-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DNtkd5ePprXTZ7yptEfFgo9j5J7qZFxHyJN0nbf8YJjWCv+/AbHyWBcLubCa1zSM HvZ5SQ7n0gR5R23zsmVDrg== 0000773141-99-000005.txt : 19990701 0000773141-99-000005.hdr.sgml : 19990701 ACCESSION NUMBER: 0000773141-99-000005 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MDC HOLDINGS INC CENTRAL INDEX KEY: 0000773141 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 840622967 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-08951 FILM NUMBER: 99657185 BUSINESS ADDRESS: STREET 1: 3600 S YOSEMITE ST STE 900 CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 3037731100 MAIL ADDRESS: STREET 1: 3600 S YOSEMITE ST STREET 2: SUITE 900 CITY: DENVER STATE: CO ZIP: 80237 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 Commission file number 1-8951 M.D.C. Holdings, Inc. 401(k) Savings Plan 3600 South Yosemite Suite 900 Denver, Colorado 80237 (Full Title and Address of the Plan) M.D.C. Holdings, Inc. (Name of Issuer of Securities held pursuant to the Plan) 3600 South Yosemite Street Suite 900 Denver, Colorado 80237 (Address of Principal Executive Office of Issuer of the Securities Held Pursuant to the Plan) REQUIRED INFORMATION 1. Audited Statements of Net Assets Available for Benefits (with Fund Information) as of December 31, 1998 and 1997 (incorporated by reference to the M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and Additional Information attached hereto as Exhibit 99.1). 2. Audited Statements of Changes in Net Assets Available for Benefits (with Fund Information) for the years ended December 31, 1998 and 1997 (incorporated by reference to the M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and Additional Information attached hereto as Exhibit 99.1). 3. Notes to Financial Statements (with Fund Information) (incorporated by reference to the M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and Additional Information attached hereto as Exhibit 99.1). 4. Schedule 1 - Item 27a - Schedule of Assets Held for Investment purposes as of December 31, 1998 (incorporated by reference to the M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and Additional Information attached hereto as Exhibit 99.1). 5. Schedule 2 - Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1998 (incorporated by reference to the M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and Additional Information attached hereto as Exhibit 99.1). Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of the Plan has duly caused this annual report to be signed by the undersigned thereunto duly authorized. Date: June 30, 1999 M.D.C. Holdings, Inc. 401(k) Savings Plan By: /s/ Daniel S. Japha ----------------------- Daniel S. Japha Plan Administrator EXHIBITS Exhibit Description - ------- ----------- 23.1 Consent of PricewaterhouseCoopers LLP. 99.1 M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and Additional Information EX-23.1 2 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of M.D.C. Holdings, Inc. of our report dated June 28, 1999 appearing on page 1 of the Financial Statements of the M.D.C. Holdings, Inc. 401(k) Savings Plan for the year ended December 31, 1998 which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP Denver, Colorado June 30, 1999 EX-99.1 3 EXHIBIT 99.1 M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and Additional Information December 31, 1998 and 1997 M.D.C. Holdings, Inc. 401(k) Savings Plan Index Page Financial Statements: Report of Independent Accountants 1 Statement of Net Assets Available for Benefits, with Fund Information 2-3 Statement of Changes in Net Assets Available for Benefits, with Fund Information 4-6 Notes to Financial Statements 7-12 Additional Information: Schedule I - Schedule of Assets Held for Investment Purposes 13 Schedule II - Schedule of Reportable Transactions 14 Report of Independent Accountants To the Participants and Administrator of the M.D.C. Holdings, Inc. 401(k) Savings Plan In our opinion, the accompanying statements of net assets available for benefits, with fund information and the related statements of changes in net assets available for benefits, with fund information, present fairly, in all material respects, the net assets available for benefits of the M.D.C. Holdings, Inc. 401(k) Savings Plan at December 31, 1998 and 1997, and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for the purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for benefits of each fund. These supplemental schedules and fund information are the responsibility of the Plan's management. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The schedule of assets held for investment purposes and the schedule of reportable transactions that accompany the Plan's financial statements do not disclose the historical cost of certain plan assets. Disclosure of this information is required by the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Denver, Colorado June 28, 1999 The accompanying notes are an integral part of these financial statements. M.D.C. Holdings, Inc. 401(k) Savings Plan Statement of Net Assets Available for Benefits, with Fund Information As of December 31, 1998 - ---------------------------------------------------------------------
Investments Employer Employee Assets at Fair Value Receivable Receivable Total EuroPacific Growth Fund $ 61,734 - $ 3,325 $ 65,059 Fidelity Advisor Growth Opportunities Fund 5,529,960 - 20,834 5,550,794 The Income Fund of America 1,854,298 - 7,770 1,862,068 INVESCO Dynamics Fund 277,892 - 16,982 294,874 NeubergerBerman Genesis Fund 160,202 - 6,245 166,447 The Victory Stock Index Fund; Class A Shares 2,908,888 - 18,822 2,927,710 Washington Mutual Investor Fund, Inc. 204,632 - 12,593 217,225 The Bond Fund of America, Inc. 61,954 - 3,272 65,226 EB Managed Guaranteed Investment Contract 2,926,706 - 10,877 2,937,583 Participant Notes Receivable 463,831 - - 463,831 M.D.C. Stock Fund 1,587,878 $ 1,497,447 7,667 3,092,992 ----------- ----------- -------- ----------- Net assets available for benefits $16,037,975 $ 1,497,447 $108,387 $17,643,809 =========== =========== ======== ===========
The accompanying notes are an integral part of these financial statements. 2 M.D.C. Holdings, Inc. 401(k) Savings Plan Statement of Net Assets Available for Benefits, with Fund Information As of December 31, 1997 - --------------------------------------------------------------------
Assets Investments Employer Employee at Fair Value Receivable Receivable Total CIGNA Charter Guaranteed Long-Term Fund $ 2,494,051 - $ 12,868 $ 2,506,919 CIGNA Charter Guaranteed Short-Term Fund 259,658 - 2,396 262,054 CIGNA Charter Large Company Stock Index Fund 1,799,913 - 13,283 1,813,196 CIGNA Charter Balanced Fund 274,378 - 2,723 277,101 CIGNA Fidelity Advisor Growth Opportunities Fund 4,221,105 - 23,521 4,244,626 CIGNA Fidelity Advisor Balanced Fund 1,431,268 - 6,148 1,437,416 Participant Notes Receivable 284,420 - - 284,420 M.D.C. Stock Fund 651,897 $ 565,427 1,467 1,218,791 ----------- ------------- ------------ ----------- Net assets available for benefits $11,416,690 $ 565,427 $ 62,406 $12,044,523 =========== ============= ============ ===========
The accompanying notes are an integral part of these financial statements. 3 M.D.C. Holdings, Inc. 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits, with Fund Information - --------------------------------------------------------------------------------
For the Year Ended December 31, 1998 Participant Directed ---------------------------------------------------------------------------------------- Charter Charter Guaranteed Guaranteed Charter Large Fidelity Long-Term Short-Term Company Stock Charter Advisor Fund Fund Index Fund Balanced Fund Balanced Fund Additions to net assets attributed to: Investment income Interest and dividends $ 69,514 $ 5,077 $ - $ - $ - Net appreciation (depreciation) in fair value of investments - - 352,347 34,059 172,448 ------------ ------------ ------------ ------------ ------------ 69,514 5,077 352,347 34,059 172,448 ------------ ------------- ------------ ------------ ------------ Contributions Employer - - - - - Employee 220,733 29,852 283,560 48,088 138,972 ------------ ------------ ------------ ------------ ------------ 220,733 29,852 283,560 48,088 138,972 ------------ ------------ ------------ ------------ ------------ Total additions 290,247 34,929 635,907 82,147 311,420 Deductions from net assets attributed to: Benefit payments (148,929) (12,226) (115,802) (6,907) (127,091) Transaction charge (295) (139) (258) (41) (149) Participant notes receivable terminated due to withdrawal of participants - - - - - ------------ ------------ ------------ ------------ ------------ Total deductions (149,224) (12,365) (116,060) (6,948) (127,240) Change in forfeitures (52,303) (166) (3,437) (668) (2,557) ------------ ------------ ------------ ------------ ------------- Net increase (decrease) prior to fund transfers 88,720 22,398 516,410 74,531 181,623 Interfund transfers, net (171,705) (17,576) 124,195 11,039 (127,823) Transfer of assets between Trustees, net (2,423,934) (266,876) (2,453,801) (362,671) (1,491,216) ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets (2,506,919) (262,054) (1,813,196) (277,101) (1,437,416) Net assets available for benefits at beginning of year 2,506,919 262,054 1,813,196 277,101 1,437,416 ------------ ------------ ------------ ------------ ------------ Net assets available for benefits at end of $ - $ - $ - $ - $ - year ============ ============ ============ ============ ============= For the Year Ended December 31, 1998 Participant Directed ----------------------------------------------------------------- Fidelity Advisor Growth The Income EuroPacific Opportunities Fund of Growth Fund Fund America Additions to net assets attributed to: Investment income Interest and dividends $ 1,793 $ 217,355 $ 165,035 Net appreciation (depreciation) in fair value of investments 2,163 827,709 (126,901) ------------ -------------- ------------ 3,956 1,045,064 38,134 ------------ -------------- ------------ Contributions Employer - - - Employee 59,994 813,945 144,638 ------------ -------------- ------------ 59,994 813,945 144,638 ------------ -------------- ------------ Total additions 63,950 1,859,009 182,772 Deductions from net assets attributed to: Benefit payments (169) (585,187) (81,824) Transaction charge (18) (2,049) (552) Participant notes receivable terminated due to withdrawal of participants - - - ------------ -------------- ------------ Total deductions (187) (587,236) (82,376) Change in forfeitures - (6,374) - ------------ -------------- ------------ Net increase (decrease) prior to fund transfers 63,763 1,265,399 100,396 Interfund transfers, net 1,296 40,769 (93,684) Transfer of assets between Trustees, net - - 1,855,356 ------------ -------------- ------------ Net increase (decrease) in net assets 65,059 1,306,168 1,862,068 Net assets available for benefits at beginning of year - 4,244,626 - ------------ -------------- ------------ Net assets available for benefits at end of year $ 65,059 $ 5,550,794 $ 1,862,068 ============ ============== ============
The accompanying notes are an integral part of these financial statements. 4 M.D.C. Holdings, Inc. 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits with Fund Information (continued) - --------------------------------------------------------------------------------
For the Year Ended December 31, 1998 Participant Directed --------------------------------------------------------------------------------------- The Victory Stock Washington EB Managed Neuberger- Index Fund; Mutual The Bond Guaranteed INVESCO Berman Class A Investor Fund, Fund Of Investment Dynamics Genesis Fund Shares Inc. America, Inc. Contract Fund Additions to net assets attributed to: Investment income Interest and dividends $ 18,571 $ 2,258 $ 261,099 $ 15,512 $ 1,311 $ - Net appreciation (depreciation) in fair value of investments 24,167 6,464 (57,090) (148) (180) 82,920 ------------ ------------ ------------ ------------ ------------ ------------ 42,738 8,722 204,009 15,364 1,131 82,920 ------------ ------------ ------------ ------------ ------------ ------------ Contributions Employer - - - - - - Employee 240,130 145,732 348,270 167,468 54,525 221,044 ------------ ------------ ------------ ------------ ------------ ------------ 240,130 145,732 348,270 167,468 54,525 221,044 ------------ ------------ ------------ ------------ ------------ ------------ Total additions 282,868 154,454 552,279 182,832 55,656 303,964 Deductions from net assets attributed to: Benefit payments (1,060) (767) (103,089) (1,229) (404) (101,364) Transaction charge (81) (46) (874) (61) (18) (870) Participant notes receivable terminated due to withdrawal of participants - - - - - - ------------ ------------ ------------ ------------ ------------ ------------ Total deductions (1,141) (813) (103,963) (1,290) (422) (102,234) Change in forfeitures - - - - - - ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) prior to fund transfers 281,727 153,641 448,316 181,542 55,234 201,730 Interfund transfers, net 12,230 12,405 25,192 34,251 9,992 49,663 Transfer of assets between Trustees, net 917 401 2,454,202 1,432 - 2,686,190 ------------ ------------ ------------- ------------ ------------ ------------- Net increase (decrease) in net assets 294,874 166,447 2,927,710 217,225 65,226 2,937,583 Net assets available for benefits at beginning of year - - - - - - ------------ ------------ ------------ ------------ ------------ ------------ Net assets available for benefits at end of year $ 294,874 $ 166,447 $ 2,927,710 $ 217,225 $ 65,226 $ 2,937,583 ============ ============ ============ ============ ============ ============ For the Year Ended December 31, 1998 Participant Directed --------------------------------------------------------------- Participant Notes M.D.C. Receivable Stock Fund Total Additions to net assets attributed to: Investment income Interest and dividends $ 16,831 $ 10,687 $ 785,043 Net appreciation (depreciation) in fair value of investments - 328,536 1,646,494 ------------ ------------ ------------ 16,831 339,223 2,431,537 ------------ ------------ ------------ Contributions Employer - 1,497,448 1,497,448 Employee - 236,310 3,153,261 ------------ ------------ ------------ - 1,733,758 4,650,709 ------------ ------------ ------------ Total additions 16,831 2,072,981 7,082,246 Deductions from net assets attributed to: Benefit payments - (93,461) (1,379,509) Transaction charge - (1,114) (6,565) Participant notes receivable terminated due to withdrawal of participants (23,186) - (23,186) ------------ ------------ ------------ Total deductions (23,186) (94,575) (1,409,260) Change in forfeitures - (8,195) (73,700) ------------ ------------ ------------ Net increase (decrease) prior to fund transfers (6,355) 1,970,211 5,599,286 Interfund transfers, net 185,766 (96,010) - Transfer of assets between Trustees, net - - - ------------ ------------ ------------ Net increase (decrease) in net assets 179,411 1,874,201 5,599,286 Net assets available for benefits at beginning of year 284,420 1,218,791 12,044,523 ------------ ------------ ------------ Net assets available for benefits at end of year $ 463,831 $ 3,092,992 $ 17,643,809 ============ ============ ============
The accompanying notes are an integral part of these financial statements. 5 M.D.C. Holdings, Inc. 401(k) Savings Plan Statement of Changes in Net Assets Available for Benefits, with Fund Information - --------------------------------------------------------------------------------
For the Year Ended December 31, 1997 Participant Directed --------------------------------------------------------------------------------------- Fidelity Charter Charter Charter Large Advisor Fidelity Guaranteed Guaranteed Company Charter Growth Advisor Long-Term Short-Term Stock Index Balanced Opportunities Balanced Fund Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment income Interest and dividends $ 124,977 $ 10,843 $ - $ - $ - $ - Net appreciation in fair value of investments - - 371,870 37,805 882,319 247,742 ------------ ------------ ------------ ------------ ------------ ------------ 124,977 10,843 371,870 37,805 882,319 247,742 ------------ ------------ ------------ ------------ ------------ ------------ Contributions Employer 90 - 48 - 1,431 345 Employee 601,244 94,409 474,247 96,197 855,399 274,481 ------------ ------------ ------------ ------------ ------------ ------------ 601,334 94,409 474,295 96,197 856,830 274,826 ------------ ------------ ------------ ------------ ------------ ------------ Total additions 726,311 105,252 846,165 134,002 1,739,149 522,568 Deductions from net assets attributed to: Benefit payments (162,499) (20,186) (108,099) (16,895) (510,743) (130,097) Transaction charge (1,022) (161) (1,182) (157) (899) (179) Participant notes receivable terminated due to withdrawal of participants - - - - - - Transfer to affiliated plan (25,470) (12,665) (94,333) - (50,431) (34,163) ------------ ------------ ------------ ------------ ------------ ------------ Total deductions (188,991) (33,012) (203,614) (17,052) (562,073) (164,439) Change in forfeitures 14,172 (1,082) (4,012) (2,506) (14,774) (5,969) ------------ ------------ ------------ ------------ ------------ ------------- Net increase (decrease) prior to fund transfers 551,492 71,158 638,539 114,444 1,162,302 352,160 Interfund transfers, net (25,719) (51,133) 70,332 (7,828) (78,831) (41,831) ------------ ------------ ------------ ------------ ------------ ------------ Net increase in net assets 525,773 20,025 708,871 106,616 1,083,471 310,329 Net assets available for benefits at beginning of year 1,981,146 242,029 1,104,325 170,485 3,161,155 1,127,087 ------------ ------------ ------------ ------------ ------------ ------------ Net assets available for benefits at end of year $ 2,506,919 $ 262,054 $ 1,813,196 $ 277,101 $ 4,244,626 $ 1,437,416 ============ ============ ============ ============ ============ ============ For the Year Ended December 31, 1997 Participant Directed -------------------------------------------------------------- Participant Notes M.D.C. Receivable Stock Fund Total Additions to net assets attributed to: Investment income Interest and dividends $ 23,520 $ 3,979 $ 163,319 Net appreciation in fair value of investments - 277,335 1,817,071 ------------ ------------ ------------ 23,520 281,314 1,980,390 ------------ ------------ ------------ Contributions Employer - 565,263 567,177 Employee - 31,656 2,427,633 ------------ ------------ ------------ - 596,919 2,994,810 ------------ ------------ ------------ Total additions 23,520 878,233 4,975,200 Deductions from net assets attributed to: Benefit payments - (78,680) (1,027,199) Transaction charge - (1,382) (4,982) Participant notes receivable terminated due to withdrawal of participants (29,004) - (29,004) Transfer to affiliated plan - - (217,062) ------------ ------------ ------------- Total deductions (29,004) (80,062) (1,278,247) Change in forfeitures - (7,638) (21,809) ------------ ------------ ------------ Net increase (decrease) prior to fund transfers (5,484) 790,533 3,675,144 Interfund transfers, net 63,302 71,708 - ------------ ------------ ------------ Net increase in net assets 57,818 862,241 3,675,144 Net assets available for benefits at beginning of year 226,602 356,550 8,369,379 ------------ ------------ ------------ Net assets available for benefits at end of year $ 284,420 $ 1,218,791 $ 12,044,523 ============ ============ ============
The accompanying notes are an integral part of these financial statements. 6 M.D.C. Holdings, Inc. 401(k) Savings Plan Notes to Financial Statements - ------------------------------------------------------------------------------- 1. Description of Plan The following description of the M.D.C. Holdings, Inc. 401(k) Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan established effective January 1, 1992 and most recently amended effective July 1, 1998. All employees of M.D.C. Holdings, Inc. (the "Company") become eligible to participate upon completing six months of service and attaining the age of 21. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Contributions Participants may contribute an amount equal to, but not less than 1 percent, nor more than 15 percent of their pretax annual compensation, up to a maximum amount of $10,000 and $9,500 in 1998 and 1997, respectively, in accordance with Internal Revenue Service regulations. The Company may make matching contributions in a discretionary amount to be determined by resolution of the Board of Directors, on an annual basis. The Company may make a discretionary profit sharing contribution without regard to the current or accumulated net profits of the Company for the taxable year ending with, or within the plan year. The Company's matching and profit sharing contributions may be made in cash or in shares of M.D.C. Holdings, Inc. common stock. Participant Accounts Each participant's account is credited with the participant's contribution, allocations of the Company's contributions, if any, and Plan earnings. Plan earnings are allocated by fund based on the ratio of a participant's account invested in a particular fund to all participants' investments in that fund. Forfeited balances of terminated participants' non-vested accounts are used first to pay the expenses to administer the plan, and are then allocated to reduce future contributions by the Company. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Vesting The interest of any participant in contributions made by the Company, and earnings thereon, will become vested to the extent of the following percentages: Years of Service Vested % Less than 2 years 0% After 2 years 40% After 3 years 60% After 4 years 80% After 5 years 100% 7 M.D.C. Holdings, Inc. 401(k) Savings Plan Notes to Financial Statements - ------------------------------------------------------------------------------- 1. Description of Plan (continued) If a participant dies, suffers disability or attains the normal retirement age while still employed by the Company, the participant becomes 100% vested without regard to length of service. Investment Options Upon enrollment in the Plan, a participant may currently direct contributions among any of the following investment option: * EuroPacific Growth Fund - a fund which seeks long-term capital growth by investing in companies based outside the U.S. * Fidelity Advisor Growth Opportunities Fund - a fund which seeks capital growth by investing primarily in common stocks and securities convertible into common stocks. * The Income Fund of America - a fund which seeks current income and, secondarily, growth of capital. * INVESCO Dynamics Fund - a fund which seeks long-term capital appreciation by investing in equity securities of mid-sized core growth companies. * NeubergerBerman Genesis Fund - a fund which seeks capital appreciation by investing primarily in equity securities of companies with small market capitalization. * The Victory Stock Index Fund; Class A Shares - a fund which seeks to provide long-term capital appreciation by attempting to match the performance of the Standard & Poor's 500 Composite Stock Price Index. * Washington Mutual Investor Fund, Inc. - a fund which seeks current income and an opportunity for growth of principal. * The Bond Fund of America, Inc. - a fund which seeks a high level of current income as is consistent with preservation of capital. * EB Managed Guaranteed Investment Contract - a fund which seeks a reasonable level of income together with stability of capital by investing in a diversified portfolio of insurance companies and other investment contracts. * M.D.C. Stock Fund - funds are invested solely in shares of M.D.C. Holdings, Inc. common stock. Investment options were changed in July of 1997 in conjunction with the change in trustee, as discussed in Note 3. Participants may change or transfer their investments at any time. 8 M.D.C. Holdings, Inc. 401(k) Savings Plan Notes to Financial Statements - ------------------------------------------------------------------------------- 1. Description of Plan (continued) Payment of Benefits A participant who has attained the age of 59 1/2, or has satisfied the terms for a financial hardship, may elect to commence distributions regardless of whether employed by the Company. The participant or beneficiary may elect to receive a lump-sum distribution, an annuity, or a combination of both. Distributions are subject to the applicable provisions of the Plan agreement. Participant Notes Receivable Participants are permitted to borrow a portion of their vested benefits under the Plan. Participants may borrow up to the lesser of (1) $50,000, reduced by (a) the applicant's highest outstanding loan balance from the Plan during the one year period ending on the day before the loan is made, and (b) the applicant's outstanding loan balance from the Plan on the day the loan is made, or (2) 50 percent of the present value of the Participant's non-forfeitable accrued benefit. Loan transactions are treated as a transfer between the investment fund and the loan fund. The loans are secured by the participant's account balance and bear interest at a fixed rate equal to the current prime rate plus 100 basis points at the date the application is approved. Interest rates on outstanding loans range from 6% to 10%. Principal and interest is paid ratably through monthly payroll deductions. 2. Summary of Accounting Policies Method of Accounting The Plan's financial statements are prepared on the accrual basis of accounting, and reflect management's estimates and assumptions, such as those regarding fair value, that affect the recorded amounts. Significant estimates used are discussed throughout the notes to financial statements. Investments The Plan's investments in investment contracts are valued at market value (Note 4). Shares of the EB Managed Guaranteed Investment Contract are valued at the contract value of the underlying insurance contracts. Shares of registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. The Company stock is valued at its quoted market price. Participant notes receivable are valued at cost which approximates fair value. Use of Estimates The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Payment of Benefits Benefits are recorded when paid. 9 M.D.C. Holdings, Inc. 401(k) Savings Plan Notes to Financial Statements - ------------------------------------------------------------------------------- 2. Summary of Accounting Policies (continued) Expenses The Plan's administrative expenses are paid either by the Plan or the Company, as provided by the Plan document. 3. Administration of Plan Assets The Company administers the Plan. Investments of Plan assets and payment of benefits were previously managed under contract with CIGNA Retirement and Investment Services ("CIGNA"), the Plan's former trustee and record-keeper. During 1998, the Company appointed KeyTrust as the Plan's trustee and record-keeper. There was a two month "black-out" period during the transition when no activity occurred. The transfer of Plan assets from CIGNA to KeyTrust was completed in July of 1998, and participants re-allocated their account balances to the new investment options. 4. Deposits with Insurance Company The Plan participated in contracts with CG Life via investments in the CIGNA Charter Guaranteed Long-Term and the CIGNA Charter Guaranteed Short-Term Accounts during 1997 and through July 1998. Investments in the CIGNA Charter Guaranteed Long-Term and CIGNA Guaranteed Short-Term Accounts are non-fully benefit responsive and are recorded at contract value which approximates fair value. CG Life commingles the assets of the CIGNA Charter Guaranteed Long-Term Account with other assets. For the Plan's investment in the CIGNA Charter Guaranteed Long-Term Account, the Plan is credited with interest at the rate specified in the contract which was 5.90% for the year ended December 31, 1997, net of asset charges. For the Plan's investment in the CIGNA Charter Guaranteed Short-Term Account, the Plan is credited with interest at a yield which averaged 4.90% for the year ended December 31, 1997, net of asset charges. 10 5. Investments Investments that represent 5 percent or more of the Plan's net assets are separately identified below.
December 31, 1998 1997 Fidelity Advisor Growth Opportunities Fund units, 110,071; 68,181 $ 5,529,960 $ 4,221,105 EB Managed Guaranteed Investment Contract units, 227,688; 0 2,926,706 - The Victory Stock Index Fund; Class A Shares units, 136,953; 0 2,908,888 - The Income Fund of America units, 106,938; 0 1,854,298 - M.D.C. Stock Fund shares, 73,470; 43,287 1,587,878 651,897 CIGNA Charter Guaranteed Long-Term Fund interest rate, 5.90% - 2,494,051 CIGNA Charter Large Company Stock Index Fund units, 0; 37,576 - 1,799,913 CIGNA Fidelity Advisor Balanced Fund units, 0; 52,084 - 1,431,268
6. Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. 7. Income Taxes The Internal Revenue Service has determined and informed the Company by a letter dated August 2, 1995, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code ("IRC"). The Plan has been amended since receiving the determination letter. However, the Plan's administrator and tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan's financial statements. 11 M.D.C. Holdings, Inc. 401(k) Savings Plan Notes to Financial Statements - ------------------------------------------------------------------------------- 8. Reconciliation of Plan Financial Statements to the Form 5500 The Annual Return/Report of Employee Benefit Plan (the "Form 5500") is prepared on the modified cash basis. Accordingly, certain balances included on lines 31 and 32 of the Form 5500 differ from those included in these financial statements. Contributions in the statement of changes in net assets available for benefits differ from contributions on the Form 5500 by the amount of contributions accrued at December 31. The ending net asset balances are reconciled as follows:
December 31, 1998 1997 Net assets, per Form 5500 $ 16,037,975 $ 11,416,690 Add: Employer contributions receivable 1,497,447 565,427 Employee contributions receivable 108,387 62,406 -------------- -------------- Net assets, per financial statements $ 17,643,809 $ 12,044,523 ============== ============== 9. Transfer to Affiliated Plan Effective January 14, 1997, certain employees and their participant balances were transferred from the Plan to the Financial Asset Management LLC 401(k) Plan. 10. Forfeitures The net change in forfeitures represents the net change in the available forfeitures balance from the prior year plus the current year forfeitures generated. Forfeitures result from non-vested benefit payments remaining in the Plan for all terminated employees. Upon reaching the break-in-service, as determined in the Plan agreement, amounts forfeited are added to the forfeitures in the Plan. Forfeitures of $18,553 at December 31, 1998 are included in the Plan's investment in the EB Managed Guaranteed Investment Contract. Forfeitures are available to offset contributions or to pay Plan expenses, which would be otherwise payable by the Company, in accordance with the Plan agreement. In 1998, Company cash contributions were reduced by $71,483 from forfeited non-vested accounts. 12 M.D.C. Holdings, Inc. Additional Information 401(k) Savings Plan Schedule I Schedule of Assets Held for Investment Purposes December 31, 1998 - --------------------------------------------------------------------------------
Identity of issue, borrower, Description of investment including Cost Current lessor, or similar party maturity date, rate of interest, value collateral, par or maturity value The American Funds Group EuroPacific Growth Fund $28.40/unit $ 59,373 $ 61,734 Fidelity Advisors Fidelity Advisor Growth Opportunities Fund $50.24/unit 5,266,889 5,529,960 The American Funds Group The Income Fund of America $17.34/unit 1,974,577 1,854,298 INVESCO Equity, Inc. INVESCO Dynamics Fund $15.75/unit 253,973 277,892 NeubergerBerman Management, Inc. NeubergerBerman Genesis Fund $12.70/unit 151,711 160,202 The Victory Portfolios The Victory Stock Index Fund; Classs A Shares $21.24/unit 2,950,956 2,908,888 Washington Mutual Investors, Inc. Washington Mutual Investor Fund, Inc. $32.91/unit 204,855 204,632 The American Funds Group The Bond Fund of America, Inc. $13.61/unit 62,139 61,954 * Key Bank EB Managed Guaranteed Investment Contract $12.85/unit 2,850,379 2,926,706 Participant Notes Receivable Interest rates of 6.00% - 10.00% and maturity dates of 1 to 30 years 463,831 463,831 * M.D.C. Holdings, Inc. M.D.C. Common Stock $21.38/share ** 1,587,878 * Indicates an identified person known to be a party-in-interest to the Plan. ** Cost information is not presently available from the custodian.
13 M.D.C. Holdings, Inc. Additional Information 401(k) Savings Plan Schedule II Form 5500 - Schedule of Reportable Transactions Year Ended December 31, 1998 - --------------------------------------------------------------------------------
Current Expense value of incurred asset on Identity of party Purchase Selling Lease with Cost of transaction Net gain involved Description of asset price Price rental transaction asset date or (loss) Connecticut Purchases into CIGNA General Life Charter Guaranteed Insurance Company Long-Term Account $377,824 N/A N/A N/A $377,824 $377,824 $ - Connecticut Sales from CIGNA Charter General Life Guaranteed Long-Term Insurance Company Account N/A $2,941,389 N/A N/A 3,023,619 2,941,389 (82,230) Connecticut Purchases into CIGNA General Life Fidelity Advisor Balanced Insurance Company Fund 218,807 N/A N/A N/A 218,807 218,807 - Connecticut Sales from CIGNA Fidelity General Life Advisor Balanced Fund Insurance Company N/A 1,822,523 N/A N/A 1,649,926 1,822,523 172,597 Connecticut Purchases into CIGNA General Life Charter Large Company Insurance Company Stock Index Fund 459,956 N/A N/A N/A 459,956 459,956 - Connecticut Sales from CIGNA Charter General Life Large Company Stock Index Insurance Company Fund N/A 2,612,216 N/A N/A 2,259,611 2,612,216 352,605 Fidelity Advisors Purchases into Fidelity Advisor Growth 1,218,543 N/A N/A N/A 1,218,543 1,218,543 - Opportunities Fund Fidelity Advisors Sales from Fidelity Advisor Growth N/A 954,752 N/A N/A 757,617 954,752 197,135 Opportunities Fund The American Purchases into The Income Funds Group Fund of America 2,000,701 N/A N/A N/A 2,000,701 2,000,701 - The American Sales from the Income Funds Group Fund of America N/A 184,537 N/A N/A 169,509 184,537 15,028 The Victory Purchases into The Portfolios Victory Stock Index 2,939,038 N/A N/A N/A 2,939,038 2,939,038 - Fund; Class A Shares The Victory Sales from The Victory Portfolios Stock Index Fund; Class A N/A 234,159 N/A N/A 206,198 234,159 27,961 Shares Key Bank Purchases into the EB Managed Guaranteed N/A N/A N/A 3,141,746 - Investment Contract 3,141,746 3,141,746 Key Bank Sales from the EB Managed Guaranteed Investment N/A 297,960 N/A N/A 246,935 297,960 51,025 Contract M.D.C. Holdings, Purchases into Inc. M.D.C. common stock 835,557 N/A N/A N/A 835,557 835,557 - M.D.C. Holdings, Sales from Inc. M.D.C. common stock N/A 238,799 N/A N/A * 238,799 *
* Cost information is presently not available from the custodian 14 -----END PRIVACY-ENHANCED MESSAGE-----