News

M.D.C. Holdings Reports 54% Increase in Fourth Quarter Earnings Per Share
- Fourth quarter earnings per share of $1.80 vs. $1.17 a year ago - Record 2000 net income of $123.3 million, a 38% increase - Highest quarterly and annual revenues and home closings in Company history - Record fourth quarter and annual home orders and year-end backlog - Record annual homebuilding profits of $227.3 million, up 40% - Fourth quarter home gross margins of 22.3%, a 330 basis point increase - Debt-to-capital ratio reduced to .35 - Annual interest coverage increased to 10.5 from 9.4
PRNewswire
DENVER

M.D.C. Holdings, Inc. (www.RichmondAmerican.com), whose subsidiaries build homes under the name "Richmond American Homes," today announced net income for the quarter ended December 31, 2000 of $39.2 million, or $1.80 per share - the highest quarterly net income in the Company's history and 48% higher than net income of $26.5 million, or $1.17 per share, for the same period in 1999. Net income for the year ended December 31, 2000 was a record $123.3 million, or $5.62 per share, compared with $89.4 million, or $3.95 per share, for 1999. As in the third quarter, operating results for the 2000 fourth quarter were impacted favorably by the reduction in the effective income tax rate for this quarter to 36.6% as a result of the Company's resolution of its only open IRS income tax examination. MDC achieved record revenues for the quarter and year ended December 31, 2000 of $539 million and $1.752 billion, respectively, compared with $461 million and $1.568 billion, respectively, for the same periods in 1999.

Larry A. Mizel, MDC's chairman and chief executive officer, stated, "Our outstanding performance over the last three months marks the eleventh consecutive quarter that we have established new records for operating earnings for comparable quarters. This serves as a fitting conclusion to the most profitable year in the 29-year history of our Company. Our successes in 2000 extended well beyond the bottom line, as we continued to improve upon our position at or near the top of the homebuilding industry in measures of financial strength and stability. These measures include a return on average equity of 29%, a ratio of debt-to-capital of .35 and interest coverage of almost 11 times."

Mizel noted that MDC was recently named to the "Forbes Platinum List" of the 400 best big companies in America, and commented, "We attribute our achievements this year to the disciplined operating strategy and sound fundamental business practices which we have applied consistently throughout much of the past decade. These strategies and practices, combined with our strong balance sheet, our extensive liquidity, our growing share of some of the best housing markets in the country, and a record year-end backlog, have positioned our Company to meet the challenges of the changing economic environment in 2001."

Highest Homebuilding Profits in Company History

Operating profits from the Company's homebuilding operations reached record levels, increasing to $68.3 million and $227.3 million, respectively, for the quarter and year ended December 31, 2000, compared with $47.3 million and $162.3 million, respectively, for the same periods in 1999. These profit improvements primarily resulted from record home closings and significantly higher home gross margins, which improved to 22.3% for the quarter and year ended December 31, 2000, compared with 19.0% and 19.3%, respectively, for the same periods in 1999. In addition, the Company's average selling price per home closed for the quarter and year ended December 31, 2000 increased to $248,000 and $227,300, respectively, from $221,400 and $211,400, respectively, for the same periods in 1999. Operating profits for the quarter and year ended December 31, 2000 were impacted adversely by non-cash, pre-tax asset impairment charges of $3.4 million and $4.2 million, respectively, compared with an impairment charge of $2.2 million for the quarter and year ended December 31, 1999. The fourth quarter 2000 charge resulted from the write-down to fair market value of one homebuilding project in Southern California which has experienced a much slower than anticipated home order pace and significantly increased sales incentive requirements.

Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "Each of our homebuilding divisions was profitable in the 2000 fourth quarter, excluding the impact of the impairment charge, and all divisions except Phoenix recorded year-over-year improvements in operating results. Each of the improving divisions realized significant increases in average selling prices, lead by Southern California and Northern California, where average selling prices exceeded $325,000. Home gross margins also improved substantially for these divisions, increasing by more than 500 basis points in Virginia, Northern California and Nevada, and by more than 300 basis points in every other market except Southern California. These margin improvements are a direct result of our cost reduction and efficiency initiatives, increased contributions from our design centers, and our ability to increase selling prices and reduce incentives in most of our markets."

Record Mortgage Lending Results

Operating profits from the Company's mortgage lending operations were $4.5 million and $14.3 million, respectively, for the quarter and year ended December 31, 2000, representing the highest level of fourth quarter and total year operating profits from mortgage lending in the Company's history. Mortgage lending operating profits for the quarter and year ended December 31, 1999 were $3.4 million and $13.2 million, respectively.

The operating profit increases in the 2000 periods primarily resulted from higher origination fees received from record levels of mortgage loans originated and brokered for MDC home buyers. Operating profits for the 2000 fourth quarter also were favorably impacted by higher gains on sales of mortgage loans and mortgage loan servicing, compared with the fourth quarter of 1999. The Company originated or brokered $1.133 billion in mortgage loans for 81% of MDC's home buyers in 2000, compared with $1.032 billion in mortgage loans for 81% of MDC's home buyers in 1999.

Increased Balance Sheet Strength and Improved Operating Efficiency

MDC maintains one of the strongest balance sheets in the homebuilding industry, and the Company's financial position continued to strengthen throughout 2000. MDC reduced its ratios of homebuilding and corporate debt-to-capital and debt-to-EBITDA (as defined below) at December 31, 2000 to .35 and 1.04, respectively. These ratios are not only the lowest levels achieved in MDC's history, they are among the lowest in the entire industry. The Company's strong 2000 operating results, partially offset by MDC's repurchase of 1,932,000 shares of its common stock for $30.8 million during the year, increased stockholders' equity by 24% to $482 million, or $22.76 per outstanding share, at December 31, 2000. Further, the Company ended 2000 with $343 million in liquidity, 14% higher than at December 31, 1999, although inventory levels increased throughout the year in support of the Company's expanded homebuilding operations.

During the quarter and year ended December 31, 2000, earnings before interest, taxes, depreciation, amortization and non-cash charges ("EBITDA, as adjusted") increased to $79.6 million and $254.9 million, respectively, compared with $58.3 million and $200.1 million, respectively, for the same periods in 1999. These increases in EBITDA, as adjusted, contributed to improvements in the Company's ratios of EBITDA, as adjusted, to interest incurred to 11.3 and 10.5, respectively, for the quarter and year ended December 31, 2000, compared with 9.8 and 9.4, respectively, for the comparable periods in 1999.

MDC is one of the largest homebuilders in the United States. The Company also provides mortgage financing, primarily for MDC's home buyers, 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 metropolitan Denver; among the top five homebuilders in Northern Virginia, suburban Maryland, Tucson and Colorado Springs; and among the top ten homebuilders in Phoenix, Las Vegas, Southern California and Northern California.

All earnings per share amounts discussed above are on a diluted basis.

Certain statements in this release, including those related to the Company's anticipated earnings and analysts' estimates, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) demographic changes; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) the availability of public utilities in certain markets; (10) slow growth initiatives; (11) building moratoria; (12) governmental regulation, including the interpretation of tax, labor and environmental laws; (13) changes in consumer confidence and preferences; (14) required accounting changes; and (15) other factors over which the Company has little or no control.

                          M.D.C. HOLDINGS, INC.
                  Condensed Consolidated Balance Sheets
                              (In thousands)

                                                         December 31,
                                                      2000         1999
  ASSETS

    Corporate
      Cash and cash equivalents                      $8,411       $33,637
      Property and equipment, net                     3,069         2,909
      Deferred income taxes                          31,821        21,201
      Deferred debt issue costs, net                  2,180         2,393
      Other assets, net                               8,039         6,771
                                                     53,520        66,911

    Homebuilding
      Cash and cash equivalents                       5,265         4,935
      Home sales and other accounts receivable        4,713         3,496
      Inventories, net
        Housing completed or under construction     443,512       337,029
        Land and land under development             388,711       308,680
      Prepaid expenses and other assets, net         51,631        58,156
                                                    893,832       712,296

    Financial Services
      Cash and cash equivalents                         439           358
      Mortgage loans held in inventory              107,151        89,953
      Other assets, net                               6,656         7,490
                                                    114,246        97,801

  Total Assets                                   $1,061,598      $877,008


  LIABILITIES

    Corporate
      Accounts payable and accrued expenses         $50,843       $46,721
      Income taxes payable                            9,558        18,291
      Senior notes, net                             174,444       174,389
                                                    234,845       239,401

    Homebuilding
      Accounts payable and accrued expenses         164,660       152,488
      Line of credit                                 90,000        40,000
                                                    254,660       192,488

    Financial Services
      Accounts payable and accrued expenses          15,404         5,862
      Line of credit                                 74,459        50,234
                                                     89,863        56,096

        Total Liabilities                           579,368       487,985


  STOCKHOLDERS' EQUITY
        Total Stockholders' Equity                  482,230       389,023

  Total Liabilities and Stockholders' Equity     $1,061,598      $877,008



                          M.D.C. HOLDINGS, INC.
               Condensed Consolidated Statements of Income
                 (In thousands, except per share amounts)

                             Three Months Ended           Year Ended
                                December 31,             December 31,
                              2000        1999         2000        1999
  REVENUES
    Homebuilding            $529,790    $453,358   $1,721,559  $1,537,563
    Financial Services         8,418       6,796       28,925      27,460
    Corporate                    293         474        1,061       2,615

      Total Revenues        $538,501    $460,628   $1,751,545  $1,567,638

  NET INCOME

    Homebuilding             $68,295     $47,276     $227,319    $162,258
    Financial Services         4,483       3,397       14,282      13,169

      Operating Profit        72,778      50,673      241,601     175,427

    Corporate general
     and administrative
     expense, net            (10,931)     (6,432)     (38,400)    (26,974)

    Income before
     income taxes             61,847      44,241      203,201     148,453
    Provision for
     income taxes            (22,634)    (17,697)     (79,898)    (59,061)

      Net Income             $39,213     $26,544     $123,303     $89,392

  EARNINGS PER SHARE

    Basic                      $1.86       $1.19        $5.74       $4.02
    Diluted                    $1.80       $1.17        $5.62       $3.95

  WEIGHTED-AVERAGE
   SHARES OUTSTANDING

    Basic                     21,106      22,316       21,466      22,247
    Diluted                   21,789      22,629       21,947      22,656

  DIVIDENDS PAID PER SHARE      $.06        $.05         $.24        $.20


                          M.D.C. HOLDINGS, INC.
                     Information on Business Segments
                              (In thousands)

                             Three Months Ended          Year Ended
                                December 31,             December 31,
                              2000        1999        2000          1999

  Homebuilding
    Home sales              $528,024    $450,458   $1,701,108  $1,526,519
    Land sales                 1,159       2,377        6,641       8,114
    Other revenues               607         523       13,810       2,930
      Total Homebuilding
       Revenues              529,790     453,358    1,721,559   1,537,563

    Home cost of sales       410,407     365,089    1,322,185   1,231,922
    Land cost of sales         1,096       1,341        4,293       5,767
    Asset impairment
     charges                   3,400       2,242        4,200       2,242
    Marketing                 28,335      22,500       94,412      80,545
    General and
     administrative           18,257      14,910       69,150      54,829
                             461,495     406,082    1,494,240   1,375,305
      Homebuilding
       Operating Profit       68,295      47,276      227,319     162,258

  Financial Services
    Interest revenues            599         832        2,313       2,844
    Origination fees           4,378       3,424       13,951      12,459
    Gains on sales of
     mortgage servicing          627         282        3,162       3,114
    Gains on sales of
     mortgage loans, net       2,708       2,095        8,951       8,456
    Mortgage servicing
     and other                   106         163          548         587
      Total Financial
       Services Revenues       8,418       6,796       28,925      27,460

    General and
     administrative            3,935       3,399       14,643      14,291
      Financial Services
       Operating Profit        4,483       3,397       14,282      13,169

  Total Operating Profit      72,778      50,673      241,601     175,427

  Corporate
    Interest and other
     revenues                    293         474        1,061       2,615
    General and
     administrative          (11,224)     (6,906)     (39,461)    (29,589)
      Net Corporate
       Expenses              (10,931)     (6,432)     (38,400)    (26,974)

  Income Before Income
   Taxes                     $61,847     $44,241     $203,201    $148,453


                            M.D.C. HOLDINGS, INC.
                           Selected Financial Data
               (Dollars in thousands, except per share amounts)

                                                   December 31,
                                          2000        1999       1998
  BALANCE SHEET DATA

    Stockholders' Equity                $482,230    $389,023   $298,131

    Book Value Per Share
     Outstanding                          $22.76      $17.43     $13.56

    Homebuilding and Corporate Debt     $264,444    $214,389   $197,076
    Ratio of Homebuilding and
     Corporate Debt to Equity                .55         .55        .66

    Total Capital (excluding
     mortgage lending debt)             $746,674    $603,412   $495,207
    Ratio of Homebuilding and
     Corporate Debt to Total Capital         .35         .36        .40

    Ratio of Homebuilding and
     Corporate Debt to EBITDA,
     As Adjusted                            1.04        1.07       1.36

    Total Liquidity                     $342,583    $300,539   $298,334

    Total Homebuilding Inventories      $832,223    $645,709   $511,284
    Interest Capitalized
     in Inventories                      $19,417     $17,406    $26,332
    Interest Capitalized as a
     Percent of Inventories                 2.3%        2.7%       5.2%

    Total Lots Owned                      11,633      10,452      8,925
    Total Lots Under Option                8,131       8,063      7,729
    Active Subdivisions                      133         131        130


                                             Year Ended December 31,
                                          2000        1999       1998
  OPERATING DATA

    EBITDA, As Adjusted
      Net income                        $123,303     $89,392    $51,568
        Add:
          Income taxes                    79,898      59,061     32,284
          Interest in home and
           land cost of sales             22,356      30,187     34,184
          Other fixed charges              3,362       1,347        953
          Depreciation and
           amortization                   21,792      17,845     20,228
          Asset impairment charges         4,200       2,242      5,300
    Total EBITDA, As Adjusted           $254,911    $200,074   $144,517

    Ratio of EBITDA, As Adjusted,
     to Interest Incurred                   10.5         9.4        6.4

    Homebuilding and Corporate SG&A
     as a Percent of Home Sales
     Revenues                              11.9%       10.8%      11.5%

    Interest Incurred                    $24,367     $21,261    $22,525
    Interest Capitalized                 $24,367     $21,261    $22,525
    Interest in Home Cost of Sales
     as a Percent of Home Sales
     Revenues                               1.3%        1.9%       2.6%

    Operating Return on Revenues            7.0%        5.7%       4.1%
    Operating Return on Average Assets     12.7%       11.1%       7.5%
    Operating Return on Average Equity     29.1%       26.2%      20.8%


                          M.D.C. HOLDINGS, INC.
                      Homebuilding Operational Data
                          (Dollars in thousands)

                             Three Months Ended          Year Ended
                                December 31,             December 31,
                              2000        1999        2000         1999

  Home Sales Revenues       $528,024    $450,458  $1,701,108   $1,526,519

  Average Selling Price
   Per Home Closed            $248.0      $221.4      $227.3       $211.4

  Home Gross Margins           22.3%       19.0%       22.3%        19.3%
    Excluding Interest in
     Home Cost of Sales        23.5%       20.4%       23.6%        21.2%

  Orders For Homes, net (Units)
    Colorado                     473         496       2,607        2,755
    California                   342         267       1,614        1,396
    Arizona                      363         256       1,849        1,455
    Nevada                       108         127         739          552
    Virginia                     124         127         765          738
    Maryland                      44          68         261          336

      Total                    1,454       1,341       7,835        7,232

  Homes Closed (Units)
    Colorado                     696         638       2,848        2,484
    California                   476         544       1,363        1,465
    Arizona                      460         400       1,554        1,699
    Nevada                       178         154         678          561
    Virginia                     230         209         727          702
    Maryland                      89          90         314          310

      Total                    2,129       2,035       7,484        7,221


                           December 31,  December 31,
                               2000          1999
  Backlog (Units)
    Colorado                   1,385       1,626
    California                   508         257
    Arizona                      747         452
    Nevada                       198         137
    Virginia                     328         290
    Maryland                     126         179

      Total                    3,292       2,941

      Estimated Sales
       Value                $775,000    $600,000

SOURCE: M.D.C. Holdings, Inc.

Contact: Paris G. Reece III, Chief Financial Officer of M.D.C. Holdings,
Inc., 303-804-7706, greece@mdch.com; or Rick Matthews of Rubenstein
Associates, Inc., 212-843-8007, rmatthews@rubenstein.com, for M.D.C. Holdings,
Inc.