-----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, V7U4WF4VWpKzstcIIU7m6pyQKVwPwWzQy7jF3xV40XH+eyzPz/chgcQoqvpZpBN4 dRVobSVgqb5KIQ6R6RGCSg== 0000899733-99-000031.txt : 19990427 0000899733-99-000031.hdr.sgml : 19990427 ACCESSION NUMBER: 0000899733-99-000031 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990420 ITEM INFORMATION: FILED AS OF DATE: 19990426 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: 8-K SEC ACT: SEC FILE NUMBER: 001-08951 FILM NUMBER: 99600574 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 8-K 1 04/20/99 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 20, 1999 M.D.C. Holdings, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 1-8951 84-0622967 ----------------- ----------------------- ------------------- (State or other (Commission file number) (I.R.S. employer jurisdiction of identification no.) incorporation) 3600 South Yosemite Street, Suite 900, Denver, Colorado 80237 ------------------------------------------------------- --------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (303) 773-1100 ----------------------------------------------------------------------- NOT APPLICABLE ----------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS On April 20, 1999 the Registrant issued the press release attached as Exhibit 99.1 to this Current Report on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ------------------ M.D.C. HOLDINGS, INC. By:/s/ Paris G. Reece III ---------------------------- Paris G. Reece III Senior Vice President and Dated: April 20, 1999 Chief Financial Officer EX-99.1 2 M.D.C. HOLDINGS REPORTS 73% INCREASE IN FIRST QUARTER EARNINGS o Record operating earnings per share of $.61 vs. $.37 a year ago o Homebuilding operating profits of $25.2 million, up 78% o Home gross margins of 18.5%, a 280 basis point increase o Record first quarter revenues, home closings and backlog DENVER, Tuesday, April 20, 1999 - M.D.C. Holdings, Inc. (NYSE/PCX: MDC), which builds homes under the name "Richmond American Homes," today announced income before extraordinary item for the three months ended March 31, 1999 of $13.8 million, or $.61 per share, 36% higher than the First Call consensus estimate and 73% higher than $7.9 million, or $.37 per share, for the same period in 1998. Total revenues for the first quarter of 1999 were $297 million, the highest first quarter revenues in the Company's history and 22% higher than revenues of $244 million for the same period in 1998. Larry A. Mizel, MDC's chairman, president and chief executive officer, stated, "In realizing these record first quarter operating results, we continue to benefit from a strong national economy, marked by the lowest unemployment rate in three decades, continued low mortgage interest rates, high consumer confidence and record levels of housing affordability. Our core homebuilding operations have continued to lead the way, with record home sales revenues, home closings and operating profits, improved home gross margins and a $750 million backlog of homes sold, the highest quarter-end backlog in our history. These favorable economic conditions and outstanding operating results, combined with the strength of our balance sheet and liquidity have positioned us to achieve our objectives for 1999 of increased home closings, revenues and earnings per share, and continued improvement in shareowner value." Net income for the quarter ended March 31, 1999 was $13.8 million, or $.61 per share, compared with a net loss of $7.4 million, or $.31 per share, for the same period in 1998. The net loss in the first quarter of 1998 included an extraordinary after tax loss of $15.3 million, or $.68 per share, recognized in connection with the January 1998 refinancing of MDC's senior debt. Record Homebuilding Profits Operating profits from the Company's homebuilding operations increased 78% to a record $25.2 million for the first quarter of 1999, compared with $14.1 million for the same period in 1998. The increase in operating profit primarily resulted from record first quarter home closings of 1,447 units, a $15,800 increase in the average selling price per home closed and a 280 basis point improvement in home gross margins. Operating profits in the first quarter of 1999 included only $.3 million in land sale gains, compared with $2.4 million in land sale gains in the first quarter of 1998, primarily from the sale of lots in a project in Virginia. Paris G. Reece III, MDC's senior vice president and chief financial officer, said, "Each of our homebuilding divisions recorded improved year-over-year operating results in the first quarter of 1999, excluding the effects of the 1998 Virginia land sale gain. Our Colorado operations continued their record-setting performance with a 100% increase in operating profits. The improvements in all of our divisions' operating results generally can be attributed to higher home closings and, with the exception of Southern California and Maryland, substantial increases in home gross margins." Improved Financial Services Results Operating profits from the Company's mortgage lending operations were $3.5 million for the three months ended March 31, 1999, 75% higher than the $2.0 million for the same period in 1998. This significant improvement in operating profits primarily resulted from a 14% increase in mortgage loan originations to a record $174 million, and a $1.0 million increase in gains from sales of mortgage loan servicing. Strengthened Balance Sheet and Improved Operating Efficiency The Company successfully continued its efforts to strengthen its balance sheet and improve the efficiency of its operations. The Company's investment in unsold homes under construction at March 31, 1999 was reduced by 26% to $32 million, compared with March 31, 1998. In addition, homebuilding and corporate indebtedness decreased by $49 million to $219 million. This debt reduction was facilitated by the fourth quarter 1998 conversion into MDC common stock of all $28 million principal amount of the Company's convertible subordinated notes. The Company's strong operating results over the last year, together with the debt conversion, increased stockholders' equity by 41% to $316 million, or $14.19 per outstanding share, at March 31, 1999. These factors contributed to a reduction in the Company's ratio of homebuilding and corporate debt to total capital (excluding mortgage lending debt) to .41 at March 31, 1999 from .54 at March 31, 1998. Lower effective interest rates on the Company's outstanding debt contributed to a reduction of 18% in the Company's corporate and homebuilding interest incurred for the quarter ended March 31, 1999, compared with the same period in 1998. First quarter 1999 earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 33% to $33.5 million, compared with $25.1 million for the same period in 1998. This EBITDA increase, combined with the reduction in interest incurred, resulted in an increase in the Company's ratio of EBITDA to interest incurred to 7.1 for the quarter ended March 31, 1999, compared with 4.4 for the comparable period in 1998. MDC is one of the largest homebuilders in the United States. The Company also provides mortgage financing, primarily for MDC's home buyers, through its wholly owned subsidiary, HomeAmerican Mortgage Corporation. MDC is a major regional homebuilder with a significant presence in some of the country's best housing markets. The Company is the largest homebuilder in metropolitan Denver; among the top five homebuilders in Northern Virginia, suburban Maryland, Tucson and Colorado Springs; among the top ten homebuilders in Southern California, Phoenix and Las Vegas; and has a growing presence in the San Francisco Bay area. All earnings per share amounts discussed above are on a diluted basis. Certain statements in this press release may 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 (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) demographic changes; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) 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) the impact on the Company of Y2K compliance by the Company and its vendors, suppliers and subcontractors and by various governmental and regulatory agencies; and (15) other factors over which the Company has little or no control. -more- M.D.C. HOLDINGS, INC. Condensed Consolidated Balance Sheets (In thousands) March 31, December 31, 1999 1998 ASSETS Corporate Cash and cash equivalents.................. $ 2,591 $ 2,460 Property and equipment, net................ 2,693 2,901 Deferred income taxes...................... 17,078 17,949 Deferred debt issue costs, net............. 2,542 2,589 Other assets, net.......................... 6,135 5,670 31,039 31,569 Homebuilding Cash and cash equivalents.................. 7,505 7,279 Home sales and other accounts receivable... 15,136 12,771 Inventories, net Housing completed or under construction.. 336,431 294,104 Land and land under development.......... 239,036 217,180 Prepaid expenses and other assets, net..... 57,765 58,981 655,873 590,315 Financial Services........................... 75,354 92,129 Total Assets.................................... $ 762,266 $ 714,013 LIABILITIES Corporate Accounts payable and accrued expenses...... $ 26,441 $ 32,378 Income taxes payable....................... 16,691 14,568 Senior notes, net.......................... 174,351 174,339 217,483 221,285 Homebuilding Accounts payable and accrued expenses...... 137,438 131,374 Line of credit............................. 43,000 21,871 Notes payable.............................. 1,176 866 181,614 154,111 Financial Services........................... 47,133 40,486 Total Liabilities........................ 446,230 415,882 STOCKHOLDERS' EQUITY Total Stockholders' Equity............... 316,036 298,131 Total Liabilities and Stockholders' Equity...... $ 762,266 $ 714,013 M.D.C. HOLDINGS, INC. Condensed Consolidated Statements of Income (Loss) (In thousands, except per share amounts) Three Months Ended March 31, 1999 1998 REVENUES Homebuilding.................................. $ 289,880 $ 238,597 Financial Services............................ 6,914 4,671 Corporate..................................... 331 233 Total Revenues............................ $ 297,125 $ 243,501 NET INCOME Homebuilding.................................. $ 25,154 $ 14,144 Financial Services............................ 3,548 2,025 Operating Profit.......................... 28,702 16,169 Corporate general and administrative expense, net................................ (5,974) (3,279) Corporate and homebuilding interest expense... - - - - Income before income taxes....................... 22,728 12,890 Provision for income taxes....................... (8,977) (4,962) Income before extraordinary item................. 13,751 7,928 Extraordinary loss from early extinguishment of debt, net of income tax benefit of $9,587.. - - (15,314) Net Income (Loss)......................... $ 13,751 $ (7,386) EARNINGS PER SHARE Basic Income before extraordinary item.......... $ .62 $ .44 Net Income (Loss)......................... $ .62 $ (.41) Diluted Income before extraordinary item.......... $ .61 $ .37 Net Income (Loss)......................... $ .61 $ (.31) WEIGHTED-AVERAGE SHARES OUTSTANDING Basic..................................... 22,102 17,919 Diluted................................... 22,565 22,392 DIVIDENDS PER SHARE.............................. $ .05 $ .03 M.D.C. HOLDINGS, INC. Information on Business Segments (In thousands) Three Months Ended March 31, 1999 1998 Homebuilding Home sales................................... $ 288,084 $ 232,763 Land sales................................... 1,386 5,527 Other revenues............................... 410 307 Total Homebuilding Revenues............... 289,880 238,597 Home cost of sales........................... 234,748 196,269 Land cost of sales........................... 1,039 3,106 Asset impairment charges..................... - - - - Marketing.................................... 16,883 15,250 General and administrative................... 12,056 9,828 264,726 224,453 Homebuilding Operating Profit............. 25,154 14,144 Financial Services Mortgage Lending Revenues Interest revenues............................ 661 531 Origination fees............................. 2,503 1,865 Gains on sales of mortgage servicing......... 1,263 235 Gains on sales of mortgage loans, net........ 2,340 2,004 Mortgage servicing and other................. 147 30 Asset Management Revenues...................... - - 6 Total Financial Services Revenues......... 6,914 4,671 General and Administrative Expenses............ 3,366 2,646 Financial Services Operating Profit....... 3,548 2,025 Total Operating Profit............................ 28,702 16,169 Corporate Interest and other revenues.................. 331 233 Interest expense............................. - - - - General and administrative................... (6,305) (3,512) Net Corporate Expenses.................... (5,974) (3,279) Income Before Income Taxes and Extraordinary Item. $ 22,728 $ 12,890
M.D.C. HOLDINGS, INC. Selected Financial Data (Dollars in thousands, except per share amounts) March 31, December 31, March 31, 1999 1998 1998 BALANCE SHEET DATA Stockholders' Equity........................................ $ 316,036 $ 298,131 $ 224,354 Book Value Per Share Outstanding (pro forma for March 31, 1998 based on conversion of the 8 3/4% convertible subordinated notes)........................... $ 14.19 $ 13.56 $ 11.69 Homebuilding and Corporate Debt............................. $ 218,527 $ 197,076 $ 267,391 Ratio of Homebuilding and Corporate Debt to Equity.......... .69 .66 1.19 Total Capital (excluding mortgage lending debt)............. $ 534,563 $ 495,207 $ 491,745 Ratio of Homebuilding and Corporate Debt to Total Capital... .41 .40 0.54 Total Liquidity............................................. $ 269,735 $ 298,334 $ 153,669 Total Homebuilding Inventories.............................. $ 575,467 $ 511,284 $ 477,206 Interest Capitalized in Homebuilding Inventories............ $ 24,533 $ 26,332 $ 35,546 Interest Capitalized as a Percent of Homebuilding Inventories 4.3% 5.2% 7.5% Total Lots Owned............................................ 9,144 8,925 8,297 Total Lots Under Option..................................... 6,734 7,729 5,366 Active Subdivisions......................................... 126 130 138
Three Months Ended March 31, 1999 1998 OPERATING DATA EBITDA Computation Income From Continuing Operations................. $ 13,751 $ 7,928 Add: Income taxes............................... 8,977 4,962 Corporate & homebuilding interest expense.. - - - - Interest in home and land cost of sales.... 6,519 8,217 Depreciation and amortization.............. 4,227 4,041 Total EBITDA......................................... $ 33,474 $ 25,148 Ratio of EBITDA to Interest Incurred................. 7.1 4.4 Homebuilding and Corporate SG&A as a Percent of Home Sales Revenues................................. 12.2% 12.3% Interest Data Interest Incurred.................................... $ 4,720 $ 5,772 Interest Capitalized................................. $ 4,720 $ 5,772 Interest in Home Cost of Sales as a Percent of Home Sales Revenues................................ 2.2% 2.9% ### M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) Three Months Ended March 31, 1999 1998 Home Sales Revenues............................ $ 288,084 $ 232,763 Average Selling Price Per Home Closed.......... $ 199.1 $ 183.3 Home Gross Margins............................. 18.5% 15.7% Excluding Interest in Home Cost of Sales.. 20.7% 18.6% Orders For Homes, Net (Units) Colorado.................................. 845 910 California................................ 393 310 Arizona................................... 525 521 Nevada.................................... 128 142 Virginia.................................. 267 264 Maryland.................................. 88 129 Total................................. 2,246 2,276 Homes Closed (Units) Colorado.................................. 502 480 California................................ 223 181 Arizona................................... 386 326 Nevada.................................... 141 90 Virginia.................................. 120 122 Maryland.................................. 75 71 Total................................. 1,447 1,270 March 31, December 31, March 31, 1999 1998 1998 Backlog (Units) Colorado.................. 1,698 1,355 1,310 California................ 496 326 399 Arizona................... 835 696 588 Nevada.................... 133 146 147 Virginia.................. 401 254 353 Maryland.................. 166 153 241 Total................. 3,729 2,930 3,038 Estimated Sales Value. $ 750,000 $ 580,000 $ 570,000 -----END PRIVACY-ENHANCED MESSAGE-----