DOW JONES NEWSWIRES 
 

M.D.C. Holdings Inc.'s (MDC) fourth-quarter loss narrowed on reduced write-downs as the homebuilder finished a rough 2008 with more cash than debt, a rarity for the industry.

Home construction has been slammed the past several years by the credit crunch and the global recession, brought on in part by a drop in demand for both new and existing homes in the U.S. and a subsequent surgein loan delinquencies and defaults which is pressuring sales.

Chief Executive Larry Mizel called industry conditions in 2008 "extraordinary," but said the company strengthened its balance sheet during the year through inventory reductions and cost cuts. It has some $1.4 billion in cash and investments, compared with nearly $1 billion in debt. That will allow the company to potentially take advantage of the weakened environment.

Chief Financial Officer Christopher Anderson added M.D.C. is well-positioned to pursue land investments because its next debt maturity isn't until 2012.

M.D.C. posted a net loss of $89 million, or $1.92 a share, compared with a year-earlier net loss of $281.1 million, or $6.14 a share. The results included write-downs of $78.9 million and $343 million, respectively.

Revenue decreased 62% to $296.2 million.

Analysts expected a loss of $1.22 a share on revenue of $346 million.

Home closings fell 57% and the average selling price declined 8%. Net home orders fell 53% to 350 amid a decline in active subdivisions. The cancellation rate fell to 52% from 65%.

Analysts at Credit Suisse had said Monday they expected new orders to remain challenged for MDC because of the company's high exposure to Southwest markets in Arizona, Nevada and California, which are some of the hardest-hit amid the housing crisis.

Like many other builders, M.D.C. has been trying to lure customers with low interest rates. Last month, it offered a 30-year fixed-rate at 4%.

Analysts have said M.D.C. has a cushion because it got a head start in switching to a conservative operational and financial footing before the crisis reached the broader economy and financing became punitively expensive. Now cash-padded home builders like M.D.C. and Toll Brothers Inc. (TOL) have some time to wait for property markets to improve, and aren't likely to be forced to sell off land at rock-bottom prices.'

M.D.C.'s shares closed Monday at $35.35 and haven't traded premarket. The stock is up 17% so far this year.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com