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

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8-K - FORM 8-K - M.D.C. HOLDINGS, INC.	mdc20190129_8k.htm

Exhibit 99.1

News Release

M.D.C. HOLDINGS ANNOUNCES 2018 FOURTH QUARTER AND FULL YEAR RESULTS

Full year home sales revenues increased 19%, home sales gross margins expanded 170 basis points and pretax income rose to its highest level in over a decade.

DENVER, COLORADO, Thursday, January 31, 2019. M.D.C Holdings, Inc. (NYSE: MDC) announced results for the quarter and full year ended December 31, 2018.

Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “2018 was a banner year for MDC as home sales revenues increased 19%, home sales gross margins expanded 170 basis points, and pretax income rose to its highest level in over a decade. In addition, we ended the year in excellent financial condition, with a homebuilding debt to capital ratio of 39% and enhanced liquidity following the increase of our homebuilding line of credit from $700 million to $1.0 billion in the fourth quarter. Furthermore, we delivered on our goal of 10% active community count growth to start 2019.”

Mr. Mizel continued, “The fourth quarter marked a strong end to the year as we made significant year-over-year improvements to our top and bottom line. However, order activity during the quarter was not as robust as it was last year, a sign that buyers are being patient with their purchase decisions. Years of price appreciation coupled with recent uncertainty about mortgage rates have understandably made some buyers cautious and have resulted in a slower sales pace for our industry. Fortunately, we have adjusted our strategy over the past few years to address the rising cost of home ownership by bringing down the price points of our homes. Our more affordable home offerings were well received in 2018, and we anticipate the same will be true in 2019.”

Mr Mizel concluded, “We continue to believe that the outlook for our industry remains favorable, with rising wages, continuing job growth and positive consumer sentiment providing a healthy economic backdrop. MDC is in a great position to capitalize on these fundamentals thanks to our more affordable product focus, our strong balance sheet and our seasoned management team. As a result, we are optimistic about our company’s future as we enter the spring selling season.”

2018 Fourth Quarter Highlights and Comparisons to 2017 Fourth Quarter

●

Home sale revenues up 22% to $858.5 million from $702.6 million

Average selling price of homes delivered up 4% to $469,900

●

Pretax income up 34% to $69.3 million from $51.8 million

$6.9 million loss on investments in 2018 fourth quarter vs. $0.1 million loss in 2017 fourth quarter

●

Net income of $54.7 million, or $0.95 per diluted share, up 123% from $24.6 million, or $0.43 per diluted share

Effective tax rate of 21.0% in 2018 fourth quarter vs 52.6% in 2017 fourth quarter

●

Gross margin from home sales up 80 basis points to 18.1% from 17.3%

$10.0 million impairment charge in 2018 fourth quarter vs. $0.6 million in 2017 fourth quarter

Excluding impairments, gross margins increased 190 basis points to 19.3% from 17.4%

●

Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 70 basis points to 10.9% from 11.6%

●

Dollar value of net new orders of $453.3 million vs. $574.3 million in 2017 fourth quarter

2018 Full Year Highlights and Comparisons to 2017 Full Year

●

Home sale revenues up 19% to $2.98 billion from $2.50 billion

Average selling price of homes delivered up 7% to $481,200

●

Pretax income up 15% to $263.9 million from $229.7 million

$3.7 million loss on investments in 2018 vs $53.7 million gain in 2017

●

Net income of $210.8 million, or $3.66 per diluted share, up 49% from $141.8 million, or $2.48 per diluted share

Effective tax rate of 20.1% in 2018 vs 38.3% in 2017

●

Gross margin from home sales up 170 basis points to 18.3% from 16.6%

$21.9 million impairment charge in 2018 vs. $10.0 million in 2017

Excluding impairments, gross margins increased 200 basis points to 19.0% from 17.0%

●

Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 40 basis points to 11.1% from 11.5%

●

Dollar value of net new orders of $2.77 billion, up 3% from $2.70 billion

Average selling price of net new orders consistent with 2017

Other Selected Information

●

Backlog dollar value at December 31, 2018 down 11% year-over-year to $1.43 billion

Gross margin from home sales in backlog at 12/31/2018 comparable to 2018 full year closing gross margin (excluding impairments) of 19.0%

Backlog conversion ratio (home deliveries divided by beginning backlog) for the 2019 first quarter estimated to be in the 42% to 44% range

●

Active subdivision count at 12/31/2018 of 166, up 10% year-over-year and 5% from 9/30/2018

●

Lots controlled of 23,187 at 12/31/2018, up 20% year-over-year

●

Quarterly cash dividend of $0.30 ($1.20 annualized) and 8% stock dividend declared in January 2019

About MDC

M.D.C. Holdings, Inc. was founded in 1972. MDC's homebuilding subsidiaries, which operate under the name Richmond American Homes, have built and financed the American Dream for more than 200,000 homebuyers since 1977. 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, Orlando, Jacksonville, South Florida, Seattle and Portland. The Company's subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol "MDC." For more information, visit www.mdcholdings.com.

Forward-Looking Statements

Certain statements in this release, including any 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, 2018, 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

Senior Vice President and Chief Financial Officer

1-866-424-3395

IR@mdch.com

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2018			2017			2018			2017
	(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues	$	858,488		$	702,649		$	2,981,811		$	2,498,695
Land sale revenues		-			1,609			-			4,547
Total home and land sale revenues		858,488			704,258			2,981,811			2,503,242
Home cost of sales		(692,856	)		(580,667	)		(2,415,139	)		(2,073,833	)
Land cost of sales		-			(1,768	)		-			(4,440	)
Inventory impairments		(10,002	)		(620	)		(21,850	)		(10,010	)
Total cost of sales		(702,858	)		(583,055	)		(2,436,989	)		(2,088,283	)
Gross margin		155,630			121,203			544,822			414,959
Selling, general and administrative expenses		(93,366	)		(81,379	)		(329,801	)		(287,488	)
Interest and other income		2,132			1,614			7,718			7,714
Net realized gains from the sales of marketable securities		-			-			-			17,775
Realized gain from the sale of metropolitan district bond securities (related party)		-			-			-			35,847
Other expense		(2,683	)		(1,182	)		(5,245	)		(2,817	)
Other-than-temporary impairment of marketable securities		-			-			-			(51	)
Homebuilding pretax income		61,713			40,256			217,494			185,939

Financial Services:
Revenues		23,387			19,856			83,405			74,372
Expenses		(10,350	)		(9,287	)		(38,200	)		(34,534	)
Interest and other income		1,409			1,048			4,900			4,190
Net loss on marketable equity securities		(6,873	)		-			(3,745	)		-
Other-than-temporary impairment of marketable securities		-			(75	)		-			(235	)
Financial services pretax income		7,573			11,542			46,360			43,793

Income before income taxes		69,286			51,798			263,854			229,732
Provision for income taxes		(14,561	)		(27,246	)		(53,074	)		(87,897	)
Net income	$	54,725		$	24,552		$	210,780		$	141,835

Other comprehensive income (loss) related to available for sale securities, net of tax		-			1,166			-			(18,079	)
Comprehensive income	$	54,725		$	25,718		$	210,780		$	123,756

Earnings per share
Basic	$	0.97		$	0.44		$	3.74		$	2.54
Diluted	$	0.95		$	0.43		$	3.66		$	2.48

Weighted average common shares outstanding
Basic		56,263,535			55,802,550			56,084,373			55,663,908
Diluted		57,141,245			57,235,959			57,250,704			56,901,461

Dividends declared per share	$	0.30		$	0.23		$	1.20		$	0.93

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

(Unaudited)

	December 31,		December 31,
	2018		2017
	(Dollars in thousands, except
	per share amounts)
ASSETS
Homebuilding:
Cash and cash equivalents	$	414,724	$	472,957
Marketable securities		-		49,634
Restricted cash		6,363		8,812
Trade and other receivables		52,982		53,362
Inventories:
Housing completed or under construction		952,436		936,685
Land and land under development		1,180,558		893,051
Total inventories		2,132,994		1,829,736
Property and equipment, net		58,167		26,439
Deferred tax assets, net		37,178		41,480
Prepaid and other assets		45,794		75,666
Total homebuilding assets		2,748,202		2,558,086
Financial Services:
Cash and cash equivalents		49,052		32,471
Marketable securities		40,879		42,004
Mortgage loans held-for-sale, net		149,211		138,114
Other assets		13,733		9,617
Total financial services assets		252,875		222,206
Total Assets	$	3,001,077	$	2,780,292
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	50,505	$	39,655
Accrued liabilities		196,247		166,312
Revolving credit facility		15,000		15,000
Senior notes, net		987,967		986,597
Total homebuilding liabilities		1,249,719		1,207,564
Financial Services:
Accounts payable and accrued liabilities		58,543		53,101
Mortgage repurchase facility		116,815		112,340
Total financial services liabilities		175,358		165,441
Total Liabilities		1,425,077		1,373,005
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; 56,615,352 and 56,123,228 issued and outstanding at December 31, 2018 and December 31, 2017, respectively		566		561
Additional paid-in-capital		1,168,442		1,144,570
Retained earnings		406,992		258,164
Accumulated other comprehensive income		-		3,992
Total Stockholders' Equity		1,576,000		1,407,287
Total Liabilities and Stockholders' Equity	$	3,001,077	$	2,780,292

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

(Unaudited)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2018			2017			2018			2017
	(Dollars in thousands)
Operating Activities:
Net income	$	54,725		$	24,552		$	210,780		$	141,835
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense		5,517			2,757			14,017			5,857
Depreciation and amortization		5,920			1,116			21,326			5,321
Inventory impairments		10,002			620			21,850			10,010
Other-than-temporary impairment of marketable securities		-			75			-			286
Net gain on sale of available-for-sale marketable securities		-			-			-			(18,122	)
Net loss on marketable equity securities		6,873			-			3,745			-
Gain on sale of metropolitan district bond securities (related party)		-			-			-			(35,847	)
Amortization of discount / premiums on marketable debt securities		-			-			(366	)		-
Deferred income tax expense		(363	)		21,992			3,729			44,787
Net changes in assets and liabilities:
Trade and other receivables		2,411			(13,882	)		(4,638	)		(13,763	)
Mortgage loans held-for-sale		(34,375	)		(48,310	)		(11,097	)		660
Housing completed or under construction		119,575			32,449			(12,082	)		(69,548	)
Land and land under development		(154,287	)		(30,055	)		(304,250	)		(10,169	)
Prepaid expenses and other assets		12,083			(1,892	)		(245	)		(13,121	)
Accounts payable and accrued liabilities		23,259			6,975			49,325			22,320
Net cash provided by (used in) operating activities		51,340			(3,603	)		(7,906	)		70,506

Investing Activities:
Purchases of marketable securities		(1,667	)		(49,635	)		(18,850	)		(67,239	)
Maturities of marketable securities		-			-			50,000			-
Sales of marketable securities		2,920			-			16,230			83,315
Proceeds from sale of metropolitan district bond securities (related party)		-			-			-			44,253
Purchases of property and equipment		(7,267	)		(622	)		(27,166	)		(2,539	)
Net cash provided by (used in) investing activities		(6,014	)		(50,257	)		20,214			57,790

Financing Activities:
Advances (payments) on mortgage repurchase facility, net		26,031			47,237			4,475			(2,145	)
Proceeds from issuance of senior notes		-			146,463			-			146,463
Dividend payments		(16,985	)		(13,104	)		(67,718	)		(51,897	)
Payments of deferred financing costs		(3,026	)		(35	)		(3,026	)		(2,665	)
Proceeds from exercise of stock options		1			998			9,860			9,501
Net cash provided by (used in) financing activities		6,021			181,559			(56,409	)		99,257

Net increase (decrease) in cash and cash equivalents		51,347			127,699			(44,101	)		227,553
Cash and cash equivalents:
Beginning of period		418,792			386,541			514,240			286,687
End of period	$	470,139		$	514,240		$	470,139		$	514,240

Reconciliation of cash, cash equivalents and restricted cash:
Homebuilding:
Cash and cash equivalents	$	414,724		$	472,957		$	414,724		$	472,957
Restricted cash		6,363			8,812			6,363			8,812
Financial Services:
Cash and cash equivalents		49,052			32,471			49,052			32,471
Total cash, cash equivalents and restricted cash	$	470,139		$	514,240		$	470,139		$	514,240

New Home Deliveries

	Three Months Ended December 31,
	2018						2017						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
West		958	$	446,825	$	466.4		810	$	356,428	$	440.0		18	%		25	%		6	%
Mountain		645		330,313		512.1		501		240,024		479.1		29	%		38	%		7	%
East		224		81,350		363.2		245		106,197		433.5		(9	)%		(23	)%		(16	)%
Total		1,827	$	858,488	$	469.9		1,556	$	702,649	$	451.6		17	%		22	%		4	%

	Year Ended December 31,
	2018						2017						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
West		3,244	$	1,567,141	$	483.1		2,990	$	1,316,069	$	440.2		8	%		19	%		10	%
Mountain		2,118		1,080,475		510.1		1,691		801,644		474.1		25	%		35	%		8	%
East		835		334,195		400.2		860		380,982		443.0		(3	)%		(12	)%		(10	)%
Total		6,197	$	2,981,811	$	481.2		5,541	$	2,498,695	$	450.9		12	%		19	%		7	%

Net New Orders

	Three Months Ended December 31,
	2018								2017								% 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)
West		573	$	250,647	$	437.4		2.51		651	$	299,738	$	460.4		2.91		(12	)%		(16	)%		(5	)%		(14	)%
Mountain		315		149,583		474.9		1.60		413		204,706		495.7		2.49		(24	)%		(27	)%		(4	)%		(36	)%
East		171		53,028		310.1		2.78		188		69,817		371.4		2.72		(9	)%		(24	)%		(17	)%		2	%
Total		1,059	$	453,258	$	428.0		2.18		1,252	$	574,261	$	458.7		2.73		(15	)%		(21	)%		(7	)%		(20	)%

	Year Ended December 31,
	2018								2017								% 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)
West		3,316	$	1,535,438	$	463.0		3.71		3,094	$	1,435,474	$	464.0		3.47		7	%		7	%		(0	)%		7	%
Mountain		1,908		972,826		509.9		2.63		1,876		919,875		490.3		3.05		2	%		6	%		4	%		(14	)%
East		750		262,518		350.0		2.78		846		343,148		405.6		2.37		(11	)%		(23	)%		(14	)%		17	%
Total		5,974	$	2,770,782	$	463.8		3.16		5,816	$	2,698,497	$	464.0		3.12		3	%		3	%		(0	)%		1	%

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

Active Subdivisions

								Average Active Subdivisions
	Active Subdivisions							Three Months Ended							Year Ended
	December 31,				%			December 31,				%			December 31,				%
	2018		2017		Change			2018		2017		Change			2018		2017		Change
West		79		73		8	%		76		75		1	%		75		75		0	%
Mountain		67		56		20	%		65		55		18	%		60		52		15	%
East		20		22		(9	)%		21		22		(5	)%		22		29		(24	)%
Total		166		151		10	%		162		152		7	%		157		156		1	%

Backlog

	At December 31,
	2018						2017						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
West		1,523	$	756,335	$	496.6		1,451	$	774,182	$	533.6		5	%		(2	)%		(7	)%
Mountain		1,043		550,329		527.6		1,253		637,995		509.2		(17	)%		(14	)%		4	%
East		370		119,303		322.4		455		190,315		418.3		(19	)%		(37	)%		(23	)%
Total		2,936	$	1,425,967	$	485.7		3,159	$	1,602,492	$	507.3		(7	)%		(11	)%		(4	)%

Homes Completed or Under Construction (WIP lots)

	December 31,
	2018		2017		% Change
Unsold:
Completed		179		95		88	%
Under construction		263		215		22	%
Total unsold started homes		442		310		43	%
Sold homes under construction or completed		2,219		2,345		(5	)%
Model homes under construction or completed		407		338		20	%
Total homes completed or under construction		3,068		2,993		3	%

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

	December 31, 2018						December 31, 2017
	Lots Owned		Lots Optioned		Total		Lots Owned		Lots Optioned		Total		Total % Change
West		8,093		3,004		11,097		6,607		2,101		8,708		27	%
Mountain		6,305		2,477		8,782		4,905		2,930		7,835		12	%
East		1,899		1,409		3,308		1,486		1,283		2,769		19	%
Total		16,297		6,890		23,187		12,998		6,314		19,312		20	%

Selling, General and Administrative Expenses

	Three Months Ended December 31,								Year Ended December 31,
	2018			2017			Change		2018			2017			Change
	(Dollars in thousands)
General and administrative expenses	$	45,317		$	39,843		$	5,474	$	161,679		$	137,674		$	24,005
General and administrative expenses as a percentage of home sale revenues		5.3	%		5.7	%	(40) bps			5.4	%		5.5	%	(10) bps

Marketing expenses	$	19,234		$	17,843		$	1,391	$	70,122		$	66,388		$	3,734
Marketing expenses as a percentage of home sale revenues		2.2	%		2.5	%	(30) bps			2.4	%		2.7	%	(30) bps

Commissions expenses	$	28,815		$	23,693		$	5,122	$	98,000		$	83,426		$	14,574
Commissions expenses as a percentage of home sale revenues		3.4	%		3.4	%	0 bps			3.3	%		3.3	%	0 bps

Total selling, general and administrative expenses	$	93,366		$	81,379		$	11,987	$	329,801		$	287,488		$	42,313
Total selling, general and administrative expenses as a percentage of home sale revenues (SG&A Rate)		10.9	%		11.6	%	(70) bps			11.1	%		11.5	%	(40) bps

Capitalized Interest

	Three Months Ended						Year Ended
	December 31,						December 31,
	2018			2017			2018			2017
	(Dollars in thousands)
Homebuilding interest incurred	$	15,726		$	15,576		$	62,631		$	55,170
Less: Interest capitalized		(15,726	)		(15,576	)		(62,631	)		(55,170	)
Homebuilding interest expensed	$	-		$	-		$	-		$	-

Interest capitalized, beginning of period	$	57,232		$	60,216		$	57,541		$	68,085
Plus: Interest capitalized during period		15,726			15,576			62,631			55,170
Less: Previously capitalized interest included in home and land cost of sales		(18,113	)		(18,251	)		(65,327	)		(65,714	)
Interest capitalized, end of period	$	54,845		$	57,541		$	54,845		$	57,541

Reconciliation of Non-GAAP Financial Measures

Below is a reconciliation of gross margin from home sales to gross margin from home sales excluding inventory impairments, warranty adjustments and interest in cost of sales. The table below reconciles each of these non-GAAP financial measures to gross margin as calculated based on GAAP. We believe this information is relevant and meaningful as it provides our investors and analysts with the impact that interest, warranty 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, 2018		Gross Margin %			December 31, 2017			Gross Margin %
	(Dollars in thousands)
Gross Margin	$	155,630		18.1	%	$	121,203			17.2	%
Less: Land Sale Revenues		-					(1,609	)
Add: Land Cost of Sales		-					1,768
Gross Margin from Home Sales		155,630		18.1	%		121,362			17.3	%
Add: Inventory Impairments		10,002					620
Gross Margin from Home Sales Excluding Inventory Impairments		165,632		19.3	%		121,982			17.4	%
Add: Warranty Adjustments		307					1,716
Gross Margin from Home Sales Excluding Inventory Impairments and Warranty Adjustments		165,939		19.3	%		123,698			17.6	%
Add: Interest in Cost of Sales		18,113					18,251
Gross Margin from Home Sales Excluding Inventory Impairments,
Warranty Adjustments and Interest in Cost of Sales	$	184,052		21.4	%	$	141,949			20.2	%

	Year Ended
	December 31, 2018		Gross Margin %			December 31, 2017			Gross Margin %
	(Dollars in thousands)
Gross Margin	$	544,822		18.3	%	$	414,959			16.6	%
Less: Land Sale Revenues		-					(4,547	)
Add: Land Cost of Sales		-					4,440
Gross Margin from Home Sales		544,822		18.3	%		414,852			16.6	%
Add: Inventory Impairments		21,850					10,010
Gross Margin from Home Sales Excluding Inventory Impairments		566,672		19.0	%		424,862			17.0	%
Add: Warranty Adjustments		3,413					1,341
Gross Margin from Home Sales Excluding Inventory Impairments and Warranty Adjustments		570,085		19.1	%		426,203			17.1	%
Add: Interest in Cost of Sales		65,327					65,714
Gross Margin from Home Sales Excluding Inventory Impairments,
Warranty Adjustments and Interest in Cost of Sales	$	635,412		21.3	%	$	491,917			19.7	%

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M.D.C. HOLDINGS, INC. Reports