-----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, GywiqBZk//WbhgDdUa2tvX/2HWL/dWRKRv1pHIgcJdqgL+oFbdrdmEmPGB6e/HnR 6entzv6IbAPdn4YwwIQIhg== 0001047469-98-026027.txt : 19980701 0001047469-98-026027.hdr.sgml : 19980701 ACCESSION NUMBER: 0001047469-98-026027 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980630 SROS: NYSE 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: 98658444 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 FORM 11-K 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, 1997 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, 1997 and 1996. 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, 1997 and 1996. 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, 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. 5. Schedule 2 - Item 27d - Schedule of Reportable Transactions for the year ended December 31, 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. 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, 1998 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 Price Waterhouse 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 15, 1998 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, 1997 included in this Form 11-K. /s/ Price Waterhouse LLP - ----------------------------- PRICE WATERHOUSE LLP Hartford, Connecticut June 23, 1998 EX-99.1 3 EXHIBIT 99.1 M.D.C. HOLDINGS, INC. 401(k) SAVINGS PLAN FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION DECEMBER 31, 1997 AND 1996 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 4-5 Notes to Financial Statements 6-11 Additional Information: Schedule I - Schedule of Assets Held for Investment Purposes 12 Schedule II - Schedule of Reportable Transactions 13
[LETTERHEAD] Report of Independent Accountants June 15, 1998 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 and the related statements of changes in net assets available for benefits 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, 1997 and 1996, 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 performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included in the schedule of assets held for investment purposes and the schedule of reportable transactions is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is additional information required by 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 purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The schedule of assets held for investment purposes, the schedule of reportable transactions and the 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. PRICE WATERHOUSE LLP M.D.C. HOLDINGS, INC. 401(k) SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION - ------------------------------------------------------------------------------- December 31, 1997 Fund Information ------------------------------------------------------------------------- Charter Large Fidelity Charter Charter Company Advisor Guaranteed Guaranteed Stock Charter Growth Long-Term Short-Term Index Balanced Opportunities Fund Fund Fund Fund Fund Assets Investments, at fair value CIGNA Charter Guaranteed Long-Term Account $ 2,494,051 CIGNA Charter Guaranteed Short-Term Account $ 259,658 CIGNA Charter Large Company Stock Index Fund $ 1,799,913 CIGNA Charter Balanced Fund $ 274,378 CIGNA Fidelity Advisor Growth Opportunities Fund $ 4,221,105 CIGNA Fidelity Advisor Balanced Fund Participant notes receivable M.D.C. common stock Employer contributions receivable Employee contributions receivable 12,868 2,396 13,283 2,723 23,521 ------------ ------------ ------------ ----------- ----------- Net assets available for benefits $ 2,506,919 $ 262,054 $ 1,813,196 $ 277,101 $ 4,244,626 ------------ ------------ ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- December 31, 1997 Fund Information ---------------------------------------------------------- Fidelity Advisor Participant M.D.C. Balanced Notes Stock Fund Receivable Fund Total Assets Investments, at fair value CIGNA Charter Guaranteed Long-Term Account $ 2,494,051 CIGNA Charter Guaranteed Short-Term Account 259,658 CIGNA Charter Large Company Stock Index Fund 1,799,913 CIGNA Charter Balanced Fund 274,378 CIGNA Fidelity Advisor Growth Opportunities Fund 4,221,105 CIGNA Fidelity Advisor Balanced Fund $ 1,431,268 1,431,268 Participant notes receivable $ 284,420 284,420 M.D.C. common stock $ 651,897 651,897 Employer contributions receivable 565,427 565,427 Employee contributions receivable 6,148 1,467 62,406 ------------ ------------ ------------ ------------ Net assets available for benefits $ 1,437,416 $ 284,420 $ 1,218,791 $ 12,044,523 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
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 - ------------------------------------------------------------------------------- DECEMBER 31, 1996 FUND INFORMATION -------------------- PARTICIPANT DIRECTED -------------------------------------------------------------------------------- CHARTER LARGE FIDELITY CHARTER CHARTER COMPANY ADVISOR GUARANTEED GUARANTEED STOCK CHARTER GROWTH LONG-TERM SHORT-TERM INDEX BALANCED OPPORTUNITIES FUND FUND FUND FUND FUND ASSETS Investments, at fair value CIGNA Charter Guaranteed Long-Term Account $ 1,890,578 CIGNA Charter Guaranteed Short-Term Account $ 231,045 CIGNA Charter Large Company Stock Index Fund $ 1,058,122 CIGNA Charter Balanced Fund $ 161,025 CIGNA Fidelity Advisor Growth Opportunities Fund $ 3,049,358 CIGNA Fidelity Advisor Balanced Fund Participant notes receivable M.D.C. common stock Employer contributions receivable 77,051 7,955 33,741 6,732 86,169 Cash equivalents 13,517 3,029 12,462 2,728 25,628 ------------ ------------ ------------ ----------- ----------- Net assets available for benefits $ 1,981,146 $ 242,029 $ 1,104,325 $ 170,485 $ 3,161,155 ------------ ------------ ------------ ----------- ----------- ------------ ------------ ------------ ----------- -----------
DECEMBER 31, 1996 FUND INFORMATION ----------------------------- NON-PARTICIPANT PARTICIPANT DIRECTED DIRECTED ----------------------------- ---------------- FIDELITY ADVISOR PARTICIPANT M.D.C. BALANCED NOTES STOCK FUND RECEIVABLE FUND TOTAL ASSETS Investments, at fair value CIGNA Charter Guaranteed Long-Term Account $ 1,890,578 CIGNA Charter Guaranteed Short-Term Account 231,045 CIGNA Charter Large Company Stock Index Fund 1,058,122 CIGNA Charter Balanced Fund 161,025 CIGNA Fidelity Advisor Growth Opportunities Fund 3,049,358 CIGNA Fidelity Advisor Balanced Fund $ 1,087,934 1,087,934 Participant notes receivable $ 226,602 226,602 M.D.C. common stock $ 113,624 113,624 Employer contributions receivable 31,278 242,926 485,852 Cash equivalents 7,875 65,239 ------------ ------------ ------------ ------------ Net assets available for benefits $ 1,127,087 $ 226,602 $ 356,550 $ 8,369,379 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
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 - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1997 FUND INFORMATION ---------------------------------------------------------------------------- CHARTER LARGE FIDELITY CHARTER CHARTER COMPANY ADVISOR GUARANTEED GUARANTEED STOCK CHARTER GROWTH LONG-TERM SHORT-TERM INDEX BALANCED OPPORTUNITIES 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 ----------- --------- ----------- --------- ----------- 124,977 10,843 371,870 37,805 882,319 ----------- --------- ----------- --------- ----------- Contributions Employer 90 48 1,431 Employee 601,244 94,409 474,247 96,197 855,399 ----------- --------- ----------- --------- ----------- 601,334 94,409 474,295 96,197 856,830 ----------- --------- ----------- --------- ----------- Total additions 726,311 105,252 846,165 134,002 1,739,149 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 162,499 20,186 108,099 16,895 510,743 Transaction charge 1,022 161 1,182 157 899 Participant notes receivable terminated due to withdrawal of participant Transfer to affiliated plan 25,470 12,665 94,333 50,431 ----------- --------- ----------- --------- ----------- Total deductions 188,991 33,012 203,614 17,052 562,073 Change in forfeiture reserve, net 14,172 (1,082) (4,012) (2,506) (14,774) ----------- --------- ----------- --------- ----------- Net increase (decrease) prior to interfund transfer 551,492 71,158 638,539 114,444 1,162,302 Interfund transfers, net (25,719) (51,133) 70,332 (7,828) (78,831) ----------- --------- ----------- --------- ----------- Net increase 525,773 20,025 708,871 106,616 1,083,471 Net assets available for benefits at beginning of year 1,981,146 242,029 1,104,325 170,485 3,161,155 ----------- --------- ----------- --------- ----------- Net assets available for benefits at end of year $ 2,506,919 $ 262,054 $ 1,813,196 $ 277,101 $ 4,244,626 ----------- --------- ----------- --------- ----------- ----------- --------- ----------- --------- -----------
YEAR ENDED DECEMBER 31, 1997 FUND INFORMATION ------------------------------------------------------------- FIDELITY ADVISOR PARTICIPANT M.D.C. BALANCED NOTES STOCK FUND RECEIVABLE 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 $ 247,742 277,335 1,817,071 ----------- --------- ----------- ------------ 247,742 23,520 281,314 1,980,390 ----------- --------- ----------- ------------ Contributions Employer 345 565,263 567,177 Employee 274,481 31,656 2,427,633 ----------- --------- ----------- ------------ 274,826 - 596,919 2,994,810 ----------- --------- ----------- ------------ Total additions 522,568 23,520 878,233 4,975,200 Deductions from net assets attributed to: Benefit payments 130,097 78,680 1,027,199 Transaction charge 179 1,382 4,982 Participant notes receivable terminated due to withdrawal of participant 29,004 29,004 Transfer to affiliated plan 34,163 217,062 ----------- --------- ----------- ------------ Total deductions 164,439 29,004 80,062 1,278,247 Change in forfeiture reserve, net (5,969) (7,638) (21,809) ----------- --------- ----------- ------------ Net increase (decrease) prior to interfund transfer 352,160 (5,484) 790,533 3,675,144 Interfund transfers, net (41,831) 63,302 71,708 - ----------- --------- ----------- ------------ Net increase 310,329 57,818 862,241 3,675,144 Net assets available for benefits at beginning of year 1,127,087 226,602 356,550 8,369,379 ----------- --------- ----------- ------------ Net assets available for benefits at end of year $ 1,437,416 $ 284,420 $ 1,218,791 $ 12,044,523 ----------- --------- ----------- ------------ ----------- --------- ----------- ------------
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 - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1996 FUND INFORMATION ---------------- PARTICIPANT DIRECTED ------------------------------------------------------------------------ CHARTER LARGE FIDELITY CHARTER CHARTER COMPANY ADVISOR GUARANTEED GUARANTEED STOCK CHARTER GROWTH LONG-TERM SHORT-TERM INDEX BALANCED OPPORTUNITIES FUND FUND FUND FUND FUND ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income Interest and dividends $ 99,603 $ 9,106 -0- -0- -0- Net appreciation in fair value of investments -0- -0- $ 141,124 $ 14,771 $ 417,846 ------------ ------------ ------------ ------------ ------------ 99,603 9,106 141,124 14,771 417,846 ------------ ------------ ------------ ------------ ------------ Contributions Employer 77,051 7,955 33,741 6,732 86,169 Employee 467,707 84,549 269,425 59,548 755,419 ------------ ------------ ------------ ------------ ------------ 544,758 92,504 303,166 66,280 841,588 ------------ ------------ ------------ ------------ ------------ Total additions 644,361 101,610 444,290 81,051 1,259,434 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 256,119 42,345 114,167 44,628 275,569 Transaction charge 1,784 201 1,180 164 1,091 ------------ ------------ ------------ ------------ ------------ Participant notes receivable terminated due to withdrawal of participant -0- -0- -0- -0- -0- ------------ ------------ ------------ ------------ ------------ Total deductions 257,903 42,546 115,347 44,792 276,660 Change in forfeiture reserve, net 9,711 (79) (444) (316) (4,009) ------------ ------------ ------------ ------------ ------------ Net increase (decrease) prior to interfund transfers 396,169 58,985 328,499 35,943 978,765 Interfund transfers, net (130,331) (16,455) 223,806 37,560 72,775 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 265,838 42,530 552,305 73,503 1,051,540 Net assets available for benefits at beginning of year 1,715,308 199,499 552,020 96,982 2,109,615 ------------ ------------ ------------ ------------ ------------ Net assets available for benefits at end of year $ 1,981,146 $ 242,029 $ 1,104,325 $ 170,485 $ 3,161,155 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
YEAR ENDED DECEMBER 31, 1996 FUND INFORMATION ---------------- NON-PARTICIPANT PARTICIPANT DIRECTED DIRECTED --------------------------- --------------- FIDELITY ADVISOR PARTICIPANT M.D.C. BALANCED NOTES STOCK FUND RECEIVABLE FUND TOTAL ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income Interest and dividends -0- $ 19,049 $ 1,627 $ 129,385 Net appreciation in fair value of investments $ 84,626 -0- 19,557 677,924 ------------ ------------ ------------ ------------ 84,626 19,049 21,184 807,309 ------------ ------------ ------------ ------------ Contributions Employer 31,278 -0- 242,926 485,852 Employee 297,795 -0- -0- 1,934,443 ------------ ------------ ------------ ------------ 329,073 -0- 242,926 2,420,295 ------------ ------------ ------------ ------------ Total additions 413,699 19,049 264,110 3,227,604 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 207,673 -0- 7,134 947,635 Transaction charge 280 -0- 50 4,750 Participant notes receivable terminated due to withdrawal of participant -0- 34,459 -0- 34,459 ------------ ------------ ------------ ------------ Total deductions 207,953 34,459 7,184 986,844 Change in forfeiture reserve, net (2,773) -0- -0- 2,090 ------------ ------------ ------------ ------------ Net increase (decrease) prior to interfund transfers 202,973 (15,410) 256,926 2,242,850 Interfund transfers, net (230,040) 42,685 -0- - ------------ ------------ ------------ ------------ Net increase (decrease) (27,067) 27,275 256,926 2,242,850 Net assets available for benefits at beginning of year 1,154,154 199,327 99,624 6,126,529 ------------ ------------ ------------ ------------ Net assets available for benefits at end of year $ 1,127,087 $ 226,602 $ 356,550 $ 8,369,379 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these financial statements. 5 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 January 1, 1997. Non-union employees of M.D.C. Holdings, Inc. and Richmond American Homes of Colorado, Inc. (collectively, the "Company") hired on or before December 31, 1991 shall be eligible to participate immediately. Non-union employees hired between January 1, 1992 and December 31, 1994 become eligible to participate upon completing six months of service and attaining the age of 21. Non-union employees hired after January 1, 1995 become eligible to participate upon completing one year 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 not less than 1 percent nor more than 15 percent of their compensation for the contribution period. The Company may make matching contributions in a discretionary amount to be determined by the Company. The Company may also make a non-elective contribution in a discretionary amount upon resolution of the Company's Board of Directors. Effective January 1, 1997, the Company matching and nonelective 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 and allocation of the Company's contribution, if any, and Plan earnings. 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. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. VESTING Participants are immediately vested in their voluntary contributions plus actual earnings thereon. The balance of vesting in the participants' accounts is based on years of service. A participant becomes 20 percent vested after one year of service, 40 percent vested after two years of service, 60 percent vested after three years of service, 80 percent vested after four years of service and 100 percent vested after five years of service. However, if an active participant dies prior to attaining the normal retirement age, the participant's account becomes 100 percent vested. 6 M.D.C. HOLDINGS, INC. 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- INVESTMENT OPTIONS Upon enrollment in the Plan, a participant may currently direct contributions among any of the following investment options: - Charter Guaranteed Long-Term Fund (formerly "Guaranteed Long-Term Fund") - Funds are invested in the CIGNA Charter Guaranteed Long-Term Account, which provides a guaranteed rate of return reset semiannually. - Charter Guaranteed Short-Term Fund (formerly "Guaranteed Short-Term Fund") - Funds are invested in the CIGNA Charter Guaranteed Short-Term Account, which provides a guaranteed rate of return. - Charter Large Company Stock Index Fund (formerly "Stock Market Index Fund") - Funds are invested in the CIGNA Charter Large Company Stock Index Fund, which is a separate account which provides an investment portfolio designed to reflect the composition of the Standard & Poor's 500 Composite Stock Price Index. - Charter Balanced Fund (formerly "Balanced Fund") - Funds are invested in the CIGNA Charter Balanced Fund, which in turn invests in three different types of investments: common stocks, bonds and money market instruments. This fund is designed to provide long-term return with reduced portfolio risk. - Fidelity Advisor Growth Opportunities Fund - Funds are invested solely in units of the CIGNA Fidelity Advisor Growth Opportunities Fund, which in turn invests solely in shares of the Fidelity Advisor Growth Opportunities Fund. - Fidelity Advisor Balanced Fund (formerly "Fidelity Advisor Income & Growth Fund") Funds are invested solely in units of the CIGNA Fidelity Advisor Balanced Fund, which in turn invests solely in shares of the Fidelity Advisor Balanced Fund. - M.D.C. Stock Fund - Funds are invested solely in shares of M.D.C. Holdings, Inc. common stock. Participants may change their investment options at any time during the Plan year. PAYMENT OF BENEFITS On termination of service, a participant may elect to receive either a lump-sum amount equal to the value of his or her account, a distribution in the form of an annuity, or a combination of both. Distributions are subject to the applicable provisions of the Plan agreement. 7 M.D.C. HOLDINGS, INC. 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- PARTICIPANT NOTES RECEIVABLE Participants may borrow up to the lesser of $50,000 or 50 percent of the vested portion of their account balance, subject to certain restrictions, in accordance with interest rates and collateral requirements established by the Company. CASH EQUIVALENTS Contributions received prior to year end awaiting investment in the appropriate investment option at December 31, 1996 are invested in the CIGNA Charter Guaranteed Short-Term Account, which is recorded at fair value, and are included as cash equivalents within the fund in which units are subsequently purchased. 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 Investments in pooled separate accounts (CIGNA Charter Large Company Stock Index Fund, CIGNA Charter Balanced Fund, CIGNA Fidelity Advisor Growth Opportunities Fund and CIGNA Fidelity Advisor Balanced Fund) are recorded at fair value, as determined by the unit value as reported by the Connecticut General Life Insurance Company ("CG Life"). Investments in the CIGNA Charter Guaranteed Long-Term and CIGNA Guaranteed Short-Term Accounts are non-fully benefit responsive and are recorded at fair value. Participant notes receivable are valued at cost which approximates fair value. The Company stock is valued at its quoted market price. CONTRIBUTIONS Employee contributions are recorded in the period during which the Company makes payroll deductions from the participants' earnings. Discretionary Company contributions, if any, are recorded at the end of the Plan year. Matching Company contributions, if any, are recorded in the same period. 8 M.D.C. HOLDINGS, INC. 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- BENEFITS Benefit claims are recorded as expenses when they have been approved for payment and paid by the Plan. 3. DEPOSITS WITH INSURANCE COMPANY The Plan participates in contracts with CG Life via investments in the CIGNA Charter Guaranteed Long-Term and the CIGNA Charter Guaranteed Short-Term Accounts. 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 years ended December 31, 1997 and 1996, 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% and 4.56% for the years ended December 31, 1997 and 1996, respectively, net of asset charges. As discussed in Note 2, the Charter Guaranteed Long-Term and Charter Guaranteed Short-Term Accounts are included in the financial statements at fair value which, principally because of the periodic rate reset process, approximates contract value. 4. INVESTMENTS Investments that represent 5 percent or more of the Plan's net assets are separately identified below. DECEMBER 31, 1997 1996 CIGNA Charter Guaranteed Long-Term Account $2,494,051 $1,890,578 interest rates, 5.90%; 5.90% CIGNA Charter Large Company Stock Index Fund 1,799,913 1,058,122 units, 37,576; 29,182 CIGNA Fidelity Advisor Growth Opportunities Fund 4,221,105 3,049,358 units, 68,181; 63,199 CIGNA Fidelity Advisor Balanced Fund 1,431,268 1,087,934 units, 52,084; 48,331 M.D.C. Stock Fund 651,897 N/A units, 43,287; N/A
9 M.D.C. HOLDINGS, INC. 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 5. PARTICIPANT NOTES RECEIVABLE Under the terms of the Plan, participants may borrow from their accounts up to the lesser of $50,000 or 50% of their vested account balance. Loan transactions are treated as a transfer to/from the investment fund from/to Participant Notes Receivable. A loan is secured by the balance in the participant's account and bears interest at a rate commensurate with market rates for similar loans, as defined (6.75% to 10.00% for the years ended December 31, 1997 and 1996). 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. 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, 1997 1996 Net assets, per Form 5500 $11,416,690 $7,883,527 Add: Employer contributions receivable 565,427 485,852 Employee contributions receivable 62,406 ----------- ---------- Net assets, per financial statements $12,044,523 $8,369,379 ----------- ---------- ----------- ----------
10 M.D.C. HOLDINGS, INC. 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 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 forfeiture reserve represents the net change in the available forfeiture reserve balance from the prior year plus the current year forfeitures generated. Forfeitures result from nonvested benefit payments remaining in the Plan for all terminated employees. Upon reaching the break-in-service, as determined in the Plan agreement, forfeitures generated are added to the forfeiture reserve balance. The forfeiture reserve of $48,165 and $24,457 at December 31, 1997 and 1996, respectively, is included in the Plan's investment in the CIGNA Charter Guaranteed Long-Term Account and is available to offset contributions or to pay Plan expenses, which would be otherwise payable by the Company, in accordance with the Plan agreement. In 1997, Company cash contributions were reduced by $8,051 from forfeited nonvested accounts. 11. SUBSEQUENT EVENT Effective July 1, 1998, the M.D.C. Holdings, Inc. 401(k) Savings Plan is expected to be administered by Key Bank. 11 M.D.C. HOLDINGS, INC. ADDITIONAL INFORMATION 401(k) SAVINGS PLAN SCHEDULE I LINE 27a FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1997 - ------------------------------------------------------------------------------- (c) (a) (b) DESCRIPTION OF INVESTMENT INCLUDING (e) IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, (d) CURRENT LESSOR, OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE COST VALUE Connecticut General Life CIGNA Charter Guaranteed Long-Term * Insurance Company Account 5.90% $ 2,494,051 $ 2,494,051 Connecticut General Life CIGNA Charter Guaranteed Short-Term * Insurance Company Account 4.90% 259,658 259,658 Connecticut General Life CIGNA Charter Large Company Stock * Insurance Company Index Fund $47.90/unit 1,303,965 1,799,913 Connecticut General Life CIGNA Charter Balanced Fund * Insurance Company $25.55/unit 225,769 274,378 Connecticut General Life CIGNA Fidelity Advisor Growth * Insurance Company Opportunities Fund $61.91/unit 2,859,794 4,221,105 Connecticut General Life CIGNA Fidelity Advisor Balanced Fund * Insurance Company $27.48/unit 1,102,123 1,431,268 * Participant Notes Receivable 6.75% - 10.00% 284,420 284,420 * M.D.C. Holdings, Inc. M.D.C. common stock $15.06/share ** 651,897
* Indicates an identified person known to be a party-in-interest to the Plan. ** Cost information is not presently available from the custodian. 12 M.D.C. HOLDINGS, INC. ADDITIONAL INFORMATION 401(k) SAVINGS PLAN SCHEDULE II LINE 27d FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1997 - -------------------------------------------------------------------------------- (b) (f) DESCRIPTION OF ASSET EXPENSE (a) (INCLUDE INTEREST RATE (c) (d) (e) INCURRED IDENTITY OF PARTY AND MATURITY IN CASE PURCHASE SELLING LEASE WITH INVOLVED OF A LOAN) PRICE PRICE RENTAL TRANSACTION Connecticut General Purchases into CIGNA Life Insurance Charter Guaranteed Company Long-Term Account $1,138,395 N/A N/A N/A Connecticut General Sales from CIGNA Life Insurance Charter Guaranteed Company Long-Term Account N/A $661,998 N/A N/A Connecticut General Purchases into CIGNA Life Insurance Charter Large Company Company Stock Index Fund 805,143 N/A N/A N/A Connecticut General Sales from CIGNA Life Insurance Charter Large Company Company Stock Index Fund N/A 435,222 N/A N/A Connecticut General Purchases into CIGNA Life Insurance Fidelity Advisor Growth Company Opportunities Fund 1,171,887 N/A N/A N/A Connecticut General Sales from CIGNA Life Insurance Fidelity Advisor Growth Company Opportunities Fund N/A 882,459 N/A N/A Connecticut General Purchases into CIGNA Life Insurance Fidelity Advisor Balanced Company Fund 380,430 N/A N/A N/A Connecticut General Sales from CIGNA Life Insurance Fidelity Advisor Balanced Company Fund N/A 284,838 N/A N/A M.D.C. Holdings, Inc. Purchases into M.D.C. common stock 388,404 N/A N/A N/A M.D.C. Holdings, Inc. Sales from M.D.C. common stock N/A 131,445 N/A N/A
(h) CURRENT VALUE (a) (g) OF ASSET ON (i) IDENTITY OF PARTY COST OF TRANSACTION NET GAIN INVOLVED ASSET DATE OR (LOSS) Connecticut General Life Insurance Company $1,138,395 $1,138,395 - Connecticut General Life Insurance Company 661,998 661,998 - Connecticut General Life Insurance Company 805,143 805,143 - Connecticut General Life Insurance Company 367,949 435,222 $ 67,273 Connecticut General Life Insurance Company 1,171,887 1,171,887 - Connecticut General Life Insurance Company 647,253 882,459 235,206 Connecticut General Life Insurance Company 380,430 380,430 - Connecticut General Life Insurance Company 243,013 284,838 41,825 M.D.C. Holdings, Inc. 388,404 388,404 - M.D.C. Holdings, Inc. * 131,445 *
* Cost information is not presently available from the custodian. 13 -----END PRIVACY-ENHANCED MESSAGE-----