DENVER , Oct. 24 /PRNewswire-FirstCall/ -- M.D.C. Holdings, Inc. (NYSE: MDC) today announced a net loss for the quarter ended September 30, 2007 of $155.4 million , or $3.40 per diluted share, which included pre-tax charges of $249.0 million for asset impairments and $5.1 million for write-offs of deposits and pre-acquisition costs associated with land option contracts the Company does not intend to pursue. Net income for the third quarter of 2006 was $48.7 million , or $1.06 per diluted share, including pre-tax charges of $19.9 million for asset impairments and $7.3 million for write-offs of deposits and pre-acquisition costs. Total revenue for the third quarter of 2007 was $686.7 million , compared with revenue of $1.08 billion for the same period in 2006.
Net loss for the nine months ended September 30, 2007 was $355.8 million , or $7.79 per diluted share, which included pre-tax charges of $551.4 million for asset impairments and $15.6 million for write-offs of deposits and pre- acquisition costs. Net income for the first nine months of 2006 was $220.6 million , or $4.80 per diluted share, including pre-tax charges of $20.8 million for asset impairments and $23.0 million for write-offs of deposits and pre-acquisition costs. Total revenue for the first nine months of 2007 was $2.15 billion , compared with revenue of $3.46 billion for the same period in 2006.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, 'Throughout these turbulent times for the homebuilding industry, we have remained focused on improving our investment grade balance sheet, strengthening our financial position and enhancing our operating structure and processes in preparation for an eventual recovery.'
Mizel continued, 'We have generated cash flow from operations of $740 million over the last 12 months, including more than $130 million in this third quarter, primarily as a result of significant reductions in our inventories of land, homes under construction and mortgage loans. This cash flow raised our quarter-end cash balance to $730 million , with no borrowings outstanding on our $1.25 billion line of credit, increasing our cash and available borrowing capacity year-over-year by 45% to nearly $2.0 billion . Having already reduced the lots we control by more than 40% over the past year, we kept our expenditures for land acquisition to a small fraction of prior-year amounts. At the same time, we tightened our controls on cash outflows for land development and home starts, while continuing to work with our suppliers and subcontractors to achieve further reductions in the costs of home construction. Finally, to reduce our overhead and increase our efficiency in these difficult times, our organization has continued its downsizing and realignment efforts, reducing the number of our homebuilding divisions to 17 from 27 at the beginning of 2006, and lowering our employee headcount by almost 40% during the same period.'
Homebuilding Results
Homebuilding loss before taxes for the quarter and nine months ended September 30, 2007 was $258.0 million and $568.3 million , respectively, compared with income before taxes of $82.3 million and $385.8 million for the same periods in 2006. The pre-tax differences were driven in large part by the asset impairment charges discussed above, as well as significant declines in home closings and home gross margins from the levels achieved during the same periods in 2006. These income decreases were offset partially by the impact of reduced homebuilding commissions, marketing, general and administrative expenses ('SG&A').
The Company closed 1,963 homes and produced home gross margins of 14.1% in the 2007 third quarter, compared with 2,955 home closings and home gross margins of 22.5% for the same period in 2006. For the nine months ended September 30, 2007 , the Company closed 5,995 homes and produced home gross margins of 14.7%, compared with 9,529 home closings and home gross margins of 24.3% for the nine months ended September 30, 2006 . Average selling prices were $331,700 and $342,100 , respectively, for the quarter and nine months ended September 30, 2007 , down $23,900 and $10,200 from the same periods in 2006. Homebuilding SG&A decreased to $105.2 million and $330.1 million , respectively, for the three and nine months ended September 30, 2007 , compared with $137.0 million and $418.3 million for the same periods in the prior year.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, 'During the 2007 third quarter, we continued to battle adverse conditions in all of our homebuilding markets. As buyer confidence continued to erode and competition for new home sales intensified, we experienced reduced selling prices and increased incentive levels in most of our markets, which decreased our performance expectations with respect to certain subdivisions in these markets. As a consequence, we recognized $249 million in inventory impairments with respect to more than 7,000 lots in 132 subdivisions, which largely accounted for our third quarter loss. Land inventory was impaired by $192 million and work-in-process inventory was impaired by $57 million . The quarter-end book value of the impaired subdivisions after the impairments was $873 million , consisting of $403 million of land and $470 million of work-in-process. As has been the case in each of the last three quarters, the impairments this quarter primarily occurred in our West homebuilding segment, with more than 75% applicable to subdivisions in our Arizona, Nevada and California markets. Over the last five quarters, we have impaired approximately 55% of the 18,500 lots we owned at the end of our 2007 third quarter.'
Financial Services and Other Results
Income before taxes from the Company's Financial Services and Other segment for the quarter and nine months ended September 30, 2007 was $5.0 million and $16.8 million , respectively, compared with $13.0 million and $35.2 million for the same periods in the previous year. The decreases in both 2007 periods primarily resulted from lower gains on sales of mortgage loans, as the dollar volumes of mortgage loan originations and mortgage loans sold declined in line with builder home closings. Additionally, in an effort to reduce its exposure to the risks inherent in holding mortgage loans, the Company continued to sell loans more quickly, resulting in less profitable loan sales during the quarter.
Home Orders and Backlog
MDC received orders, net of cancellations, for 1,228 homes with an estimated sales value of $365.0 million during the 2007 third quarter, compared with net orders for 2,120 homes with an estimated sales value of $678.0 million during the same period in 2006. For the nine months ended September 30, 2007 , the Company received net orders for 5,756 homes with a sales value of $1.92 billion , compared with orders for 8,658 homes with a sales value of $2.95 billion for the nine months ended September 30, 2006 . During the third quarter and first nine months of 2007, the Company's approximate order cancellation rates were 57% and 44%, respectively, compared with rates of 49% and 40% experienced during the same periods in 2006. The Company ended the third quarter of 2007 with a backlog of 3,399 homes with an estimated sales value of $1.21 billion , compared with a backlog of 5,661 homes with an estimated sales value of $2.10 billion at September 30, 2006 .
MDC, whose subsidiaries build homes under the name ' Richmond American Homes,' is one of the top ten homebuilders in the United States , based on 2006 revenue. The Company also provides mortgage financing, primarily for MDC's homebuyers, through its wholly owned subsidiary HomeAmerican Mortgage Corporation. MDC, a Fortune 500 Company, is a major regional homebuilder with a significant presence in Colorado, Jacksonville , Las Vegas , Maryland, Northern California, Northern Virginia, Phoenix , Salt Lake City , Southern California and Tucson . MDC also has established operating divisions in Chicago , Philadelphia/Delaware Valley and West Florida. For more information about our Company, please visit RichmondAmerican.com.
Forward-Looking Statements
Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, 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, including changes in cancellation rates, net home orders, home gross margins, and land and home values; (2) changes in interest rates, mortgage lending programs and the availability of credit; (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 performance bonds and 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. Additional information about the risks and uncertainties applicable to the Company's business is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter ended June 30, 2007 , which were filed with the Securities and Exchange Commission. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted.
M.D.C. HOLDINGS, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
REVENUE
Home sales revenue $651,124 $1,050,700 $2,050,737 $3,356,416
Land sales revenue 2,700 3,336 12,151 18,812
Other revenue 32,837 26,887 85,605 83,101
Total Revenue 686,661 1,080,923 2,148,493 3,458,329
COSTS AND EXPENSES
Home cost of sales 559,402 813,824 1,749,165 2,540,381
Land cost of sales 452 3,210 7,740 18,124
Asset impairments 248,950 19,915 551,422 20,775
Marketing expenses 28,694 31,296 87,144 91,899
Commission expenses 23,900 36,390 71,530 106,627
General and
administrative expenses 76,482 99,779 247,229 326,595
Related party expenses 95 88 286 2,792
Total Costs and
Expenses 937,975 1,004,502 2,714,516 3,107,193
(Loss) income before income
taxes (251,314) 76,421 (566,023) 351,136
Benefit from (provision
for) income taxes 95,936 (27,715) 210,175 (130,518)
NET (LOSS) INCOME $(155,378) $48,706 $(355,848) $220,618
(LOSS) EARNINGS PER SHARE
Basic $(3.40) $1.08 $(7.79) $4.91
Diluted $(3.40) $1.06 $(7.79) $4.80
WEIGHTED-AVERAGE SHARES
Basic 45,751 44,972 45,659 44,911
Diluted 45,751 45,868 45,659 45,932
DIVIDENDS DECLARED PER
SHARE $0.25 $0.25 $0.75 $0.75
M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
September 30, December 31,
2007 2006
ASSETS
Cash and cash equivalents $729,479 $507,947
Restricted cash 1,633 2,641
Home sales and other receivables 66,891 143,936
Mortgage loans held in inventory, net 72,863 212,903
Income taxes receivable, net 22,748 -
Inventories
Housing completed or under
construction 1,267,478 1,178,671
Land and land under development 754,728 1,575,158
Property and equipment, net 47,020 44,606
Deferred income taxes 306,942 124,880
Prepaid expenses and other assets, net 91,471 119,133
Total Assets $3,361,253 $3,909,875
LIABILITIES
Accounts payable $150,037 $171,005
Accrued liabilities 369,168 418,953
Income taxes payable - 28,485
Related party liabilities 701 2,401
Homebuilding line of credit - -
Mortgage line of credit 41,957 130,467
Senior notes, net 996,986 996,682
Total Liabilities 1,558,849 1,747,993
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value;
25,000,000 shares authorized; none
issued or outstanding - -
Common stock, $0.01 par value;
250,000,000 shares authorized;
45,869,000 and 45,838,000 issued and
outstanding, respectively, at
September 30, 2007 and 45,179,000 and
45,165,000 issued and outstanding,
respectively, at December 31, 2006 459 452
Additional paid-in capital 791,212 760,831
Retained earnings 1,012,395 1,402,261
Accumulated other comprehensive loss (1,003) (1,003)
Less treasury stock, at cost; 31,000
and 14,000 shares, respectively, at
September 30, 2007 and December 31, 2006 (659) (659)
Total Stockholders'
Equity 1,802,404 2,161,882
Total Liabilities and
Stockholders' Equity $3,361,253 $3,909,875
M.D.C. HOLDINGS, INC.
Information on Segments
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
REVENUE
Homebuilding
West $389,309 $653,932 $1,277,012 $2,061,708
Mountain 138,439 168,193 418,300 519,107
East 72,368 137,050 205,523 444,765
Other Homebuilding 60,364 105,553 184,195 374,299
Total
Homebuilding 660,480 1,064,728 2,085,030 3,399,879
Financial Services and
Other 14,652 23,843 47,836 74,158
Corporate 16,048 60 30,510 675
Inter-company
Adjustments (4,519) (7,708) (14,883) (16,383)
Consolidated $686,661 $1,080,923 $2,148,493 $3,458,329
(LOSS) INCOME BEFORE INCOME
TAXES
Homebuilding
West $(197,917) $53,762 $(462,547) $274,642
Mountain (925) 9,320 3,218 25,183
East (15,998) 23,911 (27,168) 85,691
Other Homebuilding (43,158) (4,660) (81,776) 237
Total
Homebuilding (257,998) 82,333 (568,273) 385,753
Financial Services and
Other 5,018 12,989 16,776 35,161
Corporate 1,666 (18,901) (14,526) (69,778)
Consolidated $(251,314) $76,421 $(566,023) $351,136
ASSET IMPAIRMENTS
West $190,490 $15,243 $445,122 $15,243
Mountain 6,930 627 16,709 627
East 16,237 1,357 24,669 1,357
Other Homebuilding 35,293 2,688 64,922 3,548
Total Homebuilding $248,950 $19,915 $551,422 $20,775
September 30, December 31,
2007 2006
TOTAL ASSETS
West $1,157,760 $1,869,442
Mountain 535,568 535,554
East 308,070 333,902
Other Homebuilding 168,990 266,326
Total Homebuilding 2,170,388 3,005,224
Financial Services and Other 142,456 284,791
Corporate 1,091,566 657,917
Inter-company (43,157) (38,057)
Consolidated $3,361,253 $3,909,875
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, Change
2007 2006 Amount %
SELECTED FINANCIAL DATA
General and Administrative
Expenses
Homebuilding Operations $52,561 $69,317 $(16,756) -24%
Financial Services and
Other Operations $9,635 $11,516 $(1,881) -16%
Corporate (1) $14,381 $19,034 $(4,653) -24%
SG&A as a % of Home Sales
Revenue
Homebuilding Operations 16.1% 13.0% 3.1%
Corporate (1) 2.2% 1.8% 0.4%
Depreciation and Amortization $11,777 $13,028 $(1,251) -10%
Home Gross Margins (2) 14.1% 22.5% -8.4%
Cash Provided by (Used in)
Operating Activities $136,246 $70,928 $65,318
Cash Used in Investing
Activities $(6,307) $(2,893) $(3,414)
Cash Used in Financing
Activities $(68,839) $(26,675) $(42,164)
Ending Unrestricted Cash and
Available Borrowing Capacity $1,960,336 $1,356,532 $603,804 45%
Corporate and Homebuilding
Interest
Interest Capitalized
During the Period $14,444 $14,150 $294 2%
Interest Included in Home
Cost of Sales for the
Period $14,428 $12,574 $1,854 15%
Interest in Home Cost of
Sales as a % of Home Sales
Revenue 2.2% 1.2% 1.0%
Interest Capitalized in
Inventories at End of
Period $54,004 $50,145 $3,859 8%
Nine Months Ended
September 30, Change
2007 2006 Amount %
SELECTED FINANCIAL DATA
General and Administrative
Expenses
Homebuilding Operations $171,419 $219,820 $(48,401) -22%
Financial Services and
Other Operations $31,060 $39,041 $(7,981) -20%
Corporate (1) $45,036 $70,526 $(25,490) -36%
SG&A as a % of Home Sales
Revenue
Homebuilding Operations 16.1% 12.5% 3.6%
Corporate (1) 2.2% 2.1% 0.1%
Depreciation and Amortization $33,994 $41,537 $(7,543) -18%
Home Gross Margins (2) 14.7% 24.3% -9.6%
Cash Provided by (Used in)
Operating Activities $335,568 $(41,343) $376,911
Cash Used in Investing
Activities $(8,362) $(7,224) $(1,138)
Cash Used in Financing
Activities $(105,674) $(33,120) $(72,554)
Ending Unrestricted Cash and
Available Borrowing Capacity
Corporate and Homebuilding
Interest
Interest Capitalized During
the Period $43,320 $43,993 $(673) -2%
Interest Included in Home
Cost of Sales for the
Period $39,971 $35,847 $4,124 12%
Interest in Home Cost of
Sales as a % of Home Sales
Revenue 2.0% 1.1% 0.9%
Interest Capitalized in
Inventories at End of Period
(1) Includes related party expenses.
(2) Home sales revenue less home cost of sales (excluding commissions,
amortization of deferred marketing, project cost write offs and asset
impairments) as a percent of home sales revenue. During the three and
nine months ended September 30, 2007, we closed homes on lots for
which we had previously recorded $36.4 million and $64.4 million,
respectively, of asset impairments.
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, Change
2007 2006 Amount %
HOMEAMERICAN OPERATING ACTIVITIES
Principal Amount of Mortgage
Loans Originated $286,192 $541,446 $(255,254) -47%
Principal Amount of Mortgage
Loans Brokered $118,580 $162,783 $(44,203) -27%
Capture Rate 54% 60% -6%
Including Brokered Loans 73% 78% -5%
Mortgage Products (% of Loans
Originated)
Fixed Rate 86% 53% 33%
Adjustable Rate - Interest Only 11% 39% -28%
Adjustable Rate - Other 3% 8% -5%
Prime Loans (3) 86% 54% 32%
Alt-A Loans (4) 0% 41% -41%
Government Loans (5) 14% 4% 10%
Sub-Prime Loans (6) 0% 1% -1%
Nine Months Ended
September 30, Change
2007 2006 Amount %
HOMEAMERICAN OPERATING ACTIVITIES
Principal Amount of Mortgage
Loans Originated $930,769 $1,672,096 $(741,327) -44%
Principal Amount of Mortgage
Loans Brokered $364,813 $492,464 $(127,651) -26%
Capture Rate 55% 58% -3%
Including Brokered Loans 74% 75% -1%
Mortgage Products (% of Loans
Originated)
Fixed Rate 78% 50% 28%
Adjustable Rate - Interest Only 20% 42% -22%
Adjustable Rate - Other 2% 8% -6%
Prime Loans (3) 77% 61% 16%
Alt-A Loans (4) 14% 33% -19%
Government Loans (5) 9% 4% 5%
Sub-Prime Loans (6) 0% 2% -2%
(3) Prime loans are defined as loans with Fair, Isaac and Company
('FICO') scores greater than 620 and that comply in all ways with the
documentation standards of the government sponsored enterprise
guidelines.
(4) Alt-A loans are defined as loans that would otherwise qualify as
prime loans except that they do not comply in all ways with the
government sponsored enterprise guidelines.
(5) Government loans are loans either insured by the Federal Housing
Administration or guaranteed by the Department of Veteran Affairs.
(6) Sub-prime loans are loans that have FICO scores of less than or equal
to 620.
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
September December September
30, 31, 30,
2007 2006 2006
HOMES COMPLETED OR UNDER CONSTRUCTION
Unsold Homes Under Construction -
Final 493 476 468
Unsold Homes Under Construction -
Frame 862 573 780
Unsold Homes Under Construction -
Foundation 196 400 244
Total Unsold Homes Under
Construction 1,551 1,449 1,492
Sold Homes Under Construction 2,791 2,430 4,340
Model Homes 758 757 762
Homes Completed or Under
Construction 5,100 4,636 6,594
LOTS OWNED (excluding homes completed
or under construction)
Arizona 3,962 6,368 6,958
California 1,867 2,802 3,051
Nevada 1,879 2,747 3,096
West 7,708 11,917 13,105
Colorado 2,904 3,479 3,325
Utah 900 1,185 1,132
Mountain 3,804 4,664 4,457
Maryland 307 528 505
Virginia 417 643 674
East 724 1,171 1,179
Delaware Valley 141 265 283
Florida 849 1,093 1,220
Illinois 201 287 300
Texas - 13 69
Other Homebuilding 1,191 1,658 1,872
Total 13,427 19,410 20,613
LOTS UNDER OPTION
Arizona 388 744 1,283
California 157 387 1,053
Nevada 4 250 627
West 549 1,381 2,963
Colorado 258 801 1,304
Utah - 91 272
Mountain 258 892 1,576
Maryland 605 960 1,034
Virginia 1,769 2,381 2,459
East 2,374 3,341 3,493
Delaware Valley 315 683 874
Florida 497 1,800 1,999
Illinois - - 47
Texas - - -
Other Homebuilding 812 2,483 2,920
Total 3,993 8,097 10,952
Non-refundable Option Deposits
Cash $8,093 $20,228 $34,034
Letters of Credit 8,287 14,224 16,069
Total Non-refundable
Option Deposits $16,380 $34,452 $50,103
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, Change
2007 2006 Amount %
HOMES CLOSED (UNITS)
Arizona 700 716 (16) -2%
California 237 383 (146) -38%
Nevada 310 696 (386) -55%
West 1,247 1,795 (548) -31%
Colorado 219 334 (115) -34%
Utah 162 206 (44) -21%
Mountain 381 540 (159) -29%
Maryland 71 104 (33) -32%
Virginia 72 150 (78) -52%
East 143 254 (111) -44%
Delaware Valley 35 50 (15) -30%
Florida 115 195 (80) -41%
Illinois 41 46 (5) -11%
Texas 1 75 (74) -99%
Other Homebuilding 192 366 (174) -48%
Total 1,963 2,955 (992) -34%
AVERAGE SELLING PRICES PER HOME CLOSED
Arizona $247.9 $311.8 $(63.9) -20%
California 492.4 520.7 (28.3) -5%
Colorado 357.7 301.4 56.3 19%
Delaware Valley 417.2 394.3 22.9 6%
Florida 253.8 275.6 (21.8) -8%
Illinois 396.1 365.6 30.5 8%
Maryland 521.4 576.1 (54.7) -9%
Nevada 294.2 317.8 (23.6) -7%
Texas 110.0 164.0 (54.0) -33%
Utah 363.3 321.5 41.8 13%
Virginia 484.1 486.2 (2.1) 0%
Company Average $331.7 $355.6 $(23.9) -7%
Nine Months Ended
September 30, Change
2007 2006 Amount %
HOMES CLOSED (UNITS)
Arizona 1,997 2,337 (340) -15%
California 831 1,252 (421) -34%
Nevada 1,028 2,109 (1,081) -51%
West 3,856 5,698 (1,842) -32%
Colorado 583 1,154 (571) -49%
Utah 568 580 (12) -2%
Mountain 1,151 1,734 (583) -34%
Maryland 181 290 (109) -38%
Virginia 216 498 (282) -57%
East 397 788 (391) -50%
Delaware Valley 116 122 (6) -5%
Florida 381 702 (321) -46%
Illinois 68 119 (51) -43%
Texas 26 366 (340) -93%
Other Homebuilding 591 1,309 (718) -55%
Total 5,995 9,529 (3,534) -37%
AVERAGE SELLING PRICES PER HOME CLOSED
Arizona $254.4 $303.6 $(49.2) -16%
California 524.7 542.8 (18.1) -3%
Colorado 345.5 302.2 43.3 14%
Delaware Valley 452.7 396.5 56.2 14%
Florida 265.2 290.1 (24.9) -9%
Illinois 381.7 367.7 14.0 4%
Maryland 521.3 573.8 (52.5) -9%
Nevada 301.5 320.6 (19.1) -6%
Texas 129.6 167.1 (37.5) -22%
Utah 359.8 293.0 66.8 23%
Virginia 491.4 555.2 (63.8) -11%
Company Average $342.1 $352.2 $(10.2) -3%
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, Change
2007 2006 Amount %
ORDERS FOR HOMES, NET (UNITS)
Arizona 385 680 (295) -43%
California 152 273 (121) -44%
Nevada 239 436 (197) -45%
West 776 1,389 (613) -44%
Colorado 153 196 (43) -22%
Utah 41 251 (210) -84%
Mountain 194 447 (253) -57%
Maryland 36 70 (34) -49%
Virginia 81 76 5 7%
East 117 146 (29) -20%
Delaware Valley 23 36 (13) -36%
Florida 81 81 - 0%
Illinois 37 20 17 85%
Texas - 1 (1) -100%
Other Homebuilding 141 138 3 2%
Total 1,228 2,120 (892) -42%
Estimated Value of Orders
for Homes, net $365,000 $678,000 $(313,000) -46%
Estimated Average Selling
Price of Orders for Homes, net $297.2 $319.8 $(22.6) -7%
Approximate Order
Cancellation Rate (7) 57% 49% 8%
Nine Months Ended
September 30, Change
2007 2006 Amount %
ORDERS FOR HOMES, NET (UNITS)
Arizona 1,750 2,278 (528) -23%
California 849 1,209 (360) -30%
Nevada 984 1,734 (750) -43%
West 3,583 5,221 (1,638) -31%
Colorado 677 938 (261) -28%
Utah 390 916 (526) -57%
Mountain 1,067 1,854 (787) -42%
Maryland 227 320 (93) -29%
Virginia 275 383 (108) -28%
East 502 703 (201) -29%
Delaware Valley 104 110 (6) -5%
Florida 377 530 (153) -29%
Illinois 109 82 27 33%
Texas 14 158 (144) -91%
Other Homebuilding 604 880 (276) -31%
Total 5,756 8,658 (2,902) -34%
Estimated Value of Orders
for Homes, net $1,920,000 $2,952,000 $(1,032,000) -35%
Estimated Average Selling
Price of Orders for Homes, net $333.6 $341.0 $(7.4) -2%
Approximate Order
Cancellation Rate (7) 44% 40% 4%
(7) Gross number of cancellations received divided by gross number of
orders received.
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
(Unaudited)
September December September
30, 31, 30,
2007 2006 2006
BACKLOG (UNITS)
Arizona 1,257 1,504 2,040
California 445 427 722
Nevada 271 315 648
West 1,973 2,246 3,410
Colorado 347 253 361
Utah 287 465 674
Mountain 634 718 1,035
Maryland 233 187 281
Virginia 195 136 266
East 428 323 547
Delaware Valley 107 119 169
Florida 193 197 427
Illinois 64 23 43
Texas - 12 30
Other Homebuilding 364 351 669
Total 3,399 3,638 5,661
Backlog Estimated Sales Value $1,210,000 $1,300,000 $2,100,000
Estimated Average Selling Price of
Homes in Backlog $356.0 $357.3 $371.0
ACTIVE SUBDIVISIONS
Arizona 67 67 65
California 41 45 46
Nevada 41 41 37
West 149 153 148
Colorado 52 47 45
Utah 25 22 21
Mountain 77 69 66
Maryland 16 19 17
Virginia 21 19 19
East 37 38 36
Delaware Valley 4 8 7
Florida 23 30 29
Illinois 7 6 7
Texas - 2 2
Other Homebuilding 34 46 45
Total 297 306 295
Average for Quarter Ended 303 299 296
M.D.C. HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
September December September
30, 31, 30,
2007 2006 2006
CORPORATE AND HOMEBUILDING DEBT-TO-
CAPITAL, NET OF CASH
Total Debt $1,038,943 $1,127,149 $1,148,952
Less Mortgage Line of Credit (41,957) (130,467) (152,369)
Total Corporate and Homebuilding
Debt 996,986 996,682 996,583
Less Cash (Including Restricted
Cash) (731,112) (510,588) (137,926)
Total Corporate and Homebuilding
Debt, Net of Cash 265,874 486,094 858,657
Stockholders' Equity 1,802,404 2,161,882 2,167,132
Total Corporate and Homebuilding
Capital, Net of Cash $2,068,278 $2,647,976 $3,025,789
Ratio of Corporate and Homebuilding
Debt to Capital, Net of Cash 0.13 0.18 0.28
NOTE: From time to time, MDC discloses selected non-GAAP financial measures. While non-GAAP financial measures are not a substitute for the comparable GAAP measures, we believe that certain non-GAAP information is useful to investors and management in comparing current results to historical periods and to competitor results, and that it provides additional information on the performance of MDC's businesses. The above is a presentation of and reconciliation of a selected non-GAAP measure with the most directly comparable GAAP financial measure.
'Ratio of corporate and homebuilding debt to capital, net of cash' is a non-GAAP financial measure. MDC's management and investors use this ratio to help assess the risk associated with debt in the Company's capital structure. It excludes debt incurred under MDC's mortgage line of credit from both the numerator and denominator, as this debt is directly collateralized by mortgage loans held in inventory, which are typically liquidated within 45 days of origination, thereby reducing the risk associated with this type of debt. The ratio's numerator and denominator are also reduced by MDC's cash position, as this balance could be used to reduce MDC's exposure to debt outstanding.
SOURCE M.D.C. Holdings, Inc.
