In addition, there
could be instances of subcontractors experiencing construction delays due to
their inability to secure building materials on a timely basis. The Company
-15-
typically uses several subcontractors within a given trade. As a result, the
Company believes that it will be able to replace subcontractors that may not be
able to perform due to Y2K deficiencies.
The Company believes that, based upon its assessment of the Y2K
phenomena, certain subcontractors, vendors and government agencies may encounter
Y2K problems that impact the Company and that may require MDC to take alternate
or additional steps. In order to address Y2K concerns which may originate from
subcontractors, third party vendors and governmental agencies, the Company
intends to prepare contingency plans by the end of the third quarter of 1999.
See "Forward-Looking Statements" below.
Income Taxes - The Internal Revenue Service ("IRS") has completed its
examinations of the Company's federal income tax returns for the years 1991
through 1995 and has proposed adjustments to the taxable income reflected in
such returns. The Company is protesting certain of these proposed adjustments.
The IRS currently is examining the Company's federal income tax returns for the
years 1996 and 1997. No audit report has been issued by the IRS in connection
with this latter examination. In the opinion of management adequate provision
has been made for additional income taxes and interest, if any, which may arise
as a result of these examinations.
MDC's overall effective income tax rate increased to 39.5% for the
second quarter and first half of 1999 compared with 38.1% and 38.3%,
respectively, for the same periods in 1998, due to an increase in the Company's
effective state income tax rate. The 1999 and 1998 rates differed from the
federal statutory rate of 35% primarily due to the impact of state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
MDC uses its liquidity and capital resources to, among other things,
(1) support its operations, including its inventories of homes, home sites and
land; (2) provide working capital; and (3) provide mortgage loans for its home
buyers. Liquidity and capital resources are generated internally from operations
and from external sources.
Capital Resources
The Company's capital structure is a combination of (1) permanent
financing, represented by stockholders' equity; (2) long-term financing,
represented by publicly traded 8 3/8% senior notes due 2008 (the "New Senior
Notes"); and (3) current financing, primarily lines of credit, as discussed
below. The Company believes that its current financial condition is both
balanced to fit its current operating structure and adequate to satisfy its
current and near-term capital requirements. See "Forward-Looking Statements"
below.
MDC anticipates acquiring finished lots and partially developed land
for use in its future homebuilding operations during the remainder of 1999. The
Company currently intends to acquire a portion of the land inventories required
in future periods through takedowns of lots subject to option contracts entered
into in prior periods and under new option contracts. The use of option
contracts lessens the Company's land-related risk and improves liquidity.
Because of increased demand for partially developed and finished lots in certain
of the markets where the Company builds homes, the Company's ability to acquire
lots using option contracts has been reduced or has become more expensive. See
"Forward-Looking Statements" below.
-16-
Based upon its current capital resources and additional credit
available under existing credit agreements, MDC anticipates that it has adequate
financial resources to satisfy its current and near-term capital requirements,
including the acquisition of land. The Company believes that it can meet its
long-term capital needs (including meeting future debt payments and refinancing
or paying off other long-term debt as it becomes due) from operations and
external financing sources, assuming that no significant adverse changes in the
Company's business occur as a result of the various risk factors described
elsewhere in this report. See "Forward-Looking Statements" below.
Lines of Credit and Other
Homebuilding - The Company maintains a $300,000,000 unsecured revolving
line of credit (the "Homebuilding Line") with a group of banks to support its
homebuilding operations. The Homebuilding Line matures on June 30, 2003,
although, pursuant to the terms of the related credit agreement, a term-out of
this credit may commence earlier under certain circumstances. At June 30, 1999,
$55,000,000 was borrowed and $9,024,000 in letters of credit were outstanding
under the Homebuilding Line.
Mortgage Lending - To provide funds to originate and purchase mortgage
loans and to finance these mortgage loans on a short-term basis, HomeAmerican
utilizes its mortgage lending bank line of credit (the "Mortgage Line"). These
mortgage loans normally are sold within 40 days after origination or purchase.
During the first half of 1999 and 1998, HomeAmerican sold $422,279,000 and
$395,152,000, respectively, principal amount of mortgage loans and
mortgage-backed certificates to unaffiliated purchasers.
Available borrowings under the Mortgage Line are collateralized by
mortgage loans and mortgage-backed certificates and are limited to the value of
eligible collateral, as defined. The aggregate amount available under the
Mortgage Line at June 30, 1999 was $51,000,000. At June 30, 1999, $26,076,000
was borrowed and an additional $24,924,000 was collateralized and available to
be borrowed. The Mortgage Line is cancelable upon 90 days' notice.
General - The agreements for the Company's New Senior Notes and bank
lines of credit require compliance with certain representations, warranties and
covenants. These agreements are on file with the Securities and Exchange
Commission and are listed in the Exhibit Table in Part IV of MDC's Annual Report
on Form 10-K for its fiscal year ended December 31, 1998. The Company believes
that it is in compliance with these representations, warranties and covenants.
The financial covenants contained in the loan agreement for the
Homebuilding Line include a leverage test and a consolidated tangible net worth
test. Under the leverage test, generally MDC's consolidated indebtedness is not
permitted to exceed 2.15 times MDC's "adjusted consolidated tangible net worth,"
as defined in the loan agreement. Under the consolidated net worth test, MDC's
"tangible net worth," as defined, must not be less than $170,000,000 plus 50% of
"consolidated net income," as defined, after January 1, 1996.
The Company's New Senior Notes indenture does not contain financial
covenants. However, there are covenants that limit transactions with affiliates,
limit the amount of additional indebtedness that MDC may incur, restrict certain
payments on, or the redemptions of the Company's securities, restrict certain
sales of assets and limit incurring liens. In addition, under certain
circumstances, in the event of a change of control (generally a sale, transfer,
merger or acquisition of MDC or substantially all of its assets), MDC may be
required to offer to repurchase the New Senior Notes.
-17-
Pursuant to the Mortgage Line, HomeAmerican must maintain a
"consolidated tangible net worth," as defined in the Mortgage Line, of at least
$5,000,000 and may only pay up to 50% of its net income to MDC in the form of
dividends.
Consolidated Cash Flow
During the first six months of 1999, the Company used $19,850,000 of
cash in its operating activities, primarily due to increases in homebuilding
inventories, partially offset by internally generated funds, in conjunction with
its expanded homebuilding operations. The Company financed these operating cash
requirements primarily through borrowings on its lines of credit.
During the first six months of 1998, the Company used $37,897,000 of
cash in its operating activities, primarily due to increases in homebuilding and
mortgage loan inventories in conjunction with its expanded homebuilding
operations. The Company financed these operating cash requirements primarily
through borrowings on its lines of credit as well as the $13,250,000 proceeds
from the sale of the Company's headquarters office building and the collection
of $4,450,000 in notes receivable with respect to the sale of the Company's
asset management business.
OTHER
Forward-Looking Statements
Certain statements in this Form 10-Q Quarterly Report, the Company's
Annual Report on Form 10-K for its fiscal year ended December 31, 1998, the
Company's Annual Report to Shareowners, as well as statements made by the
Company in periodic press releases, oral statements made by the Company's
officials to analysts and shareowners in the course of presentations about the
Company and conference calls following quarterly earnings releases, 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) demographic changes; (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) the impact on the Company of
Y2K compliance by the Company and its vendors, suppliers and subcontractors and
by various governmental and regulatory agencies; and (15) other factors over
which the Company has little or no control.
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M.D.C. HOLDINGS, INC.
FORM 10-Q
PART II
ITEM 1. LEGAL PROCEEDINGS.
The Company and certain of its subsidiaries and affiliates have been
named as defendants in various claims, complaints and other legal actions
arising in the normal course of business. In the opinion of management, the
outcome of these matters will not have a material adverse effect upon the
financial condition, results of operations or cash flows of the Company.
Because of the nature of the homebuilding business, and in the ordinary
course of its operations, the Company from time to time may be subject to
product liability claims.
The Company is not aware of any litigation, matter or pending claim
against the Company which would result in material contingent liabilities
related to environmental hazards or asbestos.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREOWNERS.
MDC held its Annual Meeting of Shareowners (the "Meeting") on
May 24, 1999. At the Meeting, Messrs. Gilbert Goldstein and William B. Kemper
were elected as directors to serve three-year terms.
ITEM 5. OTHER INFORMATION.
On July 23, 1999, the Company's board of directors declared a dividend
of five cents per share for the quarter ended June 30, 1999, payable August 12,
1999, to shareowners of record on July 30, 1999. Future dividend payments are
subject to the discretion of the Company's board of directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit:
10.1 M.D.C. Holdings, Inc. 401(k) Savings
Plan Prototype Retirement Plan and
Trust.
-19-
10.2 M.D.C. Holdings, Inc. 401(k) Savings
Plan Prototype Retirement Plan &
Trust Adoption Agreement between
M.D.C. Holdings, Inc. and Key Trust
Company National Association effective
as of July 1, 1998.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
(1) Form 8-K dated April 20, 1999
reporting the Company's results for
the first quarter ended March 31,
1999, including unaudited summary
financial statements and other
financial information.
(2) Form 8-K dated June 3, 1999 reporting
the Company's home orders for
April and May 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 4, 1999 M.D.C. HOLDINGS, INC.
-------------- (Registrant)
By: /s/ Paris G. Reece III
----------------------------
Paris G. Reece III,
Executive Vice President,
Chief Financial Officer and
Principal Accounting Officer
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