Quarterly Report

Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-8951

M.D.C. HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)


Delaware		84-0622967
(State or other jurisdiction		(I.R.S. employer
of incorporation or organization)		identification no.)


4350 South Monaco Street, Suite 500		80237
Denver, Colorado		(Zip code)
(Address of principal executive offices)

(303) 773-1100
(Registrant’s telephone number, including area code)

3600 South Yosemite Street, Suite 900
Denver, Colorado 80237
(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 July 29, 2005, 44,375,000 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 JUNE 30, 2005

INDEX


	Page
	No.
Part I. Financial Information:

Item 1. Consolidated Financial Statements:

Balance Sheets as of June 30, 2005 (Unaudited) and December 31, 2004		1

Statements of Income (Unaudited) for the three and six months ended June 30, 2005 and 2004		3

Statements of Cash Flows (Unaudited) for the six months ended June 30, 2005 and 2004		4

Notes to Consolidated Financial Statements (Unaudited)		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		31

Item 4. Controls and Procedures		31

Part II. Other Information:

Item 1. Legal Proceedings		32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32

Item 3. Defaults Upon Senior Securities		32

Item 4. Submission of Matters to a Vote of Security Holders		32

Item 5. Other Information		32

Item 6. Exhibits		33

Signatures		35
Ratio of Earnings to Fixed Charges Schedule
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

(i)

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets
(In thousands)


	June 30,		December 31,
	2005		2004
	(Unaudited)
ASSETS
Corporate
Cash and cash equivalents	$	45,613	$	389,828
Property and equipment, net		30,347		28,932
Deferred income taxes		42,372		40,963
Deferred debt issue costs, net		5,436		5,671
Other assets, net		7,818		9,022

		131,586		474,416


Homebuilding
Cash and cash equivalents		23,540		16,961
Home sales and other accounts receivable		69,400		31,018
Inventories, net
Housing completed or under construction		1,190,380		851,628
Land and land under development		1,302,718		1,109,953
Prepaid expenses and other assets, net		147,684		115,544

		2,733,722		2,125,104


Financial Services
Cash and cash equivalents		1,336		1,361
Mortgage loans held in inventory		162,111		178,925
Other assets, net		8,699		10,238

		172,146		190,524


Total Assets	$	3,037,454	$	2,790,044

See notes to consolidated financial statements.

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M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets
(In thousands, except share amounts)


	June 30,			December 31,
	2005			2004
	(Unaudited)
LIABILITIES
Corporate
Accounts payable and accrued liabilities	$	82,405		$	94,178
Income taxes payable		40,725			50,979
Senior notes, net		746,459			746,310

		869,589			891,467


Homebuilding
Accounts payable		204,951			159,763
Accrued liabilities		189,768			165,705
Line of credit		30,000			—

		424,719			325,468


Financial Services
Accounts payable and accrued liabilities		18,245			18,810
Line of credit		110,879			135,478

		129,124			154,288

Total Liabilities		1,423,432			1,371,223

COMMITMENTS AND CONTINGENCIES		—			—

STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; 25,000,000 shares authorized; none issued		—			—
Common stock, $.01 par value; 100,000,000 shares authorized; 43,761,000 and 43,286,000 shares issued, respectively, at June 30, 2005 and December 31, 2004		438			433
Additional paid-in capital		683,336			660,699
Retained earnings		933,387			760,780
Unearned restricted stock		(2,534	)		(1,418	)
Accumulated other comprehensive income		(276	)		(290	)

		1,614,351			1,420,204

Less treasury stock, at cost; 9,000 and 31,000 shares, respectively, at June 30, 2005 and December 31, 2004		(329	)		(1,383	)

Total Stockholders’ Equity		1,614,022			1,418,821

Total Liabilities and Stockholders’ Equity	$	3,037,454		$	2,790,044

See notes to consolidated financial statements.

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2005			2004			2005			2004
REVENUES

Homebuilding	$	1,033,294		$	863,369		$	1,954,624		$	1,612,233
Financial services		12,812			11,947			24,410			26,395
Corporate		234			167			1,222			459

Total Revenues		1,046,340			875,483			1,980,256			1,639,087


COSTS AND EXPENSES

Homebuilding		845,669			710,884			1,604,489			1,346,303
Financial services		8,685			8,802			17,436			18,593
Corporate		28,009			21,510			58,425			40,086

Total Costs and Expenses		882,363			741,196			1,680,350			1,404,982

Income before income taxes		163,977			134,287			299,906			234,105
Provision for income taxes		(61,354	)		(51,719	)		(112,652	)		(90,636	)


NET INCOME	$	102,623		$	82,568		$	187,254		$	143,469

EARNINGS PER SHARE

Basic	$	2.35		$	1.95		$	4.30		$	3.39

Diluted	$	2.25		$	1.87		$	4.10		$	3.24


WEIGHTED-AVERAGE SHARES OUTSTANDING

Basic		43,718			42,318			43,584			42,312

Diluted		45,703			44,233			45,649			44,257


DIVIDENDS DECLARED PER SHARE	$	.180		$	.115		$	.330		$	.203

See notes to consolidated financial statements.

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


	Six Months
	Ended June 30,
	2005			2004
OPERATING ACTIVITIES

Net income	$	187,254		$	143,469
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization		21,586			17,093
Deferred income taxes		(1,409	)		(4,225	)
Net changes in assets and liabilities
Home sales and other accounts receivable		(38,382	)		(20,489	)
Homebuilding inventories		(531,517	)		(363,967	)
Prepaid expenses and other assets		(42,255	)		(15,269	)
Mortgage loans held in inventory		16,814			18,130
Accounts payable and accrued expenses		59,827			67,984
Other, net		1,979			(4,069	)

Net cash used in operating activities		(326,103	)		(161,343	)


INVESTING ACTIVITIES

Net purchase of property and equipment		(11,724	)		(5,277	)


FINANCING ACTIVITIES

Lines of credit
Advances		386,300			595,000
Principal payments		(380,899	)		(511,612	)
Dividend payments		(14,647	)		(8,743	)
Stock repurchases		—			(6,812	)
Proceeds from exercise of stock options		9,412			1,923

Net cash provided by financing activities		166			69,756

Net decrease in cash and cash equivalents		(337,661	)		(96,864	)
Cash and cash equivalents
Beginning of period		408,150			173,565

End of period	$	70,489		$	76,701

See notes to consolidated financial statements.

- 4 -

M.D.C. HOLDINGS, INC.

Notes to Consolidated Financial Statements
(Unaudited)

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 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 June 30, 2005 and for all periods presented. These statements should be read in conjunction with MDC’s consolidated 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 consolidated 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 adjusted retroactively to reflect the effect of the January 10, 2005 1.3 for 1 stock split.


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2005		2004		2005		2004
Basic Earnings Per Share
Net income	$	102,623	$	82,568	$	187,254	$	143,469

Basic weighted-average shares outstanding		43,718		42,318		43,584		42,312

Per share amounts	$	2.35	$	1.95	$	4.30	$	3.39

Diluted Earnings Per Share
Net income	$	102,623	$	82,586	$	187,254	$	143,469

Basic weighted-average shares outstanding		43,718		42,318		43,584		42,312
Stock options, net		1,985		1,915		2,065		1,945

Diluted weighted-average shares outstanding		45,703		44,233		45,649		44,257

Per share amounts	$	2.25	$	1.87	$	4.10	$	3.24

C. Stockholders’ Equity

Stock Repurchase Program — In January 2005, MDC’s board of directors authorized the repurchase of up to an additional 495,120 shares of MDC common stock, bringing the total authorization under the Company’s stock repurchase program to 5,655,000 shares. The Company has repurchased 3,509,480 shares of MDC common stock since inception of this program, leaving 2,145,520 shares available to be repurchased as of

- 5 -

June 30, 2005. At June 30, 2005, MDC held 9,000 shares of treasury stock with an average purchase price of $36.57. There were no stock repurchases made during the six months ended June 30, 2005.

Stock Split — On December 14, 2004, MDC’s board of directors declared a 1.3 for 1 stock split in the form of a 30% 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 adjusted retroactively for all periods presented to reflect the effect of this stock split.

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 (“APB”) No. 25, “Accounting for Stock Issued to Employees,” (“APB 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 and six months ended June 30, 2005 and 2004. 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, “Accounting for Stock-Based Compensation – Transition and Disclosure,” had been applied to all outstanding and unvested awards in the three and six month periods ended June 30, 2005 and 2004 (in thousands, except per share amounts).


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2005			2004			2005			2004
Net income, as reported	$	102,623		$	82,568		$	187,254		$	143,469
Deduct stock-based compensation expense determined using the fair value method, net of related tax effects		(2,599	)		(1,911	)		(5,016	)		(3,157	)

Pro forma net income	$	100,024		$	80,657		$	182,238		$	140,312


Earnings per share
Basic as reported	$	2.35		$	1.95		$	4.30		$	3.39

Basic pro forma	$	2.29		$	1.91		$	4.18		$	3.32


Diluted as reported	$	2.25		$	1.87		$	4.10		$	3.24

Diluted pro forma	$	2.19		$	1.82		$	3.99		$	3.17

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 F.

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


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2005			2004			2005			2004
Total Interest Incurred

Corporate and homebuilding	$	11,110		$	7,709		$	21,925		$	15,075
Financial services		654			385			1,138			768

Total interest incurred	$	11,764		$	8,094		$	23,063		$	15,843


Corporate/Homebuilding Interest Capitalized

Interest capitalized in homebuilding inventory, beginning of period	$	27,741		$	21,047		$	24,220		$	20,043
Interest incurred		11,110			7,709			21,925			15,075
Interest expense		—			—			—			—
Previously capitalized interest included in cost of sales		(8,558	)		(6,733	)		(15,852	)		(13,095	)

Interest capitalized in homebuilding inventory, end of period	$	30,293		$	22,023		$	30,293		$	22,023


Financial Services Net Interest Income

Interest income	$	1,382		$	1,285		$	2,393		$	2,598
Interest expense		(654	)		(385	)		(1,138	)		(768	)

Net interest income	$	728		$	900		$	1,255		$	1,830

E. 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 liabilities and homebuilding accrued liabilities in the consolidated balance sheets, and totaled $60.8 million and $64.4 million, respectively, at June 30, 2005 and December 31, 2004. Warranty expense was $7.2 million and $16.5 million for the three and six months ended June 30, 2005, compared with $9.1 million and $18.1 million for the same periods in 2004. In addition, the reserves include additional qualified settlement fund warranty reserves created pursuant to litigation settled in 1996. Warranty activity for the six months ended June 30, 2005 is shown below (in thousands).


Warranty reserve balance at December 31, 2004	$	64,424
Warranty expense provision		16,487
Warranty cash payments, net		(20,161	)

Warranty reserve balance at June 30, 2005	$	60,750

- 7 -

F. 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).


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2005			2004			2005			2004
Homebuilding
Revenues
Home sales	$	1,029,553		$	861,537		$	1,946,384		$	1,607,966
Land sales		—			—			1,296			—
Other revenues		3,741			1,832			6,944			4,267

Total Homebuilding Revenues		1,033,294			863,369			1,954,624			1,612,233

Home cost of sales		734,772			623,894			1,391,552			1,174,918
Land cost of sales		—			—			790			—
Marketing expenses		53,688			44,653			101,852			87,821
General and administrative expenses		57,209			42,337			110,295			83,564


Total Homebuilding Expenses		845,669			710,884			1,604,489			1,346,303

Homebuilding Operating Profit		187,625			152,485			350,135			265,930


Financial Services
Revenues
Net interest income		728			900			1,255			1,830
Origination fees		6,854			5,399			12,995			10,663
Gains on sales of mortgage servicing		791			521			1,469			1,137
Gains on sales of mortgage loans, net		3,769			4,533			7,016			11,310
Mortgage servicing and other		670			594			1,675			1,455

Total Financial Services Revenues		12,812			11,947			24,410			26,395
General and administrative expenses		8,685			8,802			17,436			18,593

Financial Services Operating Profit		4,127			3,145			6,974			7,802

Total Operating Profit		191,752			155,630			357,109			273,732


Corporate
Interest and other revenues		234			167			1,222			459
General and administrative expenses		(28,009	)		(21,510	)		(58,425	)		(40,086	)

Net Corporate Expenses		(27,775	)		(21,343	)		(57,203	)		(39,627	)


Income Before Income Taxes	$	163,977		$	134,287		$	299,906		$	234,105

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G. Commitments and Contingencies

The Company often is required to obtain bonds and letters of credit in support of its obligations relating to subdivision improvement, homeowners association dues and start-up expenses, warranty work, contractors license fees and earnest money deposits. At June 30, 2005, MDC had issued and outstanding performance bonds and letters of credit totaling approximately $349.1 million and $103.4 million, respectively, including $31.7 million issued by HomeAmerican Mortgage Corporation (“HomeAmerican”), a wholly owned subsidiary of MDC. 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, the Company modified the Homebuilding Line, increasing the aggregate commitment amount to $1.058 billion, while maintaining the maturity date of April 7, 2009. 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 June 30, 2005, the Company had $30.0 million of borrowings and $69.6 million in letters of credit 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 June 30, 2005, $110.9 million was borrowed and an additional $17.8 million was collateralized and available to be borrowed. The Mortgage Line is cancelable upon 120 days notice.

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 requirements, 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 June 30, 2005 and December 31, 2004 are as follows (in thousands):


	June 30,		December 31,
	2005		2004
7% Senior Notes due 2012	$	148,754	$	148,688
5 1/2% Senior Notes due 2013		349,236		349,197
5 3/8% Medium Term Senior Notes due 2014		248,469		248,425

Total Senior Notes		746,459		746,310
Homebuilding Line		30,000		—

Total Corporate and Homebuilding Debt		776,459		746,310
Mortgage Line		110,879		135,478

Total Debt	$	887,338	$	881,788

On July 7, 2005, the Company completed a public offering of $250 million principal amount of 5⅜% medium term senior notes due July 1, 2015 (the “2015 Medium Term Senior Notes”) at a discount,

- 9 -

with an effective yield of 5 ¹ / 2 %. The 2015 Medium Term Senior Notes have interest due and payable on January 1st and July 1st of each year until maturity. The Company does not make any principal payments, and the 2015 Medium Term Senior Notes are fully due on July 1, 2015. The 2015 Medium Term Senior Notes are guaranteed by certain of the Company’s subsidiaries and may be redeemed, at the election of the Company, in whole at any time or in part from time to time, at the redemption prices set forth in the 2015 Medium Term Senior Notes supplemental indenture.

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 No. 25 and amends SFAS Statement No. 95, “Statement of Cash Flows .” Generally, the approach in SFAS 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.

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 Florida, Inc.

	•		RAH of Texas, LP

	•		RAH Texas Holdings, LLC

	•		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:

- 10 -

	•		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.

- 11 -

M.D.C. Holdings, Inc.

Supplemental Combining Balance Sheet
June 30, 2005
(In thousands)
(Unaudited)


						Non-
				Guarantor		Guarantor			Eliminating
	MDC			Subsidiaries		Subsidiaries				Entries			Total
ASSETS
Corporate
Cash and cash equivalents	$	45,613		$	—	$	—		$	—		$	45,613
Investments in and advances to parent and subsidiaries		418,295			924		(1,010	)		(418,209	)		—
Other assets		86,252			130		(409	)		—			85,973

		550,160			1,054		(1,419	)		(418,209	)		131,586


Homebuilding
Cash and cash equivalents		—			15,692		7,848			—			23,540
Home sales and other accounts receivable		—			79,343		1,414			(11,357	)		69,400
Inventories, net
Housing completed or under construction		—			1,190,380		—			—			1,190,380
Land and land under development		—			1,302,718		—			—			1,302,718
Other assets		—			132,287		33,897			(18,500	)		147,684

		—			2,720,420		43,159			(29,857	)		2,733,722

Financial Services		—			—		172,146			—			172,146

Total Assets	$	550,160		$	2,721,474	$	213,886		$	(448,066	)	$	3,037,454


LIABILITIES
Corporate
Accounts payable and accrued expenses	$	101,659		$	248	$	48		$	(19,550	)	$	82,405
Advances and notes payable — parent and subsidiaries		(1,875,254	)		1,860,123		15,131			—			—
Income taxes payable		(66,726	)		104,430		3,021			—			40,725
Senior notes, net		746,459			—		—			—			746,459

		(1,093,862	)		1,964,801		18,200			(19,550	)		869,589


Homebuilding
Accounts payable and accrued expenses		—			369,279		25,440			—			394,719

Line of credit		30,000			—		—			—			30,000

		30,000			369,279		25,440			—			424,719

Financial Services		—			—		139,431			(10,307	)		129,124

Total Liabilities		(1,063,862	)		2,334,080		183,071			(29,857	)		1,423,432

STOCKHOLDERS’ EQUITY		1,614,022			387,394		30,815			(418,209	)		1,614,022

Total Liabilities and Stockholders’ Equity	$	550,160		$	2,721,474	$	213,886		$	(448,066	)	$	3,037,454

- 12 -

M.D.C. Holdings, Inc.

Supplemental Combining Balance Sheet
December 31, 2004
(In thousands)


						Non-
				Guarantor		Guarantor			Eliminating
	MDC			Subsidiaries		Subsidiaries			Entries			Total
ASSETS
Corporate
Cash and cash equivalents	$	389,828		$	—	$	—		$	—		$	389,828
Investments in and advances to parent and subsidiaries		552,635			1,246		(3,104	)		(550,777	)		—
Other assets		85,177			207		(796	)		—			84,588

		1,027,640			1,453		(3,900	)		(550,777	)		474,416


Homebuilding
Cash and cash equivalents		—			12,252		4,709			—			16,961
Home sales and other accounts receivable		—			34,144		1,477			(4,603	)		31,018
Inventories, net
Housing completed or under construction		—			851,628		—			—			851,628
Land and land under development		—			1,109,953		—			—			1,109,953
Other assets		—			100,997		29,047			(14,500	)		115,544

		—			2,108,974		35,233			(19,103	)		2,125,104

Financial Services		—			—		190,524			—			190,524

Total Assets	$	1,027,640		$	2,110,427	$	221,857		$	(569,880	)	$	2,790,044


LIABILITIES
Corporate
Accounts payable and accrued expenses	$	109,550		$	130	$	48		$	(15,550	)	$	94,178
Advances and notes payable – parent and subsidiaries		(1,057,552	)		1,043,249		14,303			—			—
Income taxes payable		(189,489	)		236,466		4,002			—			50,979
Senior notes, net		746,310			—		—			—			746,310

		(391,181	)		1,279,845		18,353			(15,550	)		891,467

Homebuilding
Accounts payable and accrued expenses		—			305,894		19,574			—			325,468
Line of credit		—			—		—			—			—
Notes payable		—			—		—			—			—

		—			305,894		19,574			—			325,468

Financial Services		—			—		157,841			(3,553	)		154,288

Total Liabilities		(391,181	)		1,585,739		195,768			(19,103	)		1,371,223


STOCKHOLDERS’ EQUITY		1,418,821			524,688		26,089			(550,777	)		1,418,821

Total Liabilities and
Stockholders’ Equity	$	1,027,640		$	2,110,427	$	221,857		$	(569,880	)	$	2,790,044

- 13 -

M.D.C. Holdings, Inc.

Supplemental Combining Statements of Income
(In thousands)
(Unaudited)

Three Months Ended June 30, 2005


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	1,031,534		$	1,760		$	—		$	1,033,294
Financial services		—			—			12,812			—			12,812
Corporate		226			—			8			—			234
Equity in earnings of subsidiaries		95,525			—			—			(95,525	)		—

Total Revenues		95,751			1,031,534			14,580			(95,525	)		1,046,340


COSTS AND EXPENSES
Homebuilding		(247	)		883,191			150			(37,425	)		845,669
Financial services		—			—			8,685			—			8,685
Corporate		28,009			—			—			—			28,009
Corporate and homebuilding interest		(37,425	)		—			—			37,425			—

Total Expenses		(9,663	)		883,191			8,835			—			882,363

Income before income taxes		105,414			148,343			5,745			(95,525	)		163,977
Provision for income taxes		(2,791	)		(56,376	)		(2,187	)		—			(61,354	)

NET INCOME	$	102,623		$	91,967		$	3,558		$	(95,525	)	$	102,623

Three Months Ended June 30, 2004


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	861,824		$	1,718		$	(173	)	$	863,369
Financial services		—			—			11,947			—			11,947
Corporate		162			—			5			—			167
Equity in earnings of subsidiaries		82,394			—			—			(82,394	)		—

Total Revenues		82,556			861,824			13,670			(82,567	)		875,483

COSTS AND EXPENSES
Homebuilding		371			733,667			(467	)		(22,687	)		710,884
Financial services		—			—			8,802			—			8,802
Corporate		21,510			—			—			—			21,510
Corporate and homebuilding interest		(22,687	)		—			—			22,687			—

Total Expenses		(806	)		733,667			8,335			—			741,196

Income before income taxes		83,362			128,157			5,335			(82,567	)		134,287
Provision for income taxes		(794	)		(49,086	)		(1,839	)		—			(51,719	)

NET INCOME	$	82,568		$	79,071		$	3,496		$	(82,567	)	$	82,568

- 14 -

M.D.C. Holdings, Inc.

Supplemental Combining Statements of Income
(In thousands)
(Unaudited)

Six Months Ended June 30, 2005


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	1,951,427		$	3,421		$	(224	)	$	1,954,624
Financial services		—			—			24,410			—			24,410
Corporate		1,204			—			18			—			1,222
Equity in earnings of subsidiaries		178,598			—			—			(178,598	)		—

Total Revenues		179,802			1,951,427			27,849			(178,822	)		1,980,256

COSTS AND EXPENSES
Homebuilding		(68	)		1,674,035			934			(70,412	)		1,604,489
Financial services		—			—			17,436			—			17,436
Corporate		58,425			—			—			—			58,425
Corporate and homebuilding interest		(70,412	)		—			—			70,412			—

Total Expenses		(12,055	)		1,674,035			18,370			—			1,680,350

Income before income taxes		191,857			277,392			9,479			(178,822	)		299,906
Provision for income taxes		(4,603	)		(104,429	)		(3,620	)		—			(112,652	)

NET INCOME	$	187,254		$	172,963		$	5,859		$	(178,822	)	$	187,254

Six Months Ended June 30, 2004


							Non-
				Guarantor			Guarantor			Eliminating
	MDC			Subsidiaries			Subsidiaries			Entries			Total
REVENUES
Homebuilding	$	—		$	1,609,434		$	3,103		$	(304	)	$	1,612,233
Financial services		—			—			26,395			—			26,395
Corporate		447			—			12			—			459
Equity in earnings of subsidiaries		140,910			—			—			(140,910	)		—

Total Revenues		141,357			1,609,434			29,510			(141,214	)		1,639,087

COSTS AND EXPENSES
Homebuilding		575			1,391,027			(700	)		(44,599	)		1,346,303
Financial services		—			—			18,593			—			18,593
Corporate		40,086			—			—			—			40,086
Corporate and homebuilding interest		(44,599	)		—			—			44,599			—

Total Expenses		(3,938	)		1,391,027			17,893			—			1,404,982

Income before income taxes		145,295			218,407			11,617			(141,214	)		234,105
Provision for income taxes		(1,826	)		(84,489	)		(4,321	)		—			(90,636	)

NET INCOME	$	143,469		$	133,918		$	7,296		$	(141,214	)	$	143,469

- 15 -

M.D.C. Holdings, Inc.

Supplemental Combining Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30, 2005


							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
Net cash provided by (used in) operating activities	$	140,746		$	(496,986	)	$	30,361		$	(224	)	$	(326,103	)

Net cash used in investing activities		(4,195	)		(7,294	)		(235	)		—			(11,724	)

Financing activities
Net increase (reduction) in borrowings from parent and subsidiaries		(505,308	)		507,720			(2,412	)		—			—
Lines of credit
Advances		386,300			—			—			—			386,300
Principal payments		(356,300	)		—			(24,599	)		—			(380,899	)
Dividend payments		(14,871	)		—			—			224			(14,647	)
Proceeds from exercise of stock options		9,412			—			—			—			9,412

Net cash provided by (used in) financing activities		(480,767	)		507,720			(27,011	)		224			166

Net increase (decrease) in cash and cash equivalents		(344,216	)		3,440			3,115			—			(337,661	)
Cash and cash equivalents
Beginning of year		389,828			12,252			6,070			—			408,150

End of year	$	45,612		$	15,692		$	9,185		$	—		$	70,489

Six Months Ended June 30, 2004


							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
Net cash provided by (used in) operating activities	$	38,769		$	(228,172	)	$	28,363		$	(303	)	$	(161,343	)

Net cash used in investing activities		(2,406	)		(2,613	)		(258	)		—			(5,277	)

Financing activities
Net increase (reduction) in borrowings from parent and subsidiaries		(220,130	)		239,441			(19,311	)		—			—
Lines of credit
Advances		595,000			—			—			—			595,000
Principal payments		(505,000	)		—			(6,612	)		—			(511,612	)
Dividend payments		(9,046	)		—			—			303			(8,743	)
Stock repurchases		(6,812	)		—			—			—			(6,812	)
Proceeds from exercise of stock options		1,923			—			—			—			1,923

Net cash provided by (used in) financing activities		(144,065	)		239,441			(25,923	)		303			69,756

Net increase (decrease) in cash and cash equivalents		(107,702	)		8,656			2,182			—			(96,864	)
Cash and cash equivalents
Beginning of year		163,133			6,335			4,097			—			173,565

End of year	$	55,431		$	14,991		$	6,279		$	—		$	76,701

- 16 -

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

M.D.C. Holdings, Inc. is a Delaware Corporation. We refer to M.D.C. Holdings, Inc. as the “Company,” “MDC,” “we” or “our” in this Form 10-Q, and these designations include our subsidiaries unless we state otherwise. Our primary business is owning and managing subsidiary companies that build and sell homes under the name “Richmond American Homes.” Our financial services segment consists of HomeAmerican Mortgage Corporation (“HomeAmerican”), which originates mortgage loans primarily for our homebuyers, and American Home Insurance Agency, Inc., which offers third party insurance products to our homebuyers. In addition, we provide title agency services through American Home Title and Escrow Company (“American Home Title”) to our homebuyers in Virginia, Maryland, Colorado, Florida, Texas and Delaware.

RESULTS OF OPERATIONS

Overview

Our second quarter earnings were the highest for any second quarter in our history, and 24% above earnings for the same period last year. Contributing to these results were second quarter records for home closings, revenues and Home Gross Margins (as defined below), as well as a significant increase in our average selling price. This improvement was driven by growth in our long-standing businesses in Arizona, Nevada and Virginia, as well as our relatively new operations in Utah and Florida. Demand remained strong in most of our markets in the 2005 second quarter, as we received record levels of home orders.

Our conservative operating model, strong financial position and expanding geographic footprint have enabled us to produce a 28.6% Home Gross Margin in the 2005 second quarter and a 31.2% return on average equity over the last 12 months. At the same time, we achieved a ratio of debt-to-capital, net of cash, of .30 at June 30, 2005.

We continue to focus on strengthening our financial position and enhancing shareowner value. As we positioned our Company for future growth through the 30% year-over-year increases in our lot supply and active subdivisions, we increased our June 30 ^th cash and available borrowing capacity by 58% from this time last year. Our financial flexibility improved even more in July when we issued an additional $250 million in 10-year, unsecured medium term senior notes at a coupon interest rate of only 5 3/8%. See “ Forward-Looking Statements ” below.

We enter the 2005 third quarter with a record Backlog (as defined below) of 9,213 homes valued at $3.14 billion. We continue to evaluate strategic land opportunities in the markets in which we operate to better position us for future growth, while maintaining a conservative balance between our owned and optioned land positions. We continue to operate within our disciplined business model without having entered into any joint venture arrangements. See “ Forward-Looking Statements ” below.

Consolidated Results

The following discussion for both consolidated results of operations and segment results refers to the three and six months ended June 30, 2005, compared with the same periods in 2004. The table below summarizes our results of operations (in thousands, except per share amounts). Prior period earnings per share have been adjusted retroactively to reflect the effect of the January 10, 2005 1.3 for 1 stock split.

- 17 -


	Three Months									Six Months
	Ended June 30,				Change					Ended June 30,				Change
	2005		2004		Amount		%			2005		2004		Amount		%
Revenues	$	1,046,340	$	875,483	$	170,857		20	%	$	1,980,256	$	1,639,087	$	341,169		21	%
Income Before Income Taxes	$	163,977	$	134,287	$	29,690		22	%	$	299,906	$	234,105	$	65,801		28	%
Net Income	$	102,623	$	82,568	$	20,055		24	%	$	187,254	$	143,469	$	43,785		31	%
Earnings Per Share:
Basic	$	2.35	$	1.95	$	0.40		21	%	$	4.30	$	3.39	$	0.91		27	%
Diluted	$	2.25	$	1.87	$	0.38		20	%	$	4.10	$	3.24	$	0.86		27	%

The increases in revenues for the second quarter and first six months of 2005 primarily were due to higher homebuilding revenues resulting from increases in home closings to 3,512 and 6,670, respectively, compared with 3,085 and 5,995, respectively, in 2004. Also contributing to the higher revenues were increases in the average selling prices of homes closed of $13,900 and $23,600, respectively, for the three and six months ended June 30, 2005, compared with the same periods in 2004.

The increases in income before income taxes for the three and six-month periods were the result of increased operating profits from our homebuilding segment, partially offset by higher corporate general and administrative expenses. The increases in homebuilding segment profits primarily resulted from the higher home closings and average selling prices described above, as well as increases in Home Gross Margins of 100 basis points and 160 basis points, respectively, for the three and six-month periods.

-18-

Homebuilding Segment

The tables below set forth information relating to our homebuilding segment (dollars in thousands).


	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2005			2004			Amount			%			2005			2004			Amount			%
Home Sales Revenues	$	1,029,553		$	861,537		$	168,016			20	%	$	1,946,384		$	1,607,966		$	338,418			21	%
Operating Profit	$	187,625		$	152,485		$	35,140			23	%	$	350,135		$	265,930		$	84,205			32	%
Average Selling Price Per Home Closed	$	293.2		$	279.3		$	13.9			5	%	$	291.8		$	268.2		$	23.6			9	%
Home Gross Margins		28.6	%		27.6	%		1.0	%					28.5	%		26.9	%		1.6	%

Home Orders, net (units)
Arizona		1,090			1,243			(153	)		-12	%		2,242			2,153			89			4	%
California		702			627			75			12	%		1,233			1,453			(220	)		-15	%
Colorado		594			599			(5	)		-1	%		1,258			1,290			(32	)		-2	%
Florida		359			90			269			299	%		679			199			480			241	%
Illinois		31			3			28			N/A			60			3			57			N/A
Maryland		131			79			52			66	%		276			203			73			36	%
Nevada		1,209			927			282			30	%		1,959			1,957			2			—
Pennsylvania/New Jersey/Delaware		57			—			57			N/A			100			—			100			N/A
Texas		189			224			(35	)		-16	%		510			495			15			3	%
Utah		236			210			26			12	%		484			386			98			25	%
Virginia		234			230			4			2	%		577			522			55			11	%

Total		4,832			4,232			600			14	%		9,378			8,661			717			8	%


Homes Closed (units)
Arizona		859			665			194			29	%		1,655			1,535			120			8	%
California		377			535			(158	)		-30	%		763			1,011			(248	)		-25	%
Colorado		568			542			26			5	%		1,016			1,020			(4	)		—
Florida		285			84			201			239	%		580			155			425			274	%
Illinois		16			—			16			N/A			21			—			21			N/A
Maryland		80			91			(11	)		-12	%		154			161			(7	)		-4	%
Nevada		626			629			(3	)		—			1,235			1,197			38			3	%
Pennsylvania/New Jersey/Delaware		1			—			1			N/A			1			—			1			N/A
Texas		237			148			89			60	%		402			218			184			84	%
Utah		233			124			109			88	%		401			228			173			76	%
Virginia		230			267			(37	)		-14	%		442			470			(28	)		-6	%

Total		3,512			3,085			427			14	%		6,670			5,995			675			11	%

-19-


	June 30,		December 31,		June 30,
	2005		2004		2004
Backlog (units)
Arizona		2,730		2,143		1,951
California		1,277		807		1,561
Colorado		934		692		1,004
Florida		737		638		148
Illinois		57		18		3
Maryland		347		225		311
Nevada		1,470		746		1,646
Pennsylvania/New Jersey/Delaware		122		23		—
Texas		364		256		420
Utah		372		289		309
Virginia		803		668		906

Total		9,213		6,505		8,259

Backlog Estimated Sales Value	$	3,140,000	$	1,920,000	$	2,500,000

Average Sales Price in Backlog	$	340.8	$	295.2	$	302.7


Active Subdivisions
Arizona		44		32		34
California		31		22		20
Colorado		55		53		55
Florida		23		18		7
Illinois		5		1		—
Maryland		14		11		10
Nevada		45		31		23
Pennsylvania/New Jersey/Delaware		5		2		—
Texas		25		24		22
Utah		17		22		18
Virginia		18		26		28

Total		282		242		217

Average for quarter ended		275		237		223

Average for six months ended		263		232		214

Home Sales Revenues — The increases in home sales revenues were the result of increased home closings and average selling prices, as discussed below, for both the three and six-month periods ended June 30, 2005.

Homes Closed — Home closings were 14% and 11% higher, respectively, in the second quarter and first six months of 2005, compared with the same periods in 2004. For the second quarter and first six months, home closings increased significantly in Arizona, primarily due to higher year-over-year Backlogs at the beginning of the 2005 first and second quarters resulting from the strong demand for new homes in this market. We experienced a significant increase in home closings in Florida, driven by a substantial increase in active subdivisions and the impact of the acquisition of the assets of Watson Home Builders, Inc. in September 2004. In addition, we closed a combined 470 homes and 803 homes, respectively, in the second quarter and first six months of 2005 in Utah and Texas, relatively new markets in which a total of only 272 homes and 446 homes, respectively, were closed during the comparable periods in 2004. We closed fewer homes in California and Virginia in the 2005 second quarter and first six months, respectively, primarily due to weather related delays in construction and lower year-over-year Backlogs to start the periods.

-20-

Average Selling Prices Per Home Closed - The $13,900 and $23,600 increases in average selling prices in the second quarter and first six months of 2005, respectively, primarily were attributable to higher average selling prices in all of our markets except Texas. The average selling prices in Virginia and California particularly were strong, both increasing over $60,000 in the 2005 second quarter and over $75,000 for the first six months of 2005. These and our other average selling price increases more than offset the impact of the change in mix of home closings that resulted in reduced home closings in California and Virginia and higher home closings in our lower-priced Florida, Utah, Arizona and Texas markets. The following table displays our average selling price per home closed, by market (in thousands).


	Three Months Ended June 30				Six Months Ended June 30,
	2005		2004		2005		2004
Average Selling Price
Arizona	$	219.5	$	192.7	$	211.7	$	191.7
California		498.1		434.0		508.4		411.8
Colorado		286.2		268.3		284.6		265.1
Florida		206.4		183.9		196.3		177.8
Illinois		451.6		—		439.8		—
Maryland		418.2		400.0		420.8		408.5
Nevada		297.7		227.7		293.3		217.7
Pennsylvania/New Jersey/Delaware		347.3		—		347.3		—
Texas		158.6		161.1		157.2		161.2
Utah		215.1		177.3		214.2		176.0
Virginia		507.4		430.3		496.3		420.7
Company average	$	293.2	$	279.3	$	291.8	$	268.2

Home Gross Margins - We define “Home Gross Margins” to mean home sales revenues less cost of goods sold (which primarily includes land and construction costs, capitalized interest, financing costs, and a reserve for warranty expense) as a percent of home sales revenues. Home Gross Margins improved in the second quarter and first six months of 2005, compared with the same periods in 2004, primarily due to the strong demand for homes and increased selling prices in many of our markets. Substantial year-over-year improvements in Home Gross Margins in Virginia, Maryland, California and Arizona, added to our increased results and offset the impact of the anticipated easing of Home Gross Margins in Nevada from the extraordinary levels of the past year. Also contributing to our improved Home Gross Margins in the 2005 second quarter were $4.0 million in insurance proceeds and other cash recoveries related to warranty and land development costs expensed in previous periods. These increases to Home Gross Margins partially were offset by the impact of a greater number of homes closed in the three and six months ended June 30, 2005 in Utah, Texas and Florida, where Home Gross Margins were lower than the Company average.

Future Home Gross Margins may be impacted by, among other things: (1) increased competition, which could affect our ability to raise home prices and maintain lower levels of incentives; (2) increases in the costs of subcontracted labor, finished lots, building materials (for example, lumber and steel have significantly increased year-over-year), and other resources, to the extent that market conditions prevent the recovery of increased costs through higher selling prices; (3) adverse weather; (4) shortages of subcontractor labor, finished lots and other resources, which can result in delays in the delivery of homes under construction and increases in related cost of sales; (5) the impact of changes in demand for housing in our markets, particularly Nevada; and (6) other general risk factors. See “ Forward-Looking Statements ” below.

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Orders for Homes – Home orders in the second quarter of 2005 increased from 2004 levels in most of our markets, led by Maryland, Nevada and California, largely due to year-over-year increases in active subdivisions. In addition, we received 447 net home orders in the 2005 second quarter from our newer markets in Florida, Pennsylvania/New Jersey/Delaware and Illinois, compared with 93 home orders from Florida and Illinois in the 2004 second quarter. These increases partially were offset by a decline in home orders in Arizona from the exceptional levels experienced during the second quarter of 2004. The demand for new homes in Arizona continued to be very strong throughout the 2005 second quarter. However, during the quarter, we limited temporarily our release of new homes for sale in certain Arizona subdivisions in an effort to reduce the growing Backlog of homes sold but not started that resulted from a combination of high levels of home orders in prior quarters and weather-related land development delays in this market.

For the first six months of 2005, home orders particularly were strong in Arizona, Virginia, Utah and Maryland, primarily due to the continued strong demand for new homes in these markets. In addition, we received 839 net home orders in the first six months of 2005 from our newer markets in Florida, Pennsylvania/New Jersey/Delaware and Illinois, compared with only 202 home orders from these markets in the comparable period in 2004. These increases partially were offset by lower home orders in California, primarily in the first quarter of 2005, compared with the strong levels we experienced in this market during the same period in 2004.

Backlog – Record home orders received during the first six months of 2005 contributed to the 12% and 26% increases, respectively, in homes under contract but not yet delivered (“Backlog”) at June 30, 2005 to 9,213 units with an estimated sales value of $3.14 billion, compared with the Backlog of 8,259 units with an estimated sales value of $2.50 billion at June 30, 2004. Assuming no significant change in market conditions or mortgage interest rates, we expect approximately 70% to 75% of our June 30, 2005 Backlog to close under existing sales contracts during 2005 and into the first quarter of 2006. The balance of the homes in Backlog are not expected to close under existing contracts due to cancellations. See “ Forward-Looking Statements ” below.

The average selling price of homes in our Backlog at June 30, 2005 increased to just over $340,000 from $308,000 at the end of the 2005 first quarter. While sales price increases played a part, this rise also can be attributed to a change in the Backlog mix, the most significant of which was an increase in California and a decrease in Arizona as a percentage of total Backlog. We anticipate that a significant number of the homes added to our Backlog in this quarter in California and Virginia will be delivered late this year and in 2006. Therefore, while we expect that the average selling price of homes we close in the third and fourth quarters of 2005 will rise sequentially from the $293,200 in the second quarter, we believe the increase in the third quarter will be relatively modest, influenced by our growth in the lower-priced, faster-delivering markets such as Utah, Florida, Texas and Arizona. See “ Forward-Looking Statements ” below.

Marketing - Marketing expenses (which include sales commissions, advertising, amortization of deferred marketing costs, model home expenses and other costs) totaled $53.7 million and $101.9 million, respectively, for the quarter and six months ended June 30, 2005, compared with $44.7 million and $87.8 million, respectively, for the same periods in 2004. The higher costs in 2005 primarily were due to (1) increases of $5.1 million and $9.3 million, respectively, in sales commissions resulting from our increased home sales revenues; (2) increases of $1.3 million and $2.0 million, respectively, for salaries and benefits attributable to our expanding homebuilding operations in new and existing home markets; and (3) increases of $1.4 million and $1.3 million, respectively, for product advertising for the second quarter and first six months of 2005, compared with the same periods in 2004.

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General and Administrative - General and administrative expenses increased to $57.2 million and $110.3 million, respectively, during the second quarter and first six months of 2005, compared with $42.3 million and $83.6 million, respectively, for the same periods in 2004, primarily due to increases in compensation and related benefits and other costs associated with the expansion of our operations in the majority of our markets.

Title Operations

American Home Title provides title agency services to MDC homebuyers in Virginia, Maryland, Colorado, Florida, Texas and Delaware. We are evaluating opportunities to provide title agency services in our other markets. Income before income taxes from title operations was $1.0 million and $2.0 million, respectively, for the quarter and six months ended June 30, 2005, compared with $1.2 million and $2.0 million, respectively, for the same periods in 2004.

Land Inventory

The table below shows the carrying value of land and land under development, by market, the total number of lots owned and lots controlled under option agreements, and total non-refundable option deposits (dollars in thousands).


	June 30,		December 31,		June 30,
	2005		2004		2004
Arizona	$	266,069	$	168,489	$	132,686
California		281,438		277,360		221,958
Colorado		135,700		139,554		112,787
Florida		39,133		27,926		12,825
Illinois		38,655		33,656		23,016
Maryland		95,313		69,523		41,199
Nevada		250,293		209,544		193,198
Philadelphia/New Jersey/Delaware Valley		35,298		28,916		—
Texas		23,748		19,420		19,540
Utah		39,321		35,104		35,001
Virginia		97,750		100,461		83,284

Total	$	1,302,718	$	1,109,953	$	875,494

Total Lots Owned (excluding lots in work-in-process)		22,721		20,760		19,523
Total Lots Controlled Under Option		20,327		21,164		13,340

Total Lots Owned and Controlled (excluding lots in work-in-process)		43,048		41,924		32,863

Non-refundable Option Deposits
Cash	$	38,891	$	41,804	$	20,577
Letters of Credit		26,544		22,062		12,757

Total Non-refundable Option Deposits	$	65,435	$	63,866	$	33,334

As of June 30, 2005, we owned a total of 22,721 lots, of which nearly 11,000 lots were finished. In addition, over 2,000 of those finished lots had a sales contract on a home to be built on such lots, for which construction had not started. The remaining lots were in the process of being developed for future home sales. Based on the amount of lots soon to be transferred to housing completed or under construction, total finished lots and lots under development as of June 30, 2005, we are well-positioned for future growth, consistent with our disciplined operating approach of maintaining approximately a two-year supply of lots. See “ Forward-Looking Statements ” below.

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Financial Services Segment

The table below sets forth information relating to our financial services segment operations (in thousands).


	Three Months												Six Months
	Ended June 30,						Change						Ended June 30,						Change
	2005			2004			Amount			%			2005			2004			Amount			%
Mortgage loan origination fees	$	6,854		$	5,399		$	1,455			27	%	$	12,995		$	10,663		$	2,332			22	%
Gains on sales of mortgage servicing, net	$	791		$	521		$	270			52	%	$	1,469		$	1,137		$	332			29	%
Gains on sales of mortgage loans, net	$	3,769		$	4,533		$	(764	)		-17	%	$	7,016		$	11,310		$	(4,294	)		-38	%
Operating Profit	$	4,127		$	3,145		$	982			31	%	$	6,974		$	7,802		$	(828	)		-11	%
Principal amount of loans originated	$	421,223		$	377,418		$	43,806			12	%	$	726,416		$	718,686		$	7,730			1	%
Principal amount of loans brokered	$	225,413		$	150,228		$	75,185			50	%	$	441,312		$	309,057		$	132,255			43	%
Capture Rate		48	%		54	%		(6	%)					45	%		55	%		(10	%)

Including brokered loans		73	%		74	%		(1	%)					71	%		76	%		(5	%)

Mortgage product (% of loans originated)
Fixed rate		52	%		67	%		(15	%)					52	%		70	%		(18	%)
Adjustable rate		48	%		33	%		15	%					48	%		30	%		18	%

Financial services operating profit for the second quarter of 2005 increased, compared with the same period in 2004, primarily due to an increase in loan origination fees earned in connection with the record level of homes closed by the homebuilding segment in the second quarter. For the six months ended June 30, 2005, operating profits decreased, compared to the same period in 2004, primarily due to the more competitive mortgage pricing environment, which resulted in lower gains on sales of mortgage loans that were partially offset by an increase in loan origination fees. This competitive environment contributed to HomeAmerican originating a higher percentage of less-valuable adjustable rate mortgage loans in the second quarter and first half of 2005, as well as brokering a higher percentage of total loans processed in the quarter and first six months to third party mortgage companies, for which no gains on sales are realized by HomeAmerican.

The principal amount of originated mortgage loans increased 12% and 1%, respectively, in the second quarter and first six months of 2005, compared with the same periods in 2004. These increases primarily were due to the record levels of homes closed by the homebuilding segment in the second quarter and first six months of 2005, partially offset by declines in our Capture Rate, which resulted from 50% and 43% increases, respectively, in the amount of loans being brokered to outside lenders for the second quarter and first six months of 2005, respectively. The Capture Rate is defined as the number of mortgage loans originated by HomeAmerican for our homebuyers as a percentage of total MDC home closings. Brokered loans, for which HomeAmerican receives a fee, have been excluded from the computation of the Capture Rate. Our homebuyers were the source of approximately 99% of the principal

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amount of mortgage loans originated and brokered by HomeAmerican in the second quarter and first six months of 2005.

Forward Sales Commitments - HomeAmerican’s operations are affected by changes in mortgage interest rates. HomeAmerican utilizes forward mortgage securities contracts to manage price risk related to fluctuations in interest rates on our fixed-rate mortgage loans held in inventory and rate-locked mortgage loans in process that had not closed. Reported gains on sales of mortgage loans may vary significantly from period to period depending on the volatility in the interest rate market.

Insurance Operations - American Home Insurance provides homeowners, auto and other types of casualty insurance in each of our markets. The results of its operations were not material for any of the periods presented.

Other Operating Results

Interest Expense - We capitalize interest incurred on our corporate and homebuilding debt during the period of active development and through the completion of construction of our 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 F to our Consolidated Financial Statements. For a reconciliation of interest incurred, capitalized and expensed, see Note D to our Consolidated Financial Statements.

Corporate General and Administrative Expenses - Corporate general and administrative expenses totaled $28.0 million and $58.4 million, respectively, during the second quarter and first six months of 2005, compared with $21.5 million and $40.1 million, respectively, for the same periods of 2004. The increases in 2005 primarily were due to greater compensation-related costs of $8.0 million and $17.9 million for the second quarter and first six months of 2005, respectively, compared with the same periods in 2004, principally resulting from our higher profitability and increased commitment to information technology.

Income Taxes - MDC’s overall effective income tax rates of 37.4% for the second quarter and 37.6% for the first six months of 2005, differed from the 38.5% and 38.7%, respectively, for the same periods in 2004, primarily due to the Internal Revenue Code Section 199 manufacturing deduction established by the American Jobs Creation Act of 2004, as well as a reduction in our state effective income tax rate.

LIQUIDITY AND CAPITAL RESOURCES

We use our liquidity and capital resources to (1) support our operations, including our homebuilding inventories; (2) provide working capital; and (3) provide mortgage loans for our homebuyers. Liquidity and capital resources are generated internally from operations and from external sources. Additionally, we have an effective shelf registration statement, which has allowed us to issue equity, debt or hybrid securities up to $1.0 billion, with $500 million having been initially earmarked for our medium term senior notes program. In December 2004, we issued $250 million principal amount of 5 3/8% medium term senior notes due 2014, and in July 2005, we issued another $250 million principal amount of 5 3/8% medium term senior notes due 2015. This issuance reduced our total capacity under our shelf registration statement to $500 million and extinguished our initial capacity for our medium term senior notes program. In July 2005, we designated another $250 million of our shelf registration statement’s remaining $500 million capacity for our medium term senior notes program.

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Capital Resources

Our capital structure is a combination of (1) permanent financing, represented by stockholders’ equity; (2) long-term financing, represented by our publicly traded 7% senior notes due 2012, 5 ¹ / 2 % senior notes due 2013, 5 ³ / 8 % medium term senior notes due 2014 and 2015, and our homebuilding line of credit (the “Homebuilding Line”); and (3) current financing, primarily our mortgage lending line of credit (the “Mortgage Line”). Based upon our current capital resources and additional capacity available under existing credit agreements, we believe that our current financial condition is both balanced to fit our current operating structure and adequate to satisfy our current and near-term capital requirements, including the acquisition of land and expansion into new markets. We believe that we can meet our long-term capital needs (including meeting future debt payments and refinancing or paying off other long-term debt as it becomes due) from operations and external financing sources, assuming that no significant adverse changes in our business or capital and credit markets occur as a result of the various risk factors described elsewhere in this report. See “ Forward-Looking Statements ” below.

Lines of Credit and Senior Notes

Homebuilding - Our 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 our request, subject to receipt of additional commitments from existing or additional participant lenders. At June 30, 2005, we had $30.0 million of borrowings and $69.6 million in letters of credit issued under the Homebuilding Line.

Mortgage Lending - Our 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 certificates and are limited to the value of eligible collateral as defined. At June 30, 2005, $110.9 million was borrowed and an additional $17.8 million was collateralized and available to be borrowed. The Mortgage Line is cancelable upon 120 days notice.

General — The agreements for our bank lines of credit and the indentures for our senior notes require compliance with certain representations, warranties and covenants. We believe that we are in compliance with these requirements, and we are not aware of any covenant violations. The agreements for the bank lines of credit and the indentures for our senior notes are on file with the Securities and Exchange Commission and are listed in the Exhibit Table in Part IV of our Annual Report on Form 10-K for our fiscal year ended December 31, 2004 and the Exhibit Table to this Form 10-Q.

The financial covenants contained in the Homebuilding Line credit agreement include a leverage test and a consolidated tangible net worth test. Under the leverage test, generally, our consolidated indebtedness is not permitted to exceed 55% (subject to adjustment in certain circumstances) of the sum of consolidated indebtedness and our “adjusted consolidated tangible net worth,” as defined. Under the consolidated tangible net worth test, our “consolidated tangible net worth,” as defined, must not be less than the sum of (1) $776 million; (2) 50% of “consolidated net income,” as defined, of the “borrower,” as defined, and the “guarantors,” as defined, after December 31, 2003; and (3) 50% of the net proceeds or other consideration received for the issuance of capital stock after December 31, 2003. Failure to satisfy the financial covenant tests may result in a scheduled term-out of the facility. In addition, “consolidated

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tangible net worth,” as defined, must not be less than the sum of (1) $485 million; (2) 50% of the quarterly consolidated net income of “borrower” and the “guarantors” earned after December 31, 2003; and (3) 50% of the net proceeds or other consideration received for the issuance of capital stock after December 31, 2003. Failure to satisfy this covenant could result in a termination of the facility. We believe that we are in full compliance with these covenants, and we are not aware of any covenant violations.

Our senior notes are not secured, and the senior notes indentures do not contain financial covenants. Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by most of our homebuilding segment subsidiaries.

On July 7, 2005, we completed a public offering of $250 million principal amount of 5 ³ / 8 % medium term senior notes due July 1, 2015 (the “2015 Medium Term Senior Notes”) at a discount, with an effective yield of 5 ¹ / 2 %. The 2015 Medium Term Senior Notes have interest due and payable on January 1st and July 1st of each year until maturity. We do not make any principal payments and the 2015 Medium Term Senior Notes are fully due on July 1, 2015. The 2015 Medium Term Senior Notes are guaranteed by certain of our subsidiaries and may be redeemed, at our election, in whole at any time or in part from time to time, at the redemption prices set forth in the 2015 Medium Term Senior Notes pricing supplement.

MDC Common Stock Repurchase Programs

In January 2005, our board of directors authorized the repurchase of up to an additional 495,120 shares of MDC common stock, bringing the total authorization under our stock repurchase program to 5,655,000 shares. We have repurchased 3,509,480 shares of MDC common stock since inception of this program, leaving 2,145,520 shares available to be repurchased as of June 30, 2005. At June 30, 2005, we held 9,000 shares of treasury stock with an average purchase price of $36.57. There were no MDC common stock repurchases made during the six months ended June 30, 2005.

Consolidated Cash Flow

During the first six months of 2005, we used $326.1 million of cash for operating activities. The 2005 operating cash use primarily was the result of a $612.2 million increase in our homebuilding inventories, prepaid expenses and other assets and home sales and other accounts receivable in conjunction with our expanded homebuilding operations, partially offset by income before depreciation and amortization and deferred income taxes of $207.4 million and a decrease of $16.8 million in mortgage loans held in inventory. We continued to expand our homebuilding operations in existing markets through increased active subdivisions and controlled lot inventory, thereby expending cash to acquire additional homebuilding assets.

Financing activities provided cash of $0.2 million in the first six months of 2005, primarily due to net borrowings on our lines of credit of $5.4 million and cash proceeds of $9.4 million from the exercise of stock options, offset by dividends paid of $14.6 million.

Additionally, we used $11.7 million of cash from investing activities in the first six months of 2005, primarily due to the purchase of property and equipment.

During the first six months of 2004, we used $161.3 million of cash from our operating activities. Cash used to build net homebuilding assets in support of our expanding homebuilding activities partially was provided by net income before depreciation and amortization and the increase in accounts payable and accrued liabilities. We had net borrowings of $83.4 million on our bank lines of credit, which assisted

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us in financing these operating cash requirements, as well as the repurchase of 119,200 shares of MDC common stock for $6.8 million and the $8.7 million payment of dividends.

Off-Balance Sheet Arrangements

At June 30, 2005, we had outstanding performance bonds of $349.1 million issued by third parties to secure our performance under various contracts. We expect that the obligations secured by these performance bonds generally will be performed in the ordinary course of business and in accordance with the applicable contractual terms. To the extent that the obligations are performed, the related performance bonds will be released and we will not have any continuing obligations.

All other off-balance sheet arrangements have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2004 Annual Report on Form 10-K.

Contractual Obligations

Our contractual obligations have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2004 Annual Report on Form 10-K.

IMPACT OF INFLATION, CHANGING PRICES AND ECONOMIC CONDITIONS

Real estate and residential housing prices are affected by inflation, which can cause increases in the price of land, raw materials and subcontracted labor. Unless these increased costs are recovered through higher sales prices, Home Gross Margins would decrease. If interest rates increase, construction and financing costs, as well as the cost of borrowings, also could increase, which can result in lower Home Gross Margins. Increases in home mortgage interest rates make it more difficult for our customers to qualify for home mortgage loans, potentially decreasing home sales revenue. Increases in interest rates also may affect adversely the volume of mortgage loan originations.

The volatility of interest rates could have an adverse effect on our future operations and liquidity. Reported gains on sales of mortgage loans may vary significantly from period to period depending on the volatility in the interest rate market. Derivative instruments utilized in the normal course of business by HomeAmerican include forward sales securities commitments, private investor sales commitments and commitments to originate mortgage loans. We utilize these commitments to manage the price risk on fluctuations in interest rates on our mortgage loans held in inventory and commitments to originate mortgage loans. Such contracts are the only significant financial derivative instruments we utilize.

Among other things, an increase in interest rates may affect adversely the demand for housing and the availability of mortgage financing and may reduce the credit facilities offered to us by banks, investment bankers and mortgage bankers. See “ Forward-Looking Statements ” below.

Our business also is significantly affected by general economic conditions and, particularly, the demand for new homes in the markets in which we build. The demand for new homes in Nevada reached unprecedented levels during the last half of 2003 and the first six months of 2004. This extraordinary demand resulted in a substantial increase in new home sales and median home prices. Our average home selling price in this market, along with our Home Gross Margins, increased significantly in the latter half of 2004 and into 2005, without a substantial change in product mix.

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We continue to follow our disciplined strategy of controlling approximately a two-year supply of land in all of our markets. The demand for new homes in Nevada during the first half of 2005 was more consistent with levels experienced during the first half of 2003 and 2002. As we move into the second half of 2005, our financial results in Nevada may be impacted by the recent significant appreciation in land costs, which could adversely affect our Home Gross Margins if we are unable to recover these costs through increases in home selling prices. See “ Forward-Looking Statements ” below.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Management evaluates such estimates and judgments on an ongoing basis and makes adjustments as deemed necessary. Actual results could differ from these estimates using different estimates and assumptions, or if conditions are significantly different in the future. See “ Forward-Looking Statements ” below.

Listed below are those policies that we believe are critical and require the use of complex judgment in their application. Our critical accounting policies are those related to (1) homebuilding inventory valuation; (2) estimates to complete land development and home construction; (3) warranty costs; and (4) litigation reserves.

Our critical accounting policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2004 Annual Report on Form 10-K.

OTHER

Forward-Looking Statements

Certain statements in this Form 10-Q, as well as statements made by us in periodic press releases, oral statements made by our officials to analysts and shareowners in the course of presentations about the Company and conference calls following quarterly earnings releases, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We have identified the forward-looking statements in this Form 10-Q by cross-referencing this section at the end of the paragraph in which the forward-looking statement is located. 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, those listed below:

	•		General Economic and Business Conditions — Changes in national, regional and local economic conditions, as well as changes in consumer confidence and preferences, can have a negative impact on our business.

	•		Interest Rate Changes — Our homebuilding and mortgage lending operations are impacted by the availability and cost of mortgage financing.

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	•		Changes in Federal Lending Programs — The availability of mortgage financing under federal lending programs is an important factor in our business. Any change in the availability of this financing could reduce our home sales and mortgage lending volume.

	•		Availability of Capital — Our ability to grow our business is dependent on our ability to generate or obtain capital. Increases in interest rates and changes in the capital markets could increase our costs of borrowing or reduce the availability of funds.

	•		Competition — The real estate industry is fragmented and highly competitive. Our homebuilding subsidiaries compete with numerous homebuilders, including a number that are substantially larger and have greater financial resources.

	•		The Availability and Cost of Land, Labor and Materials — Our operations depend on our ability to continue to obtain land, labor and materials at reasonable prices. Changes in the general availability or cost of these items may hurt our ability to build homes and develop new residential communities.

	•		The Availability and Cost of Performance Bonds and Insurance — Our operations also are affected by our ability to obtain performance bonds and insurance at reasonable prices. Changes in the availability and cost of bonds and insurance can adversely impact our business operations.

	•		Weather and Geology — The climates and geology of many of the states in which we operate present increased risks of natural disasters and adverse weather. To the extent that such events occur, our business may be adversely affected.

	•		Governmental Regulation and Environmental Matters — Our operations are subject to continuing compliance requirements mandated by applicable federal, state and local statutes, ordinances, rules and regulations, including environmental laws, moratoriums on utility availability, growth restrictions, zoning and land use ordinances, building, plumbing and electrical codes, contractors’ licensing laws, state insurance laws, federal and state human resources laws and regulations and health and safety regulations and laws.

	•		Product Liability Litigation and Warranty Claims — As a homebuilder, we are subject to construction defect and home warranty claims, including moisture intrusion and related mold claims that can be costly and adversely affect our business.

	•		Other Factors — Other factors over which we have little or no control, such as required accounting changes and terrorist acts and other acts of war, can also adversely affect us.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the 2004 Annual Report on Form 10-K related to the Company’s exposure to market risk from interest rates.

Item 4. Controls and Procedures

(a) Conclusion regarding the effectiveness of disclosure controls and procedures - An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was performed under the supervision, and with the participation, of our management, including the Chief Executive Officer and the Chief Financial Officer. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of June 30, 2005.

(b) Changes in internal control over financial reporting - There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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M.D.C. HOLDINGS, INC.
FORM 10-Q

PART II

Item 1 . Legal Proceedings

The Company and certain of its subsidiaries and affiliates have been named as defendants in various claims, complaints and other legal actions arising in the normal course of business, including moisture intrusion and related mold claims. In the opinion of management, the outcome of these matters will not have a material adverse effect upon the financial condition, results of operations or cash flows of the Company. See “ Forward-Looking Statements ” above.

The U.S. Environmental Protection Agency (“EPA”) filed an administrative action against Richmond American Homes of Colorado, Inc. (“Richmond”), alleging that Richmond violated the terms of Colorado’s general permit for discharges of stormwater from construction activities at two of Richmond’s development sites. In its complaint, the EPA sought civil penalties against Richmond in the amount of $122,000. On November 11, 2003, the EPA filed a motion to withdraw the administrative action so that it could refile the matter in United States District Court as part of a consolidated action against Richmond for alleged stormwater violations at not only the original two sites, but also two additional sites. The EPA’s motion to withdraw was granted by the Administrative Law Judge on February 9, 2004. The EPA has not yet refiled the matter. The EPA has inspected a number of sites under development by Richmond affiliates in Virginia, Maryland, Arizona, California and again in Colorado, and claims to have found additional stormwater permit violations. Richmond has substantial defenses to the allegations made by the EPA and also is exploring methods of resolving this matter with the EPA.

Because of the nature of the homebuilding business, and in the ordinary course of its operations, the Company from time to time may be subject to product liability claims.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not repurchase any shares during the second quarter of 2005. Additionally, there were no sales of unregistered equity securities during the second quarter of 2005.

Item 3. Defaults Upon Senior Securities.

None.

Item 4 . Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

On July 25, 2005, MDC’s board of directors declared a cash dividend of eighteen cents ($.18) per share for the quarter ended June 30, 2005. The dividend is to be paid on August 24, 2005 to shareowners of record on August 10, 2005.

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Item 6 . Exhibits



(a) Exhibit:

	4.1	Pricing Supplement No. 2, dated June 28, 2005, with respect to MDC’s 5.375% Medium Term Senior Notes due July 1, 2015 (incorporated herein by reference to the Company’s Rule 424(b)(2) filing on June 29, 2005). *

	4.2	Amendment No. 1 dated as of July 18, 2005 to Supplemental Indenture dated as of October 6, 2004 (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K dated July 20, 2005). *

	10.1	Lease Agreement among MDC, M.D.C. Land Corporation and Larry A. Mizel, executed February 24, 2005 (incorporated herein by reference to Exhibit 99.1 to the Company’s Form 8-K dated February 25, 2005) . *

	10.2	Lease Agreement among MDC, M.D.C. Land Corporation and David D. Mandarich, executed February 24, 2005 (incorporated herein by reference to Exhibit 99.1 to the Company’s Form 8-K dated February 25, 2005) . *

	10.3	Purchase Agreement dated as of June 28, 2005, among MDC and Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC, Banc of America Securities LLC, BNP Paribas Securities Corp., Comerica Securities, Inc., Credit Suisse First Boston LLC, KeyBanc Capital Markets, Greenwich Capital Markets, Inc. and SunTrust Capital Markets, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated July 7, 2005). *

	10.4	Amendment No. 1 to Distribution Agreement, dated as of July 20, 2005, among MDC, certain of its subsidiaries and Banc of America Securities LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Comerica Securities, Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., Greenwich Capital Markets, Inc., J.P. Morgan Securities Inc., McDonald Investments Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, SunTrust Capital Markets, Inc., UBS Securities LLC and Wachovia Capital Markets, LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated July 20, 2005). *

	10.5	Sub-Sublease agreement between MDC and CVentures, Inc., executed July 25, 2005 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated July 25, 2005). *

	12	Ratio of Earnings to Fixed Charges Schedule.

	31.1	Certification of Chief Executive Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification of Chief Financial Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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*		Incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: August 8, 2005	M.D.C. HOLDINGS, INC.
	(Registrant)

	By:	/s/ Paris G. Reece III Paris G. Reece III,
		Executive Vice President,
		Chief Financial Officer and
		Principal Accounting Officer

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INDEX TO EXHIBITS


Exhibit Number		Description


4.1		Pricing Supplement No. 2, dated June 28, 2005, with respect to MDC’s 5.375% Medium Term Senior Notes due July 1, 2015 (incorporated herein by reference to the Company’s Rule 424(b)(2) filing on June 29, 2005). *

4.2		Amendment No. 1 dated as of July 18, 2005 to Supplemental Indenture dated as of October 6, 2004 (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K dated July 20, 2005). *

10.1		Lease Agreement among MDC, M.D.C. Land Corporation and Larry A. Mizel, executed February 24, 2005 (incorporated herein by reference to Exhibit 99.1 to the Company’s Form 8-K dated February 25, 2005) . *

10.2		Lease Agreement among MDC, M.D.C. Land Corporation and David D. Mandarich, executed February 24, 2005 (incorporated herein by reference to Exhibit 99.1 to the Company’s Form 8-K dated February 25, 2005) . *

10.3		Purchase Agreement dated as of June 28, 2005, among MDC and Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC, Banc of America Securities LLC, BNP Paribas Securities Corp., Comerica Securities, Inc., Credit Suisse First Boston LLC, KeyBanc Capital Markets, Greenwich Capital Markets, Inc. and SunTrust Capital Markets, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated July 7, 2005). *

10.4		Amendment No. 1 to Distribution Agreement, dated as of July 20, 2005, among MDC, certain of its subsidiaries and Banc of America Securities LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Comerica Securities, Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., Greenwich Capital Markets, Inc., J.P. Morgan Securities Inc., McDonald Investments Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, SunTrust Capital Markets, Inc., UBS Securities LLC and Wachovia Capital Markets, LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated July 20, 2005). *

10.5		Sub-Sublease agreement between MDC and CVentures, Inc., executed July 25, 2005 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated July 25, 2005). *

12		Ratio of Earnings to Fixed Charges Schedule.

31.1		Certification of Chief Executive Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Incorporated herein by reference.

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Exhibit 12

M.D.C. HOLDINGS, INC.

RATIO OF EARNINGS TO FIXED CHARGES


	Six Months Ended June 30,						Three Months to June 30,						Year Ended December 31,
(dollars in 000's)	2005			2004			2005			2004			2004			2003			2002			2001			2000
Earnings	$	322,345		$	251,749		$	176,230		$	143,379		$	675,748		$	389,940		$	301,072		$	286,228		$	232,034

Fixed Charges	$	28,512		$	19,624		$	14,805		$	10,068		$	43,011		$	43,977		$	27,453		$	28,782		$	30,844

Earnings to Fixed Charges		11.31			12.83			11.90			14.24			15.71			8.87			10.97			9.94			7.52


Earnings:

Pretax Earnings from Continuing Operations		299,906			234,105			163,977			134,287			636,914			348,223			274,044			255,387			203,201
Add:
Fixed Charges		28,512			19,624			14,805			10,068			43,011			43,977			27,453			28,782			30,844
Less capitalized interest		(21,925	)		(15,075	)		(11,110	)		(7,709	)		(32,879	)		(26,779	)		(21,116	)		(22,498	)		(24,367	)
Add amortization of previously capitalized interest		15,852			13,095			8,558			6,733			28,702			24,519			20,691			24,557			22,356


Total Earnings		322,345			251,749			176,230			143,379			675,748			389,940			301,072			286,228			232,034


Fixed Charges:

Homebuilding and corporate interest expense		0			0			0			0			0			0			0			0			0
Mortgage lending interest expense		1,138			768			654			385			1,946			1,967			1,822			2,666			3,115
Interest component of rent expense		3,351			2,322			1,835			1,247			5,462			3,897			2,812			2,253			2,177
Amortization and expensing of debt expenses (1)		2,098			1,459			1,206			727			2,724			11,334			1,703			1,365			1,185
Capitalized interest		21,925			15,075			11,110			7,709			32,879			26,779			21,116			22,498			24,367


Total Fixed Charges		28,512			19,624			14,805			10,068			43,011			43,977			27,453			28,782			30,844


(1)		Year Ended December 31, 2003 includes $9,315 of expenses related to debt redemption.

Exhibit 31.1

CERTIFICATIONS

I, Larry A. Mizel, certify that:

	1.		I have reviewed this report on Form 10-Q of M.D.C. Holdings, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 8, 2005		/s/ Larry A. Mizel

		Chairman of the Board of Directors
		and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Paris G. Reece III, certify that:

	1.		I have reviewed this report on Form 10-Q of M.D.C. Holdings, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 8, 2005		/s/ Paris G. Reece III

		Executive Vice President,
		Chief Financial Officer and Principal Accounting Officer

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of M.D.C. Holdings, Inc. (the “Company”) hereby certifies that the Report on Form 10-Q of the Company for the period ended June 30, 2005, accompanying this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 8, 2005.		/s/ Larry A. Mizel

		Larry A. Mizel
		Chief Executive Officer

The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Title 18, United States Code, and is not being filed as part of the report or as a separate disclosure document.

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of M.D.C. Holdings, Inc. (the “Company”) hereby certifies that the Report on Form 10-Q of the Company for the period ended June 30, 2005, accompanying this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 8, 2005 .		/s/ Paris G. Reece III

		Paris G. Reece III
		Chief Financial Officer

Certification of Chief Executive Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.