Note 21 - Supplemental Guarantor Information

9 Months Ended

Sep. 30, 2014

Supplemental Guarantor Information [Abstract]

Supplemental Guarantor Information [Text Block]

21.          Supplemental Guarantor Information

Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by the following subsidiaries (collectively, the "Guarantor Subsidiaries"), which are 100%-owned subsidiaries of the Company.

● M.D.C. Land Corporation

● RAH of Florida, Inc.

● Richmond American Construction, Inc.

● Richmond American Homes of Arizona, Inc.

● Richmond American Homes of Colorado, Inc.

● Richmond American Homes of Delaware, Inc.

● Richmond American Homes of Florida, LP

● Richmond American Homes of Illinois, Inc.

● Richmond American Homes of Maryland, Inc.

● Richmond American Homes of Nevada, Inc.

● Richmond American Homes of New Jersey, Inc.

● Richmond American Homes of Pennsylvania, Inc.

● Richmond American Homes of Utah, Inc.

● Richmond American Homes of Virginia, Inc.

● Richmond American Homes of Washington, Inc.

The senior note indentures do not provide for a suspension of the guarantees, but do provide that any Guarantor may be released from its guarantee so long as (1) no default or event of default exists or would result from release of such guarantee, (2) the Guarantor being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (3) the Guarantors released from their guarantees in any year-end period comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (4) such release would not have a material adverse effect on the homebuilding business of the Company and its subsidiaries and (5) the Guarantor is released from its guarantee(s) under all Specified Indebtedness (other than by reason of payment under its guarantee of Specified Indebtedness). Upon delivery of an officers’ certificate and an opinion of counsel stating that all conditions precedent provided for in the indenture relating to such transactions have been complied with and the release is authorized, the guarantee will be automatically and unconditionally released. “Specified Indebtedness” means indebtedness under the senior notes, the Company’s Indenture dated as of December 3, 2002, the Revolving Credit Facility, and any refinancing, extension, renewal or replacement of any of the foregoing.

We have determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor and Non-Guarantor Subsidiaries is presented below.

Supplemental Condensed Combining Balance Sheet

	September 30, 2014
					Non-
			Guarantor		Guarantor		Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries		Entries			MDC
	Dollars in thousands
ASSETS
Homebuilding:
Cash and cash equivalents	$	53,732	$	2,771	$	-	$	-		$	56,503
Marketable securities		437,444		-		-		-			437,444
Restricted cash		-		3,034		-		-			3,034
Trade receivables		7,622		19,747		-		(2,411	)		24,958
Inventories:
Housing completed or under construction		-		836,520		-		-			836,520
Land and land under development		-		854,677		-		-			854,677
Total inventories		-		1,691,197		-		-			1,691,197
Intercompany receivables		1,468,682		2,854		5,472		(1,477,008	)		-
Investment in subsidiaries		239,529		-		-		(239,529	)		-
Metropolitan district bond securities (related party)		15,379		-		-		-			15,379
Deferred tax asset, net		151,508		-		-		3,034			154,542
Other assets, net		41,720		57,300		-		-			99,020
Total Homebuilding Assets		2,415,616	$	1,776,903		5,472		(1,715,914	)		2,482,077
Financial Services:
Cash and cash equivalents		-		-		26,616		-			26,616
Marketable securities		-		-		17,195		-			17,195
Intercompany receivables		-		-		38,744		(38,744	)		-
Mortgage loans held-for-sale, net		-		-		58,132		-			58,132
Other assets, net		-		-		7,229		(3,034	)		4,195
Total Financial Services Assets		-		-		147,916		(41,778	)		106,138
Total Assets	$	2,415,616	$	1,776,903	$	153,388	$	(1,757,692	)	$	2,588,215
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	39,927	$	-	$	-		$	39,927
Accrued liabilities		36,701		90,001		26		1,664			128,392
Advances and notes payable to parent and subsidiaries		47,071		1,442,113		23,811		(1,512,995	)		-
Revolving credit facility		10,000		-		-		-			10,000
Senior notes, net		1,096,269		-		-		-			1,096,269
Total Homebuilding Liabilities		1,190,041		1,572,041		23,837		(1,511,331	)		1,274,588
Financial Services:
Accounts payable and other liabilities		-		-		60,345		(4,075	)		56,270
Advances and notes payable to parent and subsidiaries		-		-		2,757		(2,757	)		-
Mortgage repurchase facility		-		-		31,782		-			31,782
Total Financial Services Liabilities		-		-		94,884		(6,832	)		88,052
Total Liabilities		1,190,041		1,572,041		118,721		(1,518,163	)		1,362,640
Equity:
Total Stockholders' Equity		1,225,575		204,862		34,667		(239,529	)		1,225,575
Total Liabilities and Stockholders' Equity	$	2,415,616	$	1,776,903	$	153,388	$	(1,757,692	)	$	2,588,215

Supplemental Condensed Combining Balance Sheet

	December 31, 2013
					Non-
			Guarantor		Guarantor		Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries		Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	145,180	$	3,454	$	-	$	-		$	148,634
Marketable securities		569,021		-		-		-			569,021
Restricted cash		-		2,195		-		-			2,195
Trade receivables		915		27,951		-		(5,459	)		23,407
Inventories:
Housing completed or under construction		-		636,700		-		-			636,700
Land and land under development		-		774,961		-		-			774,961
Total inventories		-		1,411,661		-		-			1,411,661
Intercompany receivables		1,144,292		2,576		1,899		(1,148,767	)		-
Investment in subsidiaries		335,870		-		-		(335,870	)		-
Deferred tax asset, net		172,975		-		-		3,287			176,262
Metropolitan district bond securities (related party)		12,729		-		-		-			12,729
Other assets, net		41,204		43,569		-		-			84,773
Total Homebuilding Assets		2,422,186		1,491,406		1,899		(1,486,809	)		2,428,682
Financial Services:
Cash and cash equivalents		-		-		50,704		-			50,704
Marketable securities		-		-		19,046		-			19,046
Intercompany receivables		-		-		11,216		(11,216	)		-
Mortgage loans held-for-sale, net		-		-		92,578		-			92,578
Other assets, net		-		-		7,726		(3,287	)		4,439
Total Financial Services Assets		-		-		181,270		(14,503	)		166,767
Total Assets	$	2,422,186	$	1,491,406	$	183,169	$	(1,501,312	)	$	2,595,449
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	13	$	15,033	$	-	$	-		$	15,046
Accrued liabilities		97,612		56,334		82		(1,207	)		152,821
Advances and notes payable to parent and subsidiaries		15,692		1,121,581		19,668		(1,156,941	)		-
Senior notes, net		1,095,620		-		-		-			1,095,620
Total Homebuilding Liabilities		1,208,937		1,192,948		19,750		(1,158,148	)		1,263,487
Financial Services:
Accounts payable and other liabilities		-		-		59,891		(4,252	)		55,639
Advances and notes payable to parent and subsidiaries		-		-		3,042		(3,042	)		-
Mortgage repurchase facility		-		-		63,074		-			63,074
Total Financial Services Liabilities		-		-		126,007		(7,294	)		118,713
Total Liabilities		1,208,937		1,192,948		145,757		(1,165,442	)		1,382,200
Equity:
Total Stockholders' Equity		1,213,249		298,458		37,412		(335,870	)		1,213,249
Total Liabilities and Stockholders' Equity	$	2,422,186	$	1,491,406	$	183,169	$	(1,501,312	)	$	2,595,449

Supplemental Condensed Combining Statement of Operations

	Three Months Ended September 30, 2014
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	407,704		$	-		$	-		$	407,704
Cost of Sales		-			(340,022	)		-			-			(340,022	)
Inventory impairments		-			-			-			-			-
Gross margin		-			67,682			-			-			67,682
Selling, general, and administrative expenses		(7,813	)		(42,532	)		-			(167	)		(50,512	)
Equity income of subsidiaries		19,538			-			-			(19,538	)		-
Interest and other income		5,680			254			3			(11	)		5,926
Interest expense		-			-			-			-			-
Other expense		(2	)		(839	)		-			-			(841	)
Loss on early extinguishment of debt		-			-			-			-			-
Other-than-temporary impairment of marketable securities		(4,293	)		-			-			-			(4,293	)
Homebuilding pretax income (loss)		13,110			24,565			3			(19,716	)		17,962
Financial Services:
Financial services pretax income		-			-			5,784			178			5,962
Income before income taxes		13,110			24,565			5,787			(19,538	)		23,924
(Provision) benefit for income taxes		2,348			(8,677	)		(2,137	)		-			(8,466	)
Net income	$	15,458		$	15,888		$	3,650		$	(19,538	)	$	15,458
Other comprehensive income related to available-for-sale securities, net of tax		(2,484	)		-			(208	)		208			(2,484	)
Comprehensive income	$	12,974		$	15,888		$	3,442		$	(19,330	)	$	12,974

	Three Months Ended September 30, 2013
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	433,718		$	-		$	-		$	433,718
Cost of Sales		-			(354,924	)		-			-			(354,924	)
Inventory impairments		-			(350	)		-			-			(350	)
Gross margin		-			78,444			-			-			78,444
Selling, general, and administrative expenses		(18,067	)		(39,594	)		2			(94	)		(57,753	)
Equity income of subsidiaries		29,421			-			-			(29,421	)		-
Interest and other income		6,434			408			11			-			6,853
Interest expense		-			-			-			-			-
Other expense		(3	)		(878	)		-			-			(881	)
Loss on early extinguishment of debt		-			-			-			-			-
Other-than-temporary impairment of marketable securities		-			-			-			-			-
Homebuilding pretax income (loss)		17,785			38,380			13			(29,515	)		26,663
Financial Services:
Financial services pretax income		-			-			8,152			94			8,246
Income before income taxes		17,785			38,380			8,165			(29,421	)		34,909
(Provision) benefit for income taxes		18,466			(13,820	)		(3,304	)		-			1,342
Net income	$	36,251		$	24,560		$	4,861		$	(29,421	)	$	36,251
Other comprehensive income related to available-for-sale securities, net of tax		1,960			-			86			(86	)		1,960
Comprehensive income	$	38,211		$	24,560		$	4,947		$	(29,507	)	$	38,211

Supplemental Condensed Combining Statement of Operations

	Nine Months Ended September 30, 2014
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	1,157,499		$	-		$	-		$	1,157,499
Cost of Sales		-			(956,197	)		-			-			(956,197	)
Inventory impairments		-			(850	)		-			-			(850	)
Gross margin		-			200,452			-			-			200,452
Selling, general, and administrative expenses		(30,534	)		(117,619	)		-			(499	)		(148,652	)
Equity income of subsidiaries		62,290			-			-			(62,290	)		-
Interest and other income		23,021			1,089			12			(34	)		24,088
Interest expense		(685	)		-			-			-			(685	)
Other expense		(6	)		(2,528	)		-			-			(2,534	)
Loss on early extinguishment of debt		(9,412	)		-			-			-			(9,412	)
Other-than-temporary impairment of marketable securities		(4,293	)		-			-			-			(4,293	)
Homebuilding pretax income (loss)		40,381			81,394			12			(62,823	)		58,964
Financial Services:
Financial services pretax income		-			-			17,093			533			17,626
Income before income taxes		40,381			81,394			17,105			(62,290	)		76,590
(Provision) benefit for income taxes		8,123			(29,848	)		(6,361	)		-			(28,086	)
Net income	$	48,504		$	51,546		$	10,744		$	(62,290	)	$	48,504
Other comprehensive income related to available-for-sale securities, net of tax		(4,203	)		-			(93	)		93			(4,203	)
Comprehensive income	$	44,301		$	51,546		$	10,651		$	(62,197	)	$	44,301

	Nine Months Ended September 30, 2013
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
Homebuilding:
Revenues	$	-		$	1,168,848		$	-		$	(1,248	)	$	1,167,600
Cost of Sales		-			(959,610	)		-			1,248			(958,362	)
Inventory impairments		-			(350	)		-			-			(350	)
Gross margin		-			208,888			-			-			208,888
Selling, general, and administrative expenses		(48,163	)		(109,439	)		(1	)		(259	)		(157,862	)
Equity income of subsidiaries		99,079			-			-			(99,079	)		-
Interest and other income		22,491			1,100			11			-			23,602
Interest expense		(1,726	)		-			-			-			(1,726	)
Other expense		(11	)		(1,592	)		-			-			(1,603	)
Loss on early extinguishment of debt		-			-			-			-			-
Other-than-temporary impairment of marketable securities		-			-			-			-			-
Homebuilding pretax income (loss)		71,670			98,957			10			(99,338	)		71,299
Financial Services:
Financial services pretax income		-			-			23,949			259			24,208
Income before income taxes		71,670			98,957			23,959			(99,079	)		95,507
(Provision) benefit for income taxes		212,006			(14,646	)		(9,191	)		-			188,169
Net income	$	283,676		$	84,311		$	14,768		$	(99,079	)	$	283,676
Other comprehensive income related to available-for-sale securities, net of tax		2,500			-			(206	)		206			2,500
Comprehensive income	$	286,176		$	84,311		$	14,562		$	(98,873	)	$	286,176

Supplemental Condensed Combining Statement of Cash Flows

	Nine Months Ended September 30, 2014
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	(44,477	)	$	(174,980	)	$	46,201		$	-		$	(173,256	)
Net cash provided by (used in) investing activities		(9,675	)		(428	)		1,717			134,011			125,625
Financing activities:
Payments from (advances to) subsidiaries		-			174,725			(40,714	)		(134,011	)		-
Advances on mortgage repurchase facility, net		-			-			(31,292	)		-			(31,292	)
Proceeds from issuance of senior notes		248,375			-			-			-			248,375
Repayment of senior notes		(259,118	)		-			-			-			(259,118	)
Advances on revolving credit facility, net		10,000			-			-			-			10,000
Dividend payments		(36,616	)		-			-			-			(36,616	)
Proceeds from exercise of stock options		63			-			-			-			63
Net cash provided by (used in) financing activities		(37,296	)		174,725			(72,006	)		(134,011	)		(68,588	)
Net increase in cash and cash equivalents		(91,448	)		(683	)		(24,088	)		-			(116,219	)
Cash and cash equivalents:
Beginning of period		145,180			3,454			50,704			-			199,338
End of period	$	53,732		$	2,771		$	26,616		$	-		$	83,119

	Nine Months Ended September 30, 2013
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	5,851		$	(357,618	)	$	125,907		$	-		$	(225,860	)
Net cash provided by (used in) investing activities		(338,320	)		(881	)		10,323			277,288			(51,590	)
Financing activities:
Payments from (advances to) subsidiaries		-			359,280			(81,992	)		(277,288	)		-
Advances on mortgage repurchase facility, net		-			-			(37,415	)		-			(37,415	)
Proceeds from the issuance of senior notes		346,938			-			-			-			346,938
Proceeds from exercise of stock options		5,118			-			-			-			5,118
Net cash provided by (used in) financing activities		352,056			359,280			(119,407	)		(277,288	)		314,641
Net increase (decrease) in cash and cash equivalents		19,587			781			16,823			-			37,191
Cash and cash equivalents:
Beginning of period		125,904			3,308			30,883			-			160,095
End of period	$	145,491		$	4,089		$	47,706		$	-		$	197,286