M.D.C. Holdings this morning reported a net fourth-quarter 2007 loss of$281.1 million ($6.14 per diluted share), including pre-tax charges of$175.2 million in impairments and write-offs, a net pre-tax loss on land sales of $13.8 million and an after-tax valuation allowance of $160.0 million related to deferred tax assets under FAS 109. The loss compares with a loss of $6.4 million ($0.14 per share) during the prior year's fourth quarter.
Revenues for the quarter fell 41.4% from the same quarter in 2006 to $784.8 million, compared with revenue of $1.34 billion for the same period in 2006.Net new orders fell 52% to 748, while value of net new orders fell 64% to$187 million. Average selling price fell 24% to $250,000. The cancellation rate rose to 65% from 57% in the previous year's quarter.
Closings for the quarter fell 39% to 2,200, with the average selling price declining 10% to $325,100. The gross margin fell to 11.7% from 16.6% in the previous year's quarter.
The company ended the quarter, and the year, with 3,480 homes completed or under construction, down from 4,636 at the same time in 2006 and 6,891 in 2005. Home building SG&A decreased 36% to $95.4 million and 27% to$425.5 million, respectively, for the three months and the year ended December 31, 2007.
The net loss for the year ended December 31, 2007 was $636.9 million, or$13.94 per diluted share, 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. The loss also included net pre-tax losses on land sales of $9.4 million and the after-tax valuation allowance of $160.0 million related to MDC's deferred tax assets. Total revenue for the 2007 full year was $2.93 billion, compared with revenue of $4.80 billion for the same period in 2006.
"After generating over $590 million in operating cash flow during 2007, including almost $260 million in the fourth quarter, we ended the year with more than $1.0 billion in cash on hand," said Larry A. Mizel, MDC's chairman and CEO, in a prepared statement. "With no borrowings outstanding on our$1.25 billion line of credit, we expanded our year-end cash and available borrowing capacity year-over-year by 30% to nearly $2.25 billion. Earlier this week, we further increased our cash balances when we received a $90 million tax refund from the IRS for the carryback of our 2007 net operating loss."
Paris G. Reece III, MDC's executive vice president and CFO said, "During the2007 fourth quarter, we recognized $175 million in inventory impairments, including $27 million on land held for sale, with respect to almost 4,900 lots in 153 subdivisions...As has been the case in each of the last four quarters, the impairments this quarter primarily occurred in our West homebuilding segment, with more than 75% applicable to subdivisions in our Arizona, Nevada and California markets. Over the last six quarters, we have impaired approximately 60% of the 15,000 lots we owned at the end of our2007 fourth quarter."
MDC stock (NYSE:MDC) was up almost 5% to $44.92 in heavier-than-usual trading.