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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
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 September 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 November 9, 1999, 22,315,000 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 SEPTEMBER 30, 1999
INDEX
Page
No.
Part I. Financial Information: ----
Item 1. Condensed Consolidated Financial Statements:
Balance Sheets as of September 30, 1999
(Unaudited)and December 31, 1998............... 1
Statements of Income (Unaudited) for the three
and nine months ended September 30, 1999
and 1998....................................... 3
Statements of Cash Flows (Unaudited) for the nine
months ended September 30, 1999 and 1998....... 4
Notes to 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)
September 30, December 31,
1999 1998
------------ -----------
ASSETS (Unaudited)
Corporate
Cash and cash equivalents................................................... $ 3,580 $ 2,460
Property and equipment, net................................................. 2,615 2,901
Deferred income taxes....................................................... 21,653 17,949
Deferred debt issue costs, net.............................................. 2,444 2,589
Other assets, net........................................................... 5,450 5,670
---------- -----------
35,742 31,569
Homebuilding
Cash and cash equivalents................................................... 6,880 7,279
Home sales and other accounts receivable.................................... 15,223 12,771
Inventories, net
Housing completed or under construction................................... 381,832 294,104
Land and land under development........................................... 285,077 217,180
Prepaid expenses and other assets, net...................................... 52,934 58,981
---------- -----------
741,946 590,315
Financial Services
Cash and cash equivalents................................................... 414 340
Mortgage loans held in inventory, net....................................... 87,244 84,548
Other assets, net........................................................... 6,121 7,241
---------- -----------
93,779 92,129
Total Assets.......................................................... $ 871,467 $ 714,013
========== ===========
See notes to condensed consolidated financial statements.
- 1 -
M.D.C. HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
September 30, December 31,
1999 1998
----------- -----------
LIABILITIES (Unaudited)
Corporate
Accounts payable and accrued expenses....................................... $ 37,681 $ 32,378
Income taxes payable........................................................ 15,627 14,568
Senior notes, net........................................................... 174,376 174,339
----------- -----------
227,684 221,285
Homebuilding
Accounts payable and accrued expenses....................................... 157,571 131,374
Line of credit.............................................................. 75,638 21,871
Notes payable............................................................... - - 866
----------- -----------
233,209 154,111
Financial Services
Accounts payable and accrued expenses....................................... 10,280 12,152
Line of credit.............................................................. 36,489 28,334
----------- -----------
46,769 40,486
Total Liabilities..................................................... 507,662 415,882
----------- -----------
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; 28,166,000 and
27,858,000 shares issued, respectively, at September 30, 1999 and
December 31, 1998......................................................... 282 279
Additional paid-in capital.................................................. 179,588 175,160
Retained earnings........................................................... 219,808 160,291
Accumulated comprehensive income............................................ 3,338 1,785
----------- -----------
403,016 337,515
Less treasury stock, at cost; 5,850,000 and 5,876,000 shares, respectively,
at September 30, 1999 and December 31, 1998............................... (39,211) (39,384)
----------- -----------
Total Stockholders' Equity............................................ 363,805 298,131
----------- -----------
Total Liabilities and Stockholders' Equity............................ $ 871,467 $ 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 Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
REVENUES
Homebuilding..................................... $ 403,195 $ 325,269 $ 1,084,205 $ 857,286
Financial services............................... 6,739 6,279 20,664 21,099
Corporate........................................ 192 87 2,141 630
------------ ------------ ------------ ------------
Total Revenues............................... 410,126 331,635 1,107,010 879,015
------------ ------------ ------------ ------------
COSTS AND EXPENSES
Homebuilding..................................... 357,363 300,000 969,223 800,966
Financial services............................... 3,812 3,069 10,892 8,702
Corporate general and administrative............. 8,719 5,310 22,683 12,862
------------ ------------ ------------ ------------
Total Costs and Expenses..................... 369,894 308,379 1,002,798 822,530
------------ ------------ ------------ ------------
Income before income taxes and extraordinary item..
40,232 23,256 104,212 56,485
Provision for income taxes.......................... (16,092) (8,999) (41,364) (21,719)
------------ ------------ ------------ ------------
Income before extraordinary item.................... 24,140 14,257 62,848 34,766
Extraordinary loss from early extinguishment of
debt, net of income tax benefit of $9,587........ - - - - - - (15,314)
------------ ------------ ------------ ------------
NET INCOME.......................................... $ 24,140 $ 14,257 $ 62,848 $ 19,452
Unrealized holding gains (losses) on securities
arising during the period, net................... 337 (791) 1,553 604
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME................................ $ 24,477 $ 13,466 $ 64,401 $ 20,056
============ ============ ============ ============
EARNINGS PER SHARE
Basic
Income before extraordinary item............. $ 1.08 $ .78 $ 2.83 $ 1.92
============ ============ ============ ============
Net Income................................... $ 1.08 $ .78 $ 2.83 $ 1.07
============ ============ ============ ============
Diluted
Income before extraordinary item............. $ 1.06 $ .65 $ 2.77 $ 1.59
============ ============ ============ ============
Net Income................................... $ 1.06 $ .65 $ 2.77 $ .91
============ ============ ============ ============
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic............................................ 22,294 18,205 22,224 18,111
============ ============ ============ ============
Diluted.......................................... 22,739 22,673 22,667 22,598
============ ============ ============ ============
DIVIDENDS PER SHARE................................. $ .05 $ .04 $ .15 $ .11
============ ============ ============ ============
See notes to condensed consolidated financial statements.
- 3 -
M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
1999 1998
------------- -------------
OPERATING ACTIVITIES
Net income.......................................................... $ 62,848 $ 19,452
Adjustments to reconcile net income to net cash used in operating
activities
Loss from the early extinguishment of debt..................... - - 24,901
Depreciation and amortization.................................. 12,968 14,602
Homebuilding asset impairment charges.......................... - - 4,500
Deferred income taxes.......................................... (3,704) (3,599)
Gains on sales of mortgage-related assets...................... - - (4,509)
Net changes in assets and liabilities
Home sales and other accounts receivable.................... (2,452) (12,807)
Homebuilding inventories.................................... (154,636) (77,058)
Mortgage loans held in inventory............................ (2,696) (25,431)
Accounts payable and accrued expenses and income taxes
payable.................................................. 30,428 33,383
Prepaid expenses and other assets........................... 138 (15,617)
Other, net..................................................... 872 (2,067)
------------- -------------
Net cash used in operating activities................................ (56,234) (44,250)
------------- -------------
INVESTING ACTIVITIES
Net proceeds from sale of office building............................ - - 13,250
Net proceeds from mortgage-related assets and liabilities............ - - 4,636
Other, net........................................................... (555) (1,952)
------------- -------------
Net cash provided by (used in) investing activities.................. (555) 15,934
------------- -------------
FINANCING ACTIVITIES
Lines of credit
Advances........................................................ 1,109,955 895,684
Principal payments.............................................. (1,048,033) (849,601)
Notes payable
Borrowings...................................................... - - 574
Principal payments.............................................. (1,898) (13,108)
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.................................................... (3,331) (1,988)
Proceeds from stock issuance......................................... 891 2,588
------------- -------------
Net cash provided by financing activities............................ 57,584 25,868
------------- -------------
Net increase (decrease) in cash and cash equivalents................. 795 (2,448)
Cash and cash equivalents
Beginning of period............................................. 10,079 11,678
------------- -------------
End of period................................................... $ 10,874 $ 9,230
============= =============
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 an 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 September 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 Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
Interest capitalized in homebuilding
inventory, beginning of period....... $ 22,183 $ 33,316 $ 26,332 $ 37,991
Interest incurred....................... 5,393 5,408 15,344 16,907
Interest expensed....................... - - - - - - - -
Previously capitalized interest included
in cost of sales..................... (9,527) (8,503) (23,627) (24,677)
----------- ----------- ----------- -----------
Interest capitalized in homebuilding
inventory, end of period............. $ 18,049 $ 30,221 $ 18,049 $ 30,221
=========== =========== =========== ===========
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") were 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 nine 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 Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
Homebuilding
Home sales......................... $ 398,833 $ 322,337 $ 1,076,061 $ 846,852
Land sales......................... 2,912 2,421 5,737 9,224
Other revenues..................... 1,450 511 2,407 1,210
------------ ------------ ------------ ------------
403,195 325,269 1,084,205 857,286
------------ ------------ ------------ ------------
Home cost of sales................. 320,020 265,927 866,833 705,449
Land cost of sales................. 2,403 1,572 4,426 5,857
Asset impairment charges........... - - 1,500 - - 4,500
Marketing.......................... 19,936 19,384 58,045 52,780
General and administrative......... 15,004 11,617 39,919 32,380
------------ ------------ ------------ ------------
357,363 300,000 969,223 800,966
------------ ------------ ------------ ------------
Homebuilding Operating Profit.. 45,832 25,269 114,982 56,320
------------ ------------ ------------ ------------
Financial Services
Mortgage Lending Revenues
Net interest income................ 735 597 2,012 1,630
Origination fees................... 3,315 2,568 9,035 6,708
Gains on sales of mortgage loans,
net.............................. 2,011 2,277 6,361 6,293
Gains on sales of mortgage
servicing........................ 543 742 2,832 1,669
Mortgage servicing and other....... 135 95 424 197
Asset Management Revenues............ - - - - - - 4,602
------------ ------------ ------------ ------------
6,739 6,279 20,664 21,099
General and Administrative Expenses.. 3,812 3,069 10,892 8,702
------------ ------------ ------------ ------------
Financial Services Operating
Profit....................... 2,927 3,210 9,772 12,397
------------ ------------ ------------ ------------
Total Operating Profit................. 48,759 28,479 124,754 68,717
------------ ------------ ------------ ------------
Corporate
Interest and other revenues........ 192 87 2,141 630
General and administrative......... (8,719) (5,310) (22,683) (12,862)
------------ ------------ ------------ ------------
Net Corporate Expenses......... (8,527) (5,223) (20,542) (12,232)
------------ ------------ ------------ ------------
Income Before Income Taxes and
Extraordinary Item................... $ 40,232 $ 23,256 $ 104,212 $ 56,485
============ ============ ============ ============
-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 nine months
ended September 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 Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
Basic Earnings Per Share
Income before extraordinary item................. $ 24,140 $ 14,257 $ 62,848 $ 34,766
Extraordinary loss, net of taxes................. - - - - - - (15,314)
----------- ----------- ----------- -----------
Net income.................................. $ 24,140 $ 14,257 $ 62,848 $ 19,452
=========== =========== =========== ===========
Basic weighted-average shares outstanding........ 22,294 18,205 22,224 18,111
=========== =========== =========== ===========
Per share amounts
Income before extraordinary item............ $ 1.08 $ .78 $ 2.83 $ 1.92
Extraordinary loss, net of taxes............ - - - - - - (.85)
----------- ----------- ----------- ----------
Net income.................................. $ 1.08 $ .78 $ 2.83 $ 1.07
=========== =========== =========== ===========
Diluted Earnings Per Share
Income before extraordinary item................. $ 24,140 $ 14,257 $ 62,848 $ 34,766
Conversion of Convertible Subordinated Notes..... - - 392 - - 1,175
----------- ----------- ----------- -----------
Adjusted income before extraordinary item........ 24,140 14,649 62,848 35,941
Extraordinary loss, net of taxes................. - - - - - - (15,314)
----------- ----------- ----------- -----------
Adjusted net income......................... $ 24,140 $ 14,649 $ 62,848 $ 20,627
=========== =========== =========== ===========
Basic weighted-average shares outstanding........ 22,294 18,205 22,224 18,111
Stock options, net............................... 445 855 443 874
Conversion of Convertible Subordinated Notes..... - - 3,613 - - 3,613
----------- ----------- ----------- -----------
Diluted weighted-average shares outstanding. 22,739 22,673 22,667 22,598
=========== =========== =========== ===========
Per share amounts
Income before extraordinary item............ $ 1.06 $ .65 $ 2.77 $ 1.59
Extraordinary loss, net of taxes............ - - - - - - (.68)
----------- ----------- ----------- ----------
Net income.................................. $ 1.06 $ .65 $ 2.77 $ .91
=========== =========== =========== ===========
G. Supplemental Disclosure of Cash Flow Information (in thousands).
Nine Months
Ended September 30,
1999 1998
----------- -----------
Cash paid during the period for
Interest................................................... $ 6,842 $ 14,274
Income taxes............................................... $ 46,192 $ 13,234
Non-cash investing and financing activities
Land purchases financed by seller.......................... $ 1,032 $ 574
Land sales financed by MDC................................. $ 43 $ 282
-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 Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
Revenues................................ $ 410,126 $ 331,635 $ 1,107,010 $ 879,015
Income Before Income Taxes and
Extraordinary Item................... $ 40,232 $ 23,256 $ 104,212 $ 56,485
Income Before Extraordinary Item........ $ 24,140 $ 14,257 $ 62,848 $ 34,766
Net Income.............................. $ 24,140 $ 14,257 $ 62,848 $ 19,452
Earnings Per Share:
Basic
Income Before Extraordinary Item... $ 1.08 $ .78 $ 2.83 $ 1.92
Net Income......................... $ 1.08 $ .78 $ 2.83 $ 1.07
Diluted
Income Before Extraordinary Item... $ 1.06 $ .65 $ 2.77 $ 1.59
Net Income......................... $ 1.06 $ .65 $ 2.77 $ .91
Revenues for the third quarter and first nine months of 1999 increased
$78,491,000 and $227,995,000, respectively, compared with the same periods in
1998, primarily due to higher home sales revenues resulting from record levels
of home closings and increases of almost 10% in the average selling prices of
homes closed.
Income before extraordinary item increased 69% and 81%, respectively,
in the third quarter and first nine months 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 230 and 270 basis point increases, respectively,
in Home Gross Margins (as defined below).
-8-
Net income for the first nine 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 Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
Home Sales Revenues......................... $ 398,833 $ 322,337 $ 1,076,061 $ 846,852
Homebuilding Operating Profit............... $ 45,832 $ 25,269 $ 114,982 $ 56,320
Average Selling Price Per Home Closed..... $ 212.7 $ 195.5 $ 207.5 $ 189.0
Home Gross Margins.......................... 19.8% 17.5% 19.4% 16.7%
Excluding Interest in Home Cost of Sales 21.9% 20.1% 21.5% 19.4%
Orders For Homes, net (units)
Colorado............................. 655 603 2,259 2,200
California........................... 329 238 1,129 858
Arizona.............................. 261 445 1,199 1,396
Nevada............................... 151 156 425 461
Virginia............................. 150 124 611 551
Maryland............................. 70 84 268 309
------------ ------------ ------------ ------------
Total........................... 1,616 1,650 5,891 5,775
============ ============ ============ ============
Homes Closed (units)
Colorado............................. 653 588 1,846 1,699
California........................... 381 274 921 649
Arizona.............................. 444 428 1,299 1,119
Nevada............................... 151 111 407 307
Virginia............................. 183 156 493 441
Maryland............................. 63 92 220 266
------------ ------------ ------------ ------------
Total........................... 1,875 1,649 5,186 4,481
============ ============ ============ ============
September 30, December 31, September 30,
1999 1998 1998
------------ ------------ ------------
Backlog (units)
Colorado............................. 1,768 1,355 1,381
California........................... 534 326 479
Arizona.............................. 596 696 670
Nevada............................... 164 146 249
Virginia............................. 372 254 321
Maryland............................. 201 153 226
------------ ------------ ------------
Total........................... 3,635 2,930 3,326
============ ============ ============
Estimated Sales Value........... $ 750,000 $ 580,000 $ 650,000
============ ============ ============
-9-
September 30, December 31, September 30,
1999 1998 1998
------------ ------------ ------------
Active Subdivisions
Colorado............................. 48 45 46
California........................... 26 21 19
Arizona.............................. 18 24 26
Nevada............................... 11 9 11
Virginia............................. 16 20 21
Maryland............................. 10 11 14
------------ ------------ ------------
Total........................... 129 130 137
============ ============ ============
Home Sales Revenues - Home sales revenues in the third quarter and
first nine months of 1999 were the highest for comparable periods in the
Company's history and were 24% and 27% 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 nine months ended
September 30, 1999, which were higher in all of the Company's markets except
Maryland, increased 14% and 16%, respectively, compared with the same periods in
1998. Home closings in the third quarter and first nine months of 1999, compared
with the same periods in 1998, particularly were strong in (1) Phoenix
(increases of 5% and 17%, respectively), Southern California (increases of 11%
and 20%, respectively) and Colorado (increases of 11% and 9%, respectively) as a
result of the strong demand for homes in these markets; and (2) Northern
California, where the Company has opened eight active subdivisions in the San
Francisco Bay area. Home closings decreased in the third quarter and first nine
months of 1999 in Maryland, compared with the same periods in 1998, primarily
due to the decreased number of active subdivisions in this market.
Average Selling Price Per Home Closed - The average selling price per
home closed in the third quarter and first nine months of 1999 increased $17,200
and $18,500, respectively, compared with the same periods in 1998. Each of the
Company's markets realized higher average selling prices for the nine months
ended September 30, 1999. 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 existing
design centers in Colorado, Phoenix and Southern California and from its new
design centers in Las Vegas and Virginia.
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 were 19.8% and
19.4%, representing increases of 230 and 270 basis points, respectively, during
the quarter and nine months ended September 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
continued strong demand for new homes in these markets; (2) in Maryland, fewer
under-performing subdivisions in 1999 and management's continued efforts to
improve profitability; (3) a reduction in previous estimates of costs to
complete land development and homes in
-10-
certain projects in Phoenix; (4) reduced levels of interest in home cost of
sales, as discussed below; (5) increases in sales of higher-margin products
through the Company's design centers; (6) a higher proportion of presold homes
closed, which generally have higher Home Gross Margins than closings of spec
homes; (7) home order cancellations which were re-sold at higher average selling
prices; (8) lower incentives provided to home buyers particularly in Colorado,
Phoenix and Tucson; and (9) initiatives implemented in each of the Company's
markets designed to improve operating efficiency, control costs and increase
rates of return. These increases in Home Gross Margins were partially offset by
increases in the cost of (1) land; (2) lumber, insulation, concrete and other
raw materials; (3) subcontract labor; and (4) incurred and estimated future land
development with respect to certain projects in Southern California.
Looking forward, the Company believes that Home Gross Margins for the
fourth quarter of 1999 will exceed by more than 100 basis points the Home Gross
Margins achieved by the Company for the comparable period 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, finished lots and other resources. 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 third quarter and first nine months of
1999 decreased to 2.1%, compared with 2.6% and 2.7%, respectively, for the same
periods in 1998. These reductions primarily resulted from lower levels of
capitalized interest in homebuilding inventories during the first nine months of
1999, compared with the first nine months of 1998. Despite increases in the
amount of the Company's homebuilding inventories, interest capitalized in
homebuilding inventories at September 30, 1999 decreased to $18,049,000,
compared with $30,221,000 at September 30, 1998. This reduction in interest
capitalized in homebuilding inventories primarily was due to (1) lower levels of
interest incurred over the last year resulting from lower effective interest
rates on the Company's outstanding debt; (2) the continued reduction in
homebuilding and corporate debt levels; and (3) the build-out of older projects
with higher levels of capitalized interest in Colorado, Virginia and Maryland.
Orders for Homes and Backlog - The Company received orders for 1,616
homes and 5,891 homes, respectively, during the quarter and nine months ended
September 30, 1999, compared with 1,650 and 5,775 home orders, respectively,
received for the same periods in 1998. Compared with the third quarter of 1998,
home orders in the third quarter of 1999 increased in (1) Virginia and Colorado,
as a result of the continued strong demand for homes in these markets; and (2)
Northern California, where home orders increased by 108 due to the addition of
eight active subdivisions in the San Francisco Bay area. Near-record home orders
in the first half of 1999 in Phoenix and Southern California accelerated the
sell-out of certain projects, which caused a temporary decline in the number of
active subdivisions and a corresponding decrease in home orders for the third
quarter of 1999 in these markets.
MDC's strong 1999 home orders contributed to a 9% increase in the
Company's homes under contract but not yet delivered ("Backlog") at September
30, 1999 to 3,635 units with an estimated sales value of $750,000,000, compared
with a Backlog of 3,326 units with an estimated sales value of $650,000,000 at
September 30, 1998. Assuming no significant change in market conditions or
mortgage interest rates, the Company expects approximately 75% of its September
30, 1999 Backlog to close under existing sales contracts during the fourth
quarter 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-
Marketing - Marketing expenses (which include amortization of deferred
marketing, model home expenses, sales commissions and other costs) increased to
$19,936,000 and $58,045,000, respectively, for the quarter and nine months ended
September 30, 1999, compared with $19,384,000 and $52,780,000, respectively, for
the same periods in 1998. The increases in 1999 primarily were volume related,
resulting from higher (1) sales commissions; (2) marketing-related salaries and
benefits; and (3) product advertising and other costs incurred in connection
with the Company's increased homebuilding activities. Notwithstanding the
increased costs, these expenses declined as a percentage of home sales revenues
to 5.0% and 5.4%, respectively, for the third quarter and first nine months of
1999, compared with 6.0% and 6.2%, respectively, for the same periods in 1998.
General and Administrative - General and administrative expenses
increased to $15,004,000 and $39,919,000, respectively, during the third quarter
and first nine months of 1999, compared with $11,617,000 and $32,380,000,
respectively, for the same periods in 1998, primarily due to increased
compensation costs resulting from MDC's higher profitability and increased
homebuilding activity.
Asset Impairment Charges
No asset impairment charges were recorded during the first nine months
of 1999. Operating results during the third quarter and first nine months of
1998 were reduced by asset impairment charges of $1,500,000 and $4,500,000,
respectively, 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;
(2) the write-down to fair value of certain subdivisions which experienced slow
sales and negative Home Gross Margins; and (3) the write-off of capitalized
costs, primarily deferred marketing and option deposits, related to several
low-margin projects.
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).
September 30, December 31, September 30,
1999 1998 1998
------------ ----------- ------------
Colorado................................ $ 64,873 $ 53,720 $ 49,678
California.............................. 150,716 100,754 70,334
Arizona................................. 28,197 25,178 26,480
Nevada.................................. 26,838 20,027 24,216
Virginia................................ 7,040 11,292 12,346
Maryland................................ 7,413 6,209 6,999
------------ ------------ -------------
Total.............................. $ 285,077 $ 217,180 $ 190,053
============ ============ =============
Total Lots Owned........................ 9,436 8,925 8,896
Total Lots Controlled Under Option...... 8,503 7,729 7,082
------------ ------------ -------------
Total Lots Owned and Controlled... 17,939 16,654 15,978
============= ============ =============
Total Option Deposits................... $ 8,591 $ 12,504 $ 10,999
============= ============ =============
-12-
Financial Services Segment
Operating profits from the financial services segment were $2,927,000
and $9,772,000, respectively, for the third quarter and first nine months of
1999, compared with $3,210,000 and $12,397,000, respectively, for the same
periods in 1998. The 1998 nine-month period benefited from the recognition of a
$4,450,000 pre-tax gain related to the sale of the Company's asset management
business in 1996.
The table below summarizes the results of HomeAmerican's operations (in
thousands).
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
Origination Fees............................ $ 3,315 $ 2,568 $ 9,035 $ 6,708
Gains on Sales of Mortgage Loans, net....... $ 2,011 $ 2,277 $ 6,361 $ 6,293
Gains on Sales of Mortgage Servicing, net...
$ 543 $ 742 $ 2,832 $ 1,669
Operating Profit............................ $ 2,927 $ 3,210 $ 9,772 $ 7,807
Principal Amount of Originations and
Purchases
MDC home buyers........................ $ 223,568 $ 184,715 $ 610,985 $ 499,044
Spot................................... 11,403 10,267 33,929 38,820
Correspondent.......................... - - 29,142 12,074 105,816
----------- ----------- ----------- -----------
Total.............................. $ 234,971 $ 224,124 $ 656,988 $ 643,680
=========== =========== =========== ===========
Capture Rate................................ 69% 69% 70% 71%
=========== =========== =========== ===========
Including Brokered Loans............... 81% 78% 81% 78%
=========== =========== =========== ===========
HomeAmerican's operating profits for the first nine months of 1999
increased, compared with the same periods in 1998, primarily due to increases of
$2,327,000 in origination fees and $1,163,000 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 continued to benefit from the Company's homebuilding growth as MDC
home buyers were the source of approximately 95% and 93%, respectively, of the
principal amount of mortgage loans originated by HomeAmerican in the third
quarter and first nine months of 1999.
HomeAmerican originates mortgage loans primarily for MDC home buyers
and brokers mortgage loans for origination by outside lending institutions for
MDC home buyers with non-agency-qualified credit. The portion of 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
nine months ended September 30, 1999, compared with the Capture Rate for the
same periods in 1998. However, the number of mortgage loans brokered by
HomeAmerican has increased in 1999, compared with the prior year. 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% for both
the third quarter and first nine months of 1999, compared with approximately 9%
and 7%, respectively, for the same periods in 1998.
-13-
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 first nine months 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. See "Forward-Looking
Statements" below.
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
third quarter and first nine months of 1999 and 1998.
Corporate and homebuilding interest incurred decreased to $5,393,000
and $15,344,000, respectively, for the third quarter and first nine months of
1999, compared with $5,408,000 and $16,907,000, 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 $8,719,000 and $22,683,000, respectively,
during the third quarter and first nine months of 1999, compared with $5,310,000
and $12,862,000, respectively, for the same periods in 1998. The increases in
1999 primarily were due to (1) greater compensation expense in 1999 related to
the Company's higher profitability and increased homebuilding activities; (2)
the recognition in the first nine months of 1998 of a credit to health insurance
expense related to a reduction in incurred but not reported liabilities of the
employee medical plan sponsored by the Company; and (3) approximately $900,000
and $1,900,000, respectively, for the quarter and nine months ended September
30, 1999 in increased expenses primarily attributable to the development of new
processes, controls and computer systems related 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.
-14-
The Company has completed all six phases with respect to its
homebuilding and financial services information systems and believes these
systems are Y2K compliant. 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 75% 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 nine months of 1999 and all of 1998 and 1997 related to Y2K which
aggregated approximately $825,000, and future consulting and internal costs are
expected to be approximately $25,000 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 September 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
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 is
preparing a contingency plan. 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. See "Forward-Looking Statements" below.
MDC's overall effective income tax rate increased to 40% and 39.7%,
respectively, for the third quarter and first nine months of 1999 compared with
38.7% and 38.5%, respectively, for the same
-15-
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.
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. At September 30, 1999, $75,638,000 was borrowed and
$11,346,000 in letters of credit were outstanding under the Homebuilding Line.
In October 1999, the Homebuilding Line was amended and restated to (1) extend
the maturity date to September 30, 2004 from June 30, 2003; and (2) increase the
maximum amount available to $450,000,000 upon the Company's request, requiring
additional commitments from existing or additional participant lenders.
-16-
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 nine months of 1999 and 1998, HomeAmerican sold $652,647,000
and $617,122,000, 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 September 30, 1999 was $51,000,000. At September 30, 1999,
$36,489,000 was borrowed and an additional $14,511,000 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. The Company believes that it is in compliance with these
representations, warranties and covenants. The agreements containing these
representations, warranties and covenants, other than the October 1999 amended
and restated agreement for the Homebuilding Line (the "Amended and Restated
Credit Agreement"), 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 Amended and Restated Credit
Agreement is being filed with the Securities and Exchange Commission as an
Exhibit to this Form 10-Q.
The financial covenants contained in the Amended and Restated Credit
Agreement 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 the product of 2.15 (subject to downward adjustment in
certain circumstances) times MDC's "adjusted consolidated tangible net worth,"
as defined. Under the consolidated tangible net worth test, MDC's "tangible net
worth," as defined, must not be less than the sum of $238,000,000 and 50% of
"consolidated net income," as defined, after December 31, 1998. In addition, the
"consolidated tangible net worth," as defined, must not be less than
$150,000,000.
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.
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 nine months of 1999, the Company used $56,234,000 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.
-17-
During the first nine months of 1998, the Company used $44,250,000 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.
-18-
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
No matters were submitted to shareowners during the third quarter of
1999.
ITEM 5. OTHER INFORMATION
On October 25, 1999, the Company's board of directors declared a
dividend of five cents per share for the quarter ended September 30, 1999,
payable November 23, 1999, to shareowners of record on November 8, 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:
4.1 Amended and Restated Credit Agreement
dated as of October 8, 1999 among
M.D.C. Holdings, Inc. as Borrower and
The Banks Named therein and Bank One,
NA as Administrative Agent, Bank
United of Texas FSB as Co-Agent and
KeyBank, National Association as
Co-Agent.
-19-
4.2 Form of Guaranty agreement dated as of
October 8, 1999 by certain
subsidiaries of M.D.C. Holdings, Inc.,
including RICHMOND AMERICAN HOMES OF
CALIFORNIA, INC., RICHMOND AMERICAN
HOMES OF MARYLAND, INC., RICHMOND
AMERICAN HOMES OF NEVADA, INC.,
RICHMOND AMERICAN HOMES OF VIRGINIA,
INC., RICHMOND AMERICAN HOMES OF
ARIZONA, INC., RICHMOND AMERICAN HOMES
OF COLORADO, INC., RICHMOND AMERICAN
HOMES OF NORTHERN CALIFORNIA, INC.,
M.D.C. LAND CORPORATION, and RICHMOND
AMERICAN CONSTRUCTION, INC.
4.3 Form of Promissory Note of M.D.C.
Holdings, Inc. as Maker dated as of
October 8, 1999 payable to each of the
Banks named in the Amended and
Restated Credit Agreement dated as of
October 8, 1999 among M.D.C. Holdings,
Inc. as Borrower and The Banks Named
therein and Bank One, NA as
Administrative Agent, Bank United of
Texas FSB as Co-Agent and KeyBank,
National Association as Co-Agent.
10.1 Letter Agreement between M.D.C.
Holdings, Inc. and Gilbert Goldstein,
P.C. dated October 25, 1999 amending
the Consulting Agreement effective
October 1, 1998 between M.D.C.
Holdings, Inc. and Gilbert Goldstein,
P.C.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
(1) Form 8-K dated July 2, 1999 reporting
certain changes to the Company's
senior management.
(2) Form 8-K dated July 9, 1999 reporting
the Company's second quarter home order,
home closings and backlog.
(3) Form 8-K dated July 27, 1999 reporting
the Company's results for the second
quarter ended June 30, 1999 including
unaudited summary financial statements
and other financial information.
(4) Form 8-K dated July 27, 1999
reporting the Company's second quarter
dividend.
-20-
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: November 10, 1999 M.D.C. HOLDINGS, INC.
----------------- (Registrant)
By: /s/ Paris G. Reece III
------------------------
Paris G. Reece III,
Senior Vice President,
Chief Financial Officer and
Principal Accounting Officer
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