M.D.C. HOLDINGS, INC. - FORM 8-K - EX-99 - EXHIBIT 99.1

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8-K - FORM 8-K - M.D.C. HOLDINGS, INC.	mdc20140203_8k.htm

Exhibit 99.1

M.D.C. HOLDINGS, INC.

News Release

M.D.C. HOLDINGS ANNOUNCES 2013 FOURTH QUARTER RESULTS

DENVER, COLORADO, Wednesday, February 5, 2014. M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended December 31, 2013.

2013 Fourth Quarter Highlights and Comparisons to 2012 Fourth Quarter

●

Net income of $30.7 million, or $0.62 per diluted share vs. $29.7 million, or $0.59 per diluted share

●

Pretax income of $34.3 million, up 15% from $29.9 million

●

Home sale revenues of $460.9 million, up 18%

	●	Gross margin from home sales of 17.4% vs. 16.7%, up 70 basis points
	●	SG&A expenses as a percentage of home sale revenues of 12.0%, a 60 basis point improvement

●

Ending active community count of 146 vs. 148

Up 9% from 134 at September 30, 2013

●

Net new orders of 752 homes, down 13% on an 8% decrease in average active community count

Dollar value down 2% to $285.2 million

●

Backlog dollar value of $506.0 million, down 13%

●

Lots owned and optioned of 15,786, up 38%

●

Total liquidity of $1.24 billion at December 31, 2013, including amount available under new $450 million line of credit

Issued $250 million 10-year 5½% senior unsecured notes in January 2014

2013 Full Year Highlights and Comparisons to 2012 Full Year

●

Net income of $314.4 million, or $6.34 per diluted share vs. $62.7 million, or $1.29 per diluted share

Excluding the $187.6 million reversal of the deferred tax asset valuation allowance in the second quarter, net income was $126.7 million*, or $2.56* per diluted share

●

Home sale revenues of $1.63 billion, up 41%

Home deliveries of 4,710 homes, up 26%

●

Gross margin from home sales of 17.8% vs. 15.4%, up 240 basis points

●

SG&A expenses as a percentage of home sale revenues of 13.1% vs. 14.5%, a 140 basis point improvement

●

Net new orders of 4,327 homes vs. 4,342 in 2012

●

Acquired 7,887 lots in 168 communities, including 128 new communities

Total land acquisition spend of $632.6 million

M.D.C. HOLDINGS, INC.

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

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

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

Homebuilding

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

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

M.D.C. HOLDINGS, INC.

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

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

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

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

Financial Services

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

About MDC

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

M.D.C. HOLDINGS, INC.

Forward-Looking Statements

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

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

Contact: Robert N. Martin

Vice President of Finance and Corporate Controller

(720) 977-3431

bob.martin@mdch.com

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended						Year Ended
	December 31,						December 31,
	2013			2012			2013			2012
	(Dollars in thousands, except per share amounts)
	(Unaudited)
Homebuilding:
Home sale revenues	$	460,939		$	389,141		$	1,626,707		$	1,150,998
Land sale revenues		636			1,724			2,468			5,144
Total home and land sale revenues		461,575			390,865			1,629,175			1,156,142
Home cost of sales		(380,086	)		(323,179	)		(1,336,978	)		(973,120	)
Land cost of sales		(491	)		(1,613	)		(1,961	)		(4,823	)
Inventory impairments		(569	)		(1,105	)		(919	)		(1,105	)
Total cost of sales		(381,146	)		(325,897	)		(1,339,858	)		(979,048	)
Gross margin		80,429			64,968			289,317			177,094
Selling, general and administrative expenses		(55,421	)		(49,160	)		(213,283	)		(167,295	)
Interest income		5,792			6,747			26,938			23,398
Interest expense		-			-			(1,726	)		(808	)
Other income (expense)		(1,776	)		(364	)		(923	)		228
Homebuilding pretax income		29,024			22,191			100,323			32,617

Financial Services:
Revenues		10,587			14,908			51,259			46,881
Expenses		(6,127	)		(8,186	)		(25,271	)		(21,645	)
Interest and other income		834			938			3,514			3,262
Financial services pretax income		5,294			7,660			29,502			28,498

Income before income taxes		34,318			29,851			129,825			61,115
(Provision for) benefit from income taxes		(3,609	)		(181	)		184,560			1,584
Net income	$	30,709		$	29,670		$	314,385		$	62,699


Other comprehensive income related to available for sale securities, net of tax		4,237			1,133			6,737			12,078
Comprehensive income	$	34,946		$	30,803		$	321,122		$	74,777

Earnings per share
Basic	$	0.62		$	0.60		$	6.39		$	1.29
Diluted	$	0.62		$	0.59		$	6.34		$	1.29

Weighted average common shares outstanding
Basic		48,497,526			48,140,725			48,453,119			47,660,629
Diluted		48,728,889			48,607,571			48,831,785			47,834,156

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

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

	December 31,
	2013		2012
	(Dollars in thousands, except per share amounts)
	(Unaudited)
ASSETS
Homebuilding:
Cash and cash equivalents	$	148,634	$	129,535
Marketable securities		569,021		519,465
Restricted cash		2,195		1,859
Trade and other receivables		23,407		28,163
Inventories:
Housing completed or under construction		636,700		512,949
Land and land under development		774,961		489,572
Total inventories		1,411,661		1,002,521
Property and equipment, net		31,248		33,125
Deferred tax asset, net of valuation allowance of $8,201 and $248,306 at December 31, 2013 and December 31, 2012, respectively		176,262		-
Metropolitan district bond securities (related party)		12,729		5,818
Prepaid and other assets		53,525		38,959
Total homebuilding assets		2,428,682		1,759,445

Financial Services:
Cash and cash equivalents		50,704		30,560
Marketable securities		19,046		32,473
Mortgage loans held-for-sale, net		92,578		119,953
Other assets		4,439		3,010
Total financial services assets		166,767		185,996
Total Assets	$	2,595,449	$	1,945,441

LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	15,046	$	73,055
Accrued liabilities		152,821		118,456
Senior notes, net		1,095,620		744,842
Total homebuilding liabilities		1,263,487		936,353

Financial Services:
Accounts payable and accrued liabilities		55,639		51,864
Mortgage repurchase facility		63,074		76,327
Total financial services liabilities		118,713		128,191
Total Liabilities		1,382,200		1,064,544

Stockholders' Equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding		-		-
Common stock, $0.01 par value; 250,000,000 shares authorized; 48,788,887 and 48,698,757 issued and outstanding at December 31, 2013 and December 31, 2012, respectively		488		487
Additional paid-in-capital		908,090		896,861
Retained earnings (accumulated deficit)		293,096		(21,289	)
Accumulated other comprehensive income		11,575		4,838
Total Stockholders' Equity		1,213,249		880,897
Total Liabilities and Stockholders' Equity	$	2,595,449	$	1,945,441

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Consolidated Statements of Cash Flows

	Three Months Ended						Year Ended
	December 31,						December 31,
	2013			2012			2013			2012
	(Dollars in thousands)
	(Unaudited)
Operating Activities:
Net income	$	30,709		$	29,670		$	314,385		$	62,699
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		1,412			3,597			9,652			16,225
Depreciation and amortization		904			1,058			3,864			4,766
Inventory impairments		569			1,105			919			1,105
Amortization of discount (premiums) on marketable debt securities		(597	)		317			219			596
Deferred income tax benefit		2,486			-			(187,171	)		-
Excess tax benefits from stock-based compensation		(391	)		-			(391	)		-
Net changes in assets and liabilities:
Restricted cash		(9	)		225			(336	)		(1,192	)
Trade and other receivables		5,785			7,462			4,186			(6,223	)
Mortgage loans held-for-sale		(18,238	)		(33,305	)		27,375			(41,618	)
Housing completed or under construction		(3,046	)		(9,160	)		(124,211	)		(212,154	)
Land and land under development		(74,852	)		(97,092	)		(285,070	)		15,314
Prepaid expenses and other assets		471			4,527			(13,562	)		4,388
Accounts payable		(4,921	)		23,410			(58,142	)		47,473
Accrued liabilities		16,029			9,822			38,734			(198	)
Net cash used in operating activities		(43,689	)		(58,364	)		(269,549	)		(108,819	)

Investing Activities:
Purchases of marketable securities		(35,078	)		(81,534	)		(404,965	)		(478,701	)
Maturities of marketable securities		27,100			2,250			159,592			108,250
Sales of marketable securities		29,673			64,882			216,756			349,938
Purchases of property and equipment		(507	)		(310	)		(1,785	)		(1,268	)
Net cash provided by (used in) investing activities		21,188			(14,712	)		(30,402	)		(21,781	)

Financing Activities:
Payments on mortgage repurchase facility		(38,911	)		(58,873	)		(234,671	)		(196,402	)
Advances on mortgage repurchase facility		63,073			88,312			221,418			224,027
Dividend payments		-			(60,869	)		-			(96,915	)
Excess tax benefits from stock-based compensation		391			-			391			-
Proceeds from issuance of senior notes		-			-			346,938			-
Proceeds from exercise of stock options		-			804			5,118			16,624
Net cash provided by (used in) financing activities		24,553			(30,626	)		339,194			(52,666	)

Net increase (decrease) in cash and cash equivalents		2,052			(103,702	)		39,243			(183,266	)
Cash and cash equivalents:
Beginning of period		197,286			263,797			160,095			343,361
End of period	$	199,338		$	160,095		$	199,338		$	160,095

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

New Home Deliveries

	Three Months Ended December 31,
	2013						2012						% Change
			Dollar		Average				Dollar		Average					Dollar			Average
	Homes		Value		Price		Homes		Value		Price		Homes			Value			Price
	(Dollars in thousands)
Arizona		192	$	50,646	$	263.8		185	$	41,358	$	223.6		4	%		22	%		18	%
California		174		75,164		432.0		224		76,722		342.5		-22	%		-2	%		26	%
Nevada		112		35,515		317.1		165		37,990		230.2		-32	%		-7	%		38	%
Washington		64		22,004		343.8		81		25,014		308.8		-21	%		-12	%		11	%
West		542		183,329		338.2		655		181,084		276.5		-17	%		1	%		22	%
Colorado		354		132,409		374.0		268		96,493		360.0		32	%		37	%		4	%
Utah		37		12,195		329.6		75		22,132		295.1		-51	%		-45	%		12	%
Mountain		391		144,604		369.8		343		118,625		345.8		14	%		22	%		7	%
Maryland		131		58,484		446.4		77		31,523		409.4		70	%		86	%		9	%
Virginia		107		53,807		502.9		84		42,672		508.0		27	%		26	%		-1	%
Florida		81		20,715		255.7		62		15,237		245.8		31	%		36	%		4	%
East		319		133,006		416.9		223		89,432		401.0		43	%		49	%		4	%
Total		1,252	$	460,939	$	368.2		1,221	$	389,141	$	318.7		3	%		18	%		16	%

	Year Ended December 31,
	2013						2012						% Change
			Dollar		Average				Dollar		Average					Dollar			Average
	Homes		Value		Price		Homes		Value		Price		Homes			Value			Price
	(Dollars in thousands)
Arizona		635	$	156,308	$	246.2		603	$	131,278	$	217.7		5	%		19	%		13	%
California		643		243,804		379.2		543		184,490		339.8		18	%		32	%		12	%
Nevada		593		163,127		275.1		604		125,725		208.2		-2	%		30	%		32	%
Washington		333		108,038		324.4		247		73,074		295.8		35	%		48	%		10	%
West		2,204		671,277		304.6		1,997		514,567		257.7		10	%		30	%		18	%
Colorado		1,287		479,619		372.7		807		289,416		358.6		59	%		66	%		4	%
Utah		208		65,292		313.9		226		64,006		283.2		-8	%		2	%		11	%
Mountain		1,495		544,911		364.5		1,033		353,422		342.1		45	%		54	%		7	%
Maryland		368		159,169		432.5		233		99,476		426.9		58	%		60	%		1	%
Virginia		355		177,142		499.0		280		135,067		482.4		27	%		31	%		3	%
Florida		288		74,208		257.7		195		47,915		245.7		48	%		55	%		5	%
Illinois		-		-		-		2		551		275.5	N/M			N/M			N/M
East		1,011		410,519		406.1		710		283,009		398.6		42	%		45	%		2	%
Total		4,710	$	1,626,707	$	345.4		3,740	$	1,150,998	$	307.8		26	%		41	%		12	%

N/M - Not meaningful

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Net New Orders

	Three Months Ended December 31,
	2013								2012								% Change
							Monthly								Monthly
			Dollar		Average		Absorption				Dollar		Average		Absorption					Dollar			Average
	Homes		Value		Price		Rate		Homes		Value		Price		Rate		Homes			Value			Price
	(Dollars in thousands)
Arizona		137	$	34,817	$	254.1		2.10		56	$	12,436	$	222.1		1.46		145	%		180	%		14	%
California		110		58,546		532.2		3.12		143		49,641		347.1		3.08		-23	%		18	%		53	%
Nevada		88		27,285		310.1		1.89		130		31,271		240.5		3.21		-32	%		-13	%		29	%
Washington		38		13,277		349.4		1.01		56		18,285		326.5		1.70		-32	%		-27	%		7	%
West		373		133,925		359.0		2.02		385		111,633		290.0		2.43		-3	%		20	%		24	%
Colorado		184		73,557		399.8		1.61		247		87,289		353.4		1.93		-26	%		-16	%		13	%
Utah		16		5,186		324.1		1.07		36		10,589		294.1		0.81		-56	%		-51	%		10	%
Mountain		200		78,743		393.7		1.55		283		97,878		345.9		1.64		-29	%		-20	%		14	%
Maryland		62		29,586		477.2		1.27		68		26,812		394.3		1.23		-9	%		10	%		21	%
Virginia		42		20,377		485.2		1.51		86		43,004		500.0		2.34		-51	%		-53	%		-3	%
Florida		75		22,597		301.3		2.00		47		12,991		276.4		1.04		60	%		74	%		9	%
East		179		72,560		405.4		1.57		201		82,807		412.0		1.46		-11	%		-12	%		-2	%
Total		752	$	285,228	$	379.3		1.76		869	$	292,318	$	336.4		1.86		-13	%		-2	%		13	%

	Year Ended December 31,
	2013								2012								% Change
							Monthly								Monthly
			Dollar		Average		Absorption				Dollar		Average		Absorption					Dollar			Average
	Homes		Value		Price		Rate		Homes		Value		Price		Rate		Homes			Value			Price
	(Dollars in thousands)
Arizona		645	$	165,101	$	256.0		2.91		625	$	137,159	$	219.5		2.93		3	%		20	%		17	%
California		561		237,694		423.7		3.90		654		225,174		344.3		3.11		-14	%		6	%		23	%
Nevada		529		162,270		306.7		3.47		652		146,094		224.1		3.10		-19	%		11	%		37	%
Washington		300		98,156		327.2		2.19		272		82,325		302.7		2.14		10	%		19	%		8	%
West		2,035		663,221		325.9		3.11		2,203		590,752		268.2		2.90		-8	%		12	%		22	%
Colorado		1,234		466,285		377.9		2.67		1,044		364,056		348.7		1.90		18	%		28	%		8	%
Utah		153		48,893		319.6		1.80		239		71,080		297.4		1.19		-36	%		-31	%		7	%
Mountain		1,387		515,178		371.4		2.53		1,283		435,136		339.2		1.71		8	%		18	%		9	%
Maryland		314		145,310		462.8		1.45		303		129,891		428.7		1.39		4	%		12	%		8	%
Virginia		273		136,054		498.4		2.07		362		179,744		496.5		2.20		-25	%		-24	%		0	%
Florida		318		84,897		267.0		2.09		189		46,493		246.0		1.06		68	%		83	%		9	%
Illinois		-		-		-		-		2		550		275.0	N/M		N/M			N/M			N/M
East		905		366,261		404.7		1.81		856		356,678		416.7		1.52		6	%		3	%		-3	%
Total		4,327	$	1,544,660	$	357.0		2.54		4,342	$	1,382,566	$	318.4		2.10		0	%		12	%		12	%

N/M - not meaningful

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Active Subdivisions

	At December 31,				%
	2013		2012		Change
Arizona		25		12		108	%
California		11		13		-15	%
Nevada		15		12		25	%
Washington		13		10		30	%
West		64		47		36	%
Colorado		38		42		-10	%
Utah		5		14		-64	%
Mountain		43		56		-23	%
Maryland		17		18		-6	%
Virginia		10		12		-17	%
Florida		12		15		-20	%
East		39		45		-13	%
Total		146		148		-1	%
Average for quarter ended		143		156		-8	%
Average for year ended		142		173		-18	%

Backlog

	At December 31,
	2013						2012						%Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		160	$	43,184	$	269.9		150	$	35,064	$	233.8		7	%		23	%		15	%
California		147		71,855		488.8		229		78,400		342.4		-36	%		-8	%		43	%
Nevada		140		49,350		352.5		204		50,533		247.7		-31	%		-2	%		42	%
Washington		46		16,430		357.2		79		26,761		338.7		-42	%		-39	%		5	%
West		493		180,819		366.8		662		190,758		288.2		-26	%		-5	%		27	%
Colorado		417		171,688		411.7		470		174,280		370.8		-11	%		-1	%		11	%
Utah		26		8,422		323.9		81		25,058		309.4		-68	%		-66	%		5	%
Mountain		443		180,110		406.6		551		199,338		361.8		-20	%		-10	%		12	%
Maryland		129		65,435		507.2		183		79,162		432.6		-30	%		-17	%		17	%
Virginia		103		51,594		500.9		185		92,303		498.9		-44	%		-44	%		0	%
Florida		94		28,037		298.3		64		17,452		272.7		47	%		61	%		9	%
East		326		145,066		445.0		432		188,917		437.3		-25	%		-23	%		2	%
Total		1,262	$	505,995	$	400.9		1,645	$	579,013	$	352.0		-23	%		-13	%		14	%

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Homes Completed or Under Construction (WIP lots):

	December 31,
	2013		2012		% Change
Unsold:
Completed		378		221		71	%
Under construction		1,038		604		72	%
Total unsold started homes		1,416		825		72	%
Sold homes under construction or completed		981		1,147		-14	%
Model homes		258		221		17	%
Total homes completed or under construction		2,655		2,193		21	%

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

	December 31, 2013						December 31, 2012
	Lots Owned		Lots Optioned		Total Lots Controlled		Lots Owned		Lots Optioned		Total Lots Controlled		Total % Change
Arizona		2,838		74		2,912		1,763		80		1,843		58	%
California		1,765		129		1,894		1,080		-		1,080		75	%
Nevada		1,503		391		1,894		1,226		40		1,266		50	%
Washington		537		182		719		472		162		634		13	%
West		6,643		776		7,419		4,541		282		4,823		54	%
Colorado		4,292		1,093		5,385		3,335		508		3,843		40	%
Utah		538		19		557		532		13		545		2	%
Mountain		4,830		1,112		5,942		3,867		521		4,388		35	%
Maryland		446		304		750		577		315		892		-16	%
Virginia		469		133		602		553		263		816		-26	%
Florida		650		423		1,073		365		159		524		105	%
East		1,565		860		2,425		1,495		737		2,232		9	%
Total		13,038		2,748		15,786		9,903		1,540		11,443		38	%

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Reconciliation of Non-GAAP Financial Measures

Adjusted Gross Margin from Home Sales

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

	Three Months Ended
	December			Gross			December			Gross			September			Gross
	31,			Margin			31,			Margin			30,			Margin
	2013			%			2012			%			2013			%
	(Dollars in thousands)
Gross Margin	$	80,429			17.4	%	$	64,968			16.6	%	$	78,444			18.1	%
Less: Land Sale Revenues		(636	)					(1,724	)					(25	)
Add: Land Cost of Sales		491						1,613						35
Gross Margin from Home Sales		80,284			17.4	%		64,857			16.7	%		78,454			18.1	%
Add: Inventory Impairments		569						1,105						350
Add: Interest in Cost of Sales		16,140						10,452						15,567
Add: Warranty Adjustments		-						-						-
Adjusted Gross Margin from Home Sales	$	96,993			21.0	%	$	76,414			19.6	%	$	94,371			21.8	%

M.D.C. HOLDINGS, INC.

M.D.C. HOLDINGS, INC.

Reconciliation of Non-GAAP Financial Measures (continued)

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

Net income excluding the impact of the reversal of the deferred tax asset valuation allowance per diluted share is a non-GAAP financial measure. We believe this information is meaningful as it more clearly reflects the Company’s current operating results and facilitates the investors ability to compare our financial results to those of our peer group and to our prior financial performance by excluding items which otherwise would distort the comparison. Net income excluding the impact of the reversal of the deferred tax asset valuation allowance per basic and diluted share for the year ended December 31, 2013 is calculated as follows:

	Year Ended December 31, 2013
	(Dollars in thousands, except per share amounts)
Numerator
Net income	$	314,385
Less: deferred tax asset valuation allowance reversal		(187,643	)
Adjusted net income		126,742
Less: distributed earnings allocated to participating securities		-
Less: undistributed earnings allocated to participating securities		(1,982	)
Net income attributable to common stockholders (numerator for basic earnings per share)		124,760
Add back: undistributed earnings allocated to participating securities		1,982
Less: undistributed earnings reallocated to participating securities		(1,967	)
Numerator for diluted earnings per share	$	124,775

Denominator
Weighted-average common shares outstanding		48,453,119
Add: dilutive effect of stock options		378,666
Denominator for diluted earnings per share under two class method		48,831,785

Basic earnings per common share excluding impact of reversal of deferred tax asset valuation allowance	$	2.58
Diluted earnings per common share excluding impact of reversal of deferred tax asset valuation allowance	$	2.56

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M.D.C. HOLDINGS, INC. Reports