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- -------------------------------------------------------------------------------
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 MARCH 31, 1995
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 MAY 1, 1995, 19,952,000 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 MARCH 31, 1995
INDEX
PAGE
NO.
PART I. FINANCIAL INFORMATION:
Item 1. Condensed Consolidated Financial Statements:
Balance Sheets as of March 31, 1995 (Unaudited) and
December 31, 1994. . . . . . . . . . . . . . . . . . . 1
Statements of Income (Unaudited) for the three months
ended March 31, 1995 and 1994. . . . . . . . . . . . . 3
Statements of Cash Flows (Unaudited) for the three
months ended March 31, 1995 and 1994 . . . . . . . . . 4
Notes to Financial Statements (Unaudited) . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 17
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . 27
Item 4. Submission of Matters to a Vote of Shareowners. . . . . 28
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 28
(i)
M.D.C. HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
1995 1994
----------- -----------
ASSETS (UNAUDITED)
Corporate
Cash and cash equivalents. . . . . . . . . . . . . . $ 13,772 $ 31,210
Property and equipment, net. . . . . . . . . . . . . 9,799 9,962
Deferred income taxes. . . . . . . . . . . . . . . . 11,835 11,944
Deferred issue costs, net. . . . . . . . . . . . . . 10,456 10,621
Other assets, net. . . . . . . . . . . . . . . . . . 3,329 3,270
-------- --------
49,191 67,007
-------- --------
Home Building
Cash and cash equivalents. . . . . . . . . . . . . . 7,946 10,162
Home sales and other accounts receivable . . . . . . 15,376 12,508
Investments and marketable securities, net . . . . . 6,205 6,089
Inventories, net
Housing completed or under construction. . . . . . 278,281 280,319
Land and land under development. . . . . . . . . . 186,151 183,838
Prepaid expenses and other assets, net . . . . . . . 42,477 43,975
-------- --------
536,436 536,891
-------- --------
Mortgage Lending
Cash and cash equivalents. . . . . . . . . . . . . . 1,029 1,607
Restricted cash. . . . . . . . . . . . . . . . . . . 2,650 2,650
Accrued interest and other assets, net . . . . . . . 2,206 1,447
Mortgage loans held in inventory, net. . . . . . . . 40,169 44,368
-------- --------
46,054 50,072
-------- --------
Asset Management
Cash and cash equivalents. . . . . . . . . . . . . . 782 585
Mortgage Collateral, net, and assets related to
mortgage-backed bonds and related liabilities. . . 62,414 64,574
Other loans and assets, net. . . . . . . . . . . . . 5,650 6,316
-------- --------
68,846 71,475
-------- --------
Total Assets. . . . . . . . . . . . . . . . . . $700,527 $725,445
-------- --------
-------- --------
See notes to condensed consolidated financial statements.
-1-
M.D.C. HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
1995 1994
----------- ------------
LIABILITIES (Unaudited)
Corporate
Accounts payable and accrued expenses. . . . . . . . $ 26,555 $ 34,311
Income taxes payable . . . . . . . . . . . . . . . . 13,264 11,166
Notes payable. . . . . . . . . . . . . . . . . . . . 3,571 3,583
Senior Notes, net. . . . . . . . . . . . . . . . . . 187,393 187,352
Subordinated notes, net. . . . . . . . . . . . . . . 38,218 38,217
--------- ---------
269,001 274,629
--------- ---------
Home Building
Accounts payable and accrued expenses. . . . . . . . 75,214 75,399
Lines of credit. . . . . . . . . . . . . . . . . . . 64,775 62,332
Notes payable. . . . . . . . . . . . . . . . . . . . 28,045 33,585
--------- ---------
168,034 171,316
--------- ---------
Mortgage Lending
Accounts payable and accrued expenses. . . . . . . . 3,650 2,450
Line of credit . . . . . . . . . . . . . . . . . . . 3,490 23,211
--------- ---------
7,140 25,661
--------- ---------
Asset Management
Accounts payable and accrued expenses. . . . . . . . 588 670
Mortgage-backed bonds, net, and related liabilities,
recourse solely to limited-purpose subsidiary
assets . . . . . . . . . . . . . . . . . . . . . . 58,313 60,874
--------- ---------
58,901 61,544
--------- ---------
Total Liabilities . . . . . . . . . . . . . . . 503,076 533,150
--------- ---------
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; 21,599,000 and 21,187,000 shares
issued, respectively, at March 31, 1995 and
December 31, 1994. . . . . . . . . . . . . . . . . 216 212
Additional paid-in capital . . . . . . . . . . . . . 134,812 133,934
Retained earnings. . . . . . . . . . . . . . . . . . 75,648 71,502
--------- ---------
210,676 205,648
Less treasury stock, at cost; 2,292,000 and
2,314,000 shares, respectively, at March 31, 1995
and December 31, 1994. . . . . . . . . . . . . . . (13,225) (13,353)
--------- ---------
Total Stockholders' Equity. . . . . . . . . . . 197,451 192,295
--------- ---------
Total Liabilities and Stockholders' Equity. . . $ 700,527 $ 725,445
--------- ---------
--------- ---------
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
ENDED MARCH 31,
--------------------
1995 1994
-------- --------
REVENUES:
Home Building. . . . . . . . . . . . . . . . . . . . $184,529 $158,578
Mortgage Lending . . . . . . . . . . . . . . . . . . 4,667 5,487
Asset Management . . . . . . . . . . . . . . . . . . 2,909 4,266
Corporate. . . . . . . . . . . . . . . . . . . . . . 413 362
-------- --------
Total Revenues . . . . . . . . . . . . . . . . . . 192,518 168,693
-------- --------
COSTS AND EXPENSES:
Home Building. . . . . . . . . . . . . . . . . . . . 176,520 149,265
Mortgage Lending . . . . . . . . . . . . . . . . . . 1,784 2,583
Asset Management . . . . . . . . . . . . . . . . . . 2,036 3,244
Corporate general and administrative . . . . . . . . 3,127 3,933
Corporate and home building interest (Note C). . . . 2,839 2,956
-------- --------
Total Expenses . . . . . . . . . . . . . . . . . . 186,306 161,981
-------- --------
Income before income taxes . . . . . . . . . . . . . . 6,212 6,712
Provision for income taxes . . . . . . . . . . . . . . 2,144 2,906
-------- --------
Net Income . . . . . . . . . . . . . . . . . . . . . . $ 4,068 $ 3,806
-------- --------
-------- --------
EARNINGS PER SHARE
Primary. . . . . . . . . . . . . . . . . . . . . . . $ .20 $ .19
-------- --------
-------- --------
Fully-diluted. . . . . . . . . . . . . . . . . . . . $ .19 $ .18
-------- --------
-------- --------
WEIGHTED-AVERAGE SHARES OUTSTANDING
Primary. . . . . . . . . . . . . . . . . . . . . . . 20,323 20,326
-------- --------
-------- --------
Fully-diluted. . . . . . . . . . . . . . . . . . . . 23,936 23,939
-------- --------
-------- --------
DIVIDENDS PER SHARE. . . . . . . . . . . . . . . . . . $ .02 $ --
-------- --------
-------- --------
See notes to condensed consolidated financial statements.
-3-
M.D.C. HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
--------------------
1995 1994
-------- --------
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . $ 4,068 $ 3,806
Adjustments To Reconcile Net Income To Net Cash Used
In Operating Activities:
Depreciation and amortization. . . . . . . . . . . 2,123 1,871
Deferred income taxes. . . . . . . . . . . . . . . 109 (751)
Gains on sales of mortgage-related assets. . . . . -- (313)
Net Changes In Assets and Liabilities
Mortgage loans held in inventory . . . . . . . . . 4,199 19,236
Home building inventories. . . . . . . . . . . . . 1,257 (22,304)
Receivables. . . . . . . . . . . . . . . . . . . . (4,530) (3,606)
Accounts payable and accrued expenses. . . . . . . (6,476) (1,961)
Other, net . . . . . . . . . . . . . . . . . . . . 3,565 (2,993)
-------- --------
Net Cash Provided By (Used In) Operating Activities. . 4,315 (7,015)
-------- --------
INVESTING ACTIVITIES:
Mortgage Collateral and other loans
Principal payments and prepayments . . . . . . . . 2,606 17,670
Sales. . . . . . . . . . . . . . . . . . . . . . . -- 4,910
Changes in restricted cash, net. . . . . . . . . . . . -- 6,363
Other, net . . . . . . . . . . . . . . . . . . . . . . 368 900
-------- --------
Net Cash Provided By Investing Activities. . . . . . . 2,974 29,843
-------- --------
See notes to condensed consolidated financial statements.
-4-
M.D.C. HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
---------------------
1995 1994
--------- ---------
FINANCING ACTIVITIES:
Mortgage-backed bonds - principal payments . . . . . $ (2,698) $(26,350)
Lines of credit
Advances . . . . . . . . . . . . . . . . . . . . 155,308 171,804
Principal payments . . . . . . . . . . . . . . . (172,586) (174,299)
Notes payable
Borrowings . . . . . . . . . . . . . . . . . . . 1,075 497
Principal payments . . . . . . . . . . . . . . . (8,315) (15,019)
Dividend payments. . . . . . . . . . . . . . . . . . (387) --
Other, net . . . . . . . . . . . . . . . . . . . . . 279 108
-------- --------
Net Cash Used In Financing Activities. . . . . . . . (27,324) (43,259)
-------- --------
Net Decrease In Cash and Cash Equivalents. . . . . . (20,035) (20,431)
Cash and Cash Equivalents
Beginning Of Period. . . . . . . . . . . . . . . 43,564 63,003
-------- --------
End Of Period. . . . . . . . . . . . . . . . . . $ 23,529 $ 42,572
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest, net of amounts capitalized . . . . . . $ NA(1) $ 533
Income taxes . . . . . . . . . . . . . . . . . . 657 12,620
(1) Interest capitalized exceeded interest paid during the period.
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Home building inventory purchases financed by
seller . . . . . . . . . . . . . . . . . . . . . . $ 1,688 $ 3,049
Home building land inventory sales financed by MDC . 156 457
Disposition of land inventories collateralized by
notes payable
Inventories. . . . . . . . . . . . . . . . . . . -- 2,864
Notes payable. . . . . . . . . . . . . . . . . . -- 2,176
Accrued interest and other liabilities . . . . . -- 688
See notes to condensed consolidated financial statements.
-5-
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, unless otherwise indicated, refers to M.D.C.
Holdings, Inc. and its subsidiaries) have been prepared by MDC, 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 March
31, 1995 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, 1994.
Price Waterhouse LLP has made a review, and not an audit, of the
unaudited condensed consolidated financial statements of the Company for the
three-month periods ended March 31, 1995 and 1994 (based on procedures adopted
by the American Institute of Certified Public Accountants) as set forth in their
separate report dated April 26, 1995, which is included as an exhibit to this
Form 10-Q. This report is not a "report" within the meaning of Sections 7 and
11 of the Securities Act of 1933, and the independent accountant's liability
under Section 11 does not extend to it.
Certain reclassifications have been made in the 1994 financial statements
to conform to the classifications used in the current year.
B. INFORMATION ON BUSINESS SEGMENTS
The Company operates in three business segments: home building, mortgage
lending and asset management. A summary of the Company's segment information is
shown below (in thousands).
THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1994
--------- ---------
Home Building
Home sales. . . . . . . . . . . . . $ 182,064 $ 156,735
Land sales. . . . . . . . . . . . . 2,313 1,750
Other revenues. . . . . . . . . . . 152 93
--------- ---------
184,529 158,578
--------- ---------
Home cost of sales. . . . . . . . . 157,015 131,479
Land cost of sales. . . . . . . . . 1,993 2,037
Marketing . . . . . . . . . . . . . 11,117 9,002
General and administrative. . . . . 6,395 6,747
--------- ---------
176,520 149,265
--------- ---------
Operating Profit. . . . . . . . . 8,009 9,313
--------- ---------
-6-
THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1994
--------- ---------
Mortgage Lending
Interest revenues . . . . . . . . . $ 693 $ 765
Origination fees. . . . . . . . . . 1,074 1,236
Gains on sale of mortgage servicing 2,670 2,872
Gains (losses) on sale of mortgage
loans, net. . . . . . . . . . . . (336) 99
Mortgage servicing and other. . . . 566 515
--------- ---------
4,667 5,487
--------- ---------
Interest expense. . . . . . . . . . -- 194
General and administrative. . . . . 1,784 2,389
--------- ---------
1,784 2,583
--------- ---------
Operating Profit . . . . . . . 2,883 2,904
--------- ---------
Asset Management
Interest revenues . . . . . . . . . 1,517 2,646
Gains on sales of mortgage-related
assets. . . . . . . . . . . . . . -- 313
Management fees and other . . . . . 1,392 1,307
--------- ---------
2,909 4,266
--------- ---------
Interest expense. . . . . . . . . . 1,426 2,554
General and administrative. . . . . 610 690
--------- ---------
2,036 3,244
--------- ---------
Operating Profit . . . . . . . 873 1,022
--------- ---------
Corporate
Other revenues. . . . . . . . . . . 413 362
--------- ---------
Interest expense. . . . . . . . . . 2,839 2,956
General and administrative. . . . . 3,127 3,933
--------- ---------
5,966 6,889
--------- ---------
Net Corporate Expenses . . . . (5,553) (6,527)
--------- ---------
Income Before Income Taxes . . . . . . $ 6,212 $ 6,712
--------- ---------
--------- ---------
-7-
C. CORPORATE AND HOME BUILDING INTEREST ACTIVITY
THREE MONTHS
ENDED MARCH 31,
------------------
1995 1994
-------- --------
(IN THOUSANDS)
Interest capitalized in home building inventory,
beginning of period. . . . . . . . . . . . . . . $ 42,478 $ 42,681
Corporate and home building interest incurred. . . 8,989 8,364
Corporate and home building interest expensed. . . (2,839) (2,956)
Previously capitalized home building interest
included in cost of sales. . . . . . . . . . . . (6,590) (6,208)
-------- --------
Interest capitalized in home building inventory,
end of period. . . . . . . . . . . . . . . . . . $ 42,038 $ 41,881
-------- --------
-------- --------
Home building inventories, end of period . . . . . $464,432 $413,336
-------- --------
-------- --------
D. EARNINGS PER SHARE
Primary earnings per share are based on the weighted-average number of
common and common equivalent shares outstanding during each period. The
computation of fully-diluted earnings per share also assumes the conversion into
MDC Common Stock of all of the $28,000,000 outstanding principal amount of the
8 3/4% convertible subordinated notes due December 2005 (the "Convertible
Notes") at a conversion price of $7.75 per share of MDC Common Stock. The
primary and fully-diluted earnings per share calculations are shown below (in
thousands, except per share amounts).
THREE MONTHS
ENDED MARCH 31,
-----------------
1995 1994
------- -------
PRIMARY EARNINGS PER SHARE CALCULATION:
Net Income . . . . . . . . . . . . . . . . . . . . $ 4,068 $ 3,806
------- -------
------- -------
Weighted-average shares outstanding. . . . . . . . 19,128 18,748
Dilutive stock options . . . . . . . . . . . . . . 1,195 1,578
------- -------
Total Weighted-Average Shares. . . . . . . . . 20,323 20,326
------- -------
------- -------
Primary Earnings Per Share . . . . . . . . . . . . $ .20 $ .19
------- -------
------- -------
FULLY-DILUTED EARNINGS PER SHARE CALCULATION:
Net Income . . . . . . . . . . . . . . . . . . . . $ 4,068 $ 3,806
Adjustment for interest on Convertible Notes, net
of income tax benefit; conversion assumed. . . . 384 384
------- -------
Adjusted Net Income. . . . . . . . . . . . . . $ 4,452 $ 4,190
------- -------
------- -------
Weighted-average shares outstanding. . . . . . . . 19,128 18,748
Dilutive stock options . . . . . . . . . . . . . . 1,195 1,578
Shares issuable upon conversion of Convertible
Notes; conversion assumed. . . . . . . . . . . . 3,613 3,613
------- -------
Total Weighted-Average Shares. . . . . . . . . 23,936 23,939
------- -------
------- -------
Fully-Diluted Earnings Per Share . . . . . . . . . $ .19 $ .18
------- -------
------- -------
-8-
E. SUPPLEMENTAL GUARANTOR INFORMATION
The Senior Notes are guaranteed unconditionally on an unsecured
subordinated basis, jointly and severally (the "Guaranties"), by 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, Inc., Richmond Homes, Inc. I and Richmond Homes,
Inc. II (collectively, the "Guarantors"). The Guaranties are subordinated to
all Guarantor Senior Indebtedness (as defined in the Senior Notes Indenture).
Supplemental combining financial information follows.
-9-
SUPPLEMENTAL COMBINING BALANCE SHEET
MARCH 31, 1995
(IN THOUSANDS)
UNCONSOLIDATED
-------------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
MDC SUBSIDIARIES SUBSIDIARIES ENTRIES MDC
--------- ------------ ------------ ----------- ------------
ASSETS
Corporate
Cash and cash equivalents . . . . . . $ 13,772 $ -- $ -- $ -- $ 13,772
Investments in subsidiaries . . . . . 313,592 15,336 17,435 (346,363) --
Advances and notes receivable -
Parent and subsidiaries . . . . . . 170,988 24 85,886 (256,898) --
Property and equipment, net . . . . . 9,799 -- -- -- 9,799
Deferred income taxes . . . . . . . . 11,835 -- -- -- 11,835
Deferred issue costs, net . . . . . . 10,456 -- -- -- 10,456
Other assets, net . . . . . . . . . . 3,170 -- 159 -- 3,329
--------- -------- --------- --------- ---------
533,612 15,360 103,480 (603,261) 49,191
--------- -------- --------- --------- ---------
Home Building
Cash and cash equivalents . . . . . . . 4 7,890 52 -- 7,946
Home sales and other accounts
receivable. . . . . . . . . . . . . . -- 25,828 -- (10,452) 15,376
Investments and marketable
securities, net . . . . . . . . . . . 6,205 -- -- -- 6,205
Inventories, net
Housing completed or under
construction. . . . . . . . . . . . -- 258,435 19,846 -- 278,281
Land and land under development . . . -- 154,799 32,057 (705) 186,151
Prepaid expenses and other assets,
net . . . . . . . . . . . . . . . . . 4,003 37,438 1,036 -- 42,477
--------- -------- --------- --------- ---------
10,212 484,390 52,991 (11,157) 536,436
--------- -------- --------- --------- ---------
Mortgage Lending
Cash and cash equivalents . . . . . . . -- -- 1,029 -- 1,029
Restricted cash . . . . . . . . . . . . -- -- 2,650 -- 2,650
Accrued interest and other assets, net. -- -- 2,206 -- 2,206
Mortgage loans held in inventory, net . -- -- 40,169 -- 40,169
--------- -------- --------- --------- ---------
-- -- 46,054 -- 46,054
--------- -------- --------- --------- ---------
Asset Management
Cash and cash equivalents . . . . . . . -- -- 782 -- 782
Mortgage Collateral, net, and assets
related to mortgage-backed bonds
and related liabilities . . . . . . . -- -- 62,414 -- 62,414
Other loans and assets, net . . . . . . -- -- 5,650 -- 5,650
--------- -------- --------- --------- ---------
-- -- 68,846 -- 68,846
--------- -------- --------- --------- ---------
Total Assets. . . . . . . . . . . . $ 543,824 $ 499,750 $ 271,371 $(614,418) $ 700,527
--------- -------- --------- --------- ---------
--------- -------- --------- --------- ---------
-10-
SUPPLEMENTAL COMBINING BALANCE SHEET
MARCH 31, 1995
(IN THOUSANDS)
(continued)
UNCONSOLIDATED
-------------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
MDC SUBSIDIARIES SUBSIDIARIES ENTRIES MDC
--------- ------------ ------------ ----------- ------------
LIABILITIES
Corporate
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . $ 26,198 $ -- $ 357 $ -- $ 26,555
Advances and notes payable - Parent
and subsidiaries. . . . . . . . . . . 70,120 198,627 20,822 (289,569) --
Income taxes payable. . . . . . . . . . 13,264 -- -- -- 13,264
Notes payable . . . . . . . . . . . . . 3,571 -- -- -- 3,571
Senior Notes, net . . . . . . . . . . . 187,393 -- -- -- 187,393
Subordinated notes, net . . . . . . . . 38,218 -- -- -- 38,218
--------- --------- --------- --------- ---------
338,764 198,627 21,179 (289,569) 269,001
--------- --------- --------- --------- ---------
Home Building
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . 3,033 59,973 12,208 -- 75,214
Lines of credit . . . . . . . . . . . . -- 64,775 -- -- 64,775
Notes payable . . . . . . . . . . . . . 4,576 19,234 4,235 -- 28,045
--------- --------- --------- --------- ---------
7,609 143,982 16,443 -- 168,034
--------- --------- --------- --------- ---------
Mortgage Lending
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . -- -- 14,159 (10,509) 3,650
Line of credit. . . . . . . . . . . . . -- -- 3,490 -- 3,490
--------- --------- --------- --------- ---------
-- -- 17,649 (10,509) 7,140
--------- --------- --------- --------- ---------
Asset Management
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . -- -- 588 -- 588
Mortgage-backed bonds, net, and
related liabilities, recourse solely
to limited-purpose subsidiary assets. -- -- 58,313 -- 58,313
--------- --------- --------- --------- ---------
-- -- 58,901 -- 58,901
--------- --------- --------- --------- ---------
Total Liabilities . . . . . . . . . 346,373 342,609 114,172 (300,078) 503,076
--------- --------- --------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock . . . . . . . . . . . . . -- -- 10 (10) --
Common Stock. . . . . . . . . . . . . . . 216 18 82 (100) 216
Additional paid-in capital. . . . . . . . 134,812 144,756 224,915 (369,671) 134,812
Retained earnings . . . . . . . . . . . . 75,648 12,367 (67,799) 55,432 75,648
Less treasury stock . . . . . . . . . . . (13,225) -- (9) 9 (13,225)
--------- --------- --------- --------- ---------
Total Stockholders' Equity. . . . . . 197,451 157,141 157,199 (314,340) 197,451
--------- --------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity. . . . . . . . $ 543,824 $ 499,750 $ 271,371 $(614,418) $ 700,527
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
-11-
SUPPLEMENTAL COMBINING BALANCE SHEET
DECEMBER 31, 1994
(IN THOUSANDS)
UNCONSOLIDATED
-------------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
MDC SUBSIDIARIES SUBSIDIARIES ENTRIES MDC
--------- ------------ ------------ ----------- ------------
ASSETS
Corporate
Cash and cash equivalents . . . . . . . . $ 31,210 $ -- $ -- $ -- $ 31,210
Investments in subsidiaries . . . . . . . 327,021 26,822 16,948 (370,791) --
Advances and notes receivable -
Parent and subsidiaries . . . . . . . . 145,900 -- 106,486 (252,386) --
Property and equipment, net . . . . . . . 9,962 -- -- -- 9,962
Deferred income taxes . . . . . . . . . . 11,944 -- -- -- 11,944
Deferred issue costs, net . . . . . . . . 10,621 -- -- -- 10,621
Other assets, net . . . . . . . . . . . . 3,017 -- 253 -- 3,270
--------- --------- --------- --------- ---------
539,675 26,822 123,687 (623,177) 67,007
--------- --------- --------- --------- ---------
Home Building
Cash and cash equivalents . . . . . . . . -- 9,656 506 -- 10,162
Home sales and other accounts
receivable. . . . . . . . . . . . . . . 243 23,572 -- (11,307) 12,508
Investments and marketable
securities, net . . . . . . . . . . . . 6,089 -- -- -- 6,089
Inventories, net
Housing completed or under
construction. . . . . . . . . . . . . -- 258,044 22,275 -- 280,319
Land and land under development . . . . -- 146,655 37,813 (630) 183,838
Prepaid expenses and other assets, net. . 6,601 33,011 4,363 -- 43,975
--------- --------- --------- --------- ---------
12,933 470,938 64,957 (11,937) 536,891
--------- --------- --------- --------- ---------
Mortgage Lending
Cash and cash equivalents . . . . . . . . -- -- 1,607 -- 1,607
Restricted cash . . . . . . . . . . . . . -- -- 2,650 -- 2,650
Accrued interest and other assets, net. . -- -- 1,447 -- 1,447
Mortgage loans held in inventory, net . . -- -- 44,368 -- 44,368
--------- --------- --------- --------- ---------
-- -- 50,072 -- 50,072
--------- --------- --------- --------- ---------
Asset Management
Cash and cash equivalents . . . . . . . . -- -- 585 -- 585
Mortgage Collateral, net, and assets
related to mortgage-backed bonds
and related liabilities . . . . . . . . -- -- 64,574 -- 64,574
Other loans and assets, net . . . . . . . -- -- 6,316 -- 6,316
--------- --------- --------- --------- ---------
-- -- 71,475 -- 71,475
--------- --------- --------- --------- ---------
Total Assets. . . . . . . . . . . . . $ 552,608 $ 497,760 $ 310,191 $(635,114) $ 725,445
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
-12-
SUPPLEMENTAL COMBINING BALANCE SHEET
DECEMBER 31, 1994
(IN THOUSANDS)
(continued)
UNCONSOLIDATED
-------------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
MDC SUBSIDIARIES SUBSIDIARIES ENTRIES MDC
--------- ------------ ------------ ----------- ------------
LIABILITIES
Corporate
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . . $ 34,192 $ -- $ 119 $ -- $ 34,311
Advances and notes payable - Parent
and Subsidiaries. . . . . . . . . . . . 78,665 174,880 7,385 (260,930) --
Income taxes payable. . . . . . . . . . . 11,166 -- -- -- 11,166
Notes payable . . . . . . . . . . . . . . 3,583 -- -- -- 3,583
Senior Notes, net . . . . . . . . . . . . 187,352 -- -- -- 187,352
Subordinated notes, net . . . . . . . . . 38,217 -- -- -- 38,217
--------- --------- --------- --------- ---------
353,175 174,880 7,504 (260,930) 274,629
--------- --------- --------- --------- ---------
Home Building
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . . 2,562 64,389 8,448 -- 75,399
Lines of credit . . . . . . . . . . . . . -- 62,332 -- -- 62,332
Notes payable . . . . . . . . . . . . . . 4,576 18,857 10,152 -- 33,585
--------- --------- --------- --------- ---------
7,138 145,578 18,600 -- 171,316
--------- --------- --------- --------- ---------
Mortgage Lending
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . . -- -- 13,757 (11,307) 2,450
Line of credit. . . . . . . . . . . . . . -- -- 23,211 -- 23,211
--------- --------- --------- --------- ---------
-- -- 36,968 (11,307) 25,661
--------- --------- --------- --------- ---------
Asset Management
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . . -- -- 670 -- 670
Mortgage-backed bonds, net, and
related liabilities, recourse solely to
limited-purpose subsidiary assets . . . -- -- 60,874 -- 60,874
--------- --------- --------- --------- ---------
-- -- 61,544 -- 61,544
--------- --------- --------- --------- ---------
Total Liabilities . . . . . . . . . 360,313 320,458 124,616 (272,237) 533,150
--------- --------- --------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock . . . . . . . . . . . . . -- -- 10 (10) --
Common Stock. . . . . . . . . . . . . . . 212 18 121 (139) 212
Additional paid-in capital. . . . . . . . 133,934 144,756 234,578 (379,334) 133,934
Retained earnings . . . . . . . . . . . . 71,502 32,528 (49,125) 16,597 71,502
Less treasury stock . . . . . . . . . . . (13,353) -- (9) 9 (13,353)
--------- --------- --------- --------- ---------
Total Stockholders' Equity. . . . . 192,295 177,302 185,575 (362,877) 192,295
--------- --------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity. . . . . . . $ 552,608 $ 497,760 $ 310,191 $ (635,114) $ 725,445
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
-13-
SUPPLEMENTAL COMBINING STATEMENTS OF INCOME
(IN THOUSANDS)
UNCONSOLIDATED
-----------------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
MDC SUBSIDIARIES SUBSIDIARIES ENTRIES MDC
------------ ------------ ------------ ------------ ------------
THREE MONTHS ENDED MARCH 31, 1995
REVENUES:
Home Building. . . . . . . . . . . . . . . . . . $ 33 $164,848 $ 20,045 $ (397) $184,529
Mortgage Lending . . . . . . . . . . . . . . . . -- -- 4,667 -- 4,667
Asset Management . . . . . . . . . . . . . . . . -- -- 2,909 -- 2,909
Corporate. . . . . . . . . . . . . . . . . . . . 413 -- -- -- 413
Equity in earnings of subsidiaries . . . . . . . 6,000 1,196 -- (7,196) --
------------ ------------ ------------ ------------ ------------
Total Revenues. . . . . . . . . . . . . . . 6,446 166,044 27,621 (7,593) 192,518
------------ ------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Home Building. . . . . . . . . . . . . . . . . . 546 157,825 18,149 -- 176,520
Mortgage Lending . . . . . . . . . . . . . . . . -- -- 1,784 -- 1,784
Asset Management . . . . . . . . . . . . . . . . -- -- 2,036 -- 2,036
Corporate general and administrative . . . . . . 3,092 -- 35 -- 3,127
Corporate and home building interest . . . . . . (3,404) 5,959 740 (456) 2,839
------------ ------------ ------------ ------------ ------------
Total Expenses. . . . . . . . . . . . . . . 234 163,784 22,744 (456) 186,306
------------ ------------ ------------ ------------ ------------
Income before income taxes . . . . . . . . . . . . 6,212 2,260 4,877 (7,137) 6,212
Provision for income taxes . . . . . . . . . . . . 2,144 859 1,647 (2,506) 2,144
------------ ------------ ------------ ------------ ------------
NET INCOME . . . . . . . . . . . . . . . . . . . . $ 4,068 $ 1,401 $ 3,230 $ (4,631) $ 4,068
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
THREE MONTHS ENDED MARCH 31, 1994
REVENUES:
Home Building. . . . . . . . . . . . . . . . . . $ -- $147,681 $ 11,656 $ (759) $158,578
Mortgage Lending . . . . . . . . . . . . . . . . -- -- 5,487 -- 5,487
Asset Management . . . . . . . . . . . . . . . . -- -- 4,547 (281) 4,266
Corporate. . . . . . . . . . . . . . . . . . . . 342 -- 20 -- 362
Equity in earnings of subsidiaries . . . . . . . 9,169 999 -- (10,168) --
------------ ------------ ------------ ------------ ------------
Total Revenues. . . . . . . . . . . . . . . 9,511 148,680 21,710 (11,208) 168,693
------------ ------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Home Building. . . . . . . . . . . . . . . . . . 364 138,543 10,563 (205) 149,265
Mortgage Lending . . . . . . . . . . . . . . . . -- -- 2,583 -- 2,583
Asset Management . . . . . . . . . . . . . . . . -- -- 3,244 -- 3,244
Corporate general and administrative . . . . . . 3,902 -- 31 -- 3,933
Corporate and home building interest . . . . . . (1,467) 4,127 1,032 (736) 2,956
------------ ------------ ------------ ------------ ------------
Total Expenses. . . . . . . . . . . . . . . 2,799 142,670 17,453 (941) 161,981
------------ ------------ ------------ ------------ ------------
Income before income taxes . . . . . . . . . . . . 6,712 6,010 4,257 (10,267) 6,712
Provision for income taxes . . . . . . . . . . . . 2,906 2,348 1,445 (3,793) 2,906
------------ ------------ ------------ ------------ ------------
NET INCOME . . . . . . . . . . . . . . . . . . . . $ 3,806 $ 3,662 $ 2,812 $ (6,474) $ 3,806
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
-14-
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
UNCONSOLIDATED
-----------------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
MDC SUBSIDIARIES SUBSIDIARIES ENTRIES MDC
------------ ------------ ------------ ------------ ------------
NET CASH PROVIDED BY (USED
IN) OPERATING ACTIVITIES. . . . . . . . . . . . . $(23,026) $(21,079) $ 6,233 $ 42,187 $ 4,315
------------ ------------ ------------ ------------ ------------
INVESTING ACTIVITIES:
Mortgage Collateral
Principal payments and
prepayments. . . . . . . . . . . . . . . . . -- -- 2,606 -- 2,606
Affiliate notes receivable . . . . . . . . . . . . 14,257 -- -- (14,257) --
Other, net . . . . . . . . . . . . . . . . . . . . -- -- 368 -- 368
------------ ------------ ------------ ------------ ------------
Net Cash Provided By (Used In)
Investing Activities . . . . . . . . . . . . . 14,257 -- 2,974 (14,257) 2,974
------------ ------------ ------------ ------------ ------------
FINANCING ACTIVITIES:
Net increase (reduction) in borrowings
from Parent and subsidiaries . . . . . . . . . . (8,545) 23,038 13,437 (27,930) --
Mortgage-backed bonds - principal
payments . . . . . . . . . . . . . . . . . . . . -- -- (2,698) -- (2,698)
Lines of Credit
Advances . . . . . . . . . . . . . . . . . . . -- 155,308 -- -- 155,308
Principal payments . . . . . . . . . . . . . . -- (152,865) (19,721) -- (172,586)
Notes payable
Borrowings . . . . . . . . . . . . . . . . . . -- 1,075 -- -- 1,075
Principal payments . . . . . . . . . . . . . . (12) (7,243) (1,060) -- (8,315)
Dividend payments . . . . . . . . . . .. . . . . . (387) -- -- -- (387)
Other, net . . . . . . . . . . . . . . . . . . . . 279 -- -- -- 279
------------ ------------ ------------ ------------ ------------
Net Cash Provided By (Used In)
Financing Activities . . . . . . . . . . . . . . (8,665) 19,313 (10,042) (27,930) (27,324)
------------ ------------ ------------ ------------ ------------
Net Decrease In Cash And Cash
Equivalents. . . . . . . . . . . . . . . . . . . (17,434) (1,766) (835) -- (20,035)
Cash And Cash Equivalents
Beginning Of Period. . . . . . . . . . . . . . . 31,210 9,656 2,698 -- 43,564
------------ ------------ ------------ ------------ ------------
End Of Period. . . . . . . . . . . . . . . . . . $ 13,776 $ 7,890 $ 1,863 $ -- $ 23,529
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
-15-
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1994
(IN THOUSANDS)
UNCONSOLIDATED
-----------------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
MDC SUBSIDIARIES SUBSIDIARIES ENTRIES MDC
------------ ------------ ------------ ------------ ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES. . . . . . . . . . . . . . . $ (9,952) $ (20,598) $ 21,786 $ 1,749 $ (7,015)
------------ ------------ ------------ ------------ ------------
INVESTING ACTIVITIES:
Mortgage Collateral
Principal payments and prepayments. . . . . . -- 211 17,459 -- 17,670
Sales . . . . . . . . . . . . . . . . . . . . -- -- 4,910 -- 4,910
Changes in restricted cash . . . . . . . . . . . . -- -- 6,363 -- 6,363
Affiliate notes receivable . . . . . . . . . . . . 2,108 -- 3,053 (5,161) --
Other, net . . . . . . . . . . . . . . . . . . . . 22 (110) 988 -- 900
------------ ------------ ------------ ------------ ------------
Net Cash Provided By Investing Activities. . . . . 2,130 101 32,773 (5,161) 29,843
------------ ------------ ------------ ------------ ------------
FINANCING ACTIVITIES:
Net increase (reduction) in borrowings from
Parent and subsidiaries. . . . . . . . . . . . . (5,311) 17,880 (10,820) (1,749) --
Mortgage-backed bonds - principal
payments . . . . . . . . . . . . . . . . . . . -- -- (26,350) -- (26,350)
Lines of Credit
Advances. . . . . . . . . . . . . . . . . . . -- 171,804 -- -- 171,804
Principal payments. . . . . . . . . . . . . . -- (157,649) (16,650) -- (174,299)
Notes payable
Borrowings. . . . . . . . . . . . . . . . . . -- 497 -- -- 497
Principal payments. . . . . . . . . . . . . . (3,631) (10,461) (927) -- (15,019)
Affiliate notes payable. . . . . . . . . . . . . . -- (5,161) -- 5,161 --
Other, net . . . . . . . . . . . . . . . . . . . . 108 -- -- -- 108
------------ ------------ ------------ ------------ ------------
Net Cash Provided By (Used In) Financing
Activities . . . . . . . . . . . . . . . . . . . (8,834) 16,910 (54,747) 3,412 (43,259)
------------ ------------ ------------ ------------ ------------
Net Decrease In Cash And Cash
Equivalents. . . . . . . . . . . . . . . . . . . (16,656) (3,587) (188) -- (20,431)
Cash And Cash Equivalents
Beginning Of Period. . . . . . . . . . . . . . . 42,443 17,792 2,768 -- 63,003
------------ ------------ ------------ ------------ ------------
End Of Period. . . . . . . . . . . . . . . . . . $ 25,787 $ 14,205 $ 2,580 $ -- $ 42,572
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
-16-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
INTRODUCTION
MDC is a national home builder with operations in (i) metropolitan Denver
and Colorado Springs, Colorado (collectively, "Colorado"); (ii) northern
Virginia and suburban Maryland (collectively, "Mid-Atlantic"); (iii) Northern
and Southern California (collectively, "California"); (iv) Phoenix and Tucson,
Arizona (collectively, "Arizona"); and (v) Las Vegas, Nevada ("Nevada").
In its home building operations, the Company is engaged in the construction
and sale of residential housing (collectively, the "home building segment"). In
its mortgage origination, purchase and sale activities (collectively, the
"mortgage lending segment"), which primarily support the Company's home
building segment, HomeAmerican Mortgage Corporation (a wholly owned subsidiary
of M.D.C. Holdings, Inc., "HomeAmerican") provides mortgage loans to the
Company's home buyers and to others.
In its asset management operations (collectively, the "asset management
segment"), Financial Asset Management Corporation (an indirect, wholly owned
subsidiary of M.D.C. Holdings, Inc., "FAMC") manages, by contract, the
operations of two publicly traded real estate investment trusts (each, a
"REIT").
RESULTS OF OPERATIONS
The table below summarizes MDC's results of operations during each of the
periods presented (in thousands, except per share amounts).
THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1994
-------- --------
Revenues. . . . . . . . . . . . . . . . . . . $192,518 $168,693
Income before income taxes. . . . . . . . . . 6,212 6,712
Operating and net income. . . . . . . . . . . 4,068 3,806
Primary Earnings Per Share. . . . . . . . . . .20 .19
Revenues for the first quarter of 1995 increased 14% to $192,518,000 from
$168,693,000 during the same period in 1994 primarily due to a significant
increase in homes closed. The Company closed 1,008 homes during the
first quarter of 1995, the highest level of first quarter home closings in the
Company's history and an 18% increase over the 854 homes closed in the same
period in 1994.
Income before income taxes was lower in the three months ended March 31,
1995 compared with the same period in 1994 primarily as a result of lower home
building segment operating profits, partially offset by lower corporate general
and administrative expenses. Operating profit from the Company's home building
operations for the first quarter of 1995 totalled $8,009,000 compared with
$9,313,000 for the same period in 1994. The reduction in home building
operating profits in the first quarter of 1995 primarily resulted from a decline
in the Home Gross Margins (as hereinafter defined) to 13.8% compared with 16.1%
in the first quarter of 1994. This decline largely was due to increased
incentives offered to home buyers in order to stimulate sales as home building
markets throughout the nation experienced slower activity in the first quarter
of 1995 than in the same period in 1994 and additional costs related to the
Company's aggressive marketing program to reduce its inventory of unsold homes
under construction.
During the three months ended March 31, 1995, MDC earned operating and net
income of $4,068,000, or $.20 per share (primary). This was the Company's
highest first quarter operating income
-17-
since 1987 and a seven percent increase over the $3,806,000, or $.19 per share
(primary), in operating and net income for the same period in 1994.
IMPACT OF HOME MORTGAGE INTEREST RATES.
Beginning in 1992 through October 1993, home mortgage interest rates
declined to their lowest levels in 25 years to an average of 6.7% on a 30-year,
fixed-rate mortgage. Since October 1993, mortgage interest rates have increased
from a low of 6.7% to as high as 9.25% in December 1994 primarily as a result of
seven interest rate increases by the Federal Reserve Board. While current
mortgage interest rates (approximately 8.4% in April 1995) are still low
compared with historical rates for the past 25 years, the general increase in
mortgage interest rates, particularly since April 1994 when rates moved above
8%, has affected adversely the Company's home building and mortgage lending
segments.
The general increases in mortgage interest rates since October 1993 have
affected adversely, and may continue to affect adversely in the future (i)
sales of new homes and the level of Home Gross Margins; and (ii) the Company's
mortgage lending operations by substantially decreasing mortgage loan
originations for refinancing.
The Company is unable to predict the extent to which future increases in
mortgage interest rates will affect adversely the Company's operating
activities and results of operations.
HOME BUILDING SEGMENT.
The table below sets forth certain information with respect to the
Company's homes sold, closed and delivered during each of the periods presented
as well as units sold under a contract but not delivered ("Backlog") at each
date shown (dollars in thousands).
THREE MONTHS
ENDED MARCH 31,
---------------------
1995 1994
-------- --------
Home sales revenues . . . . . . . . . . . . . . . $182,064 $156,735
Operating profits . . . . . . . . . . . . . . . . 8,009 9,313
Average selling price per housing unit . . . . . 180.6 183.5
Home Gross Margins . . . . . . . . . . . . . . . 13.8% 16.1%
Homes - units
Sales contracted, net
Colorado . . . . . . . . . . . . . . . . 540 750
Mid-Atlantic . . . . . . . . . . . . . . 330 412
California . . . . . . . . . . . . . . . 160 146
Arizona . . . . . . . . . . . . . . . . 178 154
Nevada . . . . . . . . . . . . . . . . . 25 30
-------- --------
Total . . . . . . . . . . . . . . . 1,233 1,492
-------- --------
-------- --------
Closed and delivered
Colorado . . . . . . . . . . . . . . . . 480 392
Mid-Atlantic . . . . . . . . . . . . . . 191 252
California . . . . . . . . . . . . . . . 126 107
Arizona . . . . . . . . . . . . . . . . 184 86
Nevada . . . . . . . . . . . . . . . . . 27 17
-------- --------
Total . . . . . . . . . . . . . . . 1,008 854
-------- --------
-------- --------
-18-
MARCH 31, DECEMBER 31, MARCH 31,
1995 1994 1994
---------- ------------ ----------
Backlog
Units
Colorado . . . . . . . . . . . 670 610 1,018
Mid-Atlantic . . . . . . . . . 476 337 585
California . . . . . . . . . . . 135 101 137
Arizona . . . . . . . . . . . . 251 257 215
Nevada . . . . . . . . . . . . . 27 29 40
-------- -------- --------
Total . . . . . . . . . . 1,559 1,334 1,995
-------- -------- --------
Sales value . . . . . . . . . . . . . $288,700 $241,900 $363,270
-------- -------- --------
-------- -------- --------
HOME SALES REVENUES AND HOMES CLOSED AND DELIVERED. Home sales revenues
for the three months ended March 31, 1995 were the highest first quarter home
sales revenues in the Company's history, representing an increase of 16% over
home sales revenues for the same period in 1994. This increase primarily was
the result of increases in home closings in (i) Colorado (a 22% increase) due to
the strong backlog at December 31, 1994, favorable winter weather which enabled
the Company to finish and close a greater percentage of this backlog and an
active marketing program to sell and deliver certain unsold homes under
construction; (ii) Arizona (a 114% increase) primarily due to a significant
expansion of the Company's operations in Phoenix; and (iii) California (an 18%
increase) due to the Company's acquisition and opening of several new
subdivisions in this market, particularly in Southern California. The
Company's Mid-Atlantic market had lower home closings in the first quarter of
1995 compared with the same period in 1994, despite an increase in the number
of active subdivisions, as strong market conditions in the first quarter of
1994 have softened during the latter part of 1994 and into the first quarter
of 1995.
The Company increased the number of active subdivisions throughout its
markets from 105 at March 31, 1994 to 132 at March 31, 1995. Most of the
increases in active subdivisions occurred in (i) the Mid-Atlantic market (a net
increase of 11); (ii) Arizona (a net increase of 11); and (iii) California (a
net increase of 3).
AVERAGE SELLING PRICE PER HOUSING UNIT. The decrease in the average
selling price per housing unit in the first quarter of 1995 compared with the
first quarter of 1994 primarily was a result of lower average selling prices in
(i) Southern California primarily due to the introduction in new subdivisions of
lower-priced homes primarily marketed to first and second-time move-up home
buyers during the latter part of 1994; (ii) Tucson primarily due to the opening
of new subdivisions which target the first-time and first-time move-up buyer;
and (iii) Colorado as the Company continues to offer lower-priced homes in
response to consumer demand. These decreases partially were offset by increases
in average selling prices in the Mid-Atlantic and Northern California markets
principally due to the mix of homes closed.
HOME GROSS MARGINS. Gross margins (home sales revenues less cost of goods
sold, which primarily includes land and construction costs, capitalized
interest, a reserve for warranty expense and financing costs) as a percent of
home sales revenue ("Home Gross Margins") decreased during the first quarter of
1995 compared with the first quarter of 1994. This decline largely was due to
increased incentives offered to home buyers in order to stimulate sales in view
of weakening conditions in home building markets throughout the nation and
additional costs related to the company's aggressive marketing program to reduce
its inventory of unsold homes under construction. The Company believes that the
-19-
weakening market conditions, increased incentives and additional costs will
result in lower Home Gross Margins in the second quarter, and possibly the third
quarter, of 1995 compared with the same periods in 1994. In addition, increases
in, among other things, the costs of subcontracted labor, finished lots and
building materials have affected adversely, and may affect adversely in the
future, Home Gross Margins to the extent that market conditions prevent the
recovery of increased costs through higher sales prices.
HOME SALES AND BACKLOG. Sales for the first quarter of 1995 decreased by
17% to 1,233 homes from 1,492 homes for the same period in 1994 as the Company,
in general, experienced lower sales per active subdivision in each of its
markets in the first quarter of 1995 compared with the prior year. Sales for
the first quarter of 1994 reflected the trend of strong sales experienced prior
to the significant increase in mortgage interest rates in April 1994. Backlog
at March 31, 1995 was 1,559 compared with 1,334 at December 31, 1994 and 1,995
at March 31, 1994. MDC expects approximately 70% of its March 31, 1995 Backlog
to close under existing sales contracts during the second and third quarters of
1995.
Sales for the first quarter of 1995 compared with 1994 in Colorado declined
28% as a result of, among other things, increased competition as new competitors
entered the market and increases in mortgage rates which affected adversely the
demand for new homes. Sales for the first quarter of 1995 compared with 1994 in
the Mid-Atlantic market declined 20% due to an overall slowing in this market
which began in the second quarter of 1994. The overall Mid-Atlantic market
declined by approximately 19% in the first quarter of 1995 compared with the
first quarter of 1994.
Sales increased in the first quarter of 1995 compared with 1994 in
(i) Arizona (an increase of 16%) due to an expansion of the Company's operations
in Phoenix; and (ii) California (an increase of 10%) primarily due to an
expansion of the Company's operations in Southern California.
Sales in April 1995 increased by 17% to 427 homes compared with sales of
365 homes in April 1994. The Company is unable to predict if this trend will
continue in the future.
MARKETING. Marketing expenses (which include, among other things,
amortization of deferred marketing, model home expenses and sales commissions)
totalled $11,117,000 for the first quarter of 1995 compared with $9,002,000 for
1994. This 24% increase during 1995 principally was due to the 16% increase in
home sales revenue and expanded operations in most of the Company's major
regions. Significant additional marketing-related salary, sales commission and
model home operation expenses were incurred to support the Company's expanded
operations. Additionally, the Company has increased its marketing in an effort
to stimulate sales in most of its markets.
GENERAL AND ADMINISTRATIVE. General and administrative expenses totalled
$6,395,000 during the first quarter of 1995 compared with $6,747,000 during
1994. General and administrative expenses have decreased in the aggregate
primarily due to the Company's continuing efforts to decrease general and
administrative expenses. General and administrative expenses as a percentage
of home sales revenues decreased to 3.5% for 1995 compared with 4.3% in 1994
as the Company was able to deliver more homes without a proportionate increase
in overhead.
UNSOLD HOMES UNDER CONSTRUCTION.
The Company maintains levels of unsold homes in various stages of
completion to assist it in meeting the immediate and near-term demands of its
home buyers. The Company monitors and adjusts its
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levels of unsold homes under construction based on, among other factors, its
evaluation of market conditions and in anticipation of seasonal sales patterns
and weather.
The Company in the past has offered, and may in the future offer,
incentives to assist in selling certain of its unsold homes under construction.
These incentives include buying down mortgage interest rates, offering
prospective home buyers options and upgrades at a discount and, to a
substantially lesser extent, price concessions. The cost of these incentives is
included in the determination of the Company's Home Gross Margins.
As with all of the Company's inventories, interest and other carrying costs
incurred with respect to the Company's unsold homes under construction are
capitalized during periods of active construction and expensed following their
completion. In view of the Company's recent sales trends, the period of time
required to sell and close the Company's unsold homes under construction, in
some cases, may be extended. The Company's operating income will be affected
adversely by any additional interest and other carrying costs incurred (most of
which will be expensed) with respect to these unsold homes during this extended
period.
The Company aggressively is marketing certain unsold homes which it
considers to be in excess of its present needs and plans to continue this
program through the second quarter of 1995. The Company has reduced the number
of unsold homes under construction at March 31, 1995 by 15% compared with the
December 31, 1994 level. The Company is unable to predict the extent to
which its Home Gross Margins and operating income in 1995 will be affected
adversely by the incentives offered and the additional interest and carrying
costs incurred with respect to the Company's unsold homes under construction.
LAND INVENTORY.
The table below shows the carrying value of MDC's land and land under
development in each of its home building markets at March 31, 1995, segregated
by property acquired or optioned before 1991 ("Pre-1991") and after 1990
("Other"). The table also shows the carrying value of MDC's inactive land
inventory which is included in the total, most of which was acquired prior to
1991 (in thousands).
TOTAL LAND AND LAND UNDER DEVELOPMENT
------------------------------------- INACTIVE
PRE-1991 OTHER TOTAL LAND
---------- --------- --------- ---------
Colorado . . . . . . . . . $ 67,172 $ 21,504 $ 88,676 $ 46,643
Mid-Atlantic . . . . . . . 14,247 18,915 33,162 --
California . . . . . . . . 3,183 30,833 34,016 1,374
Arizona . . . . . . . .. . 4,968 18,915 23,883 1,810
Nevada . . . . . . . . . . -- 6,414 6,414 --
---------- --------- --------- ---------
Totals . . . . . . . . . $ 89,570 $ 96,581 $ 186,151 $ 49,827
---------- --------- --------- ---------
---------- --------- --------- ---------
The Company's net income and cash flow are affected adversely by the
carrying costs (e.g., interest and property taxes) associated with inactive land
inventories. These inactive land inventories comprised approximately 27% of the
carrying value of the Company's total land and land under development at
March 31, 1995 compared with approximately 43% of the $192,881,000 carrying
value at December 31, 1993. The decrease in inactive land inventory, most of
which occurred during 1994, is due to the commencement of development and
construction activity in certain subdivisions as well as sales of inactive land.
Carrying costs on inactive land inventories are expensed, not capitalized. The
Company is actively pursuing opportunities to reduce, through sales or home
building activities, its inactive land inventories.
-21-
MORTGAGE LENDING SEGMENT.
The table below summarizes the results of HomeAmerican's operations during
each of the periods presented (in thousands).
THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1994
-------- --------
Gains from sales of mortgage servicing:
Bulk . . . . . . . . . . . . . . . . . . . $ 2,218 $ 2,585
Other. . . . . . . . . . . . . . . . . . . 452 287
Net interest income. . . . . . . . . . . . . 693 571
Origination fees . . . . . . . . . . . . . . 1,074 1,236
Gains (losses) on sales of mortgage loans . (336) 99
Mortgage servicing and other . . . . . . . . 566 515
General and administrative expenses . . . . (1,784) (2,389)
-------- --------
Operating profit . . . . . . . . . . . . . . $ 2,883 $ 2,904
-------- --------
-------- --------
Principal amount of originations and purchases:
MDC home buyers. . . . . . . . . . . . . $ 77,743 $ 76,260
Spot . . . . . . . . . . . . . . . . . . 6,017 31,288
Correspondent. . . . . . . . . . . . . . 9,130 26,252
-------- --------
Total . . . . . . . . . . . . . . . . $ 92,890 $133,800
-------- --------
-------- --------
MARCH 31, DECEMBER 31, MARCH 31,
1995 1994 1994
--------- ------------ ----------
Composition of Servicing Portfolio at End of
Period:
FHA insured/VA guaranteed. . . . . . . . . . . $208,981 $203,991 $410,057
Conventional . . . . . . . . . . . . . . . . . 416,409 365,072 344,297
-------- -------- --------
Total Servicing Portfolio. . . . . . . . . . . . . $625,390 $569,063 $754,354
-------- -------- --------
-------- -------- --------
Salable Portion of Servicing Portfolio . . . . . . $448,166 $506,098 $487,331
-------- -------- --------
-------- -------- --------
HomeAmerican's operating profit of $2,883,000 for the first quarter of 1995
approximated the operating profit of $2,904,000 for the same period in 1994.
While loan origination fees were lower in 1995 compared with 1994, this
reduction was more than offset by a decrease in general and administrative
expenses as HomeAmerican reduced its general and administrative costs in
response to the decline in the level of its refinancing activities in its
mortgage lending operations.
HomeAmerican's loan originations and purchases decreased by 30% in the
first quarter of 1995 compared with the same period in 1994 primarily due to
increased mortgage interest rates which resulted in a significant decrease in
refinancing activity and lower mortgage loan originations market wide. The
decrease partially was offset by a 2% increase in the dollar amount of
originations for MDC's home buyers principally due to increased closings by
MDC's home building segment. HomeAmerican originated mortgages for 54% of MDC's
home buyers in the first quarter of 1995 compared with 59% for the same period
in 1994. The decline in the percentage of mortgages originated for MDC's home
buyers was the result of, among other things, increased competition for mortgage
loan originations and increases in closings in Southern California where
HomeAmerican does not have an origination facility, partially offset by
increasing mortgage loan origination percentages in Colorado and the Mid-
Atlantic.
-22-
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 HomeAmerican.
ASSET MANAGEMENT SEGMENT.
The following table summarizes the results of the asset management segment
operations during each of the periods presented (in thousands).
THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1994
-------- --------
Management fees from REITs . . . . . . . . . $ 637 $ 754
Gains on sales of mortgage-related assets. . -- 313
Other, net . . . . . . . . . . . . . . . . . 236 (45)
------ ------
Operating profit . . . . . . . . . . . . . . $ 873 $1,022
------ ------
------ ------
The Company currently does not anticipate making additional mortgage-
related investments in the future. As a result, future income from the asset
management segment substantially will be dependent on management fees earned
from two publicly traded REITs. At March 31, 1995, the REITs had approximately
$160,000,000 in assets under management by FAMC.
OTHER OPERATING RESULTS.
INTEREST EXPENSE. Corporate and home building interest incurred increased
by 7.5% to $8,989,000 for the first quarter of 1995 compared with $8,364,000 for
the same period in 1994 primarily due to higher average effective interest rates
with respect to the Company's variable-rate bank lines of credit and project
loans due to higher interest rates in 1995 and higher average outstanding
borrowings during the first quarter of 1995 compared with the first quarter of
1994 to support the higher level of the Company's home building operations in
1995.
The portion of this corporate and home building interest which was
capitalized (the Company capitalizes interest on its home building inventories
during the period of active development and through the completion of
construction) during the first quarter of 1995 totalled $6,150,000 compared with
$5,408,000 for the same period in 1994. The increase in interest capitalized
for 1995 primarily was due to (i) increased levels of active home building
inventories resulting from expanded operations; and (ii) higher interest
capitalization rates resulting from higher average effective interest rates on
the Company's debt.
Corporate and home building interest incurred not capitalized is reflected
as interest expense and totalled $2,839,000 for the first quarter of 1995
compared with $2,956,000 for the first quarter of 1994.
For a reconciliation of interest incurred, capitalized and expensed, see
Note C to the Company's Consolidated Financial Statements.
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES. Corporate general and
administrative expenses totalled $3,127,000 during the three months ended March
31, 1995 compared with $3,933,000 during the first quarter of 1994. The
decrease in the first quarter of 1995 primarily was due to a decrease in
professional fees and other expenses
-23-
as the Company has continued to streamline its operations.
INCOME TAXES. M.D.C. Holdings, Inc. and its wholly owned subsidiaries file
a consolidated federal income tax return (an "MDC Consolidated Return").
Richmond Homes and its wholly owned subsidiaries filed a separate consolidated
federal income tax return (each a "Richmond Homes Consolidated Return") from its
inception (December 28, 1989) through February 2, 1994, the date Richmond Homes
became a wholly owned subsidiary of MDC.
MDC's overall effective income tax rates of 34.5% and 43.3%, respectively,
for the first quarter of 1995 and 1994 differed from the federal statutory rate
of 35%. These differences primarily were due to, among other things, (i) the
impact of state income taxes; (ii) the realization of non-taxable income for
financial reporting purposes for which no tax liability was recorded; and
(iii) in 1994, adjustments of prior years' income taxes.
In April 1995, the Company received approval from the Congressional Joint
Committee on Taxation regarding the Company's final agreement with the Internal
Revenue Service (the "IRS") relative to the IRS's examination of the MDC
Consolidated Returns for the years 1984 and 1985. Also in April 1995, the
Company and the IRS reached final agreement on the IRS examinations of the
Richmond Homes Consolidated Returns for the years 1989 and 1990. Such
agreements had no material impact upon the Company's financial position or
results of operations.
The IRS has completed its examination of the MDC Consolidated Returns for
the years 1986 through 1990 and has proposed certain adjustments to the taxable
income reflected in such returns. In general, the proposed adjustments would
shift the recognition of certain items of income and expense from one year to
another ("Timing Adjustments"). To the extent taxable income in a prior year is
increased by proposed Timing Adjustments, taxable income may be reduced by a
corresponding amount in other years; however, the Company would incur an
interest charge as a result of such adjustment. The Company currently is
protesting many of these proposed adjustments through the IRS appeals process.
In the opinion of management, adequate provision has been made for the
additional income taxes and interest which may result from the proposed
adjustments.
The IRS currently is examining the MDC and Richmond Homes Consolidated
Returns for the years 1991, 1992 and 1993. No reports have been issued by the
IRS in connection with these examinations. In the opinion of management,
adequate provision has been made for additional income taxes and interest which
may result from these examinations.
LIQUIDITY AND CAPITAL RESOURCES
MDC uses its capital resources to, among other things, (i) support its
operations, including its inventories of homes, home sites and land;
(ii) provide working capital; and (iii) provide mortgage loans for its home
buyers. Capital resources are generated internally from operations and from
external sources.
Based upon its current financial condition and credit relationships, MDC
believes that it has, or can obtain, adequate financial resources to satisfy its
current and near-term capital requirements. The Company believes that it can
meet its long-term capital needs (including, among other things, meeting future
debt payments and refinancing or paying off other long-term debt as it becomes
due) from operations and external financing sources.
-24-
LINES OF CREDIT AND NOTES PAYABLE.
HOME BUILDING. MDC's home building bank lines of credit and letter of
credit facilities at March 31, 1995 aggregated $160,000,000, which represents a
substantial increase over the $70,000,000 of similar facilities at December 31,
1993. Agreements governing $147,000,000 of the present facilities were entered
into during 1994 and the first quarter of 1995, with terms that provide for
final maturities generally from four to five years, including scheduled term-out
periods (although the term-out periods may commence earlier under certain
circumstances). Borrowings under the bank lines of credit are collateralized by
home building inventories and are limited to the value of "eligible collateral"
(as defined in the credit agreements). At March 31, 1995, $64,775,000 was
borrowed and an additional $76,226,000 was collateralized and available to be
borrowed under the bank lines of credit.
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 are subsequently sold. During the first quarters of 1995 and
1994, HomeAmerican sold $85,350,000 and $153,884,000, respectively, principal
amount of mortgage loans and mortgage certificates.
The aggregate amount available under the Mortgage Line at March 31, 1995
was $51,000,000. 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 in the credit agreement). At March 31, 1995,
$3,490,000 was borrowed and an additional $25,320,000 was collateralized and
available to be borrowed under the Mortgage Line. The Company also has
additional borrowing capability with available repurchase agreements.
GENERAL. The Company's lines of credit and notes payable require
compliance with certain covenants, representations and warranties. Currently,
the Company believes that it is in compliance with these covenants,
representations and warranties.
In the event that MDC's lines of credit are not renewed as they become due
or are renewed at substantially lower levels, the Company believes that it could
meet its financing requirements through a combination of internally-generated
funds and new borrowings.
CONSOLIDATED CASH FLOW.
In the first quarter of 1995, MDC management made the decision
to lower its operating cash balances by approximately $20,000,000. The Company
believes its present liquidity available under existing bank lines of credit
allows the Company to operate with lower operating cash balances. The Company
used this cash, together with cash generated primarily from net income, to pay
down lines of credit and notes payable by $24,518,000. At March 31, 1995, the
Company had $23,529,000 available in cash and cash equivalents.
-25-
MDC used $20,431,000 of cash in the first quarter of 1994 primarily due to
uses of cash to pay down lines of credit and notes payable by $17,017,000 and
cash used in Operating Activities of $7,015,000, partially offset by net cash
generated from the asset management segment's mortgage-related assets of
$3,493,000. The net cash used in Operating Activities principally was due to
increased home building inventories, partially offset by reductions in mortgage
loans held in inventory and income from operations.
ISSUANCE OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"). The
Company's adoption of SFAS 121, which is anticipated in 1996, will not have a
material impact on the results of operations or financial position of the
Company in the year of adoption.
-26-
M.D.C. HOLDINGS, INC.
FORM 10-Q
PART II
ITEM 1. LEGAL PROCEEDINGS.
SETTLEMENT OF WESTERN SAVINGS CIVIL MATTERS.
In December 1994, the Company and the Resolution Trust Corporation (the
"RTC"), acting in its corporate capacity as receiver for Western Savings and
Loan Association ("Western"), executed a final settlement agreement providing
for the mutual release of all potential claims between the parties and certain
related persons insofar as such claims relate to any of the Company's past
transactions with Western.
Under the terms of the settlement, MDC paid to the RTC $3,912,000, which
MDC reserved (and set aside the cash) for as of December 31, 1992 when an
agreement in principle for the settlement was executed by the parties. MDC
believes that consummation of the settlement agreement will not result in any
material adverse effect on the Company's operations or financial position. The
settlement remains subject to the entry of a court order determining that the
settlement precludes the filing of cross-claims against MDC by various third
parties, a condition which can be waived or extended by the Company.
EXPANSIVE SOILS CASES.
On October 21, 1994, a complaint was served on several of the Company's
subsidiaries in an action initiated by six homeowners in Highlands Ranch,
Colorado. On January 26, 1995, counsel for the Company accepted service of two
additional complaints by a homeowner in the Stonegate subdivision in Douglas
County, Colorado and by a homeowner in the Rock Creek development located in
Boulder County, Colorado. The complaints, each of which seek certification of a
class action, purport to allege substantially identical claims relating to the
construction of homes on lots with expansive soils, including negligence, breach
of express and implied warranties, violation of the Colorado Consumer Protection
Act, non-disclosure and a claim for exemplary damages. The homeowners in each
complaint seek, individually and on behalf of the alleged class, recovery in
unspecified amounts including actual damages, statutory damages, exemplary
damages and treble damages. The Company has not as yet been required to file a
response to any of the complaints or to any discovery in these cases. While the
ultimate outcome of these matters is uncertain, management does not believe that
the outcome of these matters will have a material adverse effect on the
financial condition or results of operations of the Company.
The Company has notified its insurance carriers of these complaints and
currently is reviewing with the carriers how the Company will proceed. The
insurance carriers providing primary coverage have agreed to defend the Company
in the Highlands Ranch case subject to reservations of rights. While several of
the carriers providing primary coverage have agreed to defend the Company,
subject to reservation of rights, with respect to the matters alleged in the
two other complaints, some of the Company's other carriers as yet have not
responded to the Company's request to defend these other two complaints.
OTHER.
The Company and certain of its subsidiaries and affiliates have been named
as defendants in various other claims, complaints and legal actions arising in
the normal course of business. In the opinion
-27-
of management, the outcome of these matters will not have a material adverse
effect upon the financial condition or results of operations of the Company.
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 first quarter of 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit:
10.1 M.D.C. Holdings, Inc. Executive Option Purchase
Program.
15 Letter regarding unaudited interim financial
information.
27 Financial Data Schedule.
28 Form of Independent Accountants' Review Report
dated April 26, 1995.
(b) Reports on Form 8-K:
No Current Reports on Form 8-K were filed by the Registrant
during the period covered by this Quarterly Report on Form
10-Q.
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: May 9, 1995 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
-28-
EXHIBIT INDEX
Exhibit No. Description Page #
- ----------- ----------- ------
10.1 M.D.C. Holdings, Inc. Executive Option Purchase Program
15 Letter regarding unaudited interim financial information.
27 Financial Data Schedule.
28 Form of Independent Accountants' Review Report dated
April 26, 1995.