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UNITED STATES

FORM 10-K

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

For the fiscal year ended December 31, 2002

OR

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

For the Transition period from __________________ to __________________

Commission file number 1-8951

M.D.C. HOLDINGS, INC.

(303) 773-1100

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

     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 [X] No [   ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x

     The aggregate market value of voting stock held by non-affiliates of the Registrant was $1,057,213,000. Computation is based on the closing sales price of $52.00 per share of such stock on the New York Stock Exchange on June 28, 2002, the last business day of the Registrant’s most recently completed second quarter.

     As of February 5, 2003, the number of shares outstanding of Registrant’s common stock was 26,509,000.

DOCUMENTS INCORPORATED BY REFERENCE

     Part III of this Form 10-K is incorporated by reference from the Registrant’s 2003 definitive proxy statement to be filed with the Securities and Exchange Commission no later than 120 days after the end of the Registrant’s fiscal year.

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M.D.C. HOLDINGS, INC.

FORM 10-K

For the Year Ended December 31, 2002

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(i)

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M.D.C. HOLDINGS, INC.

FORM 10-K

PART I

Items 1 and 2. Business and Properties.

     (a)  General Development of Business

     M.D.C. Holdings, Inc. is a Delaware Corporation. We refer to M.D.C. Holdings, Inc. as the “Company” or as “MDC” in this Form 10-K. The “Company” or “MDC” includes our subsidiaries unless we state otherwise. MDC’s primary business is owning and managing subsidiary companies that build and sell homes under the name “Richmond American Homes.” We also own and manage HomeAmerican Mortgage Corporation (“HomeAmerican”), which originates mortgage loans primarily for MDC’s home buyers. In addition, MDC provides title agency services through American Home Title and Escrow Company (“American Home Title”) to MDC home buyers in Virginia, Maryland and Colorado and offers third party insurance products through American Home Insurance Agency, Inc. (“American Home Insurance”) to MDC’s home buyers in all of our markets. This Form 10-K and all other reports filed by the Company with the Securities and Exchange Commission (“SEC”) can be accessed, free of charge, through our website at http://investorrelations.richmondamerican.com/edgar.cfm as soon as reasonably practicable after the report is electronically filed with the SEC, or by contacting the Investor Relations department of M.D.C. Holdings, Inc.

     (b)  Financial Information About Industry Segments

     Note B to the consolidated financial statements contains information regarding the Company’s business segments for each of the three years ended December 31, 2002, 2001 and 2000.

     (c)  Narrative Description of Business

     MDC’s business consists of two segments, homebuilding and financial services. In our homebuilding segment, our homebuilding subsidiaries build and sell single-family homes in metropolitan Denver, Colorado Springs and Northern Colorado; Utah; Northern Virginia and suburban Maryland; Northern and Southern California; Phoenix and Tucson, Arizona; Las Vegas, Nevada; and Dallas/Fort Worth, Texas. Our financial services segment consists principally of the operations of HomeAmerican.

     Our strategy is to build homes generally for the first-time and move-up buyer, the largest group of prospective home buyers. The base prices for these homes generally range from $90,000 to $500,000, although the Company also builds homes with base prices as high as $1,400,000. The average sales prices of the Company’s homes closed in 2002 and 2001 were $254,000 and $254,100, respectively.

     When opening a new homebuilding project, the Company generally acquires no more than a two-year supply of lots to avoid overexposure to any single sub-market. The Company prefers to acquire finished lots using rolling options or in phases for cash. MDC also acquires entitled land for development into finished lots when the Company determines that the risk is justified. The Company’s Asset Management Committee, composed of members of the Company’s senior management, generally meets weekly to review all proposed land acquisitions and takedowns of lots under option. Additional information about MDC’s land acquisition practices may be found in the Homebuilding Segment, Land Acquisition and Development section.

     Homes are designed and built to meet local customer preferences. The Company is the general contractor for all of its projects and retains subcontractors for site development and home construction. The Company builds single-family detached homes, except in Virginia and Maryland, where we also build townhomes.

     HomeAmerican is a full service mortgage lender with offices located in each of MDC’s markets. Because it originates or brokers mortgage loans for approximately 81% of MDC’s home buyers, HomeAmerican is an integral part of MDC’s homebuilding business.

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Homebuilding Segment.

     General. The Company is one of the largest homebuilders in the United States. MDC is a major regional homebuilder with a significant presence in a number of selected growth markets. The Company is the largest homebuilder in Colorado; among the top five homebuilders in Northern Virginia, Phoenix, Tucson and Las Vegas; among the top ten homebuilders in suburban Maryland, Northern California and Southern California; and has recently entered the Salt Lake City and Dallas/Fort Worth markets. MDC believes a significant presence in its markets enables it to compete effectively for home buyers, land acquisitions and subcontractor labor.

     The Company designs, builds and sells quality single-family homes at affordable prices, generally for the first-time and move-up buyer. Almost 80% of its homes closed in 2002 were in subdivisions targeted to first-time and first-time move-up buyers.

     The Company’s operations are diversified geographically, as shown in the following table of home sales revenues by state for the years 2000 through 2002 (dollars in thousands).

     Housing. MDC builds homes in a number of basic series, each designed to appeal to a different segment of the home buyer market. Within each series, MDC builds several models, each with a different floor plan, elevation and standard and optional features. Differences in sales prices of similar models in any series depend primarily upon location, optional features and design specifications. The series of homes offered at a particular location are based on customer preference, lot size, the area’s demographics and, in certain cases, the requirements of major land sellers and local municipalities.

     Design centers are located in each of the Company’s homebuilding divisions, except Texas. Home buyers are able to customize certain features of their homes by selecting options and upgrades on display at the design centers. Home buyers can select finishes and upgrades soon after they decide to purchase a Richmond American home. The design centers not only provide MDC’s customers with a convenient way to select upgrades and options for their new homes, but also provide the Company with an additional source of revenue and profit.

     The Company maintains limited levels of inventories of unsold homes in its markets. Unsold homes in various stages of completion allow the Company to meet the immediate and near-term demands of prospective home buyers. In order to mitigate the risk of carrying excess inventory, the Company has strict controls and limits on the number of its unsold homes under construction.

     Land Acquisition and Development. MDC purchases finished lots using option contracts and in phases or in bulk for cash. The Company also acquires entitled land for development into finished lots when the Company determines that the risk is justified. In making land purchases, MDC considers a number of factors, including projected rates of return, sales prices of the homes to be built on the lots, population and employment growth patterns, proximity to developed areas, estimated costs of development and demographic trends. Generally, MDC acquires finished lots and land for development only in areas that will have, among other things, available building permits, utilities and suitable zoning. The Company attempts to maintain a supply of finished lots sufficient to enable it to start homes promptly after a contract for a home sale is executed. This approach is intended to minimize the Company’s investment in inventories and reduce the risk of shortages of labor and building materials. Increases in the cost of finished lots may reduce Home Gross Margins (as defined below) in the future to the extent that market conditions would not allow the Company to recover the higher cost of land through higher sales prices. We define “Home Gross Margins” to mean home sales revenues less cost of goods sold (which primarily includes land and

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construction costs, capitalized interest, a reserve for warranty expense and financing and closing costs) as a percent of home sales revenues. See “Forward-Looking Statements” below.

     MDC has the right to acquire a portion of the land it will require in the future utilizing option contracts, in some cases on a “rolling” basis. Generally, in an option contract, the Company obtains the right to purchase lots in consideration for an option deposit. In the event the Company elects not to purchase the lots within a specified period of time, the Company forfeits the option deposit. The Company’s option contracts do not contain provisions requiring specific performance by the Company. This practice limits the Company’s risk and avoids a greater demand on its liquidity. At December 31, 2002, MDC had the right to acquire 6,995 lots under option agreements with approximately $16,712,000 in non-refundable cash option deposits and $2,641,000 in letters of credit at risk. Because of increased demand for finished lots in certain of its markets, the Company’s ability to acquire lots using rolling options has been reduced or has become significantly more expensive.

     MDC owns various undeveloped parcels of real estate that it intends to develop into finished lots. MDC develops its land in phases (generally fewer than 100 lots at a time for each home series in a subdivision) in order to limit the Company’s risk in a particular project and to efficiently employ available liquidity. Building permits and utilities are available and zoning is suitable for the current intended use of substantially all of MDC’s undeveloped land. When developed, these lots generally will be used in the Company’s homebuilding activities. See “Forward-Looking Statements” below.

     The table below shows the carrying value of land and land under development, by state, as of December 31, 2002, 2001 and 2000 (in thousands).

     The table below shows the number of lots owned and under option (excluding lots in work-in-process), by state, as of December 31, 2002, 2001 and 2000.

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     Labor and Raw Materials. Generally, the materials used in MDC’s homebuilding operations are standard items carried by major suppliers. The Company generally contracts for most of its materials and labor at a fixed price during the anticipated construction period of its homes. This allows the Company to mitigate the risks associated with increases in building materials and labor costs between the time construction begins on a home and the time it is closed. Increases in the costs of building materials, particularly lumber, and subcontracted labor may reduce Home Gross Margins to the extent that market conditions prevent the recovery of increased costs through higher sales prices. From time to time and to varying degrees, the Company may experience shortages in the availability of building materials and/or labor in each of its markets, which can result in delays in the delivery of homes under construction. These shortages and delays may result in delays in the delivery of homes under construction, reduced Home Gross Margins or both. See “Forward-Looking Statements” below.

     Seasonal Nature of Business. MDC’s business is seasonal to the extent that its Colorado, Utah, Northern California, Virginia and Maryland operations encounter weather-related slowdowns. Delays in development and construction activities resulting from adverse weather conditions can increase the Company’s risk of buyer cancellations and contribute to higher costs for interest, materials and labor. In addition, home buyer preferences and demographics influence the seasonal nature of MDC’s business. See “Forward-Looking Statements” below.

     Backlog. As of December 31, 2002 and 2001, homes under contract but not yet delivered (“Backlog”) totaled 4,035 and 2,882, respectively, with estimated sales values of $1,120,000,000 and $760,000,000, respectively. Based on its past experience, assuming no significant change in market conditions and mortgage interest rates, MDC anticipates that approximately 80% of its December 31, 2002 Backlog will close under existing sales contracts during the first nine months of 2003. The remaining 20% of the homes in Backlog are not expected to close under existing contracts due to cancellations. See “Forward-Looking Statements” below.

     Marketing and Sales. MDC’s homes are sold under various commission arrangements by its own sales personnel and by cooperating brokers and referrals in the realtor community. In marketing homes, MDC primarily uses on-site model homes, advertisements in local newspapers, radio, billboards and other signage, magazines and illustrated brochures. We also market our homes on our internet website, www.richmondamerican.com, and utilize a variety of other internet sites to advertise our homes and communities. All of MDC’s homes are sold with a ten-year limited warranty issued by an unaffiliated warranty company.

     Title Operations. American Home Title provides title agency services to MDC home buyers in Virginia, Maryland and Colorado. The Company is evaluating opportunities to provide title agency services in its other markets.

     Competition. The homebuilding industry is fragmented and highly competitive. MDC competes with numerous homebuilders, including a number that are larger and have greater financial resources. Homebuilders compete for customers, desirable financing, land, building materials and subcontractor labor. Competition for home orders primarily is based upon price, style, financing provided to prospective purchasers, location of property, quality of homes built, customer service and general reputation in the community. The Company also competes with subdivision developers and land development companies when acquiring land.

     Mortgage Interest Rates. The Company’s operations are dependent upon the availability and cost of mortgage financing. Increases in home mortgage interest rates may reduce the demand for homes and home mortgages and, generally, will reduce home mortgage refinancing activity. The Company is unable to predict future changes in home mortgage interest rates or the impact such changes may have on the Company’s operating activities and results of operations. See “Forward-Looking Statements” below.

     Regulation. The Company’s operations are subject to continuing compliance requirements mandated by applicable federal, state and local statutes, ordinances, rules and regulations, including 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 (including, but not limited to, those of the Occupational Safety and Health Administration). Various localities in which the Company operates have imposed (or may impose in the future) fees on developers to fund schools, road improvements and low and moderate-income housing. See “Forward-Looking Statements” below.

     From time to time, various municipalities in which the Company operates restrict or place moratoriums on the availability of utilities, including water and sewer taps. Additionally, certain jurisdictions in which the Company

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operates have proposed or enacted growth initiatives that may restrict the number of building permits available in any given year. In addition, in certain parts of Colorado, water taps may become more difficult to obtain if current drought conditions continue. Although no assurances can be given as to future conditions or governmental actions, MDC believes that it has, or can obtain, water and sewer taps and building permits for its land inventory and land held for development. See “Forward-Looking Statements” below.

     The Company’s homebuilding operations also are affected by environmental laws and regulations pertaining to availability of water, municipal sewage treatment capacity, land use, hazardous waste disposal, naturally occurring radioactive materials, building materials, population density and preservation of endangered species, natural terrain and vegetation. Due to these considerations, the Company generally obtains an environmental site assessment for parcels of land that it acquires. The particular environmental laws and regulations that apply to any given homebuilding project vary greatly according to the site’s location, the site’s environmental conditions and the present and former uses of the site. These environmental laws and regulations may result in project delays; cause the Company to incur substantial compliance and other costs; and/or prohibit or severely restrict homebuilding activity in certain environmentally sensitive regions or areas. See “Forward-Looking Statements” below.

     Bonds and Letters of Credit. The Company is often required to obtain bonds and letters of credit in support of its related obligations with respect to subdivision improvement, homeowners association dues and start-up expenses, warranty work, contractors license fees, earnest money deposits, etc. At December 31, 2002, MDC had outstanding approximately $25,019,000 and $181,124,000 of letters of credit and performance bonds, respectively. In the event any such bonds or letters of credit are called, MDC would be obligated to reimburse the issuer of the bond or letter of credit. However, the Company does not believe that any currently outstanding bonds or letters of credit will be unexpectedly called. See “Forward-Looking Statements” below.

Financial Services Segment.

Mortgage Lending Operations.

     General. HomeAmerican is a full-service mortgage lender. Through office locations in each of the Company’s markets, HomeAmerican originates mortgage loans primarily for MDC’s home buyers. HomeAmerican also brokers mortgage loans for origination by outside lending institutions for MDC home buyers. HomeAmerican is the principal originator of mortgage loans for MDC’s home buyers.

     HomeAmerican is authorized to originate Federal Housing Administration-insured (“FHA”), Veterans Administration-guaranteed (“VA”), Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”) and conventional mortgage loans. HomeAmerican is also an authorized loan servicer for FNMA, FHLMC and the Government National Mortgage Association (“GNMA”) and, as such, is subject to the rules and regulations of such organizations.

     Substantially all of the mortgage loans originated by HomeAmerican are sold to investors within 40 days of origination. The Company uses HomeAmerican’s secured warehouse line of credit, other borrowings and internally generated Company funds to finance these mortgage loans until they are sold.

     Portfolio of Mortgage Loan Servicing. Mortgage loan servicing involves the collection of principal, interest, taxes and insurance premiums from the borrower and the remittance of such funds to the mortgage loan investor, local taxing authorities and insurance companies. The servicer is paid a fee to perform these services. HomeAmerican obtains the servicing rights related to the mortgage loans it originates. Certain mortgage loans are sold “servicing released” (the servicing rights are included with the sale of the corresponding mortgage loans). In 2002, 30% of the mortgage loans were sold “servicing released”. The servicing rights on the remainder of the mortgage loans generally are sold under minibulk contracts within two months of the sale of the mortgage loan. HomeAmerican intends to sell servicing on all mortgage loans originated in the future. See “Forward-Looking Statements” below.

     HomeAmerican’s portfolio of mortgage loan servicing at December 31, 2002 consisted of servicing rights with respect to approximately 2,889 single-family loans, 94% of which were less than one year old. This includes 1,640 single-family loans for which the servicing rights had been sold but not transferred to the purchasers as of December 31, 2002. The Company anticipates transferring these servicing rights in the first quarter of 2003. These loans are secured by mortgages on properties in eight states, with interest rates on the loans ranging from

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approximately 2.45% to 11.38% and averaging 6.16%. The underlying value of a servicing portfolio generally is determined based on the interest rates and the annual servicing fee rates (currently .44% for FHA/VA loans and .25% for conventional loans) applicable to the loans comprising the portfolio.

     Pipeline. HomeAmerican’s mortgage loans in process that had not closed (the “Pipeline”) at December 31, 2002 had aggregate principal balances of $729,680,000. An estimated 80% of the Pipeline at December 31, 2002 is anticipated to close during the first nine months of 2003. If mortgage interest rates decline, a smaller percentage of these loans would be expected to close. See “Forward-Looking Statements” below.

     Forward Sales Commitments. HomeAmerican’s operations are affected by changes in mortgage interest rates. HomeAmerican utilizes forward mortgage securities commitments to manage the price risk related to fluctuations in interest rates on its fixed-rate mortgage loans owned and rate-locked mortgage loans in the Pipeline.

     Competition. The mortgage industry is fragmented and highly competitive. In each of the locations in which it originates loans, HomeAmerican competes with numerous banks, thrifts and other mortgage bankers, many of which are larger and have greater financial resources. Competitive factors include pricing, loan terms, underwriting criteria and customer service.

Employees.

     At December 31, 2002, MDC employed approximately 2,250 persons. MDC considers its employee relations to be satisfactory.

Item 3. Legal Proceedings.

     The Company and certain of its subsidiaries 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 on the financial condition, results of operations or cash flows of the Company. See “Forward-Looking Statements” below.

     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.

     The Company is not aware of any litigation, matter or pending claim against the Company that would result in material contingent liabilities related to environmental hazards or asbestos.

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

     No meetings of the Company’s stockholders were held during the fourth quarter of 2002.

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PART II

Item 5. Market Price of Common Stock and Related Security Holder Matters.

     On February 5, 2003, MDC had 1,030 shareowners of record. The shares of MDC common stock are traded on the New York and the Pacific Stock Exchanges. The following table sets forth, for the periods indicated, the price ranges of MDC’s common stock.

     The following table sets forth the cash dividends declared and paid in 2002 and 2001 (dollars in thousands except per share amounts).

     On January 20, 2003, MDC’s board of directors approved the payment of a cash dividend of eight cents per share payable February 21, 2003 to shareowners of record on February 6, 2003.

     On January 22, 2001, MDC’s board of directors approved the payment of a 10% stock dividend, which was distributed on February 16, 2001 to shareowners of record on February 5, 2001. On December 6, 2001, MDC’s board of directors approved the payment of another 10% stock dividend, which was distributed on December 28, 2001 to shareowners of record on December 17, 2001.

     In connection with the declaration and payment of dividends, the Company is required to comply with certain covenants contained in its $600,000,000 unsecured revolving line of credit agreement and the indenture dated January 1998 for its 8 3/8% senior notes due 2008. Pursuant to the terms of these agreements, dividends may be declared or paid if the Company is in compliance with certain stockholders’ equity and debt coverage tests. At December 31, 2002, the Company had a permitted dividend capacity of approximately $184,000,000 pursuant to the most restrictive of these covenants.

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     The following table provides information as of December 31, 2002 with respect to the shares of MDC common stock that may be issued under existing equity compensation plans, all of which have been approved by the shareowners.

     Please refer to the discussion of the Company’s equity incentive plans in Note G to the Company’s consolidated financial statements for a description of the plans and the types of grants, in addition to options, that may be made under the plans. The referenced discussion also describes the formula by which the number of securities available for issuance under those plans automatically increases.

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Item 6. Selected Financial and Other Data.

     The data in this table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s Consolidated Financial Statements (in thousands, except per share and unit amounts).

SELECTED FINANCIAL DATA

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

RESULTS OF OPERATIONS

Consolidated Results.

     2002 Compared With 2001. Revenues for the year ended December 31, 2002 were $2,319,000,000, representing the ninth consecutive record for annual revenues and a 9% increase over 2001. The increase primarily resulted from a 9% increase in the number of homes closed to 8,900, the most in the Company’s history.

     Income before income taxes increased 7% to $274,044,000 in 2002. The increase primarily was due to a 6% increase in homebuilding segment operating profit and a 15% increase in financial services segment operating profit. The homebuilding segment profit increase principally was a result of the home closing increase described above. In addition, no asset impairment charges were taken in 2002, while operating profits in 2001 were reduced by non-cash, pre-tax asset impairment charges of $7,041,000. The financial services segment profit increase primarily was due to a 41% increase in gains on sales of mortgage loans and a 7% increase in loan origination fees.

     The Company’s financial position continued to strengthen throughout 2002. The Company’s strong 2002 operating results increased stockholders’ equity by 22% to $800,567,000, or $30.29 per outstanding share, at December 31, 2002. This stockholders’ equity amount also reflects the repurchase during 2002 of 789,000 shares of MDC common stock for an aggregate purchase price of $29,403,000. Homebuilding inventories grew by 36% in support of the increasing homebuilding operations as the Company prepares to close over 10,500 homes in 2003. To finance our growth objective of doubling in size from 2001 levels in five years or less, both the top line and bottom line, the Company issued $150,000,000 of 7% senior notes due in December 2012 and increased the capacity of its homebuilding line of credit to $600,000,000 from $450,000,000. Despite the increase in corporate and homebuilding debt, the Company reported a ratio of corporate and homebuilding debt-to-capital of .29 at December 31, 2002, one of the lowest in the homebuilding industry.

     2001 Compared With 2000. Revenues for the year ended December 31, 2001 were $2,126,000,000, a 21% increase over 2000. The increase primarily resulted from a 9% increase in the number of home closings and a $26,800 increase in the average selling price per home closed.

     Income before income taxes increased 26% to $255,387,000 in 2001. The increase was due to a 23% increase in homebuilding segment operating profit and a 48% increase in financial services segment operating profit. The homebuilding segment profit increase principally was a result of the home closing and average selling price increases described above and an increase of 90 basis points in Home Gross Margins. The financial services segment profit increase primarily was due to a 56% increase in gains on sales of mortgage loans and a 26% increase in loan origination fees.

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Homebuilding Segment.

     The table below sets forth information relating to the Company’s homebuilding segment (dollars in thousands).