We saw no indication of an emerging rebound in our industry," he said.
However, Mizel said after generating $590 million in operating cash flow during 2007, including almost $260 million in the fourth quarter, MDC ended the year with more than $1 billion in cash on hand. With no borrowing outstanding on the company's $1.25 billion line of credit, Mizel said MDC expanded its year-end cash and available borrowing capacity year-over-year by 30 percent to nearly $2.25 billion. Mizel also noted that earlier this week, MDC further increased its cash balances when the company received a $90 million tax refund from the IRS for the carryback of the company's 2007 net operating loss.
"Our strong financial position at the end of 2007 is a result of our high level of preparedness at the onset of this downturn, combined with our continuing efforts to improve our balance sheet," Mizel said.
"During the fourth quarter alone, we reduced our supply of lots owned by 20 percent, which contributed significantly to the 9,000 lot decrease we achieved during the year," he added.
MDC's net loss for the year ending Dec., 31, 2007 was $639.9 million, which included pre-tax charges of $726.6 million for asset impairments and $23.4 million for write-offs of deposits and pre-acquisition costs. This was compared to net income of $214.3 million for 2006. Total revenue for 2007 was $2.93 billion compared to revenue of $4.8 billion for the full year of 2006.
According to Paris G. Reece, MDC's chief financial officer, of the nearly $727 million in impairment charges MDC took during 2007, $556 million related to the company's land inventory, which decreased by almost 65 percent year-over-year to $554 million by Dec. 31, 2007. In the company's West region, where 80 percent of MDC's impairments took place, land inventory decreased by more than 75 percent during 2007. The company's land holdings in California also dropped by more than 90 percent in 2007 and most of the remaining land is being held for sale to third-party developers or investors.
MDC received orders for 748 homes worth $187 million in the fourth quarter, compared to net orders of 1,571 homes with an estimated sales value of $515 million during the same period in 2006. For the full year 2007, MDC received net orders for 6,504 homes with a sales value of $2.11 billion compared to orders for 10,229 homes with a sales value of $3.47 billion for 2006.
The big builder's cancellation rates for the fourth-quarter and full year 2007 were 65 percent and 48 respectively. This compared with rates of 57 percent and 43 percent experienced during the same periods in 2006.
MDC ended the fourth-quarter of 2007 with a backlog of 1,947 homes with an estimated sales value of $650 million compared to a backlog of 3,638 homes with an estimated sales value of $1.3 billion on Dec. 31, 2006.