UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2005

OR

Commission File No. 1-8951

M.D.C. HOLDINGS, INC.

(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 þ No o

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

As of April 30, 2005, 43,700,000 shares of M.D.C. Holdings, Inc. common stock were outstanding.

M.D.C. HOLDINGS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2005

INDEX

 (i) 

M.D.C. HOLDINGS, INC.

See notes to consolidated financial statements.

- 1 -

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

See notes to consolidated financial statements.

- 2 -

M.D.C. HOLDINGS, INC.

See notes to consolidated financial statements.

- 3 -

M.D.C. HOLDINGS, INC.

See notes to consolidated financial statements.

- 4 -

M.D.C. HOLDINGS, INC.

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 of the 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 March 31, 2005 and for all of the 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, 2004. Certain reclassifications have been made in the 2004 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 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 the January 10, 2005 1.3 for 1 stock split.

C. Stockholders’ Equity

     Stock Split - On December 14, 2004, MDC’s board of directors declared a 1.3 for 1 stock split in the form of a stock dividend that was distributed on January 10, 2005. 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 presented to reflect the effect of this stock split.

- 5 -

     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 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 months ended March 31, 2005 and 2004 related to stock option grants. The following table illustrates the effect on net income and earnings per share if the fair value method prescribed by SFAS No. 123, as amended by SFAS No. 148, had been applied to all outstanding and unvested awards in the three month period ended March 31, 2005 and 2004 (in thousands, except per share amounts).

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

- 6 -

E. 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).

- 7 -

F. 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 accounts payable and accrued expenses and homebuilding accrued expenses in the consolidated balance sheets, and totaled $64.1 million and $64.4 million, respectively, at March 31, 2005 and December 31, 2004. Warranty expense was $9.3 million and $9.0 million for the three months ended March 31, 2005 and 2004, respectively. 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 qualified settlement fund warranty reserves created pursuant to litigation settled in 1996. Warranty activity for the three months ended March 31, 2005 is shown below (in thousands).

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 March 31, 2005, MDC had issued and outstanding performance bonds and letters of credit totaling $330.0 million and $103.2 million, respectively, including $27.9 million in letters of credit issued by HomeAmerican Mortgage Corporation (“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. Lines of Credit and Total Debt Obligations

     Homebuilding – The Company’s homebuilding line of credit (“Homebuilding Line”) is an unsecured revolving line of credit with a group of lenders for support of our homebuilding operations. During January 2005, we modified the Homebuilding Line, increasing the aggregate commitment amount to $1.058 billion, while maintaining the maturity date of April 7, 2009. In addition, the facility’s provision for letters of credit is available in the aggregate amount of $350 million. The modified facility permits an increase in the maximum commitment amount to $1.25 billion upon the Company’s request, subject to receipt of additional commitments from existing or additional participant lenders. At March 31, 2005, there were no borrowings outstanding, and $73.2 million in letters of credit had been issued under the Homebuilding Line.

     Mortgage Lending – The Company’s mortgage line of credit (“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. Available borrowings under the Mortgage Line are collateralized by mortgage loans and mortgage-backed securities and are limited to the value of eligible collateral as defined. At March 31, 2005, $74.8 million was borrowed and an additional $12.7 million was collateralized and available to be borrowed. The Mortgage Line is cancelable upon 120 days notice.

- 8 -

     General - The agreements for the Company’s bank lines of credit and the indentures for the Company’s senior notes require compliance with certain representations, warranties and covenants. The Company believes that it is in compliance with these representations, warranties and covenants, and the Company is not aware of any covenant violations. The agreements containing these representations, warranties and covenants for the bank lines of credit and the indentures for the Company’s senior notes are on file with the Securities and Exchange Commission and are listed in the Exhibit Table in Part IV of the Company’s 2004 Annual Report on Form 10-K.

     The Company’s debt obligations as of March 31, 2005 and December 31, 2004 are as follows (in thousands):

I. Recent Statements of Financial Accounting Standards

     On December 16, 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”), which is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123). SFAS 123(R) supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and amends SFAS Statement No. 95, “Statement of Cash Flows”. Generally, the approach in Statement 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The provisions of SFAS 123(R) must be adopted no later than January 1, 2006. Had the Company adopted SFAS 123(R) in prior periods, the impact of that standard would have approximated the impact of SFAS 123 as described in the disclosure of pro forma net income and earnings per share as disclosed above in Note C under “Stock-Based Compensation” to the Company’s consolidated financial statements.

- 9 -

J. 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
	•	RAH of Florida, Inc.
	•	Richmond American Construction, Inc.
	•	Richmond American Homes of Arizona, Inc.
	•	Richmond American Homes of California, 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.

- 10 -

M.D.C. Holdings, Inc.
Supplemental Combining Balance Sheet
March 31, 2005
(In thousands)
(Unaudited)

- 11 -

M.D.C. Holdings, Inc.
Supplemental Combining Balance Sheet
December 31, 2004
(In thousands)

- 12 -

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

Three Months Ended March 31, 2005

Three Months Ended March 31, 2004

- 13 -

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

Three Months Ended March 31, 2005

Three Months Ended March 31, 2004