MDC HOLDINGS INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-8951

M.D.C. HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)


Delaware	84-0622967
(State or other jurisdiction	(I.R.S. employer
of incorporation or organization)	identification no.)

3600 South Yosemite Street, Suite 900		80237
Denver, Colorado	(Zip code)
(Address of principal executive offices)

(303) 773-1100
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

As of July 30, 2004, 32,581,000 shares of M.D.C. Holdings, Inc. common stock were outstanding.

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets
(In thousands)


	June 30,		December 31,
	2004		2003
	(Unaudited)
ASSETS
Corporate
Cash and cash equivalents	$	55,430	$	163,133
Property and equipment, net		10,776		10,152
Deferred income taxes		36,321		32,096
Deferred debt issue costs, net		4,061		4,232
Other assets, net		8,551		7,460

		115,139		217,073

Homebuilding
Cash and cash equivalents		19,476		8,246
Home sales and other accounts receivable		28,883		8,394
Inventories, net
Housing completed or under construction		982,307		732,744
Land and land under development		875,494		763,569
Prepaid expenses and other assets, net		90,038		88,419

		1,996,198		1,601,372

Financial Services
Cash and cash equivalents		1,795		2,186
Mortgage loans held in inventory		121,910		140,040
Other assets, net		13,305		9,129

		137,010		151,355

Total Assets	$	2,248,347	$	1,969,800

See notes to condensed consolidated financial statements.

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M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(In thousands, except share amounts)


	June 30,			December 31,
	2004			2003
	(Unaudited)
LIABILITIES
Corporate
Accounts payable and accrued expenses	$	68,295		$	72,212
Income taxes payable		22,227			25,011
Senior notes, net		497,797			497,700

		588,319			594,923

Homebuilding
Accounts payable and accrued expenses		324,630			259,294
Line of credit		90,000			—
Notes payable		—			2,479

		414,630			261,773

Financial Services
Accounts payable and accrued expenses		22,387			17,944
Line of credit		72,628			79,240

		95,015			97,184

Total Liabilities		1,097,964			953,880

COMMITMENTS AND CONTINGENCIES		—			—

STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; 25,000,000 shares authorized; none issued		—			—
Common stock, $.01 par value; 100,000,000 shares authorized; 32,630,000 and 35,570,000 shares issued, respectively, at June 30, 2004 and December 31, 2003		326			326
Additional paid-in capital		635,549			484,150
Retained earnings		522,965			582,927
Unearned restricted stock		(1,356	)		(1,169	)
Accumulated other comprehensive income		(289	)		(9	)

		1,157,195			1,066,225
Less treasury stock, at cost; 119,200 and 3,082,000 shares, respectively, at June 30, 2004 and December 31, 2003		(6,812	)		(50,305	)

Total Stockholders’ Equity		1,150,383			1,015,920

Total Liabilities and Stockholders’ Equity	$	2,248,347		$	1,969,800

See notes to condensed consolidated financial statements.

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
REVENUES
Homebuilding	$	863,369		$	673,420		$	1,612,233		$	1,228,332
Financial services		11,947			15,813			26,395			30,326
Corporate		167			209			459			426

Total Revenues		875,483			689,442			1,639,087			1,259,084

COSTS AND EXPENSES
Homebuilding		710,884			588,076			1,346,303			1,078,530
Financial services		8,802			7,214			18,593			14,160
Expenses related to debt redemption		—			9,315			—			9,315
Corporate		21,510			14,832			40,086			26,308

Total Costs and Expenses		741,196			619,437			1,404,982			1,128,313

Income before income taxes		134,287			70,005			234,105			130,771
Provision for income taxes		(51,719	)		(27,311	)		(90,636	)		(51,040	)

NET INCOME	$	82,568		$	42,694		$	143,469		$	79,731

EARNINGS PER SHARE
Basic	$	2.54		$	1.35		$	4.41		$	2.51

Diluted	$	2.43		$	1.30		$	4.21		$	2.42

WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic		32,552			31,557			32,548			31,705

Diluted		34,025			32,909			34,044			32,919

DIVIDENDS DECLARED PER SHARE	$	.150		$	.075		$	.264		$	.141

See notes to condensed consolidated financial statements.

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


	Six Months
	Ended June 30,
	2004			2003
OPERATING ACTIVITIES
Net income	$	143,469		$	79,731
Adjustments to reconcile net income to net cash used in operating activities
Expenses related to debt redemption		—			9,315
Depreciation and amortization		17,093			16,475
Deferred income taxes		(4,225	)		(5,461	)
Net changes in assets and liabilities
Home sales and other accounts receivable		(20,489	)		(22,674	)
Homebuilding inventories		(363,967	)		(208,290	)
Prepaid expenses and other assets		(15,269	)		(17,652	)
Mortgage loans held in inventory		18,130			57,497
Accounts payable and accrued expenses		67,984			32,257
Other, net		(4,069	)		(452	)

Net cash used in operating activities		(161,343	)		(59,254	)

INVESTING ACTIVITIES
Net purchase of property and equipment		(5,277	)		(3,190	)

FINANCING ACTIVITIES
Lines of credit
Advances		595,000			1,365,300
Principal payments		(511,612	)		(1,244,049	)
Senior notes
Proceeds from issuance		—			147,279
Repurchase		—			(175,000	)
Premium on repurchase		—			(7,329	)
Dividend payments		(8,743	)		(4,508	)
Stock repurchases		(6,812	)		(26,731	)
Proceeds from exercise of stock options		1,923			8,403

Net cash provided by financing activities		69,756			63,365

Net (decrease) increase in cash and cash equivalents		(96,864	)		921
Cash and cash equivalents
Beginning of period		173,565			28,942

End of period	$	76,701		$	29,863

See notes to condensed consolidated financial statements.

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M.D.C. HOLDINGS, INC.

Notes to Consolidated Financial Statements
(Unaudited)

A. Presentation of Financial Statements

The consolidated financial statements of M.D.C. Holdings, Inc. (“MDC” or the “Company,” which refers to M.D.C. Holdings, Inc. and its subsidiaries) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These statements reflect all adjustments (including all normal recurring accruals) which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of MDC as of June 30, 2004 and for all periods presented. These statements should be read in conjunction with MDC’s financial statements and notes thereto included in MDC’s Annual Report on Form 10-K for its fiscal year ended December 31, 2003. Certain reclassifications have been made in the 2003 financial statements to conform to the classifications used in the current year.

The Company historically has experienced, and expects to continue to experience, variability in quarterly results. The condensed consolidated statements of income are not necessarily indicative of the results to be expected for the full year.

B. Earnings Per Share

The basic and diluted earnings per share calculations are shown below (in thousands, except per share amounts). Prior period earnings per share and weighted-average shares outstanding have been restated to reflect the effect of a 10% stock dividend declared on February 23, 2004.


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2004		2003		2004		2003
Basic Earnings Per Share
Net income	$	82,568	$	42,694	$	143,469	$	79,731

Basic weighted-average shares outstanding		32,552		31,557		32,548		31,705

Per share amounts	$	2.54	$	1.35	$	4.41	$	2.51

Diluted Earnings Per Share
Net income	$	82,586	$	42,694	$	143,469	$	79,731

Basic weighted-average shares outstanding		32,552		31,557		32,548		31,705
Stock options, net		1,473		1,352		1,496		1,214

Diluted weighted-average shares outstanding		34,025		32,909		34,044		32,919

Per share amounts	$	2.43	$	1.30	$	4.21	$	2.42

C. Stockholders’ Equity

Stock Repurchase Program - In March 2003, the MDC board of directors authorized the repurchase of up to an additional 1,350,000 shares of MDC common stock, bringing the total authorization under the Company’s stock repurchase program to 4,350,000 shares. The Company repurchased a total of 119,200 shares of MDC common stock in the 2004 second quarter and no shares in the first quarter, bringing the total shares repurchased to 2,699,600 and leaving 1,650,400 shares

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available to be repurchased as of June 30, 2004 under this program. The per share prices, including commissions, for the 119,200 shares repurchased averaged $57.15. At June 30, 2004, the Company held 119,200 shares of treasury stock with an average purchase price of $57.15 per share.

Stock Dividend - On February 23, 2004, MDC’s board of directors declared a 10% stock dividend that was distributed on March 23, 2004 to shareowners of record on March 8, 2004. In accordance with the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share,” basic and diluted net income per share amounts, weighted-average shares outstanding, and dividends declared per share have been restated for all periods affected to reflect the effect of this stock dividend.

Stock-Based Compensation - The Company has elected to account for stock-based compensation using the intrinsic value method as prescribed by Accounting Principles Board Opinion (“APB”) No. 25 and related interpretations. Stock options are granted at an exercise price that is not less than the fair market value of MDC’s common stock at the date of grant and, therefore, the Company recorded no compensation expense in the determination of net income for the three and six months ended June 30, 2004 and 2003. The following table illustrates the effect on net income and earnings per share if the fair value method prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 123, as amended by SFAS No. 148, had been applied to all outstanding and unvested awards in the three and six month periods ended June 30, 2004 and 2003 (in thousands, except per share amounts).


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
Net income, as reported	$	82,568		$	42,694		$	143,469		$	79,731
Deduct stock-based compensation expense determined using the fair value method, net of related tax effects		(1,911	)		(1,937	)		(3,157	)		(3,472	)

Pro forma net income	$	80,657		$	40,757		$	140,312		$	76,259

Earnings per share
Basic as reported	$	2.54		$	1.35		$	4.41		$	2.51

Basic pro forma	$	2.48		$	1.29		$	4.31		$	2.41

Diluted as reported	$	2.43		$	1.30		$	4.21		$	2.42

Diluted pro forma	$	2.37		$	1.24		$	4.12		$	2.32

D. Interest Activity

The Company capitalizes interest incurred on its corporate and homebuilding debt during the period of active development and through the completion of construction of its homebuilding inventories. Corporate and homebuilding interest incurred but not capitalized is reported as interest expense. Interest incurred by the financial services segment is charged to interest expense, which is deducted from interest income and reported as net interest income in Note F.

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Interest activity, in total and by business segment, is shown below (in thousands).


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
Total Interest Incurred
Corporate and homebuilding	$	7,709		$	7,363		$	15,075		$	14,415
Financial services		385			411			768			981

Total interest incurred	$	8,094		$	7,774		$	15,843		$	15,396

Corporate/Homebuilding Interest Capitalized
Interest capitalized in homebuilding inventory, beginning of period	$	21,047		$	20,032		$	20,043		$	17,783
Interest incurred		7,709			7,363			15,075			14,415
Interest expense		—			—			—			—
Previously capitalized interest included in cost of sales		(6,733	)		(6,805	)		(13,095	)		(11,608	)

Interest capitalized in homebuilding inventory, end of period	$	22,023		$	20,590		$	22,023		$	20,590

Financial Services Net Interest Income
Interest income	$	1,285		$	1,436		$	2,598		$	3,014
Interest expense		(385	)		(411	)		(768	)		(981	)

Net interest income	$	900		$	1,025		$	1,830		$	2,033

E. Warranty Reserves

Warranty reserves are reviewed quarterly, using historical data and other relevant information, to determine the reasonableness and adequacy of both the reserve and the per unit reserve amount originally included in cost of sales, as well as the timing of the reversal of the reserve. Warranty reserves are included in corporate and homebuilding accounts payable and accrued expenses in the condensed consolidated balance sheets, and totaled $58,042,000 and $51,068,000, respectively, at June 30, 2004 and December 31, 2003. Warranty expense was $9,067,000 and $18,074,000 for the three and six months ended June 30, 2004, compared with $10,109,000 and $18,154,000 for the same periods in 2003. Reserves carried over from prior years primarily are the result of the Company’s volume of homes closed increasing by over 200% in the last ten years, giving rise to continuing warranty reserves that exceed current expenditures. In addition, the carryover includes additional qualified settlement fund warranty reserves created pursuant to litigation settled in 1996. Warranty activity for the six months ended June 30, 2004 is shown below (in thousands).


Warranty reserve balance at December 31, 2003	$	51,068
Warranty expense provision		18,074
Warranty cash payments, net		(11,100	)

Warranty reserve balance at June 30, 2004	$	58,042

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F. Information on Business Segments

The Company operates in two business segments: homebuilding and financial services. A summary of the Company’s segment information is shown below (in thousands).


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
Homebuilding
Revenues
Home sales	$	861,537		$	672,439		$	1,607,966		$	1,226,014
Land sales		—			—			—			123
Other revenues		1,832			981			4,267			2,195

Total Homebuilding Revenues		863,369			673,420			1,612,233			1,228,332

Home cost of sales		623,894			515,985			1,174,918			943,587
Land cost of sales		—			—			—			87
Marketing expenses		44,653			39,625			87,821			73,225
General and administrative expenses		42,337			32,466			83,564			61,631

Total Homebuilding Expenses		710,884			588,076			1,346,303			1,078,530

Homebuilding Operating Profit		152,485			85,344			265,930			149,802

Financial Services
Revenues
Net interest income		900			1,025			1,830			2,033
Origination fees		5,399			5,234			10,663			9,894
Gains on sales of mortgage servicing		521			329			1,137			1,163
Gains on sales of mortgage loans, net		4,533			8,755			11,310			16,097
Mortgage servicing and other		594			470			1,455			1,139

Total Financial Services Revenues		11,947			15,813			26,395			30,326
General and administrative expenses		8,802			7,214			18,593			14,160

Financial Services Operating Profit		3,145			8,599			7,802			16,166

Total Operating Profit		155,630			93,943			273,732			165,968

Corporate
Expenses related to debt redemption		—			(9,315	)		—			(9,315	)
Interest and other revenues		167			209			459			426
General and administrative expenses		(21,510	)		(14,832	)		(40,086	)		(26,308	)

Net Corporate Expenses		(21,343	)		(23,938	)		(39,627	)		(35,197	)

Income Before Income Taxes	$	134,287		$	70,005		$	234,105		$	130,771

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G. Commitments and Contingencies

The Company often is required to obtain bonds and letters of credit in support of its related obligations with respect to subdivision improvement, homeowners association dues and start-up expenses, warranty work, contractors license fees and earnest money deposits. At June 30, 2004, MDC had outstanding approximately $257,855,000 of performance bonds and $52,171,000 of letters of credit, including $10,633,000 issued by HomeAmerican. In the event any such bonds or letters of credit issued by third parties are called, MDC would be obligated to reimburse the issuer of the bond or letter of credit.

H. Senior Notes and Lines of Credit

Lines of Credit – The Company has an unsecured revolving line of credit with a group of lenders for support of our homebuilding operations (the “Homebuilding Line”). In April 2004, the Company renewed the Homebuilding Line, increasing the aggregate commitment amount from $600,000,000 to $700,000,000, increasing the maximum amount available to $850,000,000 upon the Company’s request, subject to receipt of additional commitments from existing or additional participating lenders, and extending the maturity date to April 7, 2009. Pursuant to the terms of the Homebuilding Line, a term-out of the credit facility may commence prior to April 7, 2009 under certain circumstances. At June 30, 2004, the Company had $90,000,000 of borrowings and $40,687,000 in letters of credit outstanding under the Homebuilding Line.

At June 30, 2004, the Company’s mortgage lending bank line of credit (the “Mortgage Line”) had a borrowing limit of $175,000,000. The terms of the Mortgage Line are set forth in the Third Amended and Restated Warehousing Credit Agreement dated as of October 23, 2003 as amended by the First Amendment dated as of February 27, 2004. Available borrowings under the Mortgage Line are collateralized by mortgage loans and mortgage-backed certificates and are limited to the value of eligible collateral as defined. At June 30, 2004, $72,628,000 was borrowed and an additional $24,525,000 was collateralized and available to be borrowed. The Mortgage Line is cancelable upon 120 days notice.

The Company’s debt obligations as of June 30, 2004 and December 31, 2003 are as follows (in thousands):


	June 30,		December 31,
	2004		2003
7% senior notes due 2012	$	148,625	$	148,565
5 ½% senior notes due 2013		349,172		349,135

Total Senior notes		497,797		497,700
Homebuilding Line		90,000		—
Notes payable		—		2,479

Total Corporate and Homebuilding Debt		587,797		500,179
Mortgage Line		72,628		79,240

Total Debt	$	660,425	$	579,419

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I. Supplemental Guarantor Information

The Company’s senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally by the following subsidiaries (collectively, the “Guarantor Subsidiaries”).

• M.D.C. Land Corporation

• RAH of Texas, LP

• RAH Texas Holdings, LLC

• Richmond American Construction, Inc.

• Richmond American Homes of Arizona, Inc.

• Richmond American Homes of California, Inc.

• RAH of Florida, Inc. (formerly known as: Richmond American Homes of California (Inland Empire), 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 Texas, Inc.

• Richmond American Homes of Utah, Inc.

• Richmond American Homes of Virginia, Inc.

• Richmond American Homes of West Virginia, Inc.

Subsidiaries that do not guarantee the Company’s senior notes (collectively, the “Non-Guarantor Subsidiaries”) include:

• American Home Insurance Agency, Inc.

• American Home Title and Escrow Company

• HomeAmerican Mortgage Corporation

• Lion Insurance Company

• StarAmerican Insurance Ltd.

• Allegiant Insurance Company, Inc., A Risk Retention Group

The Company has determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor Subsidiaries is presented.

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M.D.C. Holdings, Inc.
Supplemental Combining Balance Sheet
June 30, 2004
(In thousands)
(Unaudited)


						Non-
				Guarantor		Guarantor			Eliminating
	MDC			Subsidiaries		Subsidiaries			Entries			Total
ASSETS
Corporate
Cash and cash equivalents	$	55,430		$	—	$	—		$	—		$	55,430
Investments in and advances to parent and subsidiaries		311,314			772		(3,071	)		(309,015	)		—
Other assets		60,818			205		(1,314	)		—			59,709

		427,562			977		(4,385	)		(309,015	)		115,139

Homebuilding
Cash and cash equivalents		—			14,992		4,484			—			19,476
Home sales and other accounts receivable		—			35,917		1,486			(8,520	)		28,883
Inventories, net
Housing completed or under construction		—			982,307		—			—			982,307
Land and land under development		—			875,494		—			—			875,494
Other assets		—			66,631		23,407			—			90,038

		—			1,975,341		29,377			(8,520	)		1,996,198

Financial Services		—			—		137,010			—			137,010

Total Assets	$	427,562		$	1,976,318	$	162,002		$	(317,535	)	$	2,248,347

LIABILITIES
Corporate
Accounts payable and accrued expenses	$	69,066		$	231	$	48		$	(1,050	)	$	68,295
Advances and notes payable — parent and subsidiaries		(1,315,170	)		1,299,751		15,419			—			—
Income taxes payable		(64,517	)		84,489		2,255			—			22,227
Senior notes, net		497,797			—		—			—			497,797

		(812,824	)		1,384,471		17,722			(1,050	)		588,319

Homebuilding
Accounts payable and accrued expenses		—			312,818		11,812			—			324,630
Line of credit		90,000			—		—			—			90,000

		90,000			312,818		11,812			—			414,630

Financial Services		—			—		102,484			(7,469	)		95,015

Total Liabilities	$	(722,824	)	$	1,697,289	$	132,018		$	(8,519	)	$	1,097,964

STOCKHOLDERS’ EQUITY	$	1,150,386		$	279,029	$	29,984		$	(309,016	)	$	1,150,383

Total Liabilities and Stockholders’ Equity	$	427,562		$	1,976,318	$	162,002		$	(317,535	)	$	2,248,347

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M.D.C. Holdings, Inc.
Supplemental Combining Balance Sheet
December 31, 2003
(In thousands)


						Non-
				Guarantor		Guarantor			Eliminating
	MDC			Subsidiaries		Subsidiaries			Entries			Total
ASSETS
Corporate
Cash and cash equivalents	$	163,133		$	—	$	—		$	—		$	163,133
Investments in and advances to parent and subsidiaries		377,353			1,112		(18,537	)		(359,928	)		—
Other assets		55,866			22		(1,948	)		—			53,940

		596,352			1,134		(20,485	)		(359,928	)		217,073

Homebuilding
Cash and cash equivalents		—			6,335		1,911			—			8,246
Home sales and other accounts receivable		—			12,538		503			(4,647	)		8,394
Inventories, net
Housing completed or under construction		—			732,744		—			—			732,744
Land and land under development		—			763,569		—			—			763,569
Other assets		—			65,876		22,543			—			88,419

		—			1,581,062		24,957			(4,647	)		1,601,372

Financial services		—			—		151,355			—			151,355

Total Assets	$	596,352		$	1,582,196	$	155,827		$	(364,575	)	$	1,969,800

LIABILITIES
Corporate
Accounts payable and accrued expenses	$	72,344		$	70	$	48		$	(250	)	$	72,212
Advances and notes payable – parent and subsidiaries		(885,966	)		871,875		14,091			—			—
Income taxes payable		(101,816	)		122,787		4,040			—			25,011
Senior notes, net		497,700			—		—			—			497,700

		(417,738	)		994,732		18,179			(250	)		594,923

Homebuilding
Accounts payable and accrued expenses		—			251,275		8,019			—			259,294
Line of credit		—			—		—			—			—
Notes payable		—			2,479		—			—			2,479

		—			253,754		8,019			—			261,773

Financial services		—			—		101,593			(4,409	)		97,184

Total Liabilities	$	(417,738	)	$	1,248,486	$	127,791			(4,659	)	$	953,880

STOCKHOLDERS’ EQUITY	$	1,014,090		$	333,710	$	28,036		$	(359,916	)	$	1,015,920

Total Liabilities and Stockholders’ Equity	$	596,352		$	1,582,196	$	155,827		$	(364,575	)	$	1,969,800

-12-

M.D.C. Holdings, Inc.
Supplemental Combining Statements of Income
(In thousands)
(Unaudited)

Three Months Ended June 30, 2004


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	861,824		$	1,718		$	(173	)	$	863,369
Financial services		—			—			11,947			—			11,947
Corporate		162			—			5			—			167
Equity in earnings of subsidiaries		83,500			—			—			(83,500	)		—

Total Revenues		83,662			861,824			13,670			(83,673	)		875,483

COSTS AND EXPENSES
Homebuilding		371			733,667			(467	)		(22,687	)		710,884
Financial services		—			—			8,802			—			8,802
Corporate		21,510			—			—			—			21,510
Corporate and homebuilding interest		(22,687	)		—			—			22,687			—

Total Expenses		(806	)		733,667			8,335			—			741,196

Income before income taxes		84,468			128,157			5,335			(83,673	)		134,287
Provision for income taxes		(794	)		(49,086	)		(1,839	)		—			(51,719	)

NET INCOME	$	83,674		$	79,071		$	3,496		$	(83,673	)	$	82,568

Three Months Ended June 30, 2003


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	672,573		$	932		$	(85	)	$	673,420
Financial services		—			—			15,813			—			15,813
Corporate		204			—			5			—			209
Equity in earnings of subsidiaries		45,024			—			—			(45,024	)		—

Total Revenues		45,228			672,573			16,750			(45,109	)		689,442

COSTS AND EXPENSES
Homebuilding		30			609,144			(70	)		(21,028	)		588,076
Financial services		—			—			7,214			—			7,214
Expenses related to debt redemption		9,315			—			—			—			9,315
Corporate		14,832			—			—			—			14,832
Corporate and homebuilding interest		(21,028	)		—			—			21,028			—

Total Expenses		3,149			609,144			7,144			—			619,437

Income before income taxes		42,079			63,429			9,606			(45,109	)		70,005
Provision for income taxes		1,848			(25,412	)		(3,747	)		—			(27,311	)

NET INCOME	$	43,927		$	38,017		$	5,859		$	(45,109	)	$	42,694

-13-

M.D.C. Holdings, Inc.
Supplemental Combining Statements of Income
(In thousands)
(Unaudited)

Six Months Ended June 30, 2004


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	1,609,434		$	3,103		$	(304	)	$	1,612,233
Financial services		—			—			26,395			—			26,395
Corporate		447			—			12			—			459
Equity in earnings of subsidiaries		142,641			—			—			(142,641	)		—

Total Revenues		143,088			1,609,434			29,510			(142,945	)		1,639,087

COSTS AND EXPENSES
Homebuilding		575			1,391,027			(700	)		(44,599	)		1,346,303
Financial services		—			—			18,593			—			18,593
Corporate		40,086			—			—			—			40,086
Corporate and homebuilding interest		(44,599	)		—			—			44,599			—

Total Expenses		(3,938	)		1,391,027			17,893			—			1,404,982

Income before income taxes		147,026			218,407			11,617			(142,945	)		234,105
Provision for income taxes		(1,826	)		(84,489	)		(4,321	)		—			(90,636	)

NET INCOME	$	145,200		$	133,918		$	7,296		$	(142,945	)	$	143,469

Six Months Ended June 30, 2003


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	1,226,805		$	1,688		$	(161	)	$	1,228,332
Financial services		—			—			30,326			—			30,326
Corporate		411			—			15			—			426
Equity in earnings of subsidiaries		77,772			—			—			(77,772	)		—

Total Revenues		78,183			1,226,805			32,029			(77,933	)		1,259,084

COSTS AND EXPENSES
Homebuilding		(5	)		1,118,468			(25	)		(39,908	)		1,078,530
Financial services		—			—			14,160			—			14,160
Expenses related to debt redemption		9,315			—			—			—			9,315
Corporate		26,308			—			—			—			26,308
Corporate and homebuilding interest		(39,908	)		—			—			39,908			—

Total Expenses		(4,290	)		1,118,468			14,135			—			1,128,313

Income before income taxes		82,473			108,337			17,894			(77,933	)		130,771
Provision for income taxes		(917	)		(43,161	)		(6,962	)		—			(51,040	)

NET INCOME	$	81,556		$	65,176		$	10,932		$	(77,933	)	$	79,731

-14-

M.D.C. Holdings, Inc.
Supplemental Combining Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30, 2004


							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
Net cash provided by (used in) operating activities	$	38,769		$	(228,172	)	$	28,363		$	(303	)	$	(161,343	)

Net cash used in investing activities		(2,406	)		(2,613	)		(258	)		—			(5,277	)

Financing activities
Net increase (reduction) in borrowings from parent and subsidiaries		(220,130	)		239,441			(19,311	)		—			—
Lines of credit
Advances		595,000			—			—			—			595,000
Principal payments		(505,000	)		—			(6,612	)		—			(511,612	)
Dividend payments		(9,046	)		—			—			303			(8,743	)
Stock repurchases		(6,812	)		—			—			—			(6,812	)
Proceeds from exercise of stock options		1,923			—			—			—			1,923

Net cash provided by (used in) financing activities		(144,065	)		239,441			(25,923	)		303			69,756

Net increase (decrease) in cash and cash equivalents		(107,702	)		8,656			2,182			—			(96,864	)
Cash and cash equivalents
Beginning of year		163,133			6,335			4,097			—			173,565

End of year	$	55,431		$	14,991		$	6,279		$	—		$	76,701

Six Months Ended June 30, 2003


							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
Net cash provided by (used in) operating activities	$	(2,002	)	$	(146,415	)	$	89,324		$	(161	)	$	(59,254	)

Net cash used in investing activities		(771	)		(1,947	)		(472	)		—			(3,190	)

Financing activities
Net increase (reduction) in borrowings from parent and subsidiaries		(141,534	)		149,632			(8,098	)		—			—
Lines of credit
Advances		1,365,300			—			—			—			1,365,300
Principal payments		(1,165,300	)		—			(78,749	)		—			(1,244,049	)
Senior notes
Proceeds from issuance		147,279			—			—			—			147,279
Repurchase		(175,000	)		—			—			—			(175,000	)
Premium on repurchase		(7,329	)		—			—			—			(7,329	)
Dividend payments		(4,669	)		—			—			161			(4,508	)
Stock repurchases		(26,731	)		—			—			—			(26,731	)
Proceeds from exercise of stock options		8,403			—			—			—			8,403

Net cash provided by (used in) financing activities		419			149,632			(86,847	)		161			63,365

Net increase (decrease) in cash and cash equivalents		(2,354	)		1,270			2,005			—			921
Cash and cash equivalents
Beginning of year		23,164			4,171			1,607			—			28,942

End of year	$	20,810		$	5,441		$	3,612		$	—		$	29,863

-15-

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

M.D.C. Holdings, Inc. is a Delaware Corporation. We refer to M.D.C. Holdings, Inc. as the “Company,” “MDC,” “we” or “our” in this Form 10-Q and these designations include our subsidiaries unless we state otherwise. Our primary business is owning and managing subsidiary companies that build and sell homes under the name “Richmond American Homes.” Our financial services segment consists of HomeAmerican Mortgage Corporation (“HomeAmerican”), which originates mortgage loans primarily for our homebuyers, and American Home Insurance, which offers third party insurance products to our homebuyers. In addition, we provide title agency services through American Home Title and Escrow Company (“American Home Title”) to our homebuyers in Virginia, Maryland, Colorado, Florida, Texas and Delaware.

RESULTS OF OPERATIONS

Overview

Our second quarter earnings were the highest for any quarter in our 32-year history, a 93% increase over last year. Contributing to these results were all-time quarterly highs for revenues and Home Gross Margins (as defined below), as well as record second quarter home closings. Demand was strong in most of our markets in the 2004 second quarter, as we received record levels of home orders. These home orders enabled us to accumulate our highest ever quarter-end backlog of 8,259 homes.

The improvements in our earnings and revenues for the second quarter primarily were driven by organic growth in our long-standing markets, especially in Nevada. We are fortunate to have accelerated our expansion in Nevada during a period of extraordinary demand, which has driven up home prices throughout this market and enabled us to realize significant year-over-year improvements in Home Gross Margins. To a lesser extent, our record performance in this quarter was supported by similar circumstances leading to Home Gross Margin increases in California and Arizona. There can be no assurance that the extraordinary levels of demand for housing in Nevada, California and Arizona will continue. Further, this demand has caused and may continue to cause increases in the cost of land used by our homebuilding operations in some or all of these markets. These factors may adversely affect the Company’s future Home Gross Margins.

As we prepare for future growth, we plan to capitalize on expansion opportunities, both in our existing markets and in new markets. Our approach includes efforts to increase our share of the markets we have served for many years while, at the same time, building a significant presence in the markets we recently entered and exploring other opportunities to expand our geographic locations. We have proven our ability to penetrate high-growth areas of the country as evidenced by the fact that our operations in five of the seven markets we entered over the last two years contributing 12% of our total home orders in the 2004 second quarter. We have expanded our controlled lot supply to over 32,000 at quarter-end (excluding lots in work-in-process), an increase of over 40% from the 2003 second quarter. This supply of lots will support our growth plans and is consistent with our objective of maintaining a conservative two-year supply of lots. See “Forward-Looking Statements” below.

Our financial position continued to strengthen throughout the second quarter of 2004. Our stockholders’ equity at June 30, 2004 increased by 32% year-over-year to $1.15 billion, or $35.38 per outstanding share, and we lowered our June 30, 2004 ratio of debt-to-capital, net of cash, to 0.31. In addition, we ended the quarter with approximately $654 million in unrestricted cash and available borrowing capacity, which can be used to fund our growth. In addition, during April 2004, we extended

-16-

the term of our Homebuilding Line to April 2009 and increased our borrowing capacity to $700 million with the ability to further expand the borrowing capacity to $850 million with lender approval.

Consolidated Results

The following discussion for both consolidated results of operations and segment results refers to the three and six months ended June 30, 2004, compared with the same periods in 2003. The table below summarizes MDC’s results of operations (in thousands, except per share amounts). Prior period earnings per share have been restated to reflect the effect of a 10% stock dividend declared on February 23, 2004.


	Three Months									Six Months
	Ended June 30,				Change					Ended June 30,				Change
	2004		2003		Amount		%			2004		2003		Amount		%
Revenues	$	875,483	$	689,442	$	186,041		27	%	$	1,639,087	$	1,259,084	$	380,003		30	%
Income Before Income Taxes	$	134,287	$	70,005	$	64,282		92	%	$	234,105	$	130,771	$	103,334		79	%
Net Income	$	82,568	$	42,694	$	39,874		93	%	$	143,469	$	79,731	$	63,738		80	%
Earnings Per Share:
Basic	$	2.54	$	1.35	$	1.19		88	%	$	4.41	$	2.51	$	1.90		76	%
Diluted	$	2.43	$	1.30	$	1.13		87	%	$	4.21	$	2.42	$	1.79		74	%

The increases in revenues for the second quarter and first six months of 2004 primarily were due to higher homebuilding revenues resulting from an increase in home closings to 3,085 and 5,995, respectively, compared with 2,624 and 4,724, respectively, in 2003. Also contributing to the higher revenues were increases in the average selling prices per home closed of 9% and 3%, respectively, for the three and six months ended June 30, 2004, compared with the same periods in 2003.

The increases in income before income taxes for the three and six-month periods were the result of increased operating profits from our homebuilding segment, partially offset by lower operating profits from our financial services segment and higher corporate general and administrative expenses. The increases in homebuilding segment profits primarily resulted from the higher home closings described above and increases in Home Gross Margins (as defined below) of 430 basis points and 390 basis points for the three and six-month periods, respectively. Financial services segment profits decreased primarily due to lower gains on sales of mortgage loans and higher general and administrative expenses associated with HomeAmerican’s expanded loan origination activity.

-17-

Homebuilding Segment

The tables below set forth information relating to the Company’s homebuilding segment (dollars in thousands).


	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2004			2003			Amount			%			2004			2003			Amount			%
Home Sales Revenues	$	861,537		$	672,439		$	189,098			28	%	$	1,607,966		$	1,226,014		$	381,952			31	%
Operating Profit	$	152,485		$	85,344		$	67,141			79	%	$	265,930		$	149,802		$	116,128			78	%
Average Selling Price Per Home Closed	$	279.3		$	256.3		$	23.0			9	%	$	268.2		$	259.5		$	8.7			3	%
Home Gross Margins		27.6	%		23.3	%								26.9	%		23.0	%
Home Gross Margins, Excluding Interest		28.4	%		24.2	%								27.7	%		23.9	%
Orders For Homes, net (units)
Arizona		1,243			986			257			26	%		2,153			1,910			243			13	%
California		627			511			116			23	%		1,453			1,041			412			40	%
Colorado		599			812			(213	)		-26	%		1,290			1,483			(193	)		-13	%
Florida		90			—			90			—			199			—			199			—
Illinois		3			—			3			—			3			—			3			—
Maryland		79			115			(36	)		-31	%		203			226			(23	)		-10	%
Nevada		927			774			153			20	%		1,957			1,357			600			44	%
Texas		224			69			155			225	%		495			119			376			316	%
Utah		210			93			117			126	%		386			186			200			108	%
Virginia		230			305			(75	)		-25	%		522			708			(186	)		-26	%

Total		4,232			3,665			567			16	%		8,661			7,030			1,631			23	%

Homes Closed (units)
Arizona		665			663			2			—			1,535			1,234			301			24	%
California		535			487			48			10	%		1,011			915			96			10	%
Colorado		542			625			(83	)		-13	%		1,020			1,234			(214	)		-17	%
Florida		84			—			84			—			155			—			155			—
Maryland		91			77			14			18	%		161			144			17			12	%
Nevada		629			508			121			24	%		1,197			781			416			53	%
Texas		148			29			119			410	%		218			39			179			459	%
Utah		124			69			55			80	%		228			109			119			109	%
Virginia		267			166			101			61	%		470			268			202			75	%

Total		3,085			2,624			461			18	%		5,995			4,724			1,271			27	%

-18-


	June 30,		December 31,		June 30,
	2004		2003		2003
Backlog (units)
Arizona		1,951		1,333		1,752
California		1,561		1,119		1,048
Colorado		1,004		734		1,206
Florida		148		104		—
Illinois		3		—		—
Maryland		311		269		270
Nevada		1,646		886		926
Texas		420		143		96
Utah		309		151		127
Virginia		906		854		916

Total		8,259		5,593		6,341

Backlog Estimated Sales Value	$	2,500,000	$	1,600,000	$	1,630,000

Average Sales Price in Backlog	$	302.7	$	286.1	$	257.1

Active Subdivisions
Arizona		34		38		42
California		20		26		20
Colorado		55		49		56
Florida		7		9		—
Maryland		10		9		7
Nevada		23		17		22
Texas		22		11		6
Utah		18		11		7
Virginia		28		28		30

Total		217		198		190

Average for the quarter ended		223		200		198

Average for the six months ended		214		196		193

Home Sales Revenues - The increases in home sales revenues were the result of increased home closings, as discussed below, for both the three and six-month periods ended June 30, 2004, and the increases in average selling prices discussed below.

Homes Closed — Home closings were higher in the second quarter and first six months of 2004, compared with the same periods in 2003, in all of our markets except Colorado. For the second quarter, home closings increased significantly in Nevada and Virginia, and for the first six months, home closings increased significantly in Nevada, Arizona and Virginia, primarily due to higher year-over-year Backlogs (as defined below) at the beginning of the 2004 first and second quarters resulting from the strong demand for new homes in each of these markets. In addition, we closed a combined 356 homes and 601 homes, respectively, in the second quarter and first six months of 2004, in Utah, Texas and Florida, new markets in which a total of only 98 homes and 148 homes, respectively, were closed during the comparable periods in 2003. We closed fewer homes in Colorado, primarily due to fewer active subdivisions and the more challenging economic conditions experienced in this market.

Average Selling Price Per Home Closed - The $23,000 increase in average selling price in the 2004 second quarter primarily was attributable to closing a greater number of homes in Virginia and California, where average home selling prices are significantly above the Company average. In addition,

-19-

we closed significantly more homes in Nevada, where our average selling price increased $45,700, or 25%, over the second quarter of 2003. For the first six months of 2004, our average selling price increased $8,700 over 2003, primarily resulting from the items noted above, partially offset by the impact of increased closings in Arizona, where the average home selling price is $77,000 lower than the Company average. The following table displays our average selling price per home closed, by market (in thousands).


	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Average Selling Price
Arizona	$	192.7	$	189.1	$	191.7	$	182.9
California		434.0		381.6		411.8		390.2
Colorado		268.3		254.0		265.1		259.4
Florida		183.9		—		177.8		—
Maryland		400.0		381.5		408.5		375.7
Nevada		227.7		182.0		217.7		183.6
Texas		161.1		155.0		161.2		153.9
Utah		177.3		176.5		176.0		174.9
Virginia		430.3		385.2		420.7		375.6
Company average	$	279.3	$	256.3	$	268.2	$	259.5

Home Gross Margins - We define “Home Gross Margins” to mean home sales revenues less cost of goods sold (which primarily includes land and construction costs, capitalized interest, financing costs, and a reserve for warranty expense) as a percent of home sales revenues. Home Gross Margins improved in the second quarter and first six months of 2004, compared with the same periods in 2003, primarily due to strong demand and increased selling prices in many of our markets and closing a number of homes with significantly higher margins than the Company average in Nevada and Virginia. Nevada has experienced extraordinary demand for new homes recently, resulting in significant increases in selling prices in all of our price points in this market. In Virginia, we closed more homes in subdivisions that were in process of closing out, which have higher margins than new subdivisions. Additionally, corporate initiatives directed at reducing construction costs enabled us to more than offset the impact of rising costs of land, lumber and other building materials. These increases to Home Gross Margins partially were offset by the impact of a greater number of homes closed in the three and six months ended June 30, 2004 in Utah, Texas and Florida, where Home Gross Margins were lower than the Company average.

Future Home Gross Margins may be impacted adversely by, among other things: (1) increased competition, which could affect our ability to raise home prices and maintain lower levels of incentives; (2) increases in the costs of subcontracted labor, finished lots, building materials (for example, lumber and steel have significantly increased year-over-year), and other resources, to the extent that market conditions prevent the recovery of increased costs through higher selling prices; (3) adverse weather; (4) shortages of subcontractor labor, finished lots and other resources, (for example, shortages of concrete recently have been experienced in certain markets), which can result in delays in the delivery of homes under construction and increases in related cost of sales; (5) the impact of changes in demand for housing in Nevada and, to a lesser extent, in California and Arizona, as discussed in the “Overview” above; and (6) other general risk factors. See “Forward-Looking Statements” below.

Orders for Homes and Backlog - Home orders during the quarter and six months ended June 30, 2004 particularly were strong in Nevada (up 20% and 44%, respectively), Arizona (up 26% and 13%, respectively) and California (up 23% and 40%, respectively), primarily due to the continued strong demand for new homes in these markets. The Company also received a combined 524 and 1,080 home

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orders, respectively, in the second quarter and first six months of 2004 from its new markets in Utah, Texas and Florida. Colorado home orders were lower for the quarter and six months ended June 30, 2004, compared with the same periods in 2003, primarily resulting from a reduction in the number of active subdivisions and a more challenging economic environment in this market. In addition, we intentionally slowed the pace of new orders over the last several weeks of the 2004 second quarter in certain communities within some of our fastest growing markets, including Southern California and Nevada. Similar to our actions in Virginia and Maryland in the first quarter, which continued throughout the second quarter, we increased sales prices and limited the release of new homes for sale to allow construction to catch up with the growing backlog of homes sold but not started in these markets.

Record home orders received during the first six months of 2004 contributed to the 30% increase in homes under contract but not yet delivered (“Backlog”) at June 30, 2004 to 8,259 units with an estimated sales value of $2.50 billion, compared with the Backlog of 6,341 units with an estimated sales value of $1.63 billion at June 30, 2003. Assuming no significant change in market conditions or mortgage interest rates, the Company expects approximately 70% to 75% of its June 30, 2004 Backlog to close under existing sales contracts during the third and fourth quarters of 2004. The balance of the homes in Backlog are not expected to close under existing contracts due to cancellations. See “Forward-Looking Statements” below.

Marketing - Marketing expenses (which include sales commissions, advertising, amortization of deferred marketing costs, model home expenses and other costs) totaled approximately $44.7 million and $87.8 million, respectively, for the quarter and six months ended June 30, 2004, compared with $39.6 million and $73.2 million, respectively, for the same periods in 2003. The increases in 2004 primarily were due to (1) an increase of $4.8 million and $10.3 million in sales commissions resulting from the Company’s increased home sales revenues; (2) an increase of $0.7 million and $1.8 million for salaries and benefits attributable to the Company’s expanding homebuilding operations in new and existing home markets; and (3) an increase of $0.9 million and $2.3 million for product advertising for the second quarter and first six months of 2004, compared with the same periods in 2003.

General and Administrative - General and administrative expenses increased to $42.3 million and $83.6 million, respectively, during the second quarter and first six months of 2004, compared with $32.5 million and $61.6 million, respectively, for the same periods in 2003, primarily due to higher compensation, related benefits and other costs associated with expanded operations in many of our markets, most notably Nevada, Virginia and Arizona, and in new markets in Florida, Texas, Illinois and Philadelphia/Delaware Valley.

Title Operations - American Home Title provides title agency services to MDC homebuyers in Virginia, Maryland, Colorado, Florida, Texas and Delaware. The Company is evaluating opportunities to provide title agency services in its other markets. Income before income taxes from title operations was $1.2 million and $2.0 million, respectively, for the quarter and six months ended June 30, 2004, compared with $0.7 million and $1.1 million, respectively, for the same periods in 2003.

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Land Inventory

The table below shows the carrying value of land and land under development, by market, the total number of lots owned and lots controlled under option agreements, and total non-refundable option deposits (dollars in thousands).


	June 30,		December 31,		June 30,
	2004		2003		2003
Arizona	$	132,686	$	89,950	$	84,090
California		221,958		239,714		225,760
Colorado		112,787		105,223		117,460
Florida		12,825		12,116		—
Illinois		23,016		—		—
Maryland		41,199		53,483		41,758
Nevada		193,198		129,554		124,026
Texas		19,540		16,420		6,389
Utah		35,001		22,548		15,209
Virginia		83,284		94,561		110,619

Total	$	875,494	$	763,569	$	725,311

Total Lots Owned (excluding lots in work-in-process)		19,523		16,351		16,273
Total Lots Controlled Under Option		13,340		12,251		6,608

Total Lots Owned and Controlled (excluding lots in work-in-process)		32,863		28,602		22,881

Non-refundable Option Deposits
Cash	$	20,577	$	17,089	$	13,461
Letters of Credit		12,757		8,225		5,321

Total Non-refundable Option Deposits	$	33,334	$	25,314	$	18,782

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Financial Services Segment

The table below sets forth information relating to HomeAmerican’s operations (in thousands).


	Three Months												Six Months
	Ended June 30,						Change						Ended June 30,						Change
	2004			2003			Amount			%			2004			2003			Amount			%
Mortgage loan origination fees	$	5,399		$	5,234		$	165			3	%	$	10,663		$	9,894		$	769			8	%
Gains on sales of mortgage servicing, net	$	521		$	329		$	192			58	%	$	1,137		$	1,163		$	(26	)		-2	%
Gains on sales of mortgage loans, net	$	4,533		$	8,755		$	(4,222	)		-48	%	$	11,310		$	16,097		$	(4,787	)		-30	%
Operating Profit	$	3,145		$	8,599		$	(5,454	)		-63	%	$	7,802		$	16,166		$	(8,364	)		-52	%
Principal amount of loan originations MDC homebuyers	$	376,576		$	364,021		$	12,555			3	%	$	717,129		$	679,043		$	38,086			6	%
Spot		842			6,003			(5,161	)		-86	%		1,557			9,752			(8,195	)		-84	%

Total	$	377,418		$	370,024		$	7,394			2	%	$	718,686		$	688,795		$	29,891			4	%

Principal amount of loans brokered MDC homebuyers	$	148,683		$	84,611		$	64,072			76	%	$	306,981		$	129,936		$	177,045			136	%
Spot		1,545			1,000			545			55	%		2,076			1,538			538			35	%

Total	$	150,228		$	85,611		$	64,617			75	%	$	309,057		$	131,474		$	177,583			135	%

Capture Rate		54	%		66	%								55	%		68	%

Including brokered loans		74	%		81	%								76	%		81	%

The decreases in financial services operating profits for both the three and six months ended June 30, 2004, compared to the same periods in 2003, primarily were due to a more competitive mortgage pricing environment, which contributed to lower gains on sales of mortgage loans. The lower gains primarily resulted from relative increases in originations of less-valuable adjustable rate mortgage loans, as well as brokering to third party mortgage companies a higher percentage of total loans processed in the two periods. Operating profits in the 2004 periods also were impacted by higher general and administrative expenses incurred to handle the higher volume of mortgage loan closings, as well as the record backlog level of the homebuilding segment.

The total principal amount of originated and brokered loans increased 16% and 25% in the second quarter and first six months of 2004, compared with the same periods in 2003. These improvements primarily were due to the increases in homes closed by the homebuilding segment. Our homebuyers were the source of approximately 99% of the principal amount of mortgage loans originated and brokered by HomeAmerican for the three and six months ended June 30, 2004. Mortgage loans originated by HomeAmerican for our homebuyers as a percentage of total MDC home closings are defined as our Capture Rate. The declines in the Capture Rate for both the quarter and six-month periods

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primarily resulted from HomeAmerican brokering out a higher percentage of mortgage loans to outside lending institutions for our homebuyers due to the competitive environment for mortgage loans that resulted from a significant decline in refinancing activity in the marketplace. Brokered loans, for which HomeAmerican receives a fee, have been excluded from the computation of the Capture Rate.

Forward Sales Commitments - HomeAmerican’s operations are affected by changes in mortgage interest rates. HomeAmerican utilizes forward mortgage securities contracts to manage price risk related to fluctuations in interest rates on its mortgage loans held in inventory and its rate-locked commitments to originate loans in the pipeline. Reported gains on sales of mortgage loans may vary significantly from period to period depending on the volatility in the interest rate market. However, for the periods presented, this was not material.

Insurance Operations - American Home Insurance provides homeowners, auto and other types of casualty insurance in each of our markets. The results of its operations were not material for any of the periods presented.

Other Operating Results

Interest Expense - We capitalize interest incurred on our corporate and homebuilding debt during the period of active development and through the completion of construction of our homebuilding inventories. Corporate and homebuilding interest incurred but not capitalized is reported as interest expense. Interest incurred by the financial services segment is charged to interest expense, which is deducted from interest income and reported as net interest income in Note F to our Consolidated Financial Statements. For a reconciliation of interest incurred, capitalized and expensed, see Note D to our Consolidated Financial Statements.

Corporate General and Administrative Expenses - Corporate general and administrative expenses totaled $21.5 million and $40.1 million, respectively, during the second quarter and first six months of 2004, compared with $14.8 million and $26.3 million, respectively, for the same periods of 2003. The increases in 2004 primarily were due to greater compensation-related costs principally resulting from our higher profitability, increased compensation and other expenses for information technology, and charitable contributions of $2.0 million and $3.0 million, respectively, to the M.D.C. Holdings, Inc. Charitable Foundation in the second quarter and first six months of 2004.

Income Taxes - MDC’s overall effective income tax rate of 38.5% for the second quarter and 38.7% for the first six months of 2004, compared with 39.0% and 39.0%, respectively, for the same periods in 2003, differed primarily due to the impact of state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

We use our liquidity and capital resources to (1) support our operations, including our homebuilding inventories; (2) provide working capital; and (3) provide mortgage loans for our homebuyers. Liquidity and capital resources are generated internally from operations and from external sources. Additionally, we have a registration statement that was filed on July 12, 2004, that, at such time as it is declared effective by the Securities and Exchange Commission, would allow us to issue equity, debt or hybrid securities up to $1.0 billion.

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Capital Resources

Our capital structure is a combination of (1) permanent financing, represented by stockholders’ equity; (2) long-term financing, represented by our publicly traded 7% senior notes due 2012 (the “7% Senior Notes”), 5 -1/2% senior notes due 2013 (the “5 -1/2% Senior Notes”) and our homebuilding line of credit (the “Homebuilding Line”); and (3) current financing, primarily our mortgage lending line of credit (the “Mortgage Line”). Based upon our current capital resources and additional capacity available under existing credit agreements, we believe that our current financial condition is both balanced to fit our current operating structure and adequate to satisfy our current and near-term capital requirements, including the acquisition of land and expansion into new markets. We believe that we can meet our long-term capital needs (including meeting future debt payments and refinancing or paying off other long-term debt as it becomes due) from operations and external financing sources, assuming that no significant adverse changes in our business or capital and credit markets occur as a result of the various risk factors described elsewhere in this report. See “Forward-Looking Statements” below.

Lines of Credit and Other

Homebuilding - Our Homebuilding Line is an unsecured revolving line of credit with a group of lenders for support of our homebuilding operations. During April 2004, we renewed the Homebuilding Line, increasing the aggregate commitment amount to $700 million and extending the maturity date to April 7, 2009. In addition, the facility’s provision for letters of credit was increased to an available aggregate amount of $350 million. The facility permits an increase in the maximum commitment amount to $850 million upon our request, subject to receipt of additional commitments from existing or additional participant lenders. At June 30, 2004, there were $90 million of borrowings and $40.7 million in letters of credit outstanding under the Homebuilding Line.

Mortgage Lending - Our Mortgage Line has a borrowing limit of $175 million with terms that allow for increases of up to $50 million in the borrowing limit to a maximum of $225 million, subject to concurrence by the participating banks. The terms of the Mortgage Line are set forth in the Third Amended and Restated Warehousing Credit Agreement dated as of October 23, 2003 as amended by the First Amendment dated as of February 27, 2004. Available borrowings under the Mortgage Line are collateralized by mortgage loans and mortgage-backed certificates and are limited to the value of eligible collateral as defined. At June 30, 2004, $72.6 million was borrowed and an additional $24.5 million was collateralized and available to be borrowed. The Mortgage Line is cancelable upon 120 days notice.

General — The agreements for our bank lines of credit and the indentures for our senior notes require compliance with certain representations, warranties and covenants. We believe that we are in compliance with these representations, warranties and covenants. The agreements for our Homebuilding Line and Mortgage Line and the indentures for our senior notes are on file with the Securities and Exchange Commission and are listed in the exhibit index in Part IV of our Annual Report on Form 10-K for our fiscal year ended December 31, 2003, the exhibit index in Part II of this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004 and in the Current Report on Form 8-K dated April 12, 2004.

The financial covenants contained in the Homebuilding Line credit agreement include a leverage test and a consolidated tangible net worth test. Under the leverage test, generally, our consolidated indebtedness is not permitted to exceed 55% (subject to adjustment in certain circumstances) of the sum of consolidated indebtedness and our “adjusted consolidated tangible net worth,” as defined. Under the consolidated tangible net worth test, our “adjusted consolidated tangible net worth,” as defined, must not be less than the sum of (1) $776,018,000; (2) 50% of “consolidated net income,” as defined, of the

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“borrower,” as defined, and the “guarantors,” as defined, after December 31, 2003; and (3) 50% of the net proceeds or other consideration received for the issuance of capital stock after December 31, 2003. Failure to satisfy the financial covenant tests could result in a scheduled term-out of the facility. In addition, “consolidated tangible net worth,” as defined, must not be less than the sum of (1) $485,011,000; (2) 50% of the quarterly consolidated net income of “borrower” and the “guarantors” earned after December 31, 2003; and (3) 50% of the net proceeds or other consideration received for the issuance of capital stock after December 31, 2003. Failure to satisfy this covenant could result in a termination of the facility. We believe that we are in full compliance with these covenants.

Our senior notes are not secured and the senior notes indentures do not contain financial covenants. Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by most of our homebuilding segment subsidiaries.

MDC Common Stock Repurchase Program

On March 24, 2003, the MDC board of directors authorized the repurchase of up to an additional 1,350,000 shares of MDC common stock, bringing the total authorization under the Company’s stock repurchase program to 4,350,000 shares. The Company repurchased a total of 119,200 shares of MDC common stock in the 2004 second quarter and no shares in the first quarter, bringing the total shares repurchased to 2,699,600 and leaving 1,650,400 shares available to be repurchased as of June 30, 2004 under this program. The per share prices, including commissions, for the 119,200 shares repurchased averaged $57.15. At June 30, 2004, the Company held 119,200 shares of treasury stock with an average purchase price of $57.15 per share.

Consolidated Cash Flow

During the first six months of 2004, the Company used $161.3 million of cash from its operating activities. Cash used to build net homebuilding assets in support of our expanding homebuilding activities partially was provided by net income before depreciation and amortization and the increase in accounts payable and accrued liabilities. In addition, we had net borrowings of $83.4 million on our bank lines of credit, which assisted us in financing these operating cash requirements, as well as the repurchase of 119,200 shares of common stock for $6.8 million and the $8.7 million payment of dividends.

During the first six months of 2003, the Company used $59.3 million of cash in its operating activities. Cash provided by (1) net income before depreciation, amortization and expenses related to debt redemption; and (2) the sale of mortgage loans was more than offset by cash used to build net homebuilding assets in support of the Company’s expanding homebuilding activities. The Company financed these operating cash requirements, as well as the repurchase of 727,100 shares of stock for $26.7 million and the payment of dividends, primarily through borrowings on its bank lines of credit. Also during the second quarter of 2003, the Company issued the 5 -1/2% Senior Notes with a $150 million principal amount at a discount of $2.7 million, and redeemed all $175 million principal amount of its 8 -3/8% Senior Notes. The Company paid a premium of $7.3 million on the redemption.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2003 Annual Report on Form 10-K.

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Contractual Obligations

Our contractual obligations have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2003 Annual Report on Form 10-K.

IMPACT OF INFLATION, CHANGING PRICES AND ECONOMIC CONDITIONS

Real estate and residential housing prices are affected by inflation, which can cause increases in the price of land, raw materials and subcontracted labor. Unless these increased costs are recovered through higher sales prices, Home Gross Margins would decrease. If interest rates increase, construction and financing costs, as well as the cost of borrowings, also would increase, which can result in lower Home Gross Margins. Increases in home mortgage interest rates make it more difficult for our customers to qualify for home mortgage loans, potentially decreasing home sales revenue. Increases in interest rates also may affect adversely the volume of mortgage loan originations.

The volatility of interest rates could have an adverse effect on our future operations and liquidity. Reported gains on sales of mortgage loans may vary significantly from period to period depending on the volatility in the interest rate market. Derivative instruments utilized in the normal course of business by HomeAmerican include forward sales securities commitments, private investor sales commitments and commitments to originate mortgage loans. We utilize these commitments to manage the price risk on fluctuations in interest rates on our mortgage loans held in inventory and commitments to originate mortgage loans. Such contracts are the only significant financial derivative instruments utilized by MDC. An increase in interest rates may affect adversely the demand for housing and the availability of mortgage financing.

Our business also is significantly affected by general economic conditions and, particularly, the demand for new homes in the markets in which we build. The demand for new homes in Nevada has reached unprecedented levels since the beginning of the year. This extraordinary demand has resulted in a substantial increase in new home sales and has driven the market’s median home price to $239,145 at May 31, 2004, compared with $200,625 at May 31, 2003, according to a publication from Home Builders Research, Inc. Our average home selling price in Nevada, along with our Home Gross Margins, also have significantly increased in the second quarter of 2004, compared with the same period in 2003, without a substantial change in product mix.

We have increased our market share in Nevada to become the second-largest homebuilder in that market according to Southern Nevada Home Builder Association based on 2003 sales. As a result, we are well-positioned to take advantage of the recent increase in demand. Nevertheless, we continue to follow our disciplined strategy of controlling approximately a two-year supply of land. If demand for new homes in Nevada were to stabilize or decline in the future, our financial results potentially could be impacted by the recent significant appreciation in land, which could adversely affect our Home Gross Margins. See “Forward-Looking Statements” below.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management

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bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Management evaluates such estimates and judgments on an ongoing basis and makes adjustments as deemed necessary. Actual results could differ from these estimates using different estimates and assumptions, or if conditions are significantly different in the future. See “Forward-Looking Statements” below.

Listed below are those policies that we believe are critical and require the use of complex judgment in their application. Our critical accounting policies are those related to (1) homebuilding inventory valuation; (2) estimates to complete land development and home construction; (3) warranty costs; and (4) litigation reserves.

Our critical accounting policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2003 Annual Report on Form 10-K.

OTHER

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q, the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2003, as well as statements made by the Company in periodic press releases, oral statements made by the Company’s officials to analysts and shareowners in the course of presentations about the Company and conference calls following quarterly earnings releases, 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, those listed below:

• General Economic and Business Conditions — Changes in national, regional and local economic conditions, as well as changes in consumer confidence and preferences, can have a negative impact on our business.

• Interest Rate Changes — Our homebuilding and mortgage lending operations are impacted by the availability and cost of mortgage financing.

• Changes in Federal Lending Programs — The availability of mortgage financing under federal lending programs is an important factor in our business. Any change in the availability of this financing could reduce our home sales and mortgage lending volume.

• Availability of Capital — Our ability to grow our business is dependent on our ability to generate or obtain capital. Increases in interest rates and changes in the capital markets could increase our costs of borrowing or reduce the availability of funds.

• Competition — The real estate industry is fragmented and highly competitive. Our homebuilding subsidiaries compete with numerous homebuilders, including a number that are substantially larger and have greater financial resources.

• The Availability and Cost of Land, Labor and Materials — Our operations depend on our ability to continue to obtain land, labor and materials at reasonable prices. Changes in the general

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availability or cost of these items may hurt our ability to build homes and develop new residential communities.

• The Availability and Cost of Performance Bonds and Insurance — Our operations also are affected by our ability to obtain performance bonds and insurance at reasonable prices. Changes in the availability and cost of bonds and insurance can adversely impact our business operations.

• Weather and Geology — The climates and geology of many of the states in which we operate present increased risks of natural disasters and adverse weather. To the extent that such events occur, our business may be adversely affected.

• Governmental Regulation and Environmental Matters — Our operations are subject to continuing compliance requirements mandated by applicable federal, state and local statutes, ordinances, rules and regulations, including environmental laws, moratoriums on utility availability, growth restrictions, zoning and land use ordinances, building, plumbing and electrical codes, contractors’ licensing laws, state insurance laws, federal and state human resources laws and regulations and health and safety regulations and laws.

• Product Liability Litigation Warranty Claims — As a homebuilder, we are subject to construction defect and home warranty claims, including moisture intrusion and related mold claims, that can be costly and adversely affect our business.

• Other Factors — Other factors over which the Company has little or no control, such as required accounting changes and terrorist acts and other acts of war, can also adversely affect us.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 1O-Q and 8-K should be consulted.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the 2003 Annual Report on Form 10-K related to the Company’s exposure to market risk from interest rates.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures - Management recognizes its responsibility for maintaining effective internal controls and disclosure controls and procedures (the controls and procedures by which we ensure that information disclosed in annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”) is accurately recorded, processed, summarized and reported within the required time period). We have procedures in place for gathering the information that is needed to enable us to file required reports with the SEC. We have a group of officers which is responsible for reviewing all quarterly and annual SEC reports. This group consists of most of MDC’s senior management, including its chief financial officer, general counsel, treasurer and all homebuilding and mortgage lending presidents and vice presidents of finance.

An evaluation of the effectiveness of the design and operation of our internal controls and disclosure controls and procedures was performed under the supervision, and with the participation, of our management, including the chief executive officer and the chief financial officer. Based on that

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evaluation, the Company’s management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective as of June 30, 2004.

(b) Changes in internal control over financial reporting - Our evaluation did not identify any change in our internal control over financial reporting that occurred during the quarter ended June 30, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

M.D.C. HOLDINGS, INC.
FORM 10-Q

PART II

Item 1. Legal Proceedings

The Company and certain of its subsidiaries and affiliates have been named as defendants in various claims, complaints and other legal actions arising in the normal course of business, including moisture intrusion and related mold claims. In the opinion of management, the outcome of these matters will not have a material adverse effect upon the financial condition, results of operations or cash flows of the Company. See “Forward-Looking Statements” above.

The Company previously purchased 63 lots within the former Lowry Air Force Base, in an area known as the Northwest Neighborhood, in Denver, Colorado. As of June 30, 2004, the Company had sold homes on all 63 lots, completed construction of homes on 51 of these lots, closed 51 of the homes, and commenced construction on the remaining 12 lots. Asbestos, believed to have resulted from historic activities of the United States Air Force, has been discovered in this area. In August 2003, the Colorado Department of Public Health and Environment issued a Final Response Plan imposing requirements to remediate the asbestos. Through June 30, 2004, the Company had expended approximately $3.5 million in sampling and remediation costs and currently projects the total costs of these efforts to be approximately $3.6 million. Remediation of all 63 lots had been completed by the Company as of June 30, 2004. The Company has notified the Air Force and United States Department of Defense of their responsibility to reimburse the Company for all costs associated with the asbestos. Those agencies currently dispute their responsibility to reimburse the Company and the other land owners. The Company is evaluating available legal remedies to recover costs associated with the asbestos.

The U.S. Environmental Protection Agency (“EPA”) filed an administrative action against Richmond American Homes of Colorado, Inc. (“Richmond”), alleging that Richmond violated the terms of Colorado’s general permit for discharges of stormwater from construction activities at two of Richmond’s development sites. In its complaint, the EPA seeks civil penalties against Richmond in the amount of $122,000. On November 11, 2003, the EPA filed a motion to withdraw the administrative action so that it could refile the matter in United States District Court as part of a consolidated action against Richmond for alleged stormwater violations at not only the original two sites, but also two additional sites. The EPA’s motion to withdraw was granted by the Administrative Law Judge on February 9, 2004. The EPA has not yet refiled the matter. Richmond has substantial defenses to the allegations made by the EPA and also is exploring methods of resolving this matter with the EPA.

Because of the nature of the homebuilding business, and in the ordinary course of its operations, the Company from time to time may be subject to product liability claims.

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Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

The following table discloses the Company’s common stock repurchased that occurred during the six months ended June 30, 2004:

Total Number of

Maximum Number of

Shares Purchased as

Shares that May Yet

Part of Publicly

Be Purchased Under

Total number of

Average Price Paid

Announced Plans or

the Plans or

Period

shares purchased

per Share

Programs (a)

Programs

May 7, 2004 - May 12, 2004

119,200

57.15

2,699,600

1,650,400

(a) On March 24, 2003, MDC’s board of directors authorized the repurchase of up to 4,350,000 shares of MDC’s common stock. The Company repurchased 119,200 shares during the second quarter of 2004. As of June 30, 2004, the Company had 1,650,400 shares available to be repurchased under the program.

Item 4. Submission of Matters to a Vote of Security Holders

The annual meeting of the Company’s shareowners was held on April 26, 2004. The following members of the Board of Directors were elected as Class I Directors for three-year terms expiring in 2007:


	Votes For		Votes Withheld
Herbert T. Buchwald		23,052,427		6,506,440
Larry A. Mizel		28,499,350		1,059,517

Gilbert Goldstein, William B. Kemper, Steven J. Borick, David D. Mandarich and David E. Blackford continued to serve as directors of the Company after the annual meeting.

The shareowner proposal for a sustainability report described in our March 9, 2004 proxy statement was not presented by the proponent or any other shareowner at the meeting and, accordingly, no action or vote was taken on the proposal.

Item 5. Other Information

On April 26, 2004, the Company’s board of directors declared a cash dividend of $0.15 per share for the quarter ended March 31, 2004. The dividend was paid on May 26, 2004 to shareowners of record on May 12, 2004. Future dividend payments are subject to the discretion of the Company’s board of directors.

On July 26, 2004, the Company’s board of directors declared a cash dividend of $0.15 per share for the quarter ended June 30, 2004. The dividend is to be paid on August 25, 2004 to shareowners of record on August 11, 2004.

The Company has issued 10% stock dividends with the record dates of February 5, 2001, December 17, 2001, May 12, 2003 and March 8, 2004. As a result of these stock dividends, the number of shares issuable under the Company’s registration statements identified below have been

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adjusted accordingly. Pursuant to Rule 416 under the Securities Act of 1933, as amended, the following registration statements on Form S-8 are deemed to cover the additional number of shares of the Company’s common stock as listed below, as a result of the adjustments to account for such stock dividends:


Registration Statement No.	Additional Number of Shares
333-22167		499,773
333-60330		476,646
333-67894		792,383
333-103154		251,978
333-103192		191,153

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibit:


	10.1		First Amendment to Third Amended and Restated Warehousing Credit Agreement dated February 27, 2004 among HomeAmerican Mortgage Corporation and the Banks that are signatories thereto and U.S. Bank National Association as administrative agent.

	10.2		Amendment to Consulting Agreement, July 26, 2004, by and between Gilbert Goldstein, P.C. and the Company.

	12		Ratio of Earnings to Fixed Charges Schedule.

	31.1		Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1		Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2		Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K:

Form 8-K (Items 9 and 12) dated July 12, 2004, reporting the Company’s second quarter results for 2004.

Form 8-K (Items 9 and 12) dated July 6, 2004, reporting home orders, home closings and quarter-end backlog for the period ended June 30, 2004.

Form 8-K (Items 5 and 9) dated April 12, 2004, reporting the renewal of the Company's unsecured bank credit facility.

-33-

INDEX TO EXHIBITS


Exhibit Number		Description
10.1		First Amendment to Third Amended and Restated Warehousing Credit Agreement dated February 27, 2004 among HomeAmerican Mortgage Corporation and the Banks that are signatories thereto and U.S. Bank National Association as administrative agent.

10.2		Amendment to Consulting Agreement, July 26, 2004, by and between Gilbert Goldstein, P.C. and the Company.

12		Ratio of Earnings to Fixed Charges Schedule.

31.1		Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


	Page
	No.
Part I. Financial Information:
Item 1. Consolidated Financial Statements:
Balance Sheets as of June 30, 2004 (Unaudited) and December 31, 2003		1
Statements of Income (Unaudited) for the three and six months ended June 30, 2004 and 2003		3
Statements of Cash Flows (Unaudited) for the six months ended June 30, 2004 and 2003		4
Notes to Condensed Consolidated Financial Statements (Unaudited)		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4. Controls and Procedures		29
Part II. Other Information:
Item 1. Legal Proceedings		31
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		32
Item 4. Submission of Matters to a Vote of Security Holders		32
Item 5. Other Information		32
Item 6. Exhibits and Reports on Form 8-K		33
Signatures		35
Amended & Restated Warehousing Credit Agreement
Amendment to Consulting Agreement
Computation of Ratio of Earnings to Fixed Charges
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906


Date: August 5, 2004	M.D.C. HOLDINGS, INC.
	(Registrant)
	By:	/s/ Paris G. Reece III

		Paris G. Reece III,
		Executive Vice President,
		Chief Financial Officer and
		Principal Accounting Officer

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•		M.D.C. Land Corporation

•		RAH of Texas, LP

•		RAH Texas Holdings, LLC

•		Richmond American Construction, Inc.

•		Richmond American Homes of Arizona, Inc.

•		Richmond American Homes of California, Inc.

•		RAH of Florida, Inc. (formerly known as: Richmond American Homes of California (Inland Empire), 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 Texas, Inc.

•		Richmond American Homes of Utah, Inc.

•		Richmond American Homes of Virginia, Inc.

•		Richmond American Homes of West Virginia, Inc.

•		American Home Insurance Agency, Inc.

•		American Home Title and Escrow Company

•		HomeAmerican Mortgage Corporation

•		Lion Insurance Company

•		StarAmerican Insurance Ltd.

•		Allegiant Insurance Company, Inc., A Risk Retention Group

	(b)		Reports on Form 8-K:

			Form 8-K (Items 9 and 12) dated July 12, 2004, reporting the Company’s second quarter results for 2004.

			Form 8-K (Items 9 and 12) dated April 12, 2004, reporting the Company’s first quarter results for 2004.

			Form 8-K (Items 9 and 12) dated April 5, 2004, reporting home orders, home closings and quarter-end backlog for the quarterly period ended March 31, 2004.