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M.D.C. Holdings Announces 2013 Fourth Quarter Results

February 5, 2014

DENVER, Feb. 5, 2014 /PRNewswire/ — M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended December 31, 2013.

2013 Fourth Quarter Highlights and Comparisons to 2012 Fourth Quarter

    --  Net income of $30.7 million, or $0.62 per diluted share vs. $29.7
        million, or $0.59 per diluted share
    --  Pretax income of $34.3 million, up 15% from $29.9 million
    --  Home sale revenues of $460.9 million, up 18%
    --  Gross margin from home sales of 17.4% vs. 16.7%, up 70 basis points
    --  SG&A expenses as a percentage of home sale revenues of 12.0%, a 60 basis
        point improvement
    --  Ending active community count of 146 vs. 148
        --  Up 9% from 134 at September 30, 2013
    --  Net new orders of 752 homes, down 13% on an 8% decrease in average
        active community count
        --  Dollar value down 2% to $285.2 million
    --  Backlog dollar value of $506.0 million, down 13%
    --  Lots owned and optioned of 15,786, up 38%
    --  Total liquidity of $1.24 billion at December 31, 2013, including amount
        available under new $450 million line of credit
        --  Issued $250 million 10-year 5½% senior unsecured notes in January
            2014

2013 Full Year Highlights and Comparisons to 2012 Full Year

    --  Net income of $314.4 million, or $6.34 per diluted share vs. $62.7
        million, or $1.29 per diluted share
        --  Excluding the $187.6 million reversal of the deferred tax asset
            valuation allowance in the second quarter, net income was $126.7
            million*, or $2.56* per diluted share
    --  Home sale revenues of $1.63 billion, up 41%
        --  Home deliveries of 4,710 homes, up 26%
    --  Gross margin from home sales of 17.8% vs. 15.4%, up 240 basis points
    --  SG&A expenses as a percentage of home sale revenues of 13.1% vs. 14.5%,
        a 140 basis point improvement
    --  Net new orders of 4,327 homes vs. 4,342 in 2012
    --  Acquired 7,887 lots in 168 communities, including 128 new communities
        --  Total land acquisition spend of $632.6 million

Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “I am pleased to announce fourth quarter net income of $0.62 per diluted share, our eighth consecutive quarterly operating profit. For the full year, our net income improved by more than $250 million. Included in this was the reversal of most of our deferred tax asset valuation allowance during the second quarter, stemming from our return to consistent profitability and an improving housing market. Excluding the tax benefit from the allowance reversal, our income nearly doubled in 2013 on the strength of more than 40% top-line growth and significant expansion of our operating margin.”

Mr. Mizel continued, “Our net home orders declined year-over-year in the fourth quarter, largely due to a lower average active community count. Our orders also appear to have been affected by an increase in mortgage interest rates from historically low levels and the economic uncertainty created by the discussion surrounding the tapering of federal stimulus in the later part of the year. While it is difficult to discern a trend in the fourth quarter, which is typically our seasonally slow period, we continue to believe that the current housing recovery is progressing and should continue into 2014. We believe we are well-prepared to capture incremental demand from an improving market, especially given that our active community count increased sequentially by 9% in the fourth quarter, our highest increase in the last eight quarters and just in time for the historically strong spring selling season.”

Mr. Mizel concluded, “We have worked to strengthen our financial position during 2013 not only by increasing profits, but also by accessing the capital markets. During the first half of the year, we issued $350 million of 30-year 6% senior unsecured notes, and in the fourth quarter, we finalized a new 5-year, $450 million unsecured line of credit. In doing so, we increased our overall liquidity by more than 70% to over $1.2 billion at the end of 2013, even after investing more than $600 million in acquiring new communities during the year. Furthermore, to start 2014, we issued $250 million of 10-year 5½% senior unsecured notes. We believe that this financing activity, coupled with the equity added by our strong earnings in 2013 and our expectation of further sequential improvement in active community count during the first half of 2014, positions us well as we pursue continued growth and address near-term debt maturities.”

Homebuilding

Home sale revenues for the 2013 fourth quarter increased 18% to $460.9 million compared to $389.1 million for the prior year period. The increase in revenues resulted from a 3% increase in homes delivered to 1,252 homes as compared to 1,221 in the prior year and a 16% increase in our average selling price to $368,000. The increase in average selling price was largely due to price appreciation and lower incentives in many of our markets, combined with a shift in the mix of our closings.

Gross margin from home sales for the 2013 fourth quarter was 17.4%, compared to 16.7% for the year-earlier period and 18.1% for the 2013 third quarter. The year-over-year increase was primarily attributable to our continued focus on increasing pricing as we took advantage of improving markets during 2013. On a sequential basis, gross margin from home sales declined slightly due to a shift in the mix of homes closed, including fewer deliveries from our Nevada division, which have the highest gross margins in the Company, and more deliveries from our Maryland and Virginia markets, which have a lower gross margin percentage than the Company average. Excluding inventory impairments and previously capitalized interest in cost of sales, adjusted gross margin from home sales was 21.0%* for the 2013 fourth quarter, compared to 19.6%* for the 2012 fourth quarter and 21.8%* for the 2013 third quarter.

SG&A expenses as a percentage of home sale revenues decreased by 60 basis points to 12.0% for the 2013 fourth quarter versus 12.6% for the same period in 2012. The improvement was the result of operating leverage created by a year-over-year increase in home sale revenues, which outpaced a year-over-year increase in our absolute level of SG&A expenses.

Net new orders for the 2013 fourth quarter decreased 13% to 752 homes, compared to 869 homes during the same period in 2012, largely due to an 8% decrease in our average active community count. Our cancellation rate for the 2013 fourth quarter was 26% versus 24% in the prior year fourth quarter.

We ended the 2013 fourth quarter with 1,262 homes in backlog, with an estimated sales value of $506.0 million, compared with a backlog of 1,645 homes with an estimated sales value of $579.0 million at December 31, 2012.

As a result of the significant increase in our land acquisition activity in 2013, our lots owned and under option increased by 38% year-over-year to 15,786 lots. At December 31, 2013, we had 146 active subdivisions, down 1% from 148 at December 31, 2012 and up 9% from 134 at September 30, 2013. Additionally, our soon to be active communities exceeded our soon to be inactive communities by 23 as of December 31, 2013.

Financial Services

Pretax income from our financial services operations for the 2013 fourth quarter was $5.3 million, compared to $7.7 million for the 2012 fourth quarter. The decrease in pretax income primarily reflected a $4.6 million decrease in pretax income from our mortgage operations to $2.8 million in the 2013 fourth quarter. The decrease in our mortgage profitability was driven partly by lower loan lock activity, as the homebuilding segment generated lower home orders during the last half of 2013 compared with the same period a year ago. Additionally, the mortgage segment realized lower per unit origination income and gains on loans locked and sold compared to the same period a year ago, resulting primarily from a more competitive mortgage market and higher interest rates. This decrease was partially offset by improvements in the other segment of our financial services operations.

About MDC

Since 1972, MDC’s subsidiary companies have built and financed the American dream for more than 175,000 homebuyers. MDC’s commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. MDC is one of the largest homebuilders in the United States. Its subsidiaries have homebuilding operations across the country, including the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Francisco Bay Area, Washington D.C., Baltimore, Philadelphia, Jacksonville, Orlando, South Florida and Seattle. The Company’s subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol “MDC.” For more information, visit www.mdcholdings.com.

Forward-Looking Statements

Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic conditions, including changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, land and home values and subdivision counts; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) changes in the market value of the Company’s investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican’s sale of mortgage loans (6) the relative stability of debt and equity markets; (7) competition; (8) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (9) the availability and cost of performance bonds and insurance covering risks associated with our business; (10) shortages and the cost of labor; (11) weather related slowdowns; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including the interpretation of tax, labor and environmental laws; (15) terrorist acts and other acts of war; and (16) other factors over which the Company has little or no control. Additional information about the risks and uncertainties applicable to the Company’s business is contained in the Company’s Form 10-K for the year ended December 31, 2013, which is scheduled to be filed with the Securities and Exchange Commission today. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or webcasts should be consulted.

* Please see “Reconciliation of Non-GAAP Financial Measures” at the end of this release.


                                                                            M.D.C. HOLDINGS, INC.

                                                        Consolidated Statements of Operations and Comprehensive Income

                                                                           Three Months Ended                           Year Ended

                                                                              December 31,                              December 31,
                                                                              ------------                              ------------

                                                                                         2013                            2012                    2013             2012
                                                                                         ----                            ----                    ----             ----

                                                                                (Dollars in thousands, except per share
                                                                                               amounts)

    Homebuilding:                                                                            (Unaudited)

    Home sale revenues                                                                                        $460,939                 $389,141       $1,626,707       $1,150,998

    Land sale revenues                                                                                             636                    1,724            2,468            5,144
                                                                                                                   ---                    -----            -----            -----

    Total home and land sale revenues                                                                          461,575                  390,865        1,629,175        1,156,142
                                                                                                               -------                  -------        ---------        ---------

    Home cost of sales                                                                                        (380,086)                (323,179)      (1,336,978)        (973,120)

    Land cost of sales                                                                                            (491)                  (1,613)          (1,961)          (4,823)

    Inventory impairments                                                                                         (569)                  (1,105)            (919)          (1,105)
                                                                                                                  ----                   ------             ----           ------

    Total cost of sales                                                                                       (381,146)                (325,897)      (1,339,858)        (979,048)
                                                                                                              --------                 --------        ---------         --------

    Gross margin                                                                                                80,429                   64,968          289,317          177,094
                                                                                                                ------                   ------          -------          -------

    Selling, general and administrative expenses                                                               (55,421)                 (49,160)        (213,283)        (167,295)

    Interest income                                                                                              5,792                    6,747           26,938           23,398

    Interest expense                                                                                                 -                        -           (1,726)            (808)

    Other income (expense)                                                                                      (1,776)                    (364)            (923)             228
                                                                                                                ------                     ----             ----              ---

    Homebuilding pretax income                                                                                  29,024                   22,191          100,323           32,617
                                                                                                                ------                   ------          -------           ------

    Financial Services:

    Revenues                                                                                                    10,587                   14,908           51,259           46,881

    Expenses                                                                                                    (6,127)                  (8,186)         (25,271)         (21,645)

    Interest and other income                                                                                      834                      938            3,514            3,262
                                                                                                                   ---                      ---            -----            -----

    Financial services pretax income                                                                             5,294                    7,660           29,502           28,498
                                                                                                                 -----                    -----           ------           ------

    Income before income taxes                                                                                  34,318                   29,851          129,825           61,115

    (Provision for) benefit from income taxes                                                                   (3,609)                    (181)         184,560            1,584
                                                                                                                ------                     ----          -------            -----

    Net income                                                                                                 $30,709                  $29,670         $314,385          $62,699
                                                                                                               =======                  =======         ========          =======

    Other comprehensive income related to available for                                                          4,237                    1,133            6,737           12,078

        sale securities, net of tax

    Comprehensive income                                                                                       $34,946                  $30,803         $321,122          $74,777
                                                                                                               =======                  =======         ========          =======

    Earnings per share

    Basic                                                                                                        $0.62                    $0.60            $6.39            $1.29

    Diluted                                                                                                      $0.62                    $0.59            $6.34            $1.29

    Weighted average common shares outstanding

    Basic                                                                                                   48,497,526               48,140,725       48,453,119       47,660,629

    Diluted                                                                                                 48,728,889               48,607,571       48,831,785       47,834,156

    Dividends declared per share                                                            $                        -                    $1.25     $          -            $2.00




                                                                                                                                 M.D.C. HOLDINGS, INC.

                                                                                                                              Consolidated Balance Sheets

                                                                                                                                                            December 31,
                                                                                                                                                            ------------

                                                                                                                                                                       2013            2012
                                                                                                                                                                       ----            ----

                                                                                                                                                             (Dollars in
                                                                                                                                                          thousands, except
                                                                                                                                                              per share
                                                                                                                                                               amounts)

                                                                                                               ASSETS                                        (Unaudited)

    Homebuilding:

    Cash and cash equivalents                                                                                                                                                 $148,634        $129,535

    Marketable securities                                                                                                                                                      569,021         519,465

    Restricted cash                                                                                                                                                              2,195           1,859

    Trade and other receivables                                                                                                                                                 23,407          28,163

    Inventories:

    Housing completed or under construction                                                                                                                                    636,700         512,949

    Land and land under development                                                                                                                                            774,961         489,572
                                                                                                                                                                               -------         -------

    Total inventories                                                                                                                                                        1,411,661       1,002,521

    Property and equipment, net                                                                                                                                                 31,248          33,125

    Deferred tax asset, net of valuation allowance of $8,201 and $248,306 at December 31, 2013 and December                                                                    176,262               -

       31, 2012, respectively

    Metropolitan district bond securities (related party)                                                                                                                       12,729           5,818

    Prepaid and other assets                                                                                                                                                    53,525          38,959
                                                                                                                                                                                ------          ------

    Total homebuilding assets                                                                                                                                                2,428,682       1,759,445

    Financial Services:

    Cash and cash equivalents                                                                                                                                                   50,704          30,560

    Marketable securities                                                                                                                                                       19,046          32,473

    Mortgage loans held-for-sale, net                                                                                                                                           92,578         119,953

    Other assets                                                                                                                                                                 4,439           3,010
                                                                                                                                                                                 -----           -----

    Total financial services assets                                                                                                                                            166,767         185,996
                                                                                                                                                                               -------         -------

          Total Assets                                                                                                                                                      $2,595,449      $1,945,441
                                                                                                                                                                              ========        ========

                                                                                                       LIABILITIES AND EQUITY

    Homebuilding:

    Accounts payable                                                                                                                                                           $15,046         $73,055

    Accrued liabilities                                                                                                                                                        152,821         118,456

    Senior notes, net                                                                                                                                                        1,095,620         744,842
                                                                                                                                                                             ---------         -------

    Total homebuilding liabilities                                                                                                                                           1,263,487         936,353

    Financial Services:

    Accounts payable and accrued liabilities                                                                                                                                    55,639          51,864

    Mortgage repurchase facility                                                                                                                                                63,074          76,327
                                                                                                                                                                                ------          ------

    Total financial services liabilities                                                                                                                                       118,713         128,191
                                                                                                                                                                               -------         -------

          Total Liabilities                                                                                                                                                  1,382,200       1,064,544

    Stockholders' Equity

    Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding                                                                                       -               -

    Common stock, $0.01 par value; 250,000,000 shares authorized; 48,788,887 and 48,698,757 issued and

       outstanding at December 31, 2013 and December 31, 2012, respectively                                                                                                        488             487

    Additional paid-in-capital                                                                                                                                                 908,090         896,861

    Retained earnings (accumulated deficit)                                                                                                                                    293,096         (21,289)

    Accumulated other comprehensive income                                                                                                                                      11,575           4,838
                                                                                                                                                                                ------           -----

    Total Stockholders' Equity                                                                                                                                               1,213,249         880,897
                                                                                                                                                                             ---------         -------

    Total Liabilities and Stockholders' Equity                                                                                                                              $2,595,449      $1,945,441
                                                                                                                                                                              ========        ========


                                                                  M.D.C. HOLDINGS, INC.

                                                          Consolidated Statements of Cash Flows

                                        Three Months
                                            Ended                        Year Ended

                                       December 31,                      December 31,
                                       ------------                      ------------

                                                2013                      2012                         2013                         2012
                                                ----                      ----                         ----                         ----

                                              (Dollars in thousands)

    Operating Activities:                           (Unaudited)

    Net income                                                  $30,709                      $29,670                     $314,385                      $62,699

    Adjustments to reconcile
     net income to net cash
     provided by operating
     activities:

    Stock-based compensation
     expense                                                      1,412                        3,597                        9,652                       16,225

    Depreciation and
     amortization                                                   904                        1,058                        3,864                        4,766

    Inventory impairments                                           569                        1,105                          919                        1,105

    Amortization of discount
     (premiums) on marketable
     debt securities                                               (597)                         317                          219                          596

    Deferred income tax benefit                                   2,486                            -                     (187,171)                           -

    Excess tax benefits from
     stock-based compensation                                      (391)                           -                         (391)                           -

    Net changes in assets and
     liabilities:

          Restricted cash                                            (9)                         225                         (336)                      (1,192)

          Trade and other receivables                             5,785                        7,462                        4,186                       (6,223)

          Mortgage loans held-for-
           sale                                                 (18,238)                     (33,305)                      27,375                      (41,618)

          Housing completed or under
           construction                                          (3,046)                      (9,160)                    (124,211)                    (212,154)

          Land and land under
           development                                          (74,852)                     (97,092)                    (285,070)                      15,314

          Prepaid expenses and other
           assets                                                   471                        4,527                      (13,562)                       4,388

          Accounts payable                                       (4,921)                      23,410                      (58,142)                      47,473

          Accrued liabilities                                    16,029                        9,822                       38,734                         (198)
                                                                 ------                        -----                       ------                         ----

    Net cash used in operating
     activities                                                 (43,689)                     (58,364)                    (269,549)                    (108,819)
                                                                -------                      -------                     --------                     --------

    Investing Activities:

    Purchases of marketable
     securities                                                 (35,078)                     (81,534)                    (404,965)                    (478,701)

    Maturities of marketable
     securities                                                  27,100                        2,250                      159,592                      108,250

    Sales of marketable
     securities                                                  29,673                       64,882                      216,756                      349,938

    Purchases of property and
     equipment                                                     (507)                        (310)                      (1,785)                      (1,268)
                                                                   ----                         ----                       ------                       ------

    Net cash provided by (used
     in) investing activities                                    21,188                      (14,712)                     (30,402)                     (21,781)
                                                                 ------                      -------                      -------                      -------

    Financing Activities:

    Payments on mortgage
     repurchase facility                                        (38,911)                     (58,873)                    (234,671)                    (196,402)

    Advances on mortgage
     repurchase facility                                         63,073                       88,312                      221,418                      224,027

    Dividend payments                                                 -                      (60,869)                           -                      (96,915)

    Excess tax benefits from
     stock-based compensation                                       391                            -                          391                            -

    Proceeds from issuance of
     senior notes                                                     -                            -                      346,938                            -

    Proceeds from exercise of
     stock options                                                    -                          804                        5,118                       16,624
                                                                    ---                          ---                        -----                       ------

    Net cash provided by (used
     in) financing activities                                    24,553                      (30,626)                     339,194                      (52,666)
                                                                 ------                      -------                      -------                      -------

    Net increase (decrease) in
     cash and cash equivalents                                    2,052                     (103,702)                      39,243                     (183,266)

    Cash and cash equivalents:

          Beginning of period                                   197,286                      263,797                      160,095                      343,361
                                                                -------                      -------                      -------                      -------

          End of period                                        $199,338                     $160,095                     $199,338                     $160,095
                                                               ========                     ========                     ========                     ========


                                                            M.D.C. HOLDINGS, INC.

                                                        Homebuilding Operational Data

    New Home Deliveries

                                                                   Three Months Ended December 31,
                                                                   -------------------------------

                                                         2013                                                           2012                  % Change
                                                         ----                                                           ----                  --------

                              Dollar        Average                     Dollar          Average                       Dollar        Average

                        Homes        Value          Price       Homes           Value            Price          Homes        Value          Price
                        -----        -----          -----       -----           -----            -----          -----        -----          -----

                                                                        (Dollars in thousands)

      Arizona             192               $50,646             $263.8            185                   $41,358              $223.6             4%      22% 18%

      California          174                75,164              432.0            224                    76,722               342.5           -22%      -2% 26%

      Nevada              112                35,515              317.1            165                    37,990               230.2           -32%      -7% 38%

      Washington           64                22,004              343.8             81                    25,014               308.8           -21%     -12% 11%
                          ---                ------              -----            ---                    ------               -----

      West                542               183,329              338.2            655                   181,084               276.5           -17%       1% 22%
                          ---               -------              -----            ---                   -------               -----

      Colorado            354               132,409              374.0            268                    96,493               360.0            32%      37%  4%

      Utah                 37                12,195              329.6             75                    22,132               295.1           -51%     -45% 12%
                          ---                ------              -----            ---                    ------               -----

      Mountain            391               144,604              369.8            343                   118,625               345.8            14%      22%  7%
                          ---               -------              -----            ---                   -------               -----

      Maryland            131                58,484              446.4             77                    31,523               409.4            70%      86%  9%

      Virginia            107                53,807              502.9             84                    42,672               508.0            27%      26% -1%

      Florida              81                20,715              255.7             62                    15,237               245.8            31%      36%  4%
                          ---                ------              -----            ---                    ------               -----

      East                319               133,006              416.9            223                    89,432               401.0            43%      49%  4%
                          ---               -------              -----            ---                    ------               -----

      Total             1,252              $460,939             $368.2          1,221                  $389,141              $318.7             3%      18% 16%
                        =====                ======             ======          =====                    ======              ======


                                                   Year Ended December 31,
                                                   -----------------------

                                                 2013                                            2012                 % Change
                                                 ----                                            ----                 --------

                                               Dollar                         Average                                        Dollar                         Average                                           Dollar            Average

                                 Homes         Value                         Price                       Homes          Value                         Price                       Homes             Value              Price
                                 -----         -----                         -----                       -----          -----                         -----                       -----             -----              -----

                                                   (Dollars in thousands)

      Arizona                          635                         $156,308                 $246.2               603                         $131,278                 $217.7                 5%             19%                   13%

      California                       643                          243,804                  379.2               543                          184,490                  339.8                18%             32%                   12%

      Nevada                           593                          163,127                  275.1               604                          125,725                  208.2                -2%             30%                   32%

      Washington                       333                          108,038                  324.4               247                           73,074                  295.8                35%             48%                   10%
                                       ---                          -------                  -----               ---                           ------                  -----

      West                           2,204                          671,277                  304.6             1,997                          514,567                  257.7                10%             30%                   18%
                                     -----                          -------                  -----             -----                          -------                  -----

      Colorado                       1,287                          479,619                  372.7               807                          289,416                  358.6                59%             66%                    4%

      Utah                             208                           65,292                  313.9               226                           64,006                  283.2                -8%              2%                   11%
                                       ---                           ------                  -----               ---                           ------                  -----

      Mountain                       1,495                          544,911                  364.5             1,033                          353,422                  342.1                45%             54%                    7%
                                     -----                          -------                  -----             -----                          -------                  -----

      Maryland                         368                          159,169                  432.5               233                           99,476                  426.9                58%             60%                    1%

      Virginia                         355                          177,142                  499.0               280                          135,067                  482.4                27%             31%                    3%

      Florida                          288                           74,208                  257.7               195                           47,915                  245.7                48%             55%                    5%

      Illinois                           -                                -                      -                 2                              551                  275.5               N/M             N/M                   N/M
                                       ---                              ---                    ---               ---                              ---                  -----

      East                           1,011                          410,519                  406.1               710                          283,009                  398.6                42%             45%                    2%
                                     -----                          -------                  -----               ---                          -------                  -----

      Total                          4,710                       $1,626,707                 $345.4             3,740                       $1,150,998                 $307.8                26%             41%                   12%
                                     =====                         ========                 ======             =====                         ========                 ======

      N/M -Not
       meaningful


    Net New Orders

                                    Three Months Ended December 31,
                                    -------------------------------

                               2013                                    2012                      % Change
                               ----                                    ----                      --------

                                                                            Monthly                                                              Monthly

                             Dollar                 Average                 Absorption                       Dollar              Average           Absorption                   Dollar      Average

                   Homes     Value                 Price                    Rate           Homes          Value              Price              Rate            Homes      Value       Price
                   -----     -----                 -----                    ----           -----          -----              -----              ----            -----      -----       -----

                                       (Dollars in thousands)

    Arizona              137              $34,817                 $254.1              2.10             56            $12,436             $222.1            1.46       145%        180%            14%

    California           110               58,546                  532.2              3.12            143             49,641              347.1            3.08       -23%         18%            53%

    Nevada                88               27,285                  310.1              1.89            130             31,271              240.5            3.21       -32%        -13%            29%

    Washington            38               13,277                  349.4              1.01             56             18,285              326.5            1.70       -32%        -27%             7%
                         ---               ------                  -----              ----            ---             ------              -----            ----

    West                 373              133,925                  359.0              2.02            385            111,633              290.0            2.43        -3%         20%            24%
                         ---              -------                  -----              ----            ---            -------              -----            ----

    Colorado             184               73,557                  399.8              1.61            247             87,289              353.4            1.93       -26%        -16%            13%

    Utah                  16                5,186                  324.1              1.07             36             10,589              294.1            0.81       -56%        -51%            10%
                         ---                -----                  -----              ----            ---             ------              -----            ----

    Mountain             200               78,743                  393.7              1.55            283             97,878              345.9            1.64       -29%        -20%            14%
                         ---               ------                  -----              ----            ---             ------              -----            ----

    Maryland              62               29,586                  477.2              1.27             68             26,812              394.3            1.23        -9%         10%            21%

    Virginia              42               20,377                  485.2              1.51             86             43,004              500.0            2.34       -51%        -53%            -3%

    Florida               75               22,597                  301.3              2.00             47             12,991              276.4            1.04        60%         74%             9%
                         ---               ------                  -----              ----            ---             ------              -----            ----

    East                 179               72,560                  405.4              1.57            201             82,807              412.0            1.46       -11%        -12%            -2%
                         ---               ------                  -----              ----            ---             ------              -----            ----

    Total                752             $285,228                 $379.3              1.76            869           $292,318             $336.4            1.86       -13%         -2%            13%
                         ===               ======                 ======              ====            ===             ======             ======            ====




                                                                                       Year Ended December 31,
                                                                                       -----------------------

                                                                                  2013                                                                 2012                  % Change
                                                                                  ----                                                                 ----                  --------

                                                                               Monthly                                                              Monthly

                               Dollar         Average        Absorption                         Dollar         Average       Absorption             Dollar         Average

                         Homes        Value            Price            Rate            Homes           Value          Price            Rate Homes          Value          Price
                         -----        -----            -----            ----            -----           -----          -----            ---- -----          -----          -----

                                                                                        (Dollars in thousands)

    Arizona                645                $165,101                  $256.0            2.91            625                  $137,159      $219.5           2.93             3%      20%  17%

    California             561                 237,694                   423.7            3.90            654                   225,174       344.3           3.11           -14%       6%  23%

    Nevada                 529                 162,270                   306.7            3.47            652                   146,094       224.1           3.10           -19%      11%  37%

    Washington             300                  98,156                   327.2            2.19            272                    82,325       302.7           2.14            10%      19%   8%
                           ---                  ------                   -----            ----            ---                    ------       -----           ----

    West                 2,035                 663,221                   325.9            3.11          2,203                   590,752       268.2           2.90            -8%      12%  22%
                         -----                 -------                   -----            ----          -----                   -------       -----           ----

    Colorado             1,234                 466,285                   377.9            2.67          1,044                   364,056       348.7           1.90            18%      28%   8%

    Utah                   153                  48,893                   319.6            1.80            239                    71,080       297.4           1.19           -36%     -31%   7%
                           ---                  ------                   -----            ----            ---                    ------       -----           ----

    Mountain             1,387                 515,178                   371.4            2.53          1,283                   435,136       339.2           1.71             8%      18%   9%
                         -----                 -------                   -----            ----          -----                   -------       -----           ----

    Maryland               314                 145,310                   462.8            1.45            303                   129,891       428.7           1.39             4%      12%   8%

    Virginia               273                 136,054                   498.4            2.07            362                   179,744       496.5           2.20           -25%     -24%   0%

    Florida                318                  84,897                   267.0            2.09            189                    46,493       246.0           1.06            68%      83%   9%

    Illinois                 -                       -                       -               -              2                       550       275.0            N/M           N/M      N/M  N/M
                           ---                     ---                     ---             ---            ---                       ---       -----            ---

    East                   905                 366,261                   404.7            1.81            856                   356,678       416.7           1.52             6%       3%  -3%
                           ---                 -------                   -----            ----            ---                   -------       -----           ----

    Total                4,327              $1,544,660                  $357.0            2.54          4,342                $1,382,566      $318.4           2.10             0%      12%  12%
                         =====                ========                  ======            ====          =====                  ========      ======           ====

    N/M - not meaningful


    Active Subdivisions

                                   At
                               December
                                  31,               %
                               --------

                                    2013           2012          Change
                                    ----           ----          ------

      Arizona                         25             12                 108%

      California                      11             13                 -15%

      Nevada                          15             12                  25%

      Washington                      13             10                  30%
                                     ---            ---

      West                            64             47                  36%
                                     ---            ---

      Colorado                        38             42                 -10%

      Utah                             5             14                 -64%
                                     ---            ---

      Mountain                        43             56                 -23%
                                     ---            ---

      Maryland                        17             18                  -6%

      Virginia                        10             12                 -17%

      Florida                         12             15                 -20%
                                     ---            ---

      East                            39             45                 -13%
                                     ---            ---

      Total                          146            148                  -1%
                                     ===            ===

      Average for quarter
       ended                         143            156                  -8%
                                     ===            ===

      Average for year ended         142            173                 -18%
                                     ===            ===


    Backlog

                                 At December 31,
                                 ---------------

                             2013                                2012         %Change
                             ----                                ----         -------

                 Homes     Dollar                   Average           Homes          Dollar             Average        Homes      Dollar
                                                    Price                                            Price                   Value       Average Price
                                                                               Value
                           Value
                           -----

                             (Dollars in thousands)

      Arizona          160                  $43,184         $269.9        150                $35,064            $233.8   7%     23%                 15%

      California       147                   71,855          488.8        229                 78,400             342.4 -36%     -8%                 43%

      Nevada           140                   49,350          352.5        204                 50,533             247.7 -31%     -2%                 42%

      Washington        46                   16,430          357.2         79                 26,761             338.7 -42%    -39%                  5%
                       ---                   ------          -----        ---                 ------             -----

      West             493                  180,819          366.8        662                190,758             288.2 -26%     -5%                 27%
                       ---                  -------          -----        ---                -------             -----

      Colorado         417                  171,688          411.7        470                174,280             370.8 -11%     -1%                 11%

      Utah              26                    8,422          323.9         81                 25,058             309.4 -68%    -66%                  5%
                       ---                    -----          -----        ---                 ------             -----

      Mountain         443                  180,110          406.6        551                199,338             361.8 -20%    -10%                 12%
                       ---                  -------          -----        ---                -------             -----

      Maryland         129                   65,435          507.2        183                 79,162             432.6 -30%    -17%                 17%

      Virginia         103                   51,594          500.9        185                 92,303             498.9 -44%    -44%                  0%

      Florida           94                   28,037          298.3         64                 17,452             272.7  47%     61%                  9%
                       ---                   ------          -----        ---                 ------             -----

      East             326                  145,066          445.0        432                188,917             437.3 -25%    -23%                  2%
                       ---                  -------          -----        ---                -------             -----

      Total          1,262                 $505,995         $400.9      1,645               $579,013            $352.0 -23%    -13%                 14%
                     =====                   ======         ======      =====                 ======            ======


    Homes Completed or Under Construction (WIP lots):

                                  December
                                     31,
                                 ---------

                                       2013            2012 % Change
                                       ----            ---- --------

      Unsold:

      Completed                         378             221          71%

      Under construction              1,038             604          72%
                                      -----             ---

      Total unsold started
       homes                          1,416             825          72%
                                      -----             ---

      Sold homes under
       construction or
       completed                        981           1,147         -14%

      Model homes                       258             221          17%
                                        ---             ---

      Total homes completed or
       under construction             2,655           2,193          21%
                                      =====           =====


    Lots Owned and Optioned (including homes completed or under construction):

                             December 31, 2013                            December 31, 2012
                             -----------------                            -----------------

                                  Lots                 Lots                 Total Lots      Lots        Lots        Total Lots         Total %

                                  Owned              Optioned               Controlled      Owned     Optioned      Controlled      Change
                                  -----              --------               ----------      -----     --------      ----------      ------

      Arizona                         2,838                     74                    2,912     1,763            80           1,843         58%

      California                      1,765                    129                    1,894     1,080             -           1,080         75%

      Nevada                          1,503                    391                    1,894     1,226            40           1,266         50%

      Washington                        537                    182                      719       472           162             634         13%
                                        ---                    ---                      ---       ---           ---             ---

      West                            6,643                    776                    7,419     4,541           282           4,823         54%
                                      -----                    ---                    -----     -----           ---           -----

      Colorado                        4,292                  1,093                    5,385     3,335           508           3,843         40%

      Utah                              538                     19                      557       532            13             545          2%
                                        ---                    ---                      ---       ---           ---             ---

      Mountain                        4,830                  1,112                    5,942     3,867           521           4,388         35%
                                      -----                  -----                    -----     -----           ---           -----

      Maryland                          446                    304                      750       577           315             892        -16%

      Virginia                          469                    133                      602       553           263             816        -26%

      Florida                           650                    423                    1,073       365           159             524        105%
                                        ---                    ---                    -----       ---           ---             ---

      East                            1,565                    860                    2,425     1,495           737           2,232          9%
                                      -----                    ---                    -----     -----           ---           -----

      Total                          13,038                  2,748                   15,786     9,903         1,540          11,443         38%
                                     ======                  =====                   ======     =====         =====          ======



          M.D.C. HOLDINGS, INC.

        Reconciliation of Non-GAAP
            Financial Measures

    Adjusted Gross Margin from Home
     Sales

    Adjusted gross margin from home
     sales is a non-GAAP financial
     measure. We believe this
     information is meaningful as it
     isolates the impact that
     inventory impairments, warranty
     adjustments and interest have on
     our Gross Margin from Home Sales
     and permits investors to make
     better comparisons with our
     competitors, who also break out
     and adjust gross margins in a
     similar fashion.

                                                                        Three Months Ended
                                                                        ------------------

                                           December          Gross        December       Gross    September  Gross

                                                31,          Margin            31,       Margin         30,  Margin

                                               2013             %             2012          %          2013     %
                                               ----            ---            ----         ---         ----    ---

                                                                      (Dollars in thousands)

     Gross Margin                                   $80,429         17.4%                $64,968       16.6%        $78,444  18.1%

     Less: Land Sale Revenues                          (636)                              (1,724)                       (25)

     Add: Land Cost of Sales                            491                                1,613                         35
                                                        ---                                -----                        ---

     Gross Margin from Home Sales                    80,284         17.4%                 64,857       16.7%         78,454  18.1%

     Add: Inventory Impairments                         569                                1,105                        350

     Add: Interest in Cost of Sales                  16,140                               10,452                     15,567

     Add: Warranty Adjustments                            -                                    -                          -
                                                        ---                                  ---                        ---

     Adjusted Gross Margin from Home Sales          $96,993         21.0%                $76,414       19.6%        $94,371  21.8%


    Net Income Excluding the Impact of the Reversal of the
     Deferred Tax Asset Valuation Allowance

    Net income excluding the impact of the reversal of the
     deferred tax asset valuation allowance per diluted
     share is a non-GAAP financial measure. We believe this
     information is meaningful as it more clearly reflects
     the Company's current operating results and facilitates
     the investors ability to compare our financial results
     to those of our peer group and to our prior financial
     performance by excluding items which otherwise would
     distort the comparison. Net income excluding the impact
     of the reversal of the deferred tax asset valuation
     allowance per basic and diluted share for the year

                                      Year Ended
                                        December
                                        31, 2013
                                       ---------

                                        (Dollars
                                           in
                                       thousands,
                                         except
                                       per share
                                        amounts)

      Numerator

      Net income                                      $314,385

      Less: deferred tax asset
       valuation allowance reversal                   (187,643)
                                                      --------

      Adjusted net income                              126,742

      Less: distributed earnings
       allocated to participating
       securities                                            -

      Less: undistributed earnings
       allocated to participating
       securities                                       (1,982)
                                                        ------

      Net income attributable to common
       stockholders (numerator for
       basic earnings per share)                       124,760
                                                       -------

      Add back: undistributed earnings
       allocated to participating
       securities                                        1,982

      Less: undistributed earnings
       reallocated to participating
       securities                                       (1,967)
                                                        ------

      Numerator for diluted earnings
       per share                                      $124,775
                                                      ========

      Denominator

      Weighted-average common shares
       outstanding                                  48,453,119

      Add: dilutive effect of stock
       options                                         378,666
                                                       -------

      Denominator for diluted earnings
       per share under two class method             48,831,785
                                                    ==========

      Basic earnings per common
       share excluding impact of
       reversal of deferred tax
       asset valuation allowance                         $2.58

      Diluted earnings per common
       share excluding impact of
       reversal of deferred tax
       asset valuation allowance                         $2.56

SOURCE M.D.C. Holdings, Inc.


Source: PR Newswire



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