News

M.D.C. Holdings Reports Record Third Quarter Earnings
- Quarterly earnings per share of $1.57; 15% above analysts' consensus estimate - Company's highest third quarter home closings and revenues - Nine-month orders for 7,968 homes already exceed total year 2001 orders - 2002 fourth quarter and total year earnings to exceed 2001 record levels - Anticipate over 10,500 home closings and record earnings in 2003
PRNewswire-FirstCall
DENVER

M.D.C. Holdings, Inc. ( www.RichmondAmerican.com ) today announced net income for the three months ended September 30, 2002 of $43.6 million, or $1.57 per share, compared with $40.5 million, or $1.48 per share, for the same period in 2001. The 2002 third quarter earnings per share exceeded by 15% analysts' consensus estimate for the quarter of $1.36. Total revenues for the 2002 third quarter were $582 million, 12% higher than revenues of $521 million in the 2001 third quarter.

Larry A. Mizel, MDC's chairman and chief executive officer, stated, "The successful execution of our operating strategy has enabled us to produce the highest level of operating results for any third quarter and first nine months in our history. We achieved a return on total capital of more than 28%, raised our quarterly interest coverage to over 14 times, and built one of the strongest and most liquid balance sheets in the industry. Our financial flexibility recently has been enhanced with the amendment of our unsecured bank credit facility. This amendment increased the aggregate commitment amount to $538 million, raised the maximum amount available to $600 million, subject to additional commitments, and extended the maturity date to July 2006. The liquidity provided by this expanded line of credit should support growth planned in our existing markets, as well as our pursuit of opportunities to enter new markets."

Mizel continued, "The continued strength of the single-family housing market is reflected in our home orders in this quarter and throughout the year, including seven straight months of record home orders. In fact, the 7,968 net orders for homes in the first nine months of 2002 already exceed the highest level of home orders received in any full year in our history. The 50% year-over-year increase in our third quarter home orders, including a 95% increase in September, is a direct result of the strong demand for homes in most of our markets, as well as the 28% increase in our active subdivisions since the beginning of the year. Our substantial order growth has contributed to a record quarter-end backlog of 5,098 homes at September 30th, which should enable us to close more than 8,800 homes in 2002 and to establish new Company highs for revenues and earnings in the 2002 fourth quarter and full year. With our growth in active communities and an anticipated record year-end backlog, we should be positioned to meet our objectives for 2003 of closing more than 10,500 homes and realizing year-over-year growth in operating performance."

Net income for the nine months ended September 30, 2002 was $110.2 million, or $3.96 per share, compared with $108.7 million, or $3.99 per share, for the same period in 2001. Total revenues for the nine months ended September 30, 2002 were $1.548 billion, compared with revenues of $1.449 billion for the first nine months of 2001.

Strong Homebuilding and Mortgage Lending Results

Operating profits from the Company's homebuilding operations increased to $75.5 million and $194.5 million, respectively, for the quarter and nine months ended September 30, 2002, compared with $71.9 million and $195.8 million for the same periods in 2001. Operating profits in the 2001 periods were reduced by a non-cash, pre-tax asset impairment charge of $2.9 million. As previously reported, MDC closed 2,276 homes and 5,906 homes, respectively, for the three and nine months ended September 30, 2002, compared with closings of 2,076 homes and 5,759 homes for the same periods in 2001. For the third quarter and first nine months of 2002, the Company's average selling prices were $249,600 and $255,700, respectively, and home gross margins were 23.4% and 23.1%, respectively. Average selling prices were $243,700 and $245,400, respectively, for the third quarter and first nine months of 2001, and the Company posted home gross margins of 24.2% and 23.7%, respectively.

Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "Our increased homebuilding profits in the 2002 third quarter primarily resulted from improved performances by our Phoenix, Virginia and Maryland divisions. Our Phoenix and Maryland operations experienced significant improvements in home gross margins and increased average selling prices, partially offset by a reduced number of homes closed in the quarter, compared with the 2001 third quarter. In Virginia, while home gross margins increased to the highest level in the Company, the primary driver for improved profitability was 27 more homes closed, partially offset by a lower average selling price. Third quarter profits also improved in Las Vegas, where we closed 141 more homes than in the 2001 third quarter, including 103 homes closed in lower-priced, lower-margin subdivisions acquired from W.L. Homes LLC in April 2002."

Operating profits from the Company's mortgage lending operations improved to $5.9 million and $16.1 million, respectively, for the quarter and nine months ended September 30, 2002, representing the highest levels of third quarter and nine-month operating profits from mortgage lending in the Company's history. Mortgage lending operating profits for the quarter and nine months ending September 30, 2001 were $5.8 million and $14.7 million, respectively. The profit improvements in 2002 primarily resulted from increased gains on sales of mortgage loans.

Strengthened Balance Sheet and Improved Operating Efficiency

The Company continued to strengthen its balance sheet and improve the efficiency of its operations in the third quarter of 2002. This success is represented by the achievement of ratios of homebuilding and corporate debt- to-capital and debt-to-EBITDA, as adjusted (as defined below), at September 30, 2002 of .36 and 1.37, respectively. These ratios are among the lowest in the homebuilding industry. The Company's strong operating results over the past year increased stockholders' equity by 24% to $755 million, or $28.33 per outstanding share, at September 30, 2002. This stockholders' equity amount also reflects the repurchase during the 2002 third quarter of 492,600 shares of MDC common stock for an aggregate price of $19.0 million. In addition, the Company ended the 2002 third quarter with liquidity of $310 million.

Earnings before interest and other fixed charges, taxes, depreciation, amortization and asset impairment charges ("EBITDA, as adjusted") for the third quarter and first nine months of 2002 was $83.5 million and $214.3 million, respectively, compared with $82.9 million and $219.3 million, respectively, for the same periods in 2001. Reduced interest incurred, primarily resulting from lower interest rates, increased the Company's ratio of EBITDA, as adjusted, to interest incurred to 14.4 for the nine months ended September 30, 2002, compared with 12.4 for the same period in 2001.

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; among the top five homebuilders in Northern Virginia, Phoenix, Tucson and Las Vegas; among the top ten homebuilders in suburban Maryland, Northern California and Southern California; and has recently entered the Salt Lake City and Dallas/Fort Worth markets.

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) the 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.

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

                                                 September 30,  December 31,
                                                     2002           2001
  ASSETS

    Corporate
      Cash and cash equivalents                    $28,156        $31,322
      Property and equipment, net                   10,050          2,723
      Deferred income taxes                         24,430         30,081
      Deferred debt issue costs, net                 1,758          1,947
      Other assets, net                              7,929          7,597
                                                    72,323         73,670

    Homebuilding
      Cash and cash equivalents                      6,215          4,760
      Home sales and other accounts receivable      15,433          2,621
      Inventories, net
        Housing completed or under construction    675,233        456,752
        Land and land under development            604,717        450,502
      Prepaid expenses and other assets, net        61,669         49,544
                                                 1,363,267        964,179

    Financial Services
      Cash and cash equivalents                        872            518
      Mortgage loans held in inventory             134,708        144,971
      Other assets, net                              5,094          7,618
                                                   140,674        153,107

  Total Assets                                  $1,576,264     $1,190,956

  LIABILITIES

    Corporate
      Accounts payable and accrued expenses        $50,842        $61,135
      Income taxes payable                           6,261          9,953
      Senior notes, net                            174,551        174,503
                                                   231,654        245,591
    Homebuilding
      Accounts payable and accrued expenses        216,991        174,955
      Line of credit                               255,000             --
                                                   471,991        174,955

    Financial Services
      Accounts payable and accrued expenses         27,597         16,937
      Line of credit                                90,060         99,642
                                                   117,657        116,579

        Total Liabilities                          821,302        537,125

  STOCKHOLDERS' EQUITY
        Total Stockholders' Equity                 754,962        653,831

  Total Liabilities and Stockholders' Equity    $1,576,264     $1,190,956


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

                           Three Months Ended         Nine Months Ended
                              September 30,              September 30,
                           2002         2001          2002          2001
  REVENUES
    Homebuilding        $570,386      $511,008   $1,516,318    $1,421,114
    Financial Services    11,160        10,081       30,437        27,420
    Corporate                152           223          747           735

      Total Revenues    $581,698      $521,312   $1,547,502    $1,449,269

  NET INCOME

    Homebuilding         $75,472       $71,914     $194,531      $195,831
    Financial Services     5,905         5,750       16,120        14,680

      Operating Profit    81,377        77,664      210,651       210,511

    Corporate general
     and administrative
     expense, net        (10,346)      (10,874)     (30,245)      (32,278)
    Income before
     income taxes         71,031        66,790      180,406       178,233
    Provision for
     income taxes        (27,472)      (26,265)     (70,175)      (69,582)

      Net Income         $43,559       $40,525     $110,231      $108,651

  EARNINGS PER SHARE

      Basic                $1.63         $1.52        $4.11         $4.12
      Diluted              $1.57         $1.48        $3.96         $3.99

  WEIGHTED-AVERAGE SHARES
   OUTSTANDING
      Basic               26,727        26,654       26,814        26,354
      Diluted             27,680        27,370       27,861        27,213

  DIVIDENDS PAID PER SHARE  $.08          $.07         $.23          $.20


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

                             Three Months                Nine Months
                          Ended September 30,        Ended September 30,
                          2002          2001         2002          2001
  Homebuilding
     Home sales         $568,195      $505,995   $1,510,224    $1,413,121
     Land sales            1,485         2,142        2,231         2,901
     Other revenues          706         2,871        3,863         5,092
       Total Homebuilding
        Revenues         570,386       511,008    1,516,318     1,421,114

     Home cost of sales  435,041       383,777    1,161,155     1,077,786
     Land cost of sales    1,237           646        1,741         1,103
     Asset impairment
      charges                 --         2,900           --         2,900
     Marketing            31,794        28,116       85,139        78,033
     General and
      administrative      26,842        23,655       73,752        65,461
                         494,914       439,094    1,321,787     1,225,283
       Homebuilding
        Operating Profit  75,472        71,914      194,531       195,831

  Financial Services
     Interest revenues     1,045           901        2,994         2,356
     Origination fees      4,563         4,418       12,784        12,570
     Gains on sales of
      mortgage servicing     408           461        1,360         2,863
     Gains on sales of
      mortgage loans, net  4,902         4,128       12,643         9,638
     Mortgage servicing
      and other              242           173          656            (7)
       Total Financial
        Services Revenues 11,160        10,081       30,437        27,420

    General and
     administrative        5,255         4,331       14,317        12,740
       Financial Services
        Operating Profit   5,905         5,750       16,120        14,680

  Total Operating Profit  81,377        77,664      210,651       210,511

  Corporate
    Interest and
     other revenues          152           223          747           735
    General and
     administrative      (10,498)      (11,097)     (30,992)      (33,013)
       Net Corporate
        Expenses         (10,346)      (10,874)     (30,245)      (32,278)

  Income Before
   Income Taxes          $71,031       $66,790     $180,406      $178,233


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

                               September 30,   December 31,   September 30,
                                   2002            2001           2001
  BALANCE SHEET DATA

    Stockholders' Equity         $754,962        $653,831      $607,378
    Book Value Per Share
     Outstanding                   $28.33          $24.59        $25.16
    Homebuilding and
     Corporate Debt              $429,551        $174,503      $319,488
    Ratio of Homebuilding and
     Corporate Debt to Equity         .57             .27           .53
    Total Capital (excluding
     mortgage lending debt)    $1,184,513        $828,334      $926,866
    Ratio of Homebuilding and
     Corporate Debt to Total Capital  .36             .21           .34
    Ratio of Homebuilding and
     Corporate Debt to Total
     Capital (net of cash)            .34             .17           .33
    Ratio of Homebuilding and
     Corporate Debt to EBITDA,
     as adjusted *                   1.37             .55          1.07
    Ratio of Homebuilding and
     Corporate Debt (net of cash)
     to EBITDA, as adjusted*         1.26             .43          1.01
    Total Liquidity              $310,466        $491,770      $334,823
    Total Homebuilding
     Inventories               $1,279,950        $907,254    $1,030,190
    Interest Capitalized in
     Inventories                  $18,943         $17,358       $19,461
    Interest Capitalized as a
     Percent of Inventories          1.5%            1.9%          1.9%
    Total Lots Owned               16,975          13,524        13,331
    Total Lots Under Option         6,288           6,059         7,205
    Homes Under Construction
     (including models)             4,705           2,783         3,854
    Active Subdivisions               175             137           141


                           Three Months Ended         Nine Months Ended
                             September 30,               September 30,
                           2002         2001          2002          2001
  OPERATING DATA

    EBITDA, as adjusted
      Net income         $43,559       $40,525     $110,231      $108,651
        Add:
          Income taxes    27,472        26,265       70,175        69,582
          Interest in home
           and land cost
           of sales        4,568         5,921       13,278        17,594
          Other fixed
           charges         1,306           979        3,298         2,682
          Depreciation and
           amortization    6,548         6,348       17,366        17,889
          Asset impairment
           charges            --         2,900           --         2,900
    Total EBITDA,
     as adjusted         $83,453       $82,938     $214,348      $219,298

    Ratio of EBITDA,
     as adjusted to
     Interest Incurred      14.1          14.1         14.4          12.4

    Homebuilding and
     Corporate SG&A as a
     Percent of Home
     Sales Revenues        12.2%         12.4%        12.6%         12.5%

    Interest Incurred     $5,907        $5,879      $14,863       $17,638
    Interest Capitalized  $5,907        $5,879      $14,863       $17,638
    Interest in Home Cost
     of Sales as a Percent
     of Home Sales Revenues 0.8%          1.1%         0.9%          1.3%

    Operating Return on
     Revenues               7.5%          7.8%         7.1%          7.5%
    Operating Return on
     Average Assets*       11.8%         12.9%
    Operating Return on
     Average Equity*       22.9%         28.2%
    EBIT Return on
     Capital*              28.2%         31.9%

        * Rolling 12 months ended September 30


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

                           Three Months Ended          Nine Months Ended
                             September 30,               September 30,
                          2002          2001          2002          2001

  Home Sales Revenues   $568,195      $505,995   $1,510,224    $1,413,121

  Average Selling Price
   Per Home Closed        $249.6        $243.7       $255.7        $245.4

  Home Gross Margins       23.4%         24.2%        23.1%         23.7%
     Excluding Interest in
      Home Cost of Sales   24.2%         25.3%        24.0%         25.0%

  Orders For Homes, Net (Units)
     Colorado                541           494        2,299         2,101
     Utah                     46            --           77            --
     California              475           362        1,699         1,217
     Arizona                 755           433        2,096         1,699
     Nevada                  359           161          977           591
     Virginia                186           117          604           481
     Maryland                 75            61          214           239
     Texas                     2           - -            2            --

       Total               2,439         1,628        7,968         6,328

  Homes Closed (Units)
     Colorado                790           688        2,105         1,988
     Utah                     39            --           64            --
     California              394           433        1,048         1,048
     Arizona                 550           611        1,434         1,622
     Nevada                  306           165          694           493
     Virginia                134           107          368           413
     Maryland                 63            72          193           195
     Texas                    --            --           --            --

       Total               2,276         2,076        5,906         5,759


                                September 30,    December 31,  September 30,
                                    2002             2001           2001
  Backlog (Units)
     Colorado                       1,389           1,195         1,498
     Utah                              54              --            --
     California                     1,141             490           677
     Arizona                        1,287             625           887
     Nevada                           577             181           296
     Virginia                         470             234           396
     Maryland                         178             157           170
     Texas                              2              --            --

       Total                        5,098           2,882         3,924

  Backlog Estimated
   Sales Value                 $1,350,000        $760,000    $1,050,000

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

CONTACT: Paris G. Reece III, Chief Financial Officer of M.D.C. Holdings,
Inc., +1-303-804-7706, greece@mdch.com; or Rodger Van Allen of Rubenstein
Associates, Inc., +1-212-843-8000, rvanallen@rubenstein.com, for M.D.C.
Holdings, Inc.