M.D.C. Holdings Announces Fourth Quarter 2011 Results

DENVER, Feb. 2, 2012 /PRNewswire/ --

  • Loss before tax of $19.8 million, including charges of $20.2 million for extinguishment of debt and $2.7 million for asset impairments and project abandonment
    • Adjusted income before tax of $3.1 million (excluding charges), an $18.9 million year-over-year improvement
  • Net loss of $18.8 million, or $0.40 per share
  • General and administrative expense of $28.7 million decreased 33% year-over-year
  • Net orders increased 1% year-over-year to 523 homes
  • Backlog of 1,043 homes at 12/31/2011, up 24% year-over-year
  • Cash and investments of $863 million at 12/31/2011 exceeds total debt by $70 million

M.D.C. Holdings, Inc. (NYSE: MDC) today reported a net loss for the 2011 fourth quarter of $18.8 million, or $0.40 per share, including pretax charges of $20.2 million related to the extinguishment of debt and $2.7 million related to asset impairments and project abandonment charges. In the 2010 fourth quarter, our net loss was $30.0 million, or $0.65 per share, including pretax charges of $19.2 million related to asset impairments and project abandonment charges.  Revenue for the 2011 fourth quarter decreased 5% to $247.4 million, compared with $259.6 million a year ago.

Management Comments

Larry A. Mizel, MDC's chairman and chief executive officer, stated, "In the fourth quarter of 2011, excluding debt extinguishment and land-related charges, we achieved profitability, thereby providing strong evidence of the meaningful progress we have made in implementing Company initiatives over the past few quarters."

Mizel continued, "Our efforts to reduce overhead continued in the fourth quarter, allowing us to decrease general and administrative expense by 33% year-over-year. In addition, since the second quarter of 2011, when we announced a change to our strategy on starting unsold homes, our home gross margins have improved 200 basis points. Also, we completed our previously announced plan to reduce our debt by $500 million, which decreased the Company's annualized interest incurred going forward by $30 million. We believe that the actions we have taken so far will continue to positively impact our operating results going forward as we aggressively pursue our goal of returning to full-year profitability in 2012."

Mizel concluded, "To start 2012, we implemented changes to our sales process and product offering across our Company.  At the same time, January 2012 orders increased approximately 30% from January 2011. We cannot be certain that the improvement in net orders is attributable to our recent actions, or that the improvement will be sustained in future months. Nonetheless, we are encouraged by this data point and other increasingly positive signs for the health of the housing market overall and for our individual markets, which lead us to believe that our industry has stabilized and may begin to recover in 2012."

Fourth Quarter Highlights

Home closings in the 2011 fourth quarter were 792 units, with an average selling price of $291,300, compared with 865 units, with an average selling price of $291,700, in the fourth quarter of 2010.  Our ratio of closings to beginning backlog decreased to 60% for the 2011 fourth quarter, compared with 73% in the 2010 fourth quarter.  The decrease is attributable to a year-over-year decrease in the percentage of backlog under construction at the beginning of the quarter, consistent with our change in strategy on starting unsold homes.

Home gross margins in the 2011 fourth quarter were 15.0% as compared with 17.0% in the 2010 fourth quarter.  Adjusted home gross margins (excluding warranty adjustments and interest) were 16.8% in the 2011 fourth quarter, up from 16.5% in the 2010 fourth quarter.

Marketing costs were $9.1 million in the 2011 fourth quarter, compared with $11.6 million in the 2010 fourth quarter, primarily due to a decrease in product advertising costs.  Commission costs were $8.2 million, as compared with $9.4 million in the same quarter last year, inline with the decrease in revenue we experienced.

General and administrative expenses decreased to $28.7 million for the 2011 fourth quarter, compared with $42.9 million for the same period in the prior year.  The primary driver behind the decrease was a $10.3 million decline in compensation-related expenses.

During the 2011 fourth quarter, asset impairments totaled $0.8 million, compared with $17.9 million in the same quarter last year. We also incurred $1.8 million of expense related to write-offs of land option deposits and pre-acquisition costs associated with lot option contracts that we elected not to exercise during the 2011 fourth quarter, compared with $1.3 million during the 2010 fourth quarter.  

Net orders for the 2011 fourth quarter increased slightly to 523 homes with an estimated sales value of $153 million, compared with net orders for 519 homes with an estimated sales value of $150 million during the same period in 2010.

We ended the 2011 fourth quarter with 1,043 homes under contract with an estimated sales value of $330 million, compared with a backlog of 842 homes with an estimated sales value of $269 million at December 31, 2010. Our estimated home gross margin in backlog at the end of the fourth quarter increased from the estimated home gross margin in backlog to start the quarter.

Full Year Results

For full year results, please consult the Company's Form 10-K for the year ended December 31, 2011, which is scheduled to be filed with the Securities and Exchange Commission today.

About MDC

Since 1972, MDC's subsidiary companies have built and financed the American dream for more than 165,000 families. MDC's commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. MDC is one of the largest homebuilders in the United States. Its subsidiaries have homebuilding operations across the country, including the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Francisco Bay Area, Washington D.C., Baltimore, Philadelphia, Jacksonville and Seattle. The Company's subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol "MDC." For more information, visit www.mdcholdings.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 conditions, including changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, and land and home values; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) changes in the market value of the Company's investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican's sale of mortgage loans (6) the relative stability of debt and equity markets; (7) competition; (8) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (9) the availability and cost of performance bonds and insurance covering risks associated with our business; (10) shortages and the cost of labor; (11) weather related slowdowns; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including the interpretation of tax, labor and environmental laws; (15) changes in consumer confidence and preferences; (16) terrorist acts and other acts of war; and (17) 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 Form 10-K for the year ended December 31, 2011, which is scheduled to be filed with the Securities and Exchange Commission today.  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 update publicly 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 webcasts should be consulted.

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)



Three Months

Year Ended


December 31,

December 31,


2011

2010

2011

2010

REVENUE










Home sales revenue

$ 230,732

$ 252,302

$ 805,164

$  921,022

Land sales revenue

8,360

(735)

11,859

5,883

Other revenue

8,284

7,999

27,145

31,750

Total Revenue

247,376

259,566

844,168

958,655






COSTS AND EXPENSES










Home cost of sales

196,140

209,434

686,661

745,085

Land cost of sales

8,314

(617)

10,796

5,366

Asset impairments

811

17,929

14,901

21,647

Marketing expenses

9,059

11,596

38,791

41,322

Commission expenses

8,248

9,437

28,947

34,255

General and administrative expenses

28,745

42,933

137,314

166,993

Other operating expenses

1,866

1,316

5,209

3,162

Total Operating Costs and Expenses

253,183

292,028

922,619

1,017,830






LOSS FROM OPERATIONS

(5,807)

(32,462)

(78,451)

(59,175)






Other income (expense)





Interest income and other

7,578

7,209

30,904

27,197

Interest expense

(1,311)

(9,813)

(21,130)

(38,623)

Extinguishment of senior notes

(20,236)

  -

(38,795)

  -






LOSS BEFORE TAXES

(19,776)

(35,066)

(107,472)

(70,601)






Benefit from income taxes, net

955

5,092

9,082

5,831






NET LOSS

$ (18,821)

$ (29,974)

$ (98,390)

$  (64,770)






EARNINGS (LOSS) PER SHARE










Basic

$     (0.40)

$     (0.65)

$     (2.12)

$      (1.40)






Diluted

$     (0.40)

$     (0.65)

$     (2.12)

$      (1.40)






DIVIDENDS DECLARED PER SHARE

$       0.25

$       0.25

$       1.00

$        1.00



M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)



December 31,


2011

2010

ASSETS



Cash and cash equivalents

$    343,361

$    572,225

Marketable securities

519,943

968,729

Restricted cash

667

420

Receivables



Home sales receivables

15,155

8,530

Income taxes receivable

-

2,048

Other receivables

7,514

9,432

Mortgage loans held-for-sale, net

78,335

65,114

Inventories, net



Housing completed or under construction

300,714

372,422

Land and land under development

505,338

415,237

Property and equipment, net

36,288

40,826

Deferred tax asset, net of valuation allowance of $281,178 and $231,179 at



December 31, 2011 and 2010, respectively

-

-

Prepaid expenses and other assets, net

51,410

92,786

TOTAL ASSETS

$ 1,858,725

$ 2,547,769

LIABILITIES



Accounts payable

$      26,006

$      35,018

Accrued liabilities

171,273

260,819

Mortgage repurchase facility

48,702

25,434

Senior notes, net

744,108

1,242,815

TOTAL LIABILITIES

990,089

1,564,086

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; 48,017,000 and  



47,957,000 issued and outstanding, respectively, at December 31, 2011 and



47,198,000 and 47,142,000 issued and outstanding, respectively,



at December 31, 2010

480

472

Additional paid-in-capital

863,128

820,237

Retained earnings

12,927

158,749

Accumulated other comprehensive (loss) income

(7,240)

4,884

Treasury stock, at cost; 60,000 and 56,000 shares at December 31, 2011 and



December 31, 2010, respectively

(659)

(659)

TOTAL STOCKHOLDERS' EQUITY

868,636

983,683

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 1,858,725

$ 2,547,769



M.D.C. HOLDINGS, INC.

Information on Segments

(Dollars in thousands)

(Unaudited)



Three Months Ended

Year Ended


December 31,

December 31,


2011

2010

2011

2010

REVENUE





Homebuilding





West

$      93,247

$      87,183

$  276,423

$ 333,746

Mountain

88,309

106,536

320,772

352,441

East

52,433

50,119

183,211

212,585

Other Homebuilding

9,822

12,060

47,308

45,197






Total Homebuilding

243,811

255,898

827,714

943,969






Financial Services and Other

8,112

7,778

26,086

30,474

Corporate

-

-

-

-

Inter-company adjustments

(4,547)

(4,110)

(9,632)

(15,788)






Consolidated

$    247,376

$    259,566

$  844,168

$ 958,655






(LOSS) INCOME BEFORE INCOME TAXES




Homebuilding





West

$        2,092

$      (3,702)

$   (16,889)

$     9,909

Mountain

845

(5,593)

1,397

1,059

East

3,240

(1,866)

(3,579)

91

Other Homebuilding

(411)

(1,243)

(3,617)

(3,140)






Total Homebuilding

5,766

(12,404)

(22,688)

7,919






Financial Services and Other

(1,263)

38

3,156

10,299

Corporate

(24,279)

(22,700)

(87,940)

(88,819)






Consolidated

$    (19,776)

$    (35,066)

$ (107,472)

$ (70,601)






INVENTORY IMPAIRMENTS





West

$           219

$      14,338

$      8,769

$   17,971

Mountain

64

1,519

2,299

1,519

East

-

990

285

990

Other Homebuilding

  -

715

1,612

715

Consolidated

$           283

$      17,562

$    12,965

$   21,195







December 31,




2011

2010



TOTAL ASSETS





Homebuilding





West

$    346,442

$    300,652



Mountain

262,787

311,833



East

223,606

188,693



Other Homebuilding

31,468

40,554








Total Homebuilding

864,303

841,732








Financial Services and Other

143,561

135,286



Corporate

852,657

1,573,408



Inter-company adjustments

(1,796)

(2,657)








Consolidated

$ 1,858,725

$ 2,547,769










M.D.C. HOLDINGS, INC.

Selected Financial Data

(Dollars in thousands)

(Unaudited)



Three Months Ended


Year Ended



December 31,

Change

December 31,

Change


2011

2010

Amount

%

2011

2010

Amount

%

SELECTED FINANCIAL DATA









General and Administrative Expenses









Homebuilding

$      8,981

$  15,149

$     (6,168)

-41%

$    53,528

$    69,475

$    (15,947)

-23%

Financial Services and Other

10,114

8,623

1,491

17%

25,946

22,890

3,056

13%

Corporate

9,650

19,161

(9,511)

-50%

57,840

74,628

(16,788)

-22%

Total

$    28,745

$  42,933

$   (14,188)

-33%

$  137,314

$  166,993

$    (29,679)

-18%










SG&A as a % of Home Sales Revenue









Homebuilding Segments

11.4%

14.3%

-2.9%


15.1%

15.7%

-0.7%


Corporate Segment

4.2%

7.6%

-3.4%


7.2%

8.1%

-0.9%











Depreciation and Amortization (1)

$      4,442

$    5,137

$        (695)

-14%

$    16,540

$    16,943

$         (403)

-2%










Home Gross Margins (2)

15.0%

17.0%

-2.0%


14.7%

19.1%

-4.4%


Adjusted Home Gross Margin (3)

16.8%

16.5%

0.3%


16.7%

19.4%

-2.8%


Interest in Home Cost of Sales as a % of Home Sales Revenue

-2.8%

-2.7%

-0.1%


-2.6%

-2.6%

0.0%











Cash Provided by (Used in)









Operating Activities

$         459

$ (71,490)

$    71,949


$   (80,284)

$ (209,081)

$    128,797


Investing Activities

$    23,102

$ (47,340)

$    70,442


$  404,264

$ (644,466)

$ 1,048,730


Financing Activities

$ (247,701)

$    2,494

$ (250,195)


$ (552,844)

$  191,520

$  (744,364)











Corporate and Homebuilding Interest


















Interest capitalized during the year

$    10,346

$    9,064

$      1,282

14%

$    41,448

$    33,919

$        7,529

22%

Previously capitalized interest included in home cost of sales

$      6,355

$    6,827

$        (472)

-7%

$    21,152

$    23,812

$      (2,660)

-11%

Interest capitalized in homebuilding inventory, end of year

$    58,742

$  38,446

$    20,296

53%

$    58,742

$    38,446

$      20,296

53%


(1) Includes depreciation and amortization of long-lived assets and amortization of deferred marketing costs.


(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.  


(3) Excludes warranty adjustments and interest in cost of sales. See reconciliation of non-GAAP financial measures at the end of this release.



M.D.C. HOLDINGS, INC.

Selected Financial Data

(Dollars in thousands)

(Unaudited)



Three Months Ended




Year Ended




December 31,

Change


December 31,

Change


2011

2010

Amount

%


2011

2010

Amount

%

HOMEAMERICAN OPERATING ACTIVITIES










Principal amount of mortgage










loans originated

$ 165,898

$ 192,831

$ (26,933)

-14%


$ 556,558

$ 699,951

$ (143,393)

-20%











Principal amount of mortgage










loans brokered

$             -

$        828

$      (828)

-100%


$     4,518

$     6,711

$     (2,193)

-33%











Capture Rate

74%

81%

-7%



72%

81%

-9%


Including brokered loans

74%

82%

-8%



73%

82%

-9%


Mortgage products (% of










mortgage loans originated)










Fixed rate

98%

98%

0%



96%

97%

-1%


Adjustable rate - other

2%

2%

0%



4%

3%

1%












Prime loans (4)

37%

31%

6%



32%

28%

4%


Government loans (5)

63%

69%

-6%



68%

72%

-4%



(4)  Prime loans generally are defined as loans with Fair, Isaac and Company ("FICO") scores greater than 620 and that comply with the documentation standards of 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.



M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Unaudited)




December 31,

December 31,

HOMES STARTED

2011

2010


Unsold Started Homes - Completed

146

119


Unsold Started Homes - Frame

249

722


Unsold Started Homes - Foundation

79

103


  Total Unsold Started Homes

474

944


Sold Homes Started

638

609


Model Homes

226

242

TOTAL HOMES STARTED

1,338

1,795





LOTS OWNED (excluding homes started)








Arizona

812

1,257


California

1,173

1,201


Nevada

1,001

991


Washington

275

  -


  West

3,261

3,449






Colorado

2,951

2,919


Utah

524

594


  Mountain

3,475

3,513






Maryland

456

319


Virginia

545

414


  East

1,001

733






Florida

241

210


Illinois

123

130


  Other Homebuilding

364

340






       Total

8,101

8,035







M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)




December 31,

December 31,

LOTS CONTROLLED UNDER OPTION

2011

2010


Arizona

92

408


California

-

222


Nevada

33

838


Washington

147

  -


  West

272

1,468






Colorado

321

688


Utah

17

393


  Mountain

338

1,081






Maryland

598

745


Virginia

173

132


  East

771

877






Florida

340

733


Illinois

  -

  -


  Other Homebuilding

340

733






       Total

1,721

4,159





TOTAL LOTS OWNED AND CONTROLLED

9,822

12,194





NON-REFUNDABLE OPTION DEPOSITS




Cash

$            6,952

$            9,019


Letters of Credit

4,316

4,467


       Total

$          11,268

$          13,486



M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Unaudited)



Three Months Ended



Year Ended




December 31,

Change

December 31,

Change


2011

2010

Amount

%

2011

2010

Amount

%

HOMES CLOSED









  (UNITS)









  Arizona

122

110

12

11%

423

571

(148)

-26%

  California

104

122

(18)

-15%

272

298

(26)

-9%

  Nevada

108

117

(9)

-8%

331

544

(213)

-39%

  Washington

46

  -

46

N/M

146

  -

146

N/M

       West

380

349

31

9%

1,172

1,413

(241)

-17%










  Colorado

211

243

(32)

-13%

748

789

(41)

-5%

  Utah

47

106

(59)

-56%

225

383

(158)

-41%

       Mountain

258

349

(91)

-26%

973

1,172

(199)

-17%










  Maryland

54

46

8

17%

207

231

(24)

-10%

  Virginia

60

70

(10)

-14%

211

236

(25)

-11%

       East

114

116

(2)

-2%

418

467

(49)

-10%










  Florida

36

51

(15)

-29%

190

193

(3)

-2%

  Illinois

4

  -

 4

N/M

 9

  -

 9

N/M

        Other









          Homebuilding

40

51

(11)

-22%

199

193

 6

3%










  Total

792

865

(73)

-8%

2,762

3,245

(483)

-15%












M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)



Three Months




Year Ended




December 31,

Change


December 31,

Change


2011

2010

Amount

%


2011

2010

Amount

%

AVERAGE SELLING PRICE OF

HOMES CLOSED










Arizona

$ 191.3

$ 193.3

$       (2.0)

-1%


$ 191.8

$ 195.6

$       (3.8)

-2%

California

303.4

350.3

(46.9)

-13%


311.3

377.3

(66.0)

-17%

Colorado

347.3

323.2

24.1

7%


341.4

313.9

27.5

9%

Florida

241.3

236.5

4.8

2%


230.6

232.1

(1.5)

-1%

Illinois

283.0

N/A

N/M

N/M


300.7

N/A

N/M

N/M

Maryland

465.6

407.5

58.1

14%


439.4

439.4

-

0%

Nevada

186.4

197.6

(11.2)

-6%


190.0

190.4

(0.4)

0%

Utah

275.0

270.9

4.1

2%


278.1

272.3

5.8

2%

Virginia

454.0

446.0

8.0

2%


435.8

469.6

(33.8)

-7%

Washington

257.5

N/A

N/M

N/M


265.6

N/A

N/M

N/M

Average

$ 291.3

$ 291.7

$       (0.4)

0%


$ 291.5

$ 283.8

$         7.7

3%



M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)



Three Months



Year Ended




Ended December 31,

Change

December 31,

Change


2011

2010

Amount

%

2011

2010

Amount

%

ORDERS FOR HOMES,









  NET (UNITS)









  Arizona

77

81

(4)

-5%

467

552

(85)

-15%

  California

64

65

(1)

-2%

311

301

10

3%

  Nevada

62

61

1

2%

411

532

(121)

-23%

  Washington

56

  -

56

N/M

124

  -

124

N/M

       West

259

207

52

25%

1,313

1,385

(72)

-5%










  Colorado

148

133

15

11%

708

855

(147)

-17%

  Utah

10

50

(40)

-80%

224

358

(134)

-37%

       Mountain

158

183

(25)

-14%

932

1,213

(281)

-23%










  Maryland

26

55

(29)

-53%

194

231

(37)

-16%

  Virginia

39

31

8

26%

244

233

11

5%

       East

65

86

(21)

-24%

438

464

(26)

-6%










  Florida

38

42

(4)

-10%

196

198

(2)

-1%

  Illinois

 3

 1

 2

N/M

 8

 1

 7

700%

        Other









          Homebuilding

41

43

(2)

-5%

204

199

 5

3%










  Total

523

519

 4

1%

2,887

3,261

(374)

-11%










Estimated Value of









  Orders for Homes,









  net

$ 153,000

$ 150,000

$      3,000

2%

$ 835,000

$ 920,000

$   (85,000)

-9%

Estimated Average









  Selling Price of









  Orders for Homes,









  net

$     292.5

$     289.0

$          3.5

1%

$     289.2

$     282.1

$          7.1

3%

Cancellation Rate (6)

43%

46%

-3%


37%

30%

7%



(6)  We define "Cancellation Rate" as the approximate number of cancelled home order contracts during a reporting period as a percent of total home orders received during such reporting period.



M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)



December 31,

December 31,


2011

2010

BACKLOG (UNITS)



  Arizona

128

84

  California

118

79

  Nevada

156

76

  Washington

54

  -

       West

456

239




  Colorado

233

273

  Utah

68

69

       Mountain

301

342




  Maryland

113

126

  Virginia

103

70

       East

216

196




  Florida

70

64

  Illinois

  -

 1

       Other Homebuilding

70

65




           Total

1,043

842




Backlog Estimated Sales Value

$        330,000

$        269,000

Estimated Average Selling Price



  of Homes in Backlog

$            316.4

$            319.5




ACTIVE SUBDIVISIONS



Arizona

25

26

California

17

13

Nevada

20

18

Washington

 9

  -

  West

71

57




Colorado

47

39

Utah

21

19

  Mountain

68

58




Maryland

16

14

Virginia

15

 8

  East

31

22




Florida

17

11

Illinois

  -

  -

  Other Homebuilding

17

11




     Total

187

148



M.D.C. HOLDINGS, INC.

Reconciliation of Non-GAAP Financial Measures

(Dollars in thousands)

(Unaudited)



Three Months

Year Ended


Ended December 31,

Ended December 31,


2011

2010

2011

2010

ADJUSTED HOME GROSS MARGINS





Home Sales Revenue - As reported

$ 230,732

$ 252,302

$  805,164

$ 921,022

Home Cost of Sales - As reported

196,140

209,434

686,661

745,085






Home Gross Margin - As reported (Dollars)

$   34,592

$   42,868

$  118,503

$ 175,937






Home Gross Margin - As reported (Percent)

15.0%

17.0%

14.7%

19.1%






Home Gross Margin - As reported (Dollars)

34,592

42,868

118,503

175,937

Interest in Cost of Sales

6,355

6,827

21,152

23,812

Warranty Adjustments

(2,251)

(8,042)

(5,478)

(20,845)

Adjusted Home Gross Margin (Dollars)

$   38,696

$   41,653

$  134,177

$ 178,904

Adjusted Home Gross Margins (Percent) (7)

16.8%

16.5%

16.7%

19.4%











ADJUSTED INCOME (LOSS) BEFORE TAXES





Income (Loss) Before Taxes - As reported

$ (19,776)

$ (35,066)

$ (107,472)

$ (70,601)






Debt Extinguishment

20,236

-

38,795

-

Impairments

811

17,929

14,901

21,647

Project Abandonment

1,844

1,308

7,102

3,102






Adjusted Income (Loss) Before Taxes (8)

$     3,115

$ (15,829)

$   (46,674)

$ (45,852)


(7)  We believe this information is meaningful to investors as management uses it to isolate the impact that warranty adjustments and interest have on our Home Gross Margins.


(8)  We believe this information is meaningful to investors as management uses it to isolate the impact that infrequent or volatile charges have on income before tax.




SOURCE M.D.C. Holdings, Inc.



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