2008 FOURTH QUARTER

* Cash flow from operations of $51.2 million

* Quarter-end cash and investments of $1.42 billion

* No borrowings on homebuilding line of credit

* Pre-tax loss of $86.4 million; includes asset impairments of $59.7 million

* Net loss of $89.0 million vs. $281.1 million in 2007

* Diluted loss per share of $1.92 vs. $6.14 in 2007

* Total revenue of $296.2 million vs. $772.1 million in 2007

* S,G&A expenses of $71.9 million vs. $116.9 million in 2007

* Closed 944 homes at an average selling price of $300,300

* Net orders for 350 homes with an estimated value of $99.0 million

2008 FULL YEAR

* Cash flow from operations of $479.5 million

* Net loss of $380.5 million vs. $636.9 million in 2007

* Total revenue of $1.46 billion; $2.89 billion in 2007

* Closed 4,488 homes at an average selling price of $302,600

* Net orders for 3,074 homes with an estimated value of $885.0 million

DENVER, Feb. 10 /PRNewswire-FirstCall/ -- M.D.C. Holdings, Inc. (NYSE: MDC) today announced a net loss for the quarter ended December 31, 2008 of $89.0 million, or $1.92 per diluted share, which included pre-tax charges of $59.7 million for asset impairments and a $19.2 million increase in our deferred tax asset valuation allowance. The net loss for the 2007 fourth quarter was $281.1 million, or $6.14 per diluted share, including pre-tax charges of $175.2 million for asset impairments, $7.8 million for write-offs of deposits and pre-acquisition costs and a deferred tax valuation allowance of $160.0 million.

Net loss for the year ended December 31, 2008 was $380.5 million, or $8.24 per diluted share, which included pre-tax charges of $298.2 million for asset impairments and a $134.3 million increase in our deferred tax asset valuation allowance. The net loss for the 2007 full year was $636.9 million, or $13.94 per diluted share, which included pre-tax charges of $726.6 million for asset impairments, write-offs of deposits and pre-acquisition costs of $23.4 million and a deferred tax valuation allowance of $160.0 million.

Larry A. Mizel, MDC's chairman and chief executive officer, stated, 'During 2008, we faced extraordinary conditions in the homebuilding industry and the overall economy. Increasing unemployment levels, deteriorating consumer confidence, rising foreclosures and faltering conditions in the mortgage and banking industries all contributed to continued deterioration in the housing market.'

Mizel continued, 'Even though the downturn in housing negatively impacted our operating results for 2008, we have strengthened our balance sheet during the year and bolstered our position as a one of the strongest companies in our industry. Through our efforts to reduce our inventory balances and adjust our organizational structure, we generated $480 million in operating cash flow during the year, including more than $50 million in the fourth quarter. On the strength of that operating cash flow, our cash and investments balance rose by more than 40% to $1.4 billion at year end and now exceeds our total debt balance by nearly $400 million. Furthermore, we expect to receive a tax refund of $165 million during the first quarter of 2009.'

Mizel concluded, 'We look forward to 2009 as a time of continued focus on our Company-wide initiatives to streamline our processes and systems and improve the home buying experience for our customers. In addition, we will continue to explore opportunities to redeploy our capital, with an open mind to different ways in which we might take advantage of current market conditions. We believe successes that are achieved in these areas can ultimately have a positive impact on our bottom line.'

Homebuilding Results

Homebuilding loss before taxes for the quarter and full year ended December 31, 2008 improved to $67.9 million and $338.7 million, respectively, compared with losses of $195.9 million and $764.2 million for the same periods in 2007. The losses in 2008 were lower in large part due to declines in asset impairments combined with decreased marketing, commissions and general and administrative expenses ('S,G&A') and were partially offset by the impact of closing fewer homes and lower average selling prices compared with the same periods in 2007. Also, in the 2008 fourth quarter we experienced a lower amount of losses from land sales compared with the fourth quarter of 2007, and in the 2008 full year we recognized a gain on land sales compared with a loss in the prior year.

Homebuilding revenue for the 2008 fourth quarter fell to $291.3 million, compared with $762.7 million in the 2007 fourth quarter, primarily due to a 57% year-over-year decline in home closings combined with an 8% decrease in the average selling price of homes closed. All of our markets experienced year-over-year decreases in home closings in the fourth quarter, while only Colorado experienced an increase in average selling price. The slight increase in our Colorado market primarily was related to changes in the size and style of the homes that were closed and was not due to market appreciation. Homebuilding revenue for the 2008 full year fell to $1.44 billion, compared with $2.85 billion for the 2007 full year, primarily due to a 45% decrease in home closings and a 10% decrease in the average selling price of homes closed.

During the fourth quarter of 2008, we recognized $59.7 million of asset impairments, which included $57.0 million of inventory impairment charges that impacted 2,177 lots in 132 subdivisions. This fourth quarter inventory impairment charge is down 67% from the 2007 fourth quarter, primarily resulting from reduced impairments in our Phoenix, Nevada and California markets. Over the last nine quarters we have taken significant impairments in these markets, thereby significantly reducing our inventory balance and reducing our exposure to further impairments. Partially offsetting the decline in impairments in these markets were higher impairments in Colorado and Utah during the three months ended December 31, 2008. Asset impairments for the 2008 full year were $298.2 million, compared with $726.6 million in 2007.

Homebuilding S,G&A decreased to $44.9 million and $227.8 million, respectively, for the quarter and full year ended December 31, 2008, compared with $95.4 million and $425.5 million for the same periods in the prior year, as we continued to adjust our organizational structure and business practices in response to the decreased levels of closings. This decrease in S,G&A for both periods resulted from various cost saving initiatives associated with right-sizing our operations, including consolidating our homebuilding divisions and reducing our employee headcount, which allowed us to consolidate office space in many of our markets. Also contributing to this decrease from the prior year were lower commission expenses resulting from closing fewer homes and lower marketing expenses due to reduced advertising costs, a lower active subdivision count and significantly fewer model homes in operation.

The Company recorded 350 net home orders with an estimated sales value of $99.0 million during the 2008 fourth quarter, compared with net orders for 748 homes with an estimated sales value of $187.0 million during the same period in 2007. The drop in net orders was partially due to a 30% year-over-year decline in average active subdivisions, as we continued to limit our investment in new subdivisions, combined with a decrease in the average number of orders received per subdivision. Each market experienced a year-over-year decrease in net orders during the 2008 fourth quarter, with the exception of Maryland and Virginia. For the year ended December 31, 2008, the Company received net orders for 3,074 homes with a sales value of $885.0 million, compared with 6,504 homes with a sales value of $2.11 billion for the 2007 full year.

During the fourth quarter of 2008, the Company's cancellation rate was 52% compared with 65% during the same period in 2007. The cancellation rate for the year ended December 31, 2008 was 45% compared with 48% in 2007. All of our markets experienced a year-over-year decline in backlog, and we ended 2008 with 533 homes under contract with an estimated sales value of $173.0 million, compared with a backlog of 1,947 homes with an estimated sales value of $650.0 million at December 31, 2007.

Financial Services and Other

Income before taxes from the Company's Financial Services and Other segment for the quarter ended December 31, 2008 was $3.6 million compared with $6.3 million for the same period in 2007. The decrease in the 2008 fourth quarter primarily resulted from a combined decrease in gains on sales of mortgage loans and broker origination fees. This decline partially was offset by reductions in general and administrative expenses for our mortgage operations. Income before taxes from the Company's Financial Services and Other segment for the 2008 full year was $11.7 million compared with $23.1 million in 2007.

Balance Sheet and Cash Flow Highlights

For the quarter and year ended December 31, 2008, the Company generated $51.2 million and $479.5 million, respectively, of operating cash flow and ended the year with $1.42 billion in cash and investments. Our ability to generate cash during the quarter and year can be partially attributed to decreases in total lots owned, including WIP lots, of 8% and 39%, respectively, for the quarter and year ended December 31, 2008. As a result, our total inventory balance was only $637.3 million at year end compared with $1.46 billion at the end of 2007. For the lots we controlled under option contracts at December 31, 2008, we only had $10.5 million at risk.

Christopher M. Anderson, MDC's senior vice president and chief financial officer, said, 'Given that our cash and investments exceed total debt and our next debt maturity does not occur until 2012, we believe we are positioned with adequate resources to pursue opportunistic land investments in the future. While we didn't find many potential land transactions that met our underwriting criteria during the year, we were able to take advantage of isolated opportunities during the fourth quarter of 2008. During 2009 we will continue to maintain an active dialogue with potential land sellers and other parties in anticipation of a greater volume of opportunities that we believe may materialize in the future.'

About MDC

Since 1972, MDC has built and financed the American dream for more than 150,000 families. MDC's commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. As one of the largest homebuilders in the United States, the Company has homebuilding divisions across the country, including Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, California, Northern Virginia, Maryland, Philadelphia/Delaware Valley and Jacksonville. The Company also provides mortgage financing, insurance and title services, primarily for MDC homebuyers, through its wholly owned subsidiaries, HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol 'MDC.' For more information, visit http://www.mdcholdings.com.

Forward-Looking Statements

Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of 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, (1) general economic conditions, including changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, and land and home values; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) the relative stability of debt and equity markets; (5) competition; (6) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (7) the availability and cost of performance bonds and insurance covering risks associated with our business; (8) shortages and the cost of labor; (9) weather related slowdowns; (10) slow growth initiatives; (11) building moratoria; (12) governmental regulation, including the interpretation of tax, labor and environmental laws; (13) changes in consumer confidence and preferences; (14) terrorist acts and other acts of war; and (15) other factors over which the Company has little or no control. Additional information about the risks and uncertainties applicable to the Company's business is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, which is scheduled to be filed with the Securities and Exchange Commission today. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time.