MDC Holdings ends 2007 with cash of $1 billion, total liquidity of $2.25 billion

By Jennifer Lanning Drey

Portland, Ore., Feb. 7 - MDC Holdings, Inc. nearly doubled its cash balance during 2007, ending the year with cash and cash equivalents of $1 billion, Larry A. Mizel, MDC's chief executive officer, reported Thursday during the company's fourth-quarter earnings conference call.

With MDC's total debt standing at $1.07 billion at year-end, the cash position makes the company nearly debt neutral.

"Our primary focus continues to be generating cash flow and enhancing our investment-grade balance sheet, increasing the efficiencies of our business in preparation for an eventual homebuilding recovery," Mizel said.

During 2007, the company generated cash flow from operations of $592.6 million, with $257.0 million of the total being generated in the fourth quarter. The cash increase was achieved primarily through lot reductions, tightened controls on land spending, lower homebuilding construction costs and decreased overhead expense.

The company ended the year with no outstanding borrowings on its $1.25 billion line of credit.

Since the close of the quarter, MDC has further strengthened its cash position with the receipt of a $90 million tax refund for the carryback of its 2007 net operating loss, Mizel reported.

"While we are unsure of the challenges 2008 will provide for the homebuilding industry, we believe that the strength of our balance sheet, coupled with our efforts to streamline our operations and increase efficiencies will position us to capitalize on opportunities created in this environment," Mizel said.

The CEO later said, "We stand prepared to transact and if the market comes at levels that seem appropriate, we will. We expect to be very active and very aggressive on terms and conditions that are risk adjusted and make sense for us in the future."

For the fourth quarter, MDC reported a net loss of $281.1 million, which included pre-tax charges of $175.2 million for asset impairments and $7.8 million for write-offs of deposits and pre-acquisition costs related to land option contracts the company does not intend to pursue.

Denver-based MDC Holdings builds homes under the name Richmond American Homes.

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