EXHIBIT 99.1
NEWS BULLETIN [M.D.C. HOLDINGS, INC. LOGO]
M.D.C. HOLDINGS, INC. RICHMOND AMERICAN HOMES
HOMEAMERICAN MORTGAGE
FOR IMMEDIATE RELEASE
WEDNESDAY, APRIL 9, 2003
- --------------------------------------------------------------------------------
Contacts: Paris G. Reece III Robert Solomon
Chief Financial Officer Rubenstein Associates, Inc.
(303) 804-7706 (212) 843-8050
greece@mdch.com rsolomon@rubenstein.com
M.D.C. HOLDINGS REPORTS RECORD
2003 FIRST QUARTER EARNINGS
o RECORD FIRST QUARTER NET INCOME OF $37.0 MILLION, A 15%
INCREASE
o EARNINGS PER SHARE OF $1.36 VS. $1.16 A YEAR AGO
o HIGHEST FIRST QUARTER HOMEBUILDING REVENUES AND OPERATING
PROFITS IN COMPANY HISTORY
o RECORD HOME CLOSINGS, HOME ORDERS AND QUARTER-END BACKLOG
o HOME GROSS MARGINS OF 22.8%, 23.7% BEFORE INTEREST
o NET DEBT-TO-CAPITAL RATIO OF .30
DENVER, Wednesday, April 9, 2003 - M.D.C. Holdings, Inc. (NYSE/PCX:
MDC; www.RichmondAmerican.com) today announced net income for the three months
ended March 31, 2003 of $37.0 million, or $1.36 per share, the highest first
quarter net income in the Company's history and 15% higher than net income of
$32.3 million, or $1.16 per share, for the same period in 2002. Total revenues
for the first quarter of 2003 were $570 million, compared with revenues of $456
million in the 2002 first quarter.
Larry A. Mizel, MDC's chairman and chief executive officer, stated,
"We're off to a very good start in 2003, as we posted record first quarter
revenues and operating earnings for the sixth consecutive year. Both our
homebuilding and mortgage lending businesses contributed new Company highs for
first quarter operating profits on the strength of record home closings and
mortgage loan originations. These results, combined with record first quarter
home orders reported earlier, reflect the success of our organic expansion and
our operating strategy, as well as the resiliency of the homebuilding industry
in the face of tremendous challenges to our nation and our economy. With our
first quarter performance, a backlog of 5,300 homes and more than 200 active
subdivisions in some of the best markets for homebuilding in the country, we are
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positioned to meet our goals for 2003 of closing more than 10,500 homes and
achieving new Company milestones for revenues and net income."
Mizel continued, "We have managed our growth with the objective of
maximizing value for our shareowners, which we believe begins with the continued
strengthening of our balance sheet and maintaining substantial liquidity.
Consistent with this focus, our leverage and interest coverage ratios in the
2003 first quarter continue to rank among the best in the homebuilding industry,
and we ended the quarter with over $550 million in liquidity. We further
enhanced shareowner value in the quarter with the repurchase of 727,100 shares
of MDC common stock at an average cost of $36.76 per share, contributing to our
repurchase of almost 6% of our outstanding stock over the last nine months. Our
recently approved repurchase authorization will enable us to repurchase up to an
additional 1,769,600 shares. MDC's growing financial strength was recognized by
all three major rating agencies in the 2003 first quarter, with Moody's
Investors Service assigning an 'investment grade' rating of 'Baa3' to our senior
debt and both Standard & Poor's and Fitch Ratings increasing their ratings
outlooks to positive."
RECORD HOMEBUILDING AND FINANCIAL SERVICES RESULTS
Operating profits from the Company's homebuilding operations for the
first quarter of 2003 increased to $64.5 million, compared with $57.8 million
for the same period in 2002. The 2003 increase primarily resulted from a 25%
increase in homes closed. These increased home closings, partially offset by a
$2,300 decrease in average selling prices, contributed to record first quarter
home sales revenues of $554 million, 24% higher than revenues of $445 million in
the 2002 first quarter. Home gross margins were 22.8% for the three months ended
March 31, 2003, compared with 22.6% in the 2002 fourth quarter and 23.4% for the
first three months in 2002.
Paris G. Reece III, MDC's executive vice president and chief financial
officer, said, "Home closings increased significantly in Las Vegas, Phoenix and
our California markets, primarily due to higher backlogs at the beginning of the
year. Average selling prices in the 2003 first quarter were relatively
consistent with those of a year ago. However, we anticipate that our average
selling prices will decline sequentially from current levels in the second and
third quarters of 2003 by as much as 5% each quarter. These expected declines
primarily result from the implementation of our strategy to build a greater
number of homes in more affordable price points in most of our markets."
Reece continued, "Over the last year, we have experienced substantial
growth in most of our markets outside of Colorado and California, particularly
in Virginia, Las Vegas and Phoenix, where active subdivisions have increased by
19, 14 and 10, respectively, from March 31, 2002. Overall, our active
subdivisions are 36% higher than at this time last year and up 15% since the
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end of 2002. These increases have contributed to our record home orders in each
of the last 13 months, including a 21% year-over-year increase in the 2003 first
quarter. Over the balance of 2003, we will continue to evaluate prudent uses of
our capital in view of current economic conditions, opportunities to maximize
value to our shareowners and our strategy for disciplined, opportunistic growth.
Given our growth in the first quarter, we anticipate that our active subdivision
count will remain relatively consistent with current levels through the third
quarter, with an increase of approximately 10% expected in the fourth quarter as
we prepare for meeting our growth objectives for 2004."
The Company's financial services segment, primarily mortgage lending
operations, reported record operating profits of $7.6 million for the first
three months of 2003, 50% higher than the $5.0 million reported for the same
period in 2002. The improvement in operating profits primarily was due to
increased gains from sales of mortgage loans in the first quarter of 2003. In
addition, the Company recognized increased loan origination fees in the 2003
first quarter, primarily resulting from a greater volume of loans originated for
MDC's homebuyers. The Company originated or brokered $364 million in mortgage
loans for 81% of MDC's homebuyers in the 2003 first quarter, compared with $306
million in mortgage loans for 83% of MDC's homebuyers for the same period in
2002.
STRENGTHENED BALANCE SHEET AND IMPROVED OPERATING EFFICIENCY
The Company continued to strengthen its balance sheet and improve the
efficiency of its operations in the first quarter of 2003. This success is
represented by the achievement of ratios of homebuilding and corporate net
debt-to-capital and net debt-to-EBITDA, as adjusted (as defined below) at March
31, 2003 of .30 and 1.05, respectively. First quarter 2003 earnings before
interest, taxes, depreciation and amortization ("EBITDA, as adjusted") increased
to $74.0 million, contributing to a ratio of EBITDA, as adjusted-to-interest
incurred for the twelve months ended March 31, 2003 of 13.9. The Company's
strong operating results over the past year, partially offset by expenditures of
$56.1 million for the repurchase of 1,516,100 shares of MDC common stock, have
increased MDC's stockholders' equity by 18% to $816 million, or $31.50 per
outstanding share, at March 31, 2003. Further, notwithstanding higher inventory
levels needed to support the Company's expanded homebuilding operations, MDC
ended the 2003 first quarter with liquidity (as defined below) of $556 million,
28% higher than at March 31, 2002.
MDC, whose subsidiaries build homes under the name "Richmond American
Homes," is one of the largest homebuilders in the United States. The Company
also provides mortgage financing, primarily for MDC's homebuyers, through its
wholly owned subsidiary HomeAmerican Mortgage Corporation. MDC is a major
regional homebuilder with a significant presence in some of the country's best
housing markets. The Company is the largest homebuilder in Colorado;
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among the top five homebuilders in Northern Virginia, Phoenix, Tucson and Las
Vegas; among the top ten homebuilders in suburban Maryland, Northern California,
Southern California and Salt Lake City; and has recently entered the Dallas/Fort
Worth market.
All earnings per share amounts discussed above are on a diluted basis.
FORWARD-LOOKING STATEMENTS
Certain statements in this release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. Such factors include, among other things, (1) general economic and
business conditions; (2) interest rate changes; (3) the relative stability of
debt and equity markets; (4) competition; (5) the availability and cost of land
and other raw materials used by the Company in its homebuilding operations; (6)
availability and cost of insurance covering risks associated with our business;
(7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow
growth initiatives; (10) building moratoria; (11) governmental regulation,
including the interpretation of tax, labor and environmental laws; (12) changes
in consumer confidence and preferences; (13) required accounting changes; (14)
terrorist acts and other acts of war; and (15) other factors over which the
Company has little or no control.
SARBANES-OXLEY DISCLOSURES
Liquidity represents funds immediately available to MDC and is
calculated as the maximum amount available under the Company's lines of credit,
plus unrestricted cash, less outstanding letters of credit and borrowings.
EBITDA, as adjusted and liquidity are not generally accepted accounting
principle ("GAAP") measures. EBITDA, as adjusted has been computed in accordance
with the definition of "Consolidated EBITDA" set forth under the Company's 8
3/8% senior notes indenture. Under this definition, EBITDA, as adjusted is
calculated by adding to net income the provision for income tax, depreciation,
amortization, interest charges, other fixed charges and other non-cash,
extraordinary charges that reduce net income, including asset impairment
charges. EBITDA, as adjusted should not be considered an alternative to net
income determined in accordance with GAAP as an indicator of operating
performance, nor an alternative to cash flows from operating activities
determined in accordance with GAAP as a measure of liquidity. Because some
analysts and companies may not calculate EBITDA, as adjusted in the same manner
as MDC, the EBITDA, as adjusted information presented above may not be
comparable to similar presentations by others. MDC's management believes that
EBITDA, as
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adjusted reflects the changes in the Company's operating results, particularly
changes in the Company's net income, and is an indication of MDC's ability to
generate funds from operations that are available to pay income taxes, interest
and principal on debt and to meet other cash obligations. Consolidated EBITDA is
a component of the "Consolidated Fixed Charge Coverage Ratio," as defined in the
Company's 8 3/8% senior notes indenture. The Consolidated Fixed Charge Coverage
Ratio must be at least 2.0 according to the 8 3/8% senior notes indenture or the
Company may not be able to incur additional indebtedness under certain
circumstances. The Consolidated Fixed Charge Coverage Ratio is calculated as
Consolidated EBITDA divided by "Consolidated Interest Incurred," as defined by
the Company's 8 3/8% senior notes indenture. A reconciliation of EBITDA, as
adjusted to net income, the most directly comparable GAAP measure, is provided
below.
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M.D.C. HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<Table>
<Caption>
MARCH 31, DECEMBER 31,
2003 2002
------------ ------------
ASSETS
Corporate
Cash and cash equivalents ........................ $ 51,832 $ 23,164
Property and equipment, net ...................... 10,683 10,851
Deferred income taxes ............................ 24,986 25,980
Deferred debt issue costs, net ................... 3,210 3,305
Other assets, net ................................ 6,386 6,708
------------ ------------
97,097 70,008
------------ ------------
Homebuilding
Cash and cash equivalents ........................ 4,690 4,686
Home sales and other accounts receivable ......... 23,592 3,519
Inventories, net
Housing completed or under construction ........ 634,677 578,475
Land and land under development ................ 643,698 656,843
Prepaid expenses and other assets, net ........... 70,182 65,936
------------ ------------
1,376,839 1,309,459
------------ ------------
Financial Services
Cash and cash equivalents ........................ 1,551 1,092
Mortgage loans held in inventory ................. 133,891 207,938
Other assets, net ................................ 7,861 6,683
------------ ------------
143,303 215,713
------------ ------------
Total Assets .......................................... $ 1,617,239 $ 1,595,180
============ ============
LIABILITIES
Corporate
Accounts payable and accrued expenses ............ $ 48,235 $ 63,871
Income taxes payable ............................. 26,031 21,571
Senior notes, net ................................ 323,035 322,990
------------ ------------
397,301 408,432
------------ ------------
Homebuilding
Accounts payable and accrued expenses ............ 204,650 210,601
Line of credit ................................... 90,000 --
------------ ------------
294,650 210,601
------------ ------------
Financial Services
Accounts payable and accrued expenses ............ 20,541 21,506
Line of credit ................................... 88,552 154,074
------------ ------------
109,093 175,580
------------ ------------
Total Liabilities .............................. 801,044 794,613
------------ ------------
STOCKHOLDERS' EQUITY
Total Stockholders' Equity ..................... 816,195 800,567
------------ ------------
Total Liabilities and Stockholders' Equity ............ $ 1,617,239 $ 1,595,180
============ ============
</Table>
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M.D.C. HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2003 2002
------------ ------------
REVENUES
Homebuilding .................................. $ 554,912 $ 446,761
Financial Services ............................ 14,513 9,381
Corporate ..................................... 217 232
------------ ------------
Total Revenues ............................ $ 569,642 $ 456,374
============ ============
NET INCOME
Homebuilding .................................. $ 64,458 $ 57,844
Financial Services ............................ 7,567 5,030
------------ ------------
Operating Profit .......................... 72,025 62,874
Corporate general and administrative
expense, net ................................ (11,259) (9,828)
------------ ------------
Income before income taxes ....................... 60,766 53,046
Provision for income taxes ....................... (23,729) (20,710)
------------ ------------
Net Income ................................ $ 37,037 $ 32,336
============ ============
EARNINGS PER SHARE
Basic ..................................... $ 1.41 $ 1.21
============ ============
Diluted ................................... $ 1.36 $ 1.16
============ ============
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic ..................................... 26,359 26,714
============ ============
Diluted ................................... 27,212 27,773
============ ============
DIVIDENDS PAID PER SHARE ......................... $ .08 $ .07
============ ============
</Table>
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M.D.C. HOLDINGS, INC.
INFORMATION ON BUSINESS SEGMENTS
(IN THOUSANDS)
<Table>
<Caption>
THREE MONTHS
ENDED MARCH 31,
------------------------------
2003 2002
------------ ------------
HOMEBUILDING
Home sales ....................................... $ 553,575 $ 445,167
Land sales ....................................... 123 --
Other revenues ................................... 1,214 1,594
------------ ------------
TOTAL HOMEBUILDING REVENUES ................... 554,912 446,761
------------ ------------
Home cost of sales ............................... 427,602 341,061
Land cost of sales ............................... 87 --
Marketing ........................................ 33,600 25,663
General and administrative ....................... 29,165 22,193
------------ ------------
490,454 388,917
------------ ------------
HOMEBUILDING OPERATING PROFIT ................. 64,458 57,844
------------ ------------
FINANCIAL SERVICES
Interest revenues ................................ 1,008 1,008
Origination fees ................................. 4,660 4,229
Gains on sales of mortgage servicing ............. 834 471
Gains on sales of mortgage loans, net ............ 7,342 3,461
Mortgage servicing and other ..................... 669 212
------------ ------------
TOTAL FINANCIAL SERVICES REVENUES ............. 14,513 9,381
------------ ------------
General and administrative ....................... 6,946 4,351
------------ ------------
FINANCIAL SERVICES OPERATING PROFIT ........... 7,567 5,030
------------ ------------
TOTAL OPERATING PROFIT ................................ 72,025 62,874
------------ ------------
CORPORATE
Interest and other revenues ...................... 217 232
General and administrative ....................... (11,476) (10,060)
------------ ------------
NET CORPORATE EXPENSES ........................ (11,259) (9,828)
------------ ------------
INCOME BEFORE INCOME TAXES ............................ $ 60,766 $ 53,046
============ ============
</Table>
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M.D.C. HOLDINGS, INC.
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
MARCH 31, DECEMBER 31, MARCH 31,
2003 2002 2002
------------ ------------ ------------
BALANCE SHEET DATA
Stockholders' Equity Per Share Outstanding ................................. $ 31.50 $ 30.29 $ 25.81
Stockholders' Equity ....................................................... $ 816,195 $ 800,567 $ 693,528
Homebuilding and Corporate Debt ............................................ 413,035 322,990 224,519
------------ ------------ ------------
Total Capital (excluding mortgage lending debt) ............................ $ 1,229,230 $ 1,123,557 $ 918,047
============ ============ ============
Ratio of Homebuilding and Corporate Debt to Equity ......................... .51 .40 .32
Ratio of Homebuilding and Corporate Debt to Equity (net of cash) ........... .43 .37 .28
Ratio of Homebuilding and Corporate Debt to Total Capital .................. .34 .29 .24
Ratio of Homebuilding and Corporate Debt to Total Capital (net of cash) ... .30 .27 .22
Ratio of Homebuilding and Corporate Debt to EBITDA, as adjusted ............ 1.23 .99 .70
Ratio of Homebuilding and Corporate Debt (net of cash) to EBITDA,
as adjusted ............................................................... 1.05 .90 .61
Total Liquidity ............................................................ $ 556,098 $ 618,774 $ 433,655
Total Homebuilding Inventories ............................................. $ 1,278,375 $ 1,235,318 $ 982,390
Interest Capitalized in Inventories ........................................ $ 20,032 $ 17,783 $ 16,937
Interest Capitalized as a Percent of Inventories ........................... 1.6% 1.4% 1.7%
Total Lots Owned ........................................................... 16,054 16,962 14,354
Total Lots Under Option .................................................... 6,813 6,995 5,559
Homes Under Construction (including models) ................................ 4,356 3,751 3,248
Active Subdivisions ........................................................ 204 178 150
</Table>
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2003 2002
------------ ------------
OPERATING DATA
Reconciliation of Net Income to EBITDA, as adjusted
Net Income ............................................................... $ 37,037 $ 32,336
Add:
Income taxes ........................................................ 23,729 20,710
Interest included in home and land cost of sales .................... 4,803 4,462
Other fixed charges ................................................. 1,449 963
Depreciation and amortization ....................................... 7,028 5,249
------------ ------------
Total EBITDA, as adjusted ................................................ $ 74,046 $ 63,720
============ ============
Ratio of EBITDA, as adjusted to Homebuilding and Corporate
Interest Incurred ....................................................... 10.5 15.8
Homebuilding and Corporate SG&A as a Percent of Home Sales Revenues ...... 13.4% 13.0%
Homebuilding and Corporate Interest Incurred ............................. $ 7,052 $ 4,041
Interest Capitalized ..................................................... $ 7,052 $ 4,041
Interest in Home Cost of Sales as a Percent of Home Sales Revenues ....... 0.9% 1.0%
</Table>
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M.D.C. HOLDINGS, INC.
HOMEBUILDING OPERATIONAL DATA
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2003 2002
------------ ------------
Home Sales Revenues ................................... $ 553,575 $ 445,167
Average Selling Price Per Home Closed ................. $ 263.6 $ 265.9
Home Gross Margins .................................... 22.8% 23.4%
Excluding Interest in Home Cost of Sales ......... 23.7% 24.4%
Orders For Homes, net (Units)
Colorado ......................................... 671 1,001
California ....................................... 530 591
Nevada ........................................... 583 207
Arizona .......................................... 924 670
Utah ............................................. 93 --
Texas ............................................ 50 --
Virginia ......................................... 403 242
Maryland ......................................... 111 65
------------ ------------
Total ........................................ 3,365 2,776
============ ============
Homes Closed (Units)
Colorado ......................................... 609 609
California ....................................... 428 292
Nevada ........................................... 273 141
Arizona .......................................... 571 438
Utah ............................................. 40 --
Texas ............................................ 10 --
Virginia ......................................... 102 130
Maryland ......................................... 67 64
------------ ------------
Total ........................................ 2,100 1,674
============ ============
</Table>
<Table>
<Caption>
MARCH 31, DECEMBER 31, MARCH 31,
2003 2002 2002
------------ ------------ ------------
Backlog (Units)
Colorado ......................................... 1,019 957 1,587
California ....................................... 1,024 922 789
Nevada ........................................... 660 350 247
Arizona .......................................... 1,429 1,076 857
Utah ............................................. 103 50 --
Texas ............................................ 56 16 --
Virginia ......................................... 777 476 346
Maryland ......................................... 232 188 158
------------ ------------ ------------
Total ........................................ 5,300 4,035 3,984
============ ============ ============
Backlog Estimated Sales Value ......................... $ 1,400,000 $ 1,120,000 $ 1,050,000
============ ============ ============
</Table>
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