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.	mdc20150127b_8k.htm

Exhibit 99.1

News Release

M.D.C. HOLDINGS ANNOUNCES 2014 FOURTH QUARTER RESULTS

DENVER, COLORADO, Wednesday, January 28, 2015. M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended December 31, 2014.

2014 Fourth Quarter Highlights and Comparisons to 2013 Fourth Quarter

●

Net income of $14.6 million, or $0.30 per share; excluding debt extinguishment charge, net income of $20.1* million, or $0.41* per share vs. $30.7 million or $0.62 per share

Year-over-year decrease almost entirely attributable to 2014 fourth quarter debt charge ($8.7 million) and increased effective tax rate (38.7% vs. 10.5%)

●

Income before tax of $23.9 million; excluding debt extinguishment charge, income before tax of $32.6* million vs. $34.3 million

●

Home sale revenues of $493.1 million, up 7% from $460.9 million

Homes delivered of 1,242 down from 1,252

Average sales price up $28,800 per home, or 8%, to $397,000

●

Gross margin from home sales of 16.3% down from 17.4%

Gross margin excluding impairments of 16.5%* vs. 17.5%*

●

Homebuilding SG&A rate of 11.1% vs. 12.0%, a 90 basis point improvement

●

Dollar value of net new orders of $356.4 million, up 25%

●

Ending active community count of 159, up 9%

●

Ending backlog dollar value of $663.2 million, up 31%

Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “We are pleased to announce a successful 2014 fourth quarter, capping a third consecutive year of profitability for our Company. Although we have made significant progress with our business since the end of the downturn, in 2014 the homebuilding industry experienced weaker demand, following a brief surge in sales velocity and home prices during the first half of 2013. This environment led us to increase our use of incentives during 2014 to stimulate demand for new homes in certain markets. Combined with rising construction and land costs, the increased incentives placed pressure on our homebuilding gross margins for both the fourth quarter and full year, although we have been able to offset some of the gross margin pressure by keeping our overhead low.”

Mr. Mizel concluded, “The outlook for 2015 is somewhat clouded by uncertainty surrounding global and domestic economic conditions, with the full impact of issues such as falling oil prices yet to be fully understood. Nonetheless, primarily as a result of our land acquisition efforts over the past two years, we have set the stage for our Company’s growth in 2015 by expanding both our active communities and our backlog year-over-year. Additionally, during 2014, we reduced our interest costs and extended our next senior note maturity to 2020 by eliminating $500 million of existing senior notes and issuing $250 million of new senior notes. These improvements provide us with the opportunity for top and bottom line expansion in future periods, in spite of the obstacles that may remain for the housing market.”

Homebuilding

Home sale revenues for the 2014 fourth quarter increased 7% to $493.1 million, compared to $460.9 million for the prior year period. The increase in revenue was primarily driven by an 8% increase in the average selling price due to the mix of homes closed and, to a lesser extent, price appreciation.

Gross margin from home sales for the 2014 fourth quarter was 16.3%, compared with 17.4% for the year-earlier period and 16.5% in the prior quarter. Gross margin from home sales excluding impairments was 16.5%* versus 17.5%* in the prior year and 16.5%* in the prior quarter. The year-over-year decrease was primarily due to the use of additional incentives used to stimulate demand and higher construction and land costs in our homes delivered.

SG&A expenses as a percentage of home sale revenues decreased by 90 basis points to 11.1% for the 2014 fourth quarter versus 12.0% for the same period in 2013. The improvement from the prior year was primarily the result of lower compensation-related expenses and, to a lesser extent, lower legal expenses.

The dollar value of net new orders for the 2014 fourth quarter increased 25% from the same period in 2013 to $356.4 million. The increase was driven by an 18% increase in unit volume, resulting primarily from a 16% increase in our average active communities, and a 6% increase in the average selling price of net new home orders to $402,000 compared to $379,000 for the same period in 2013. Our cancellation rate for the 2014 fourth quarter was 28% compared to 26% in the same period in the prior year.

Our backlog value at the end of the 2014 fourth quarter was up 31% year-over-year to $663.2 million. The increase was driven primarily by a 20% increase in units in backlog, due primarily to the net sales activity discussed above, coupled with a 9% increase in the average selling price of homes in backlog, primarily driven by a shift in mix.

During the quarter, we completed the early redemption of $250 million in Senior Notes due July 2015. As a result of this transaction, we recognized an $8.7 million charge related to the extinguishment of debt.

Financial Services

Income before taxes from our financial services operations for the 2014 fourth quarter was $7.0 million, up $1.7 million compared to $5.3 million for the 2013 fourth quarter, as both our mortgage and insurance operations experienced growth in pretax income. The improvement in pretax income for our mortgage operations was driven primarily by an increase in the number of loans locked, due to higher net sales activity, and lower SG&A expenses.

Income Taxes

During the 2014 fourth quarter, we recognized $9.2 million of income tax expense resulting in an effective tax rate of 38.7% while for the 2013 fourth quarter, we had income tax expense of $3.6 million, resulting in an effective tax rate of 10.5%, due primarily to an $11.3 million reversal of our deferred tax asset valuation allowance.

About MDC

Since 1972, MDC's homebuilding subsidiary companies, which operate under the name Richmond American Homes, have built and financed the American dream for more than 180,000 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 Diego, Orange County, San Francisco Bay Area, Sacramento, Washington D.C., Baltimore, Philadelphia, Orlando, Jacksonville, South Florida and Seattle. MDC’s subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol "MDC." For more information, visit www.mdcholdings.com.

Forward-Looking Statements

Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of MDC 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 MDC, 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 MDC’s investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican Mortgage Corporation’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 MDC 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 and natural disasters; (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; (16) changes in energy prices; and (17) other factors over which MDC has little or no control. Additional information about the risks and uncertainties applicable to MDC's business is contained in MDC's Form 10-K for the year ended December 31, 2014, 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. MDC 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.

Contact:	Robert N. Martin
	Vice President of Finance and Corporate Controller
	1-866-424-3395 / (720) 977-3395
	IR@mdch.com

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

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended						Year Ended
	December 31,						December 31,
	2014			2013			2014			2013
	(Dollars in thousands, except per share amounts)
	(Unaudited)						(Unaudited)
Homebuilding:
Home sale revenues	$	493,070		$	460,939		$	1,647,398		$	1,626,707
Land sale revenues		62			636			3,233			2,468
Total home and land sale revenues		493,132			461,575			1,650,631			1,629,175
Home cost of sales		(411,931	)		(380,086	)		(1,365,621	)		(1,336,978	)
Land cost of sales		(52	)		(491	)		(2,559	)		(1,961	)
Inventory impairments		(910	)		(569	)		(1,760	)		(919	)
Total cost of sales		(412,893	)		(381,146	)		(1,369,940	)		(1,339,858	)
Gross margin		80,239			80,429			280,691			289,317
Selling, general and administrative expenses		(54,601	)		(55,421	)		(203,253	)		(213,283	)
Interest and other income		2,222			6,193			26,310			29,798
Interest expense		-			-			(685	)		(1,726	)
Other expense		(2,279	)		(2,177	)		(4,813	)		(3,783	)
Losses from early extinguishments of debt		(8,741	)		-			(18,153	)		-
Other-than-temporary impairment of marketable securities		-			-			(4,293	)		-
Homebuilding pretax income		16,840			29,024			75,804			100,323

Financial Services:
Revenues		12,540			10,587			43,953			51,259
Expenses		(6,152	)		(6,127	)		(22,334	)		(25,271	)
Interest and other income		657			834			3,052			3,514
Financial services pretax income		7,045			5,294			24,671			29,502

Income before income taxes		23,885			34,318			100,475			129,825
Benefit from (provision for) income taxes		(9,246	)		(3,609	)		(37,332	)		184,560
Net income	$	14,639		$	30,709		$	63,143		$	314,385


Other comprehensive income (loss) related to available for sale securities, net of tax		3,082			4,237			(1,120	)		6,737
Comprehensive income	$	17,721		$	34,946		$	62,023		$	321,122

Earnings per share
Basic	$	0.30		$	0.62		$	1.29		$	6.39
Diluted	$	0.30		$	0.62		$	1.29		$	6.34

Weighted average common shares outstanding
Basic		48,635,629			48,497,526			48,615,541			48,453,119
Diluted		48,785,682			48,728,889			48,817,566			48,831,785

Dividends declared per share	$	0.25		$	-		$	1.00		$	-

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

	December 31,		December 31,
	2014		2013
	(Dollars in thousands, except
	per share amounts)
	(Unaudited)
ASSETS

Homebuilding:
Cash and cash equivalents	$	122,642	$	148,634
Marketable securities		140,878		569,021
Restricted cash		2,816		2,195
Trade and other receivables		28,555		23,407
Inventories:
Housing completed or under construction		732,692		636,700
Land and land under development		935,268		774,961
Total inventories		1,667,960		1,411,661
Property and equipment, net		30,491		31,248
Deferred tax asset, net		140,486		176,262
Metropolitan district bond securities (related party)		18,203		12,729
Prepaid and other assets		67,996		53,525
Total homebuilding assets		2,220,027		2,428,682
Financial Services:
Cash and cash equivalents		31,183		50,704
Marketable securities		15,262		19,046
Mortgage loans held-for-sale, net		88,392		92,578
Other assets		3,574		4,439
Total financial services assets		138,411		166,767
Total Assets	$	2,358,438	$	2,595,449
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	35,445	$	15,046
Accrued liabilities		115,117		152,821
Revolving credit facility		15,000		-
Senior notes, net		846,450		1,095,620
Total homebuilding liabilities		1,012,012		1,263,487
Financial Services:
Accounts payable and accrued liabilities		57,268		55,639
Mortgage repurchase facility		60,822		63,074
Total financial services liabilities		118,090		118,713
Total Liabilities		1,130,102		1,382,200
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; 48,831,639 and 48,788,887 issued and outstanding at December 31, 2014 and December 31, 2013, respectively		488		488
Additional paid-in-capital		909,974		908,090
Retained earnings		307,419		293,096
Accumulated other comprehensive income		10,455		11,575
Total Stockholders' Equity		1,228,336		1,213,249
Total Liabilities and Stockholders' Equity	$	2,358,438	$	2,595,449

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

	Three Months Ended						Year Ended
	December 31,						December 31,
	2014			2013			2014			2013
	(Dollars in thousands)
	(Unaudited)						(Unaudited)
Operating Activities:
Net income	$	14,639		$	30,709		$	63,143		$	314,385
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Losses from early extinguishments of debt		8,741			-			18,153			-
Stock-based compensation expense		1,224			1,412			5,978			9,652
Depreciation and amortization		1,000			904			3,928			3,864
Inventory impairments		910			569			1,760			919
Other-than-temporary impairment of marketable securities		-			-			4,293			-
Net loss on sale of marketable securities		312			-			(7,310	)		-
Amortization of discount / premiums on marketable debt securities		65			(597	)		566			219
Deferred income tax expense (benefit)		5,863			2,486			34,226			(187,171	)
Excess tax benefits from stock-based compensation		(26	)		(391	)		(26	)		(391	)
Net changes in assets and liabilities:
Restricted cash		218			(9	)		(621	)		(336	)
Trade and other receivables		(817	)		5,785			(6,638	)		4,186
Mortgage loans held-for-sale		(30,260	)		(18,238	)		4,186			27,375
Housing completed or under construction		103,472			(3,046	)		(96,936	)		(124,211	)
Land and land under development		(80,998	)		(74,852	)		(160,463	)		(285,070	)
Prepaid expenses and other assets		2,211			471			(11,873	)		(13,562	)
Accounts payable and accrued liabilities		(16,945	)		11,108			(16,013	)		(19,408	)
Net cash provided by (used in) operating activities		9,609			(43,689	)		(163,647	)		(269,549	)

Investing Activities:
Purchases of marketable securities		(18,863	)		(35,078	)		(428,709	)		(404,965	)
Maturities of marketable securities		2,250			27,100			167,339			159,592
Sales of marketable securities		315,391			29,673			687,692			216,756
Purchases of property and equipment		(1,323	)		(507	)		(3,242	)		(1,785	)
Net cash provided by (used in) investing activities		297,455			21,188			423,080			(30,402	)

Financing Activities:
Advances (payments) on mortgage repurchase facility, net		29,040			24,162			(2,252	)		(13,253	)
Proceeds from issuance of senior notes		-			-			248,375			346,938
Repayment of senior notes		(258,532	)		-			(517,650	)		-
Advances on revolving credit facility, net		5,000			-			15,000			-
Dividend payments		(12,204	)		-			(48,820	)		-
Excess tax benefits from stock-based compensation		26			391			26			391
Proceeds from exercise of stock options		312			-			375			5,118
Net cash provided by (used in) financing activities		(236,358	)		24,553			(304,946	)		339,194

Net increase (decrease) in cash and cash equivalents		70,706			2,052			(45,513	)		39,243
Cash and cash equivalents:
Beginning of period		83,119			197,286			199,338			160,095
End of period	$	153,825		$	199,338		$	153,825		$	199,338

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

New Home Deliveries

	Three Months Ended December 31,
	2014						2013						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		200	$	62,093	$	310.5		192	$	50,646	$	263.8		4	%		23	%		18	%
California		253		121,974		482.1		174		75,164		432.0		45	%		62	%		12	%
Nevada		169		53,355		315.7		112		35,515		317.1		51	%		50	%		(0	)%
Washington		59		21,918		371.5		64		22,004		343.8		(8	)%		(0	)%		8	%
West		681		259,340		380.8		542		183,329		338.2		26	%		41	%		13	%
Colorado		287		124,226		432.8		354		132,409		374.0		(19	)%		(6	)%		16	%
Utah		54		17,905		331.6		37		12,195		329.6		46	%		47	%		1	%
Mountain		341		142,131		416.8		391		144,604		369.8		(13	)%		(2	)%		13	%
Maryland		73		36,345		497.9		131		58,484		446.4		(44	)%		(38	)%		12	%
Virginia		54		26,029		482.0		107		53,807		502.9		(50	)%		(52	)%		(4	)%
Florida		93		29,225		314.2		81		20,715		255.7		15	%		41	%		23	%
East		220		91,599		416.4		319		133,006		416.9		(31	)%		(31	)%		(0	)%
Total		1,242	$	493,070	$	397.0		1,252	$	460,939	$	368.2		(1	)%		7	%		8	%

	Year Ended December 31,
	2014						2013						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		731	$	200,994	$	275.0		635	$	156,308	$	246.2		15	%		29	%		12	%
California		624		296,189		474.7		643		243,804		379.2		(3	)%		21	%		25	%
Nevada		564		176,371		312.7		593		163,127		275.1		(5	)%		8	%		14	%
Washington		267		96,496		361.4		333		108,038		324.4		(20	)%		(11	)%		11	%
West		2,186		770,050		352.3		2,204		671,277		304.6		(1	)%		15	%		16	%
Colorado		1,172		478,669		408.4		1,287		479,619		372.7		(9	)%		(0	)%		10	%
Utah		165		53,136		322.0		208		65,292		313.9		(21	)%		(19	)%		3	%
Mountain		1,337		531,805		397.8		1,495		544,911		364.5		(11	)%		(2	)%		9	%
Maryland		305		144,695		474.4		368		159,169		432.5		(17	)%		(9	)%		10	%
Virginia		234		115,001		491.5		355		177,142		499.0		(34	)%		(35	)%		(2	)%
Florida		304		85,847		282.4		288		74,208		257.7		6	%		16	%		10	%
East		843		345,543		409.9		1,011		410,519		406.1		(17	)%		(16	)%		1	%
Total		4,366	$	1,647,398	$	377.3		4,710	$	1,626,707	$	345.4		(7	)%		1	%		9	%

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Net New Orders

	Three Months Ended December 31,
	2014								2013								% Change
	Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes			Dollar Value			Average Price			Monthly Absorption Rate *
	(Dollars in thousands)
Arizona		141	$	39,533	$	280.4		1.31		137	$	34,817	$	254.1		2.10		3	%		14	%		10	%		(38	)%
California		138		68,509		496.4		2.19		110		58,546		532.2		3.12		25	%		17	%		(7	)%		(30	)%
Nevada		94		33,750		359.0		1.87		88		27,285		310.1		1.89		7	%		24	%		16	%		(1	)%
Washington		47		17,517		372.7		1.57		38		13,277		349.4		1.01		24	%		32	%		7	%		55	%
West		420		159,309		379.3		1.67		373		133,925		359.0		2.02		13	%		19	%		6	%		(17	)%
Colorado		266		116,740		438.9		2.18		184		73,557		399.8		1.61		45	%		59	%		10	%		35	%
Utah		46		14,512		315.5		2.45		16		5,186		324.1		1.07		188	%		180	%		(3	)%		129	%
Mountain		312		131,252		420.7		2.21		200		78,743		393.7		1.55		56	%		67	%		7	%		43	%
Maryland		44		21,992		499.8		1.30		62		29,586		477.2		1.27		(29	)%		(26	)%		5	%		2	%
Virginia		49		24,031		490.4		1.72		42		20,377		485.2		1.51		17	%		18	%		1	%		14	%
Florida		62		19,776		319.0		1.45		75		22,597		301.3		2.00		(17	)%		(12	)%		6	%		(28	)%
East		155		65,799		424.5		1.48		179		72,560		405.4		1.57		(13	)%		(9	)%		5	%		(6	)%
Total		887	$	356,360	$	401.8		1.78		752	$	285,228	$	379.3		1.76		18	%		25	%		6	%		1	%

	Year Ended December 31,
	2014								2013								% Change
	Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes			Dollar Value			Average Price			Monthly Absorption Rate *
	(Dollars in thousands)
Arizona		802	$	235,041	$	293.1		2.04		645	$	165,101	$	256.0		2.91		24	%		42	%		14	%		(30	)%
California		669		327,248		489.2		3.22		561		237,694		423.7		3.90		19	%		38	%		15	%		(17	)%
Nevada		579		192,708		332.8		2.93		529		162,270		306.7		3.47		9	%		19	%		9	%		(16	)%
Washington		276		102,795		372.4		2.30		300		98,156		327.2		2.19		(8	)%		5	%		14	%		5	%
West		2,326		857,792		368.8		2.54		2,035		663,221		325.9		3.11		14	%		29	%		13	%		(18	)%
Colorado		1,334		576,322		432.0		2.88		1,234		466,285		377.9		2.67		8	%		24	%		14	%		8	%
Utah		179		59,304		331.3		2.55		153		48,893		319.6		1.80		17	%		21	%		4	%		42	%
Mountain		1,513		635,626		420.1		2.84		1,387		515,178		371.4		2.53		9	%		23	%		13	%		12	%
Maryland		244		117,646		482.2		1.43		314		145,310		462.8		1.45		(22	)%		(19	)%		4	%		(1	)%
Virginia		221		111,068		502.6		1.96		273		136,054		498.4		2.07		(19	)%		(18	)%		1	%		(5	)%
Florida		319		109,141		342.1		1.85		318		84,897		267.0		2.09		0	%		29	%		28	%		(11	)%
East		784		337,855		430.9		1.72		905		366,261		404.7		1.81		(13	)%		(8	)%		6	%		(5	)%
Total		4,623	$	1,831,273	$	396.1		2.43		4,327	$	1,544,660	$	357.0		2.54		7	%		19	%		11	%		(4	)%

* Calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Active Subdivisions

	December 31,				%
	2014		2013		Change
Arizona		36		25		44	%
California		19		11		73	%
Nevada		16		15		7	%
Washington		10		13		(23	)%
West		81		64		27	%
Colorado		40		38		5	%
Utah		6		5		20	%
Mountain		46		43		7	%
Maryland		9		17		(47	)%
Virginia		10		10		0	%
Florida		13		12		8	%
East		32		39		(18	)%
Total		159		146		9	%
Average for Quarter Ended		166		143		16	%
Average for Year Ended		159		142		12	%

Backlog

	At December 31,
	2014						2013						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		231	$	75,419	$	326.5		160	$	43,184	$	269.9		44	%		75	%		21	%
California		192		98,057		510.7		147		71,855		488.8		31	%		36	%		4	%
Nevada		155		61,020		393.7		140		49,350		352.5		11	%		24	%		12	%
Washington		55		20,655		375.5		46		16,430		357.2		20	%		26	%		5	%
West		633		255,151		403.1		493		180,819		366.8		28	%		41	%		10	%
Colorado		579		266,280		459.9		417		171,688		411.7		39	%		55	%		12	%
Utah		40		13,580		339.5		26		8,422		323.9		54	%		61	%		5	%
Mountain		619		279,860		452.1		443		180,110		406.6		40	%		55	%		11	%
Maryland		68		34,293		504.3		129		65,435		507.2		(47	)%		(48	)%		(1	)%
Virginia		90		45,521		505.8		103		51,594		500.9		(13	)%		(12	)%		1	%
Florida		109		48,412		444.1		94		28,037		298.3		16	%		73	%		49	%
East		267		128,226		480.2		326		145,066		445.0		(18	)%		(12	)%		8	%
Total		1,519	$	663,237	$	436.6		1,262	$	505,995	$	400.9		20	%		31	%		9	%

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Homes Completed or Under Construction (WIP lots)

	December 31,				%
	2014		2013		Change
Unsold:
Completed		483		378		28	%
Under construction		583		1,038		(44	)%
Total unsold started homes		1,066		1,416		(25	)%
Sold homes under construction or completed		1,089		981		11	%
Model homes		272		258		5	%
Total homes completed or under construction		2,427		2,655		(9	)%

Lots Owned and Options (including homes completed or under construction)

	December 31, 2014						December 31, 2013
	Lots Owned		Lots Optioned		Total		Lots Owned		Lots Optioned		Total		Total % Change
Arizona		2,266		45		2,311		2,838		74		2,912		(21	)%
California		1,600		94		1,694		1,765		129		1,894		(11	)%
Nevada		1,589		286		1,875		1,503		391		1,894		(1	)%
Washington		886		-		886		537		182		719		23	%
West		6,341		425		6,766		6,643		776		7,419		(9	)%
Colorado		4,083		929		5,012		4,292		1,093		5,385		(7	)%
Utah		598		-		598		538		19		557		7	%
Mountain		4,681		929		5,610		4,830		1,112		5,942		(6	)%
Maryland		417		417		834		446		304		750		11	%
Virginia		525		469		994		469		133		602		65	%
Florida		891		184		1,075		650		423		1,073		0	%
East		1,833		1,070		2,903		1,565		860		2,425		20	%
Total		12,855		2,424		15,279		13,038		2,748		15,786		(3	)%

M.D.C. HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures

Gross Margin from Home Sales Excluding Interest and Impairments (Unaudited)

Gross Margin from Home Sales Excluding Impairments and Gross Margin from Home Sales Excluding Interest and Impairments are non-GAAP financial measures. We believe this information is meaningful as it isolates the impact that interest and impairments 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 31,												Year Ended December 31,
	2014			Gross Margin %			2013			Gross Margin %			2014			Gross Margin %			2013			Gross Margin %
	(Dollars in thousands)
Gross Margin	$	80,239			16.3	%	$	80,429			17.4	%	$	280,691			17.0	%	$	289,317			17.8	%
Less: Land Sales Revenue		(62	)					(636	)					(3,233	)					(2,468	)
Add: Land Cost of Sales		52						491						2,559						1,961
Gross Margin from Home Sales		80,229			16.3	%		80,284			17.4	%		280,017			17.0	%		288,810			17.8	%
Add: Inventory Impairments		910						569						1,760						919
Gross Margin from Home Sales
Excluding Impairments		81,139			16.5	%		80,853			17.5	%		281,777			17.1	%		289,729			17.8	%
Add: Interest in Cost of Sales		17,296						16,140						60,508						54,261
Gross Margin from Home Sales Excluding Impairments and Interest in Cost of Sales	$	98,435			20.0	%	$	96,993			21.0	%	$	342,285			20.8	%	$	343,990			21.1	%

Pretax Income, Net Income and Diluted Earnings per Share before Debt Extinguishment Charge (Unaudited)

Pretax Income, Net Income and Diluted Earnings per Share before Debt Extinguishment Charge are non-GAAP financial measures. We believe this information is meaningful as it isolates the impact that the debt extinguishment costs have on the results of MDC and permits investors to make better comparisons with our competitors, who may not have incurred debt extinguishment charges.

	Three Months Ended December 31,
	2014			2013
	(Dollars in thousands)
Income before tax	$	23,885		$	34,318
Losses from early extinguishments of debt		8,741			-
Adjusted income before tax		32,626			34,318
Adjusted income tax provision		(12,568	)		(3,609	)
Adjusted net income	$	20,058		$	30,709

	Three Months Ended December 31,
	2014				2013
	Dollars		EPS		Dollars		EPS
	(Dollars in thousands, except per share amounts)
Numerator for diluted earnings per share under two class method	$	14,582	$	0.30	$	30,163	$	0.62
Effect of debt extinguishment charge on numerator for diluted earnings per share under two class method		5,398		0.11		-		-
Numerator for adjusted diluted earnings per share under two class method	$	19,980	$	0.41	$	30,163	$	0.62

Weighted average diluted shares outstanding		48,785,682				48,728,889

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M.D.C. HOLDINGS, INC. Reports