<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 1-8951
M.D.C. Holdings, Inc.
401(k) Savings Plan
3600 South Yosemite
Suite 900
DENVER, COLORADO 80237
------------------------------------
(Full Title and Address of the Plan)
M.D.C. HOLDINGS, INC.
--------------------------------------------------------
(Name of Issuer of Securities held pursuant to the Plan)
3600 South Yosemite Street
Suite 900
DENVER, COLORADO 80237
------------------------------------------------
(Address of Principal Executive Office of Issuer
of the Securities Held Pursuant to the Plan)
<PAGE>
REQUIRED INFORMATION
1. Audited Statements of Net Assets Available for Benefits (with Fund
Information) as of December 31, 1997 and 1996. Incorporated by reference
to the M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and
Additional Information attached hereto as Exhibit 99.1.
2. Audited Statements of Changes in Net Assets Available for Benefits (with
Fund Information) for the years ended December 31, 1997 and 1996.
Incorporated by reference to the M.D.C. Holdings, Inc. 401(k) Savings Plan
Financial Statements and Additional Information attached hereto as
Exhibit 99.1.
3. Notes to Financial Statements (with Fund Information). Incorporated by
reference to the M.D.C. Holdings, Inc. 401(k) Savings Plan Financial
Statements and Additional Information attached hereto as Exhibit 99.1.
4. Schedule 1 - Item 27a - Schedule of Assets Held for Investment purposes as
of December 31, 1997. Incorporated by reference to the M.D.C. Holdings,
Inc. 401(k) Savings Plan Financial Statements and Additional Information
attached hereto as Exhibit 99.1.
5. Schedule 2 - Item 27d - Schedule of Reportable Transactions for the year
ended December 31, 1997. Incorporated by reference to the M.D.C. Holdings,
Inc. 401(k) Savings Plan Financial Statements and Additional Information
attached hereto as Exhibit 99.1.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrator of the Plan has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
Date: June 30, 1998 M.D.C. Holdings, Inc. 401(k) Savings Plan
By: /s/ Daniel S. Japha
-------------------------------------
Daniel S. Japha
Plan Administrator
<PAGE>
EXHIBITS
Exhibit Description
- ------- -----------
23.1 Consent of Price Waterhouse LLP.
99.1 M.D.C. Holdings, Inc. 401(k) Savings Plan Financial Statements and
Additional Information
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of M.D.C. Holdings, Inc. of our report dated June 15, 1998
appearing on page 1 of the Financial Statements of the M.D.C. Holdings, Inc.
401(k) Savings Plan for the year ended December 31, 1997 included in this Form
11-K.
/s/ Price Waterhouse LLP
- -----------------------------
PRICE WATERHOUSE LLP
Hartford, Connecticut
June 23, 1998
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AND
ADDITIONAL INFORMATION
DECEMBER 31, 1997 AND 1996
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
INDEX
- -------------------------------------------------------------------------------
<TABLE>
PAGE
<S> <C>
Financial Statements:
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits, with Fund Information 2-3
Statement of Changes in Net Assets Available for Benefits, with Fund Information 4-5
Notes to Financial Statements 6-11
Additional Information:
Schedule I - Schedule of Assets Held for Investment Purposes 12
Schedule II - Schedule of Reportable Transactions 13
</TABLE>
<PAGE>
[LETTERHEAD]
Report of Independent Accountants
June 15, 1998
To the Participants and Administrator
of the M.D.C. Holdings, Inc. 401(k) Savings Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the M.D.C. Holdings, Inc. 401(k) Savings Plan at December
31, 1997 and 1996, and the changes in net assets available for benefits for
the years then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Plan's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The additional information
included in the schedule of assets held for investment purposes and the
schedule of reportable transactions is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements but is additional information required by the Employee
Retirement Income Security Act of 1974. The Fund Information in the
statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for
benefits and changes in net assets available for benefits of each fund. The
schedule of assets held for investment purposes, the schedule of reportable
transactions and the Fund Information have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
The schedule of assets held for investment purposes and the schedule of
reportable transactions that accompany the Plan's financial statements do
not disclose the historical cost of certain plan assets. Disclosure of this
information is required by the Department of Labor Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974.
PRICE WATERHOUSE LLP
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- -------------------------------------------------------------------------------
<TABLE>
December 31, 1997
Fund Information
-------------------------------------------------------------------------
Charter
Large Fidelity
Charter Charter Company Advisor
Guaranteed Guaranteed Stock Charter Growth
Long-Term Short-Term Index Balanced Opportunities
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term
Account $ 2,494,051
CIGNA Charter Guaranteed Short-Term
Account $ 259,658
CIGNA Charter Large Company Stock
Index Fund $ 1,799,913
CIGNA Charter Balanced Fund $ 274,378
CIGNA Fidelity Advisor Growth
Opportunities Fund $ 4,221,105
CIGNA Fidelity Advisor Balanced Fund
Participant notes receivable
M.D.C. common stock
Employer contributions receivable
Employee contributions receivable 12,868 2,396 13,283 2,723 23,521
------------ ------------ ------------ ----------- -----------
Net assets available for benefits $ 2,506,919 $ 262,054 $ 1,813,196 $ 277,101 $ 4,244,626
------------ ------------ ------------ ----------- -----------
------------ ------------ ------------ ----------- -----------
December 31, 1997
Fund Information
----------------------------------------------------------
Fidelity
Advisor Participant M.D.C.
Balanced Notes Stock
Fund Receivable Fund Total
<S> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term
Account $ 2,494,051
CIGNA Charter Guaranteed Short-Term
Account 259,658
CIGNA Charter Large Company Stock
Index Fund 1,799,913
CIGNA Charter Balanced Fund 274,378
CIGNA Fidelity Advisor Growth
Opportunities Fund 4,221,105
CIGNA Fidelity Advisor Balanced Fund $ 1,431,268 1,431,268
Participant notes receivable $ 284,420 284,420
M.D.C. common stock $ 651,897 651,897
Employer contributions receivable 565,427 565,427
Employee contributions receivable 6,148 1,467 62,406
------------ ------------ ------------ ------------
Net assets available for benefits $ 1,437,416 $ 284,420 $ 1,218,791 $ 12,044,523
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- -------------------------------------------------------------------------------
<TABLE>
DECEMBER 31, 1996
FUND INFORMATION
--------------------
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------
CHARTER
LARGE FIDELITY
CHARTER CHARTER COMPANY ADVISOR
GUARANTEED GUARANTEED STOCK CHARTER GROWTH
LONG-TERM SHORT-TERM INDEX BALANCED OPPORTUNITIES
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
CIGNA Charter Guaranteed Long-Term
Account $ 1,890,578
CIGNA Charter Guaranteed Short-Term
Account $ 231,045
CIGNA Charter Large Company Stock
Index Fund $ 1,058,122
CIGNA Charter Balanced Fund $ 161,025
CIGNA Fidelity Advisor Growth
Opportunities Fund $ 3,049,358
CIGNA Fidelity Advisor Balanced Fund
Participant notes receivable
M.D.C. common stock
Employer contributions receivable 77,051 7,955 33,741 6,732 86,169
Cash equivalents 13,517 3,029 12,462 2,728 25,628
------------ ------------ ------------ ----------- -----------
Net assets available for benefits $ 1,981,146 $ 242,029 $ 1,104,325 $ 170,485 $ 3,161,155
------------ ------------ ------------ ----------- -----------
------------ ------------ ------------ ----------- -----------
<CAPTION>
DECEMBER 31, 1996
FUND INFORMATION
----------------------------- NON-PARTICIPANT
PARTICIPANT DIRECTED DIRECTED
----------------------------- ----------------
FIDELITY
ADVISOR PARTICIPANT M.D.C.
BALANCED NOTES STOCK
FUND RECEIVABLE FUND TOTAL
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value
CIGNA Charter Guaranteed Long-Term
Account $ 1,890,578
CIGNA Charter Guaranteed Short-Term
Account 231,045
CIGNA Charter Large Company Stock
Index Fund 1,058,122
CIGNA Charter Balanced Fund 161,025
CIGNA Fidelity Advisor Growth
Opportunities Fund 3,049,358
CIGNA Fidelity Advisor Balanced Fund $ 1,087,934 1,087,934
Participant notes receivable $ 226,602 226,602
M.D.C. common stock $ 113,624 113,624
Employer contributions receivable 31,278 242,926 485,852
Cash equivalents 7,875 65,239
------------ ------------ ------------ ------------
Net assets available for benefits $ 1,127,087 $ 226,602 $ 356,550 $ 8,369,379
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
YEAR ENDED DECEMBER 31, 1997
FUND INFORMATION
----------------------------------------------------------------------------
CHARTER
LARGE FIDELITY
CHARTER CHARTER COMPANY ADVISOR
GUARANTEED GUARANTEED STOCK CHARTER GROWTH
LONG-TERM SHORT-TERM INDEX BALANCED OPPORTUNITIES
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Interest and dividends $ 124,977 $ 10,843
Net appreciation in fair
value of investments $ 371,870 $ 37,805 $ 882,319
----------- --------- ----------- --------- -----------
124,977 10,843 371,870 37,805 882,319
----------- --------- ----------- --------- -----------
Contributions
Employer 90 48 1,431
Employee 601,244 94,409 474,247 96,197 855,399
----------- --------- ----------- --------- -----------
601,334 94,409 474,295 96,197 856,830
----------- --------- ----------- --------- -----------
Total additions 726,311 105,252 846,165 134,002 1,739,149
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments 162,499 20,186 108,099 16,895 510,743
Transaction charge 1,022 161 1,182 157 899
Participant notes receivable terminated
due to withdrawal of participant
Transfer to affiliated plan 25,470 12,665 94,333 50,431
----------- --------- ----------- --------- -----------
Total deductions 188,991 33,012 203,614 17,052 562,073
Change in forfeiture reserve, net 14,172 (1,082) (4,012) (2,506) (14,774)
----------- --------- ----------- --------- -----------
Net increase (decrease) prior to interfund transfer 551,492 71,158 638,539 114,444 1,162,302
Interfund transfers, net (25,719) (51,133) 70,332 (7,828) (78,831)
----------- --------- ----------- --------- -----------
Net increase 525,773 20,025 708,871 106,616 1,083,471
Net assets available for benefits at beginning of
year 1,981,146 242,029 1,104,325 170,485 3,161,155
----------- --------- ----------- --------- -----------
Net assets available for benefits at end of year $ 2,506,919 $ 262,054 $ 1,813,196 $ 277,101 $ 4,244,626
----------- --------- ----------- --------- -----------
----------- --------- ----------- --------- -----------
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
FUND INFORMATION
-------------------------------------------------------------
FIDELITY
ADVISOR PARTICIPANT M.D.C.
BALANCED NOTES STOCK
FUND RECEIVABLE FUND TOTAL
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest and dividends $ 23,520 $ 3,979 $ 163,319
Net appreciation in fair
value of investments $ 247,742 277,335 1,817,071
----------- --------- ----------- ------------
247,742 23,520 281,314 1,980,390
----------- --------- ----------- ------------
Contributions
Employer 345 565,263 567,177
Employee 274,481 31,656 2,427,633
----------- --------- ----------- ------------
274,826 - 596,919 2,994,810
----------- --------- ----------- ------------
Total additions 522,568 23,520 878,233 4,975,200
Deductions from net assets attributed to:
Benefit payments 130,097 78,680 1,027,199
Transaction charge 179 1,382 4,982
Participant notes receivable terminated
due to withdrawal of participant 29,004 29,004
Transfer to affiliated plan 34,163 217,062
----------- --------- ----------- ------------
Total deductions 164,439 29,004 80,062 1,278,247
Change in forfeiture reserve, net (5,969) (7,638) (21,809)
----------- --------- ----------- ------------
Net increase (decrease) prior to interfund transfer 352,160 (5,484) 790,533 3,675,144
Interfund transfers, net (41,831) 63,302 71,708 -
----------- --------- ----------- ------------
Net increase 310,329 57,818 862,241 3,675,144
Net assets available for benefits at beginning of
year 1,127,087 226,602 356,550 8,369,379
----------- --------- ----------- ------------
Net assets available for benefits at end of year $ 1,437,416 $ 284,420 $ 1,218,791 $ 12,044,523
----------- --------- ----------- ------------
----------- --------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
YEAR ENDED DECEMBER 31, 1996
FUND INFORMATION
----------------
PARTICIPANT DIRECTED
------------------------------------------------------------------------
CHARTER
LARGE FIDELITY
CHARTER CHARTER COMPANY ADVISOR
GUARANTEED GUARANTEED STOCK CHARTER GROWTH
LONG-TERM SHORT-TERM INDEX BALANCED OPPORTUNITIES
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Interest and dividends $ 99,603 $ 9,106 -0- -0- -0-
Net appreciation in fair
value of investments -0- -0- $ 141,124 $ 14,771 $ 417,846
------------ ------------ ------------ ------------ ------------
99,603 9,106 141,124 14,771 417,846
------------ ------------ ------------ ------------ ------------
Contributions
Employer 77,051 7,955 33,741 6,732 86,169
Employee 467,707 84,549 269,425 59,548 755,419
------------ ------------ ------------ ------------ ------------
544,758 92,504 303,166 66,280 841,588
------------ ------------ ------------ ------------ ------------
Total additions 644,361 101,610 444,290 81,051 1,259,434
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments 256,119 42,345 114,167 44,628 275,569
Transaction charge 1,784 201 1,180 164 1,091
------------ ------------ ------------ ------------ ------------
Participant notes receivable terminated
due to withdrawal of participant -0- -0- -0- -0- -0-
------------ ------------ ------------ ------------ ------------
Total deductions 257,903 42,546 115,347 44,792 276,660
Change in forfeiture reserve, net 9,711 (79) (444) (316) (4,009)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) prior to interfund transfers 396,169 58,985 328,499 35,943 978,765
Interfund transfers, net (130,331) (16,455) 223,806 37,560 72,775
------------ ------------ ------------ ------------ ------------
Net increase (decrease) 265,838 42,530 552,305 73,503 1,051,540
Net assets available for benefits at
beginning of year 1,715,308 199,499 552,020 96,982 2,109,615
------------ ------------ ------------ ------------ ------------
Net assets available for benefits at
end of year $ 1,981,146 $ 242,029 $ 1,104,325 $ 170,485 $ 3,161,155
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
FUND INFORMATION
---------------- NON-PARTICIPANT
PARTICIPANT DIRECTED DIRECTED
--------------------------- ---------------
FIDELITY
ADVISOR PARTICIPANT M.D.C.
BALANCED NOTES STOCK
FUND RECEIVABLE FUND TOTAL
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Interest and dividends -0- $ 19,049 $ 1,627 $ 129,385
Net appreciation in fair
value of investments $ 84,626 -0- 19,557 677,924
------------ ------------ ------------ ------------
84,626 19,049 21,184 807,309
------------ ------------ ------------ ------------
Contributions
Employer 31,278 -0- 242,926 485,852
Employee 297,795 -0- -0- 1,934,443
------------ ------------ ------------ ------------
329,073 -0- 242,926 2,420,295
------------ ------------ ------------ ------------
Total additions 413,699 19,049 264,110 3,227,604
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments 207,673 -0- 7,134 947,635
Transaction charge 280 -0- 50 4,750
Participant notes receivable terminated
due to withdrawal of participant -0- 34,459 -0- 34,459
------------ ------------ ------------ ------------
Total deductions 207,953 34,459 7,184 986,844
Change in forfeiture reserve, net (2,773) -0- -0- 2,090
------------ ------------ ------------ ------------
Net increase (decrease) prior to interfund transfers 202,973 (15,410) 256,926 2,242,850
Interfund transfers, net (230,040) 42,685 -0- -
------------ ------------ ------------ ------------
Net increase (decrease) (27,067) 27,275 256,926 2,242,850
Net assets available for benefits at
beginning of year 1,154,154 199,327 99,624 6,126,529
------------ ------------ ------------ ------------
Net assets available for benefits at
end of year $ 1,127,087 $ 226,602 $ 356,550 $ 8,369,379
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the M.D.C. Holdings, Inc. 401(k) Savings Plan
(the "Plan") provides only general information. Participants should refer
to the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan established effective January 1,
1992 and most recently amended effective January 1, 1997. Non-union
employees of M.D.C. Holdings, Inc. and Richmond American Homes of Colorado,
Inc. (collectively, the "Company") hired on or before December 31, 1991
shall be eligible to participate immediately. Non-union employees hired
between January 1, 1992 and December 31, 1994 become eligible to
participate upon completing six months of service and attaining the age of
21. Non-union employees hired after January 1, 1995 become eligible to
participate upon completing one year of service and attaining the age of
21. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
CONTRIBUTIONS
Participants may contribute an amount equal to not less than 1 percent nor
more than 15 percent of their compensation for the contribution period. The
Company may make matching contributions in a discretionary amount to be
determined by the Company. The Company may also make a non-elective
contribution in a discretionary amount upon resolution of the Company's
Board of Directors. Effective January 1, 1997, the Company matching and
nonelective contributions may be made in cash or in shares of M.D.C.
Holdings, Inc. common stock.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocation of the Company's contribution, if any, and Plan earnings.
Earnings are allocated by fund based on the ratio of a participant's
account invested in a particular fund to all participants' investments in
that fund. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's account.
VESTING
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. The balance of vesting in the participants'
accounts is based on years of service. A participant becomes 20 percent
vested after one year of service, 40 percent vested after two years of
service, 60 percent vested after three years of service, 80 percent vested
after four years of service and 100 percent vested after five years of
service. However, if an active participant dies prior to attaining the
normal retirement age, the participant's account becomes 100 percent
vested.
6
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may currently direct
contributions among any of the following investment options:
- Charter Guaranteed Long-Term Fund (formerly "Guaranteed Long-Term
Fund") - Funds are invested in the CIGNA Charter Guaranteed Long-Term
Account, which provides a guaranteed rate of return reset
semiannually.
- Charter Guaranteed Short-Term Fund (formerly "Guaranteed Short-Term
Fund") - Funds are invested in the CIGNA Charter Guaranteed Short-Term
Account, which provides a guaranteed rate of return.
- Charter Large Company Stock Index Fund (formerly "Stock Market Index
Fund") - Funds are invested in the CIGNA Charter Large Company Stock
Index Fund, which is a separate account which provides an investment
portfolio designed to reflect the composition of the Standard & Poor's
500 Composite Stock Price Index.
- Charter Balanced Fund (formerly "Balanced Fund") - Funds are invested
in the CIGNA Charter Balanced Fund, which in turn invests in three
different types of investments: common stocks, bonds and money market
instruments. This fund is designed to provide long-term return with
reduced portfolio risk.
- Fidelity Advisor Growth Opportunities Fund - Funds are invested solely
in units of the CIGNA Fidelity Advisor Growth Opportunities Fund,
which in turn invests solely in shares of the Fidelity Advisor Growth
Opportunities Fund.
- Fidelity Advisor Balanced Fund (formerly "Fidelity Advisor Income &
Growth Fund") Funds are invested solely in units of the CIGNA Fidelity
Advisor Balanced Fund, which in turn invests solely in shares of the
Fidelity Advisor Balanced Fund.
- M.D.C. Stock Fund - Funds are invested solely in shares of M.D.C.
Holdings, Inc. common stock.
Participants may change their investment options at any time during the
Plan year.
PAYMENT OF BENEFITS
On termination of service, a participant may elect to receive either a
lump-sum amount equal to the value of his or her account, a distribution in
the form of an annuity, or a combination of both. Distributions are subject
to the applicable provisions of the Plan agreement.
7
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
PARTICIPANT NOTES RECEIVABLE
Participants may borrow up to the lesser of $50,000 or 50 percent of the
vested portion of their account balance, subject to certain restrictions,
in accordance with interest rates and collateral requirements established
by the Company.
CASH EQUIVALENTS
Contributions received prior to year end awaiting investment in the
appropriate investment option at December 31, 1996 are invested in the
CIGNA Charter Guaranteed Short-Term Account, which is recorded at fair
value, and are included as cash equivalents within the fund in which units
are subsequently purchased.
2. SUMMARY OF ACCOUNTING POLICIES
METHOD OF ACCOUNTING
The Plan's financial statements are prepared on the accrual basis of
accounting, and reflect management's estimates and assumptions, such as
those regarding fair value, that affect the recorded amounts. Significant
estimates used are discussed throughout the notes to financial statements.
INVESTMENTS
Investments in pooled separate accounts (CIGNA Charter Large Company Stock
Index Fund, CIGNA Charter Balanced Fund, CIGNA Fidelity Advisor Growth
Opportunities Fund and CIGNA Fidelity Advisor Balanced Fund) are recorded
at fair value, as determined by the unit value as reported by the
Connecticut General Life Insurance Company ("CG Life"). Investments in the
CIGNA Charter Guaranteed Long-Term and CIGNA Guaranteed Short-Term
Accounts are non-fully benefit responsive and are recorded at fair value.
Participant notes receivable are valued at cost which approximates fair
value. The Company stock is valued at its quoted market price.
CONTRIBUTIONS
Employee contributions are recorded in the period during which the Company
makes payroll deductions from the participants' earnings. Discretionary
Company contributions, if any, are recorded at the end of the Plan year.
Matching Company contributions, if any, are recorded in the same period.
8
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
BENEFITS
Benefit claims are recorded as expenses when they have been approved for
payment and paid by the Plan.
3. DEPOSITS WITH INSURANCE COMPANY
The Plan participates in contracts with CG Life via investments in the
CIGNA Charter Guaranteed Long-Term and the CIGNA Charter Guaranteed
Short-Term Accounts. CG Life commingles the assets of the CIGNA Charter
Guaranteed Long-Term Account with other assets. For the Plan's investment
in the CIGNA Charter Guaranteed Long-Term Account, the Plan is credited
with interest at the rate specified in the contract which was 5.90% for the
years ended December 31, 1997 and 1996, net of asset charges. For the
Plan's investment in the CIGNA Charter Guaranteed Short-Term Account, the
Plan is credited with interest at a yield which averaged 4.90% and 4.56%
for the years ended December 31, 1997 and 1996, respectively, net of asset
charges. As discussed in Note 2, the Charter Guaranteed Long-Term and
Charter Guaranteed Short-Term Accounts are included in the financial
statements at fair value which, principally because of the periodic rate
reset process, approximates contract value.
4. INVESTMENTS
Investments that represent 5 percent or more of the Plan's net assets are
separately identified below.
<TABLE>
DECEMBER 31,
1997 1996
<S> <C> <C>
CIGNA Charter Guaranteed Long-Term Account $2,494,051 $1,890,578
interest rates, 5.90%; 5.90%
CIGNA Charter Large Company Stock Index Fund 1,799,913 1,058,122
units, 37,576; 29,182
CIGNA Fidelity Advisor Growth Opportunities Fund 4,221,105 3,049,358
units, 68,181; 63,199
CIGNA Fidelity Advisor Balanced Fund 1,431,268 1,087,934
units, 52,084; 48,331
M.D.C. Stock Fund 651,897 N/A
units, 43,287; N/A
</TABLE>
9
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. PARTICIPANT NOTES RECEIVABLE
Under the terms of the Plan, participants may borrow from their accounts up
to the lesser of $50,000 or 50% of their vested account balance. Loan
transactions are treated as a transfer to/from the investment fund from/to
Participant Notes Receivable. A loan is secured by the balance in the
participant's account and bears interest at a rate commensurate with market
rates for similar loans, as defined (6.75% to 10.00% for the years ended
December 31, 1997 and 1996).
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
7. INCOME TAXES
The Internal Revenue Service has determined and informed the Company by a
letter dated August 2, 1995, that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code
("IRC"). The Plan has been amended since receiving the determination
letter. However, the Plan's administrator and tax counsel believe that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
8. RECONCILIATION OF PLAN FINANCIAL STATEMENTS TO THE FORM 5500
The Annual Return/Report of Employee Benefit Plan (the "Form 5500") is
prepared on the modified cash basis. Accordingly, certain balances included
on lines 31 and 32 of the Form 5500 differ from those included in these
financial statements. Contributions in the statement of changes in net
assets available for benefits differ from contributions on the Form 5500 by
the amount of contributions accrued at December 31. The ending net asset
balances are reconciled as follows:
<TABLE>
DECEMBER 31,
1997 1996
<S> <C> <C>
Net assets, per Form 5500 $11,416,690 $7,883,527
Add: Employer contributions receivable 565,427 485,852
Employee contributions receivable 62,406
----------- ----------
Net assets, per financial statements $12,044,523 $8,369,379
----------- ----------
----------- ----------
</TABLE>
10
<PAGE>
M.D.C. HOLDINGS, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. TRANSFER TO AFFILIATED PLAN
Effective January 14, 1997, certain employees and their participant
balances were transferred from the Plan to the Financial Asset Management
LLC 401(k) Plan.
10. FORFEITURES
The net change in forfeiture reserve represents the net change in the
available forfeiture reserve balance from the prior year plus the current
year forfeitures generated. Forfeitures result from nonvested benefit
payments remaining in the Plan for all terminated employees. Upon reaching
the break-in-service, as determined in the Plan agreement, forfeitures
generated are added to the forfeiture reserve balance. The forfeiture
reserve of $48,165 and $24,457 at December 31, 1997 and 1996, respectively,
is included in the Plan's investment in the CIGNA Charter Guaranteed
Long-Term Account and is available to offset contributions or to pay Plan
expenses, which would be otherwise payable by the Company, in accordance
with the Plan agreement. In 1997, Company cash contributions were reduced
by $8,051 from forfeited nonvested accounts.
11. SUBSEQUENT EVENT
Effective July 1, 1998, the M.D.C. Holdings, Inc. 401(k) Savings Plan is
expected to be administered by Key Bank.
11
<PAGE>
M.D.C. HOLDINGS, INC. ADDITIONAL INFORMATION
401(k) SAVINGS PLAN SCHEDULE I
LINE 27a FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
(c)
(a) (b) DESCRIPTION OF INVESTMENT INCLUDING (e)
IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, (d) CURRENT
LESSOR, OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE COST VALUE
<S> <C> <C> <C>
Connecticut General Life CIGNA Charter Guaranteed Long-Term
* Insurance Company Account
5.90% $ 2,494,051 $ 2,494,051
Connecticut General Life CIGNA Charter Guaranteed Short-Term
* Insurance Company Account
4.90% 259,658 259,658
Connecticut General Life CIGNA Charter Large Company Stock
* Insurance Company Index Fund
$47.90/unit 1,303,965 1,799,913
Connecticut General Life CIGNA Charter Balanced Fund
* Insurance Company $25.55/unit 225,769 274,378
Connecticut General Life CIGNA Fidelity Advisor Growth
* Insurance Company Opportunities Fund
$61.91/unit 2,859,794 4,221,105
Connecticut General Life CIGNA Fidelity Advisor Balanced Fund
* Insurance Company $27.48/unit 1,102,123 1,431,268
* Participant Notes Receivable 6.75% - 10.00% 284,420 284,420
* M.D.C. Holdings, Inc. M.D.C. common stock
$15.06/share ** 651,897
</TABLE>
* Indicates an identified person known to be a party-in-interest to the Plan.
** Cost information is not presently available from the custodian.
12
<PAGE>
M.D.C. HOLDINGS, INC. ADDITIONAL INFORMATION
401(k) SAVINGS PLAN SCHEDULE II
LINE 27d FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
(b) (f)
DESCRIPTION OF ASSET EXPENSE
(a) (INCLUDE INTEREST RATE (c) (d) (e) INCURRED
IDENTITY OF PARTY AND MATURITY IN CASE PURCHASE SELLING LEASE WITH
INVOLVED OF A LOAN) PRICE PRICE RENTAL TRANSACTION
<S> <C> <C> <C> <C> <C>
Connecticut General Purchases into CIGNA
Life Insurance Charter Guaranteed
Company Long-Term Account $1,138,395 N/A N/A N/A
Connecticut General Sales from CIGNA
Life Insurance Charter Guaranteed
Company Long-Term Account N/A $661,998 N/A N/A
Connecticut General Purchases into CIGNA
Life Insurance Charter Large Company
Company Stock Index Fund 805,143 N/A N/A N/A
Connecticut General Sales from CIGNA
Life Insurance Charter Large Company
Company Stock Index Fund N/A 435,222 N/A N/A
Connecticut General Purchases into CIGNA
Life Insurance Fidelity Advisor Growth
Company Opportunities Fund 1,171,887 N/A N/A N/A
Connecticut General Sales from CIGNA
Life Insurance Fidelity Advisor Growth
Company Opportunities Fund N/A 882,459 N/A N/A
Connecticut General Purchases into CIGNA
Life Insurance Fidelity Advisor Balanced
Company Fund 380,430 N/A N/A N/A
Connecticut General Sales from CIGNA
Life Insurance Fidelity Advisor Balanced
Company Fund N/A 284,838 N/A N/A
M.D.C. Holdings, Inc. Purchases into
M.D.C. common stock 388,404 N/A N/A N/A
M.D.C. Holdings, Inc. Sales from
M.D.C. common stock N/A 131,445 N/A N/A
<CAPTION>
(h)
CURRENT VALUE
(a) (g) OF ASSET ON (i)
IDENTITY OF PARTY COST OF TRANSACTION NET GAIN
INVOLVED ASSET DATE OR (LOSS)
<S> <C> <C> <C>
Connecticut General
Life Insurance
Company $1,138,395 $1,138,395 -
Connecticut General
Life Insurance
Company 661,998 661,998 -
Connecticut General
Life Insurance
Company 805,143 805,143 -
Connecticut General
Life Insurance
Company 367,949 435,222 $ 67,273
Connecticut General
Life Insurance
Company 1,171,887 1,171,887 -
Connecticut General
Life Insurance
Company 647,253 882,459 235,206
Connecticut General
Life Insurance
Company 380,430 380,430 -
Connecticut General
Life Insurance
Company 243,013 284,838 41,825
M.D.C. Holdings, Inc.
388,404 388,404 -
M.D.C. Holdings, Inc.
* 131,445 *
</TABLE>
* Cost information is not presently available from the custodian.
13
