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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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, 1999

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

For the transition period from to
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Commission File No. 1-12434

M/I SCHOTTENSTEIN HOMES, INC.
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(Exact name of registrant as specified in its charter)

Ohio 31-1210837
-------------------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3 Easton Oval, Suite 500
Columbus, Ohio 43219
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(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (614) 418-8000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of Each Exchange on
Title of Each Class Which Registered
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Common Stock, par value $.01 New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None
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(Title of Class)

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. [ ]

As of February 24, 2000, the aggregate market value of voting common
stock held by non-affiliates of the registrant (5,352,560 shares) was
approximately $75,605,000. The number of shares of common stock of M/I
Schottenstein Homes, Inc. outstanding on February 24, 2000 was 8,133,640.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
1999 (Part I, II and IV) Portions of the registrant's Definitive Proxy Statement
for the 2000 Annual Meeting of Shareholders filed pursuant to Regulation 14A
(Part III)

PART I

ITEM 1. BUSINESS

COMPANY

M/I Schottenstein Homes, Inc. and its subsidiaries is one of the
nation's leading homebuilders. We sell and construct single-family homes to the
entry level, move-up and empty nester buyer under the Horizon, M/I Homes and
Showcase Homes tradenames. In 1998, the latest year for which information is
available, we were the 20th largest U.S. single-family homebuilder (based on
homes delivered) as ranked by Builder Magazine. Our homes are sold in eleven
geographic markets including Columbus and Cincinnati, Ohio; Tampa, Orlando and
Palm Beach County, Florida; Charlotte and Raleigh, North Carolina; Indianapolis,
Indiana; Virginia; Maryland and Phoenix, Arizona. We currently offer a number of
distinct lines of single-family homes ranging in base sales price from
approximately $95,000 to $930,000 with an average sales price in 1999 of
$209,000. During the year ended December 31, 1999, we delivered 3,941 homes and
had revenues of $852.0 million and net income of $41.6 million, the highest in
our history. M/I Schottenstein Homes, Inc. was incorporated, through predecessor
entities, in 1973 and commenced homebuilding activities in 1976.

We are the leading homebuilder in the Columbus, Ohio market, based on
revenue, and have been the number one builder of single-family detached homes in
this market for each of the last eleven years. In addition, we are currently one
of the top ten homebuilders in a majority of our other markets and believe we
are well positioned to further penetrate these markets. Our growth strategy
targets both product line expansion and geographical diversification. With
respect to geographical diversification, we have expanded into new markets
through the opening of new divisions rather than through acquisitions. To
complement the M/I Homes ($135,000 - $255,000 base sales price range) and
Showcase Homes ($200,000 - $450,000 base sales price range) lines, the
affordably priced Horizon line ($105,000 - $185,000 base sales price range),
which appeals to the first time home buyer, was introduced to the Columbus
market in 1993. Based on the success of this line, we have expanded this product
into a majority of our other markets. Included in our Horizon line, the Encore
series, which originated in our Indianapolis market, was introduced in Columbus
in 1999. These homes are also being offered in some of our other markets.

We distinguish ourselves from competitors by offering homes in
selective areas with a higher level of design and construction quality within a
given price range and by providing superior customer service. By offering homes
at a variety of price points, we attract a wide range of buyers, many of whom
are existing M/I homeowners. We support our homebuilding operations by providing
mortgage financing services through M/I Financial, and title-related services
through affiliated entities.

Our business strategy emphasizes the following key objectives:

Focus on profitability. We focus on improving profitability while
maintaining the high quality of our homes and customer service. We focus on
gross margins by stressing the features, benefits, quality and design of our
homes during the sale process and by minimizing speculative building. We also
value-engineer our homes by working with our subcontractors and suppliers to
provide attractive features while minimizing raw material and construction
costs.

Maintain conservative and selective land policies. Our profitability is
largely dependent on the quality of our subdivision locations; therefore, we
focus on locating and controlling land in the most desirable areas of our
markets. We are conservative in our land acquisition policies and only purchase
land that is already zoned and serviceable by utilities. We seek to control a
four- to five-year supply of land in each of our markets. We believe our
expertise in developing land gives us a competitive advantage in controlling
attractive locations at competitive costs, and, as a result, we have developed
approximately 70% of our communities as of December 31, 1999. At December 31,
1999, we owned 11,439 lots and controlled an additional 9,376 lots pursuant to
contracts.

Maintain or increase market position in current markets. We have been
the leading builder of single-family, detached homes in the Columbus market for
each of the last eleven years. We seek to maintain this leading position by
continuing to provide high quality homes and superior customer service. We
believe there are significant opportunities to profitably expand in each of our
other markets. These include increasing product offerings, continuing to acquire
land in desirable locations and constructing and selling homes with the same
commitment to customer service that has accounted for our success. In addition,
we continue to explore expansion into new markets through internal growth or
acquisition.

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Provide superior customer service. Our overriding philosophy is to
provide superior customer service to our homeowners. We offer a wide array of
functional and innovative designs and involve the homeowner in virtually every
phase of the building process from selling through construction, closing and
service after delivery. Our selling process focuses on the homes' features,
benefits, quality and design as opposed to merely price and square footage. In
certain markets, we utilize design centers to enhance the selling process and
increase the sale of optional features which typically carry higher margins. In
addition, we provide many of our customers with financing and attractive
warranties. As a result, based on the responses to our customer questionnaire,
for the ninth year in a row, more than 95% of our customers would recommend us
to a potential buyer.

Offer product breadth and innovative design. We devote significant
resources to the research and design of our homes to better meet the needs of
our customers. We offer a number of distinct product lines and more than 375
different floor plans and elevations. In addition to providing customers with a
wide variety of choices, we believe we offer a higher level of design and
construction quality within a given price range. We have also introduced and
utilized innovative design concepts such as themed communities, rear garages,
rear alley access, parks and porches.

Maintain decentralized operations with experienced management. Each of
our markets has unique characteristics and, therefore, is managed locally by
dedicated, on-site personnel. All of our managers possess intimate knowledge of
their particular market and are encouraged to be entrepreneurial in order to
best meet the needs of that market. Our incentive compensation structure rewards
each manager based on financial performance, income growth and customer
satisfaction.

SALES AND MARKETING

We market and sell our homes under the Horizon, M/I and Showcase
tradenames. Home sales are conducted by our own sales personnel in on-site sales
offices located within furnished model homes. Each sales consultant is trained
and equipped to fully explain the features and benefits of our homes, to
determine which home best suits each customer's needs, to explain the
construction process and to assist the customer in choosing the best financing.
Significant attention is given to the training and re-training of all sales
personnel to assure the highest levels of professionalism and product knowledge.
We currently employ more than 125 sales consultants and operate approximately
150 model homes.

We advertise using newspapers, magazines, direct mail, billboards,
radio and television. The particular marketing medium used differs from division
to division based upon marketing demographics and other competitive factors. We
have significantly increased advertising on the world wide web through expansion
of our web site at www.mihomes.com and through homebuilder.com. In addition, we
encourage independent broker participation and, from time to time, utilize
various promotions and sales incentives to attract interest from these brokers.
Our commitment to quality design and construction along with our reputation for
superior customer service has resulted in a strong referral base and numerous
repeat buyers.

To enhance the selling process, we operate design centers in the
Cincinnati, Columbus, Tampa and, most recently, Indianapolis markets. The design
centers are staffed with interior design specialists who assist customers in
selecting interior and exterior colors as well as standard options and upgrades.
In our other markets, the color and option/upgrade selection process is handled
directly by our sales consultants. We also offer financing to our customers
through our wholly-owned subsidiary, M/I Financial, which has branches in all of
our markets except Virginia, Maryland and Phoenix. M/I Financial originates
loans for purchasers of our homes. The loans are then sold, along with the
servicing rights, to outside mortgage lenders. We also provide title-related
services to purchasers of our homes in a majority of our markets through
affiliated entities.

We generally do not commence construction of a home until we obtain a
sales contract and preliminary oral advice from the customer's lender that
financing will be approved. However, in certain markets, contracts may be
accepted contingent upon the sale of an existing home and construction is
authorized through a certain stage prior to satisfaction of that contingency. In
addition, in all markets, a limited, strictly controlled number of "spec" homes
(i.e., homes started in the absence of an executed contract) are built in order
to facilitate delivery of homes on an immediate-need basis and to provide
presentation of new products. Using a conservative approach, spec homes are
approved for start only after consultation with the respective region and
division presidents.

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Our sales and marketing efforts are further enhanced by our inspection
and warranty programs. Through these programs, we offer a 2-year limited
warranty on materials and workmanship and a 30-year limited warranty against
major structural defects. To increase the value of these warranties, both are
transferable in the event of the sale of the home. Immediately prior to closing
and again three months after a home is delivered, we inspect each home with the
customer to determine if any repairs are required. At the customer's written
request, we will also provide a free 1-year inspection and again make necessary
repairs. We pass along to our customers all warranties provided by manufacturers
or suppliers of components installed in each home. Our warranty expense was
approximately 1.0% of total costs and expenses for each of the years ended
December 31, 1999, 1998 and 1997.

DESIGN AND CONSTRUCTION

We devote significant resources to the research, design and development
of our homes in order to best meet the needs of home buyers in the markets in
which we operate. Virtually all of our floor plans and elevations are designed
by experienced and qualified in-house professionals using modern computer-aided
design technology. We offer more than 375 different floor plans and elevations,
which may differ significantly from market to market.

The construction of each home is supervised by a construction
supervisor who reports to a production manager, both of whom are employees of
M/I Homes. Customers are introduced to their construction supervisor prior to
commencement of home construction at a pre-construction "buyer/builder
conference." The purpose of this conference is to review the home plans and all
relevant construction details with the customers and to explain the construction
process and schedule. Every customer is given a hard hat at the conference as an
open invitation to visit the site of their home at any time during the course of
construction. We want customers to be involved to understand the construction of
their home and to see the quality being built into their home. All of this is
part of our philosophy to "put the customer first" and enhance the total
homebuilding experience.

Homes generally are constructed according to standardized designs and
meet applicable Federal Housing Authority ("FHA") and Veterans Administration
("VA") requirements. To allow maximum design flexibility, we limit the use of
pre-assembled building components and pre-fabricated structural assemblies. The
efficiency of the building process is enhanced by our use of standardized
materials available from a variety of sources. We utilize independent
subcontractors for the installation of site improvements and the construction of
our homes. These subcontractors are supervised by our on-site construction
supervisors. All subcontractor work is performed pursuant to written agreements.
Such agreements are generally short-term, with terms from six to twelve months
and provide for a fixed price for labor and materials. The agreements are
structured to allow for price protection for a majority of the higher cost
phases of construction related to the homes in our Backlog. We seek to build in
large volume to reduce the per unit cost of the home due to advantages achieved
by lower unit prices paid to subcontractors for labor and materials.

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MARKETS

Our operations are organized into geographic divisions to maximize
operating efficiencies and use of local management. Our present divisional
operating structure is as follows:

Year
Operations
State Division Commenced
----- -------- ---------

Ohio........................... Columbus 1976
Columbus - Showcase 1988
Columbus - Horizon 1994
Cincinnati 1988

Indiana........................ Indianapolis 1988

Florida........................ Tampa 1981
Orlando 1984
Palm Beach County 1984

North Carolina................. Charlotte 1985
Raleigh 1986

Washington, D. C. ............. Virginia 1991
Maryland 1991

Arizona........................ Phoenix 1996

Columbus is the capital of Ohio, with federal, state and local
governments providing significant and stable employment. Columbus continues to
be a stable market with diverse economic and employment bases and record high
permit activity in 1999. Columbus is also the home of The Ohio State University,
one of the largest universities in the world. Our market share in Columbus has
exceeded 20% during each of the last five years.

Cincinnati is characterized by a stable economic environment and a
diverse employment base. Employers include Proctor & Gamble, Kroger, General
Electric and the Cincinnati International Airport, which serves as a regional
hub for Delta Airlines. We continue to expand our Horizon product line in this
market and focus on more affordable communities. In 1999, we were ranked the
number one homebuilder in Cincinnati, excluding the Northern Kentucky market in
which we do not participate.

Indianapolis is a growth market noted for its excellent transportation
system and relatively young population. For the sixth consecutive year,
single-family housing permits exceeded 10,000. A large aircraft maintenance hub
for United Airlines and an express mail sorting facility for the U.S. Postal
Service are significant employers in this market.

Tampa's housing market is strong, buoyed by financial services, tourism
and conventions. Business relocation has continued, especially in the banking,
insurance and telecommunications industries. Tampa's economy continues to grow;
employment levels increased by 5% in 1999.

In 1999, Orlando's economy grew at a healthy pace, with job growth
increasing by 4%. Contributing to this growth were improved tourism (both
domestic and foreign), strong in-migration and business expansion/relocation due
primarily to lower business costs. Single-family permits exceeded 16,000 in
1999, setting a new record.

Palm Beach County is one of the more affluent markets in the United
States. Job gains of 6% in 1999 were experienced in the construction, wholesale
trade and service sectors. Housing activity continued to be stable in 1999, with
over 6,000 single-family permits, slightly exceeding 1998 levels.

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Charlotte, which is home to fast-growing firms in the banking industry,
continues to prosper as a financial center and has established itself as a
transportation hub with its manufacturing base. Construction activity set
another record in 1999, exceeding 17,000 single-family permits.

Raleigh-Durham is situated to take advantage of the explosive growth in
high-tech firms with a well-educated workforce and the recently completed North
Carolina telecommunications highway. Raleigh's economy continues to flourish
with single-family permits reaching 15,000 in 1999.

The Washington, D.C. metro economy was led in 1999 by job gains in the
construction, technology and service sectors. Housing activity was robust, with
over 28,000 single-family permits issued. Our operations are located primarily
in Fairfax, Prince William and Loudoun counties in Virginia and Prince Georges
and Montgomery counties in Maryland.

We entered the Phoenix market in late 1996. The Phoenix housing market
is one of the most active in the United States, generating over 35,000
single-family permits annually in each of the last two years. Phoenix is a
national leader in employment growth and has a very diverse economy.

PRODUCT LINES

On a regional basis, we offer homes ranging in base sales price from
approximately $95,000 to $930,000 and ranging in square footage from
approximately 1,100 to 5,400 square feet. There are more than 375 different
floor plans and elevations across all product lines. By offering a wide range of
homes, we are able to attract first-time home buyers, move-up home buyers and
empty nesters. It is our goal to sell more than one home to our customers.

In the Columbus market, which is our largest market, we offer all of
our distinct product lines. In addition, we offer a select number of our product
lines in our divisions outside of Columbus. The base sales price range and
average square footage for these product lines in Columbus are shown below:

BASE SALES AVERAGE
DIVISION PRICE RANGE SQUARE FOOTAGE
-------- ----------- --------------

Horizon $105,000 - $185,000 1,500

M/I Homes $135,000 - $255,000 2,000

Showcase Homes $200,000 - $450,000 2,600

In addition, we offer a line of attached townhomes exclusively in the
Maryland and Virginia markets. These townhomes are marketed primarily to
first-time buyers and range from 1,800 to 2,400 square feet of living space.
These townhomes utilize wood frame construction and feature aluminum exteriors
with brick fronts. In Maryland and Phoenix, the Company offers homes with up to
5,000 square feet of living space for base sales prices ranging up to $930,000.

In each of our lines of homes, certain options are available to the
purchaser for an additional charge. Major options include fireplaces, additional
bathrooms and higher quality flooring, cabinets and appliances. The options are
typically more numerous and significant on more expensive homes.

LAND DEVELOPMENT ACTIVITIES

Our land development activities and land holdings have increased
significantly in the past few years. We continue to purchase lots from outside
developers under option contracts, when possible, to limit our risk; however, we
constantly evaluate other alternatives to satisfy the need for lots in the most
cost effective manner. We develop ground internally when we can gain a
competitive advantage by doing so or when shortages of qualified land developers
make it impractical to purchase required lots from outside sources. We seek to
limit our investment in undeveloped land and

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lots to the amount reasonably expected to be sold in the next three to five
years. Although we purchase land and engage in land development activities
primarily for the purpose of furthering our homebuilding activities, we have
developed land with the intention of selling a portion of the lots to outside
homebuilders in certain markets.

To limit the risk involved in the development of raw land, we acquire
land primarily through the use of contingent purchase contracts. These contracts
require the approval of our land committee and condition our obligation to
purchase land upon approval of zoning, utilities, soil and subsurface
conditions, environmental and wetland conditions, levels of taxation, traffic
patterns, development costs, title matters and other property-related criteria.
In addition, careful attention is paid to the quality of the public school
system. Only after this thorough evaluation has been completed do we make a
commitment to purchase undeveloped land. To further reduce the risk involved in
acquiring raw land, we generally do not commence engineering or development
until zoning approvals are secured.

From time to time we enter into joint ventures, generally with other
homebuilders. At December 31, 1999, we had interests varying from 33% to 50% in
each of 32 joint ventures and limited liability companies ("LLCs"). These joint
ventures and LLCs develop raw ground into lots and, typically, we receive our
percentage interest in the form of a distribution of developed lots. The joint
ventures and LLCs pay the managing partner or manager certain fees for
accounting, administrative and construction supervision services in addition to
its percentage interest. We are currently responsible for the management of 16
of these 32 joint ventures and LLCs. These joint ventures and LLCs are equity
financed except where seller financing is available on attractive terms.

During development of lots, we are required by some municipalities and
other governmental authorities to provide completion bonds for sewer, streets
and other improvements. We generally provide letters of credit in lieu of these
completion bonds. At December 31, 1999, $14.2 million of letters of credit were
outstanding for these purposes, as well as $19.9 million of completion bonds.

AVAILABLE LOTS AND LAND

We seek to balance the economic risk of owning lots and land with the
necessity of having lots available for our homes. At December 31, 1999, we had
3,497 developed lots and 2,156 lots under development in inventory. We also
owned raw land expected to be developed into approximately 3,845 lots.

In addition, at December 31, 1999, our interest in lots held by joint
ventures and LLCs consisted of 8 developed lots and 438 lots under development.
We also own interests in raw land held by our joint ventures and LLCs which is
zoned for 1,495 lots. It is anticipated that some of the lots owned will be sold
to others.

At December 31, 1999, we had options and purchase contracts, which
expire over the next 5 years, to acquire 2,634 developed lots and land to be
developed into approximately 6,742 lots, for a total of 9,376 lots, with an
aggregate current purchase price of approximately $190.8 million. Purchase of
these properties is contingent upon satisfaction of certain requirements by us
and the sellers, such as zoning approval, completion of development and
availability of building permits. The majority of these lot purchase agreements
provide for periodic escalation of the purchase price which, we believe,
reflects the developers' carrying cost of the lots.

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The following table sets forth our land position in lots (including our
interest in joint ventures and LLCs) by region in which we operate at December
31, 1999:

Owned Lots
------------------------------------------------
Under To Be Total Lots under
State Developed Development Developed Owned Option Total
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Ohio and Indiana 2,239 1,827 4,279 8,345 7,231 15,576

Florida 685 326 629 1,640 656 2,296

Carolina 263 104 332 699 1,042 1.741

Virginia, Maryland and Phoenix 318 337 100 755 447 1,202
-----------------------------------------------------------------------------------------------------

Total 3,505 2,594 5,340 11,439 9,376 20,815
=====================================================================================================

FINANCIAL SERVICES

Through our wholly-owned subsidiary, M/I Financial, we offer fixed and
adjustable rate mortgage loans, to buyers of our homes. M/I Financial has
branches in all of our housing markets, with the exception of Virginia, Maryland
and Phoenix. Of the 3,538 Homes Delivered in 1999 in the markets in which M/I
Financial operates, M/I Financial provided financing for 3,102 of these homes
representing approximately $492.3 million of mortgage loans originated and sold.
M/I Financial issues commitments to customers and closes both conventional and
government-insured loans in its own name. To minimize the risk of financing
activities, M/I Financial sells the loans it originates to the secondary market
which provides the funding within several days. We retain a small servicing
portfolio which is currently sub-serviced by a financial institution.

M/I Financial hedges its interest rate risk using optional and
mandatory forward sales of mortgage-backed securities whereby we agree to sell
and later repurchase similar but not identical mortgage-backed securities.
Generally, the agreements are fixed-coupon agreements whereby the interest rate
and maturity date of both transactions are approximately the same and are
established to correspond with the closing of the fixed interest rate mortgage
loan commitments. The difference between the two values of the mortgage-backed
securities in the agreements at settlement provide a hedge on the interest rate
risk exposure in the mortgage loan commitments and is included in the gain or
loss on the sale of the loans to third party investors.

Additionally, we hedge the interest rate risk relative to unclosed
loans by purchasing commitments from outside investors to acquire the loans at
the interest rate at which the loan will be closed. The cost of these purchase
commitments is recorded as an asset and is expensed as loans are closed under
the related commitments. Any remaining unused balance is expensed when the
commitment expires or earlier, if we determine that we will be unable to use the
entire commitment prior to its expiration date. At December 31, 1999, we had
approximately $19.9 million of commitments to deliver mortgage loans to outside
investors.

To reduce the credit risk associated with accounting losses, which
would be recognized if the counterparties failed to completely perform as
contracted, we limit the entities with which management can enter into a
commitment to the primary dealers in the market. The risk of accounting loss is
the difference between the market rate at the time a counterparty fails and the
rate to which we committed for the mortgage loans and any purchase commitments
recorded with the counterparty.

M/I Financial has been approved by the Department of Housing and Urban
Development and the VA to originate loans insured by the FHA and the VA,
respectively, and has been approved by the Federal Home Loan Mortgage
Corporation ("FHLMC") and by the Federal National Mortgage Association ("FNMA")
as a seller and servicer of mortgages sold to FHLMC and FNMA.

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In 1996, we entered into a joint venture to provide title services in
the Indianapolis and Columbus markets. A similar joint venture was formed in the
Tampa and Orlando markets in 1997 and in the Cincinnati, Virginia and Maryland
markets in 1998.

COMPETITION

The homebuilding industry is highly competitive. We compete in each of
our local market areas with numerous national, regional and local homebuilders,
some of which have greater financial, marketing, land acquisition and sales
resources. Builders of new homes compete not only for home buyers, but also for
desirable properties, financing, raw materials and skilled subcontractors. In
addition, we compete with the resale market for existing homes which provides
different attractions for home buyers over building a new home.

REGULATION AND ENVIRONMENTAL MATTERS

The homebuilding industry, including M/I Homes, is subject to various
local, state and federal (including FHA and VA) statutes, ordinances, rules and
regulations concerning zoning, building, design, construction, sales and similar
matters. This regulation affects construction activities, including types of
construction materials which may be used, certain aspects of building design,
sales activities and other dealings with consumers. We must also obtain
licenses, permits and approvals from various governmental authorities for
development activities. In many areas, we are subject to local regulations which
impose restrictive zoning and density requirements in order to limit the number
of houses within the boundaries of a particular locality. We seek to reduce the
risk from restrictive zoning and density requirements by using contingent land
purchase contracts which require that land must meet various requirements,
including zoning, prior to our purchase.

We may be subject to periodic delays or precluded entirely from
developing projects due to building moratoriums, particularly in our Florida and
Raleigh markets. Generally, these moratoriums relate to insufficient water or
sewage facilities or inadequate road capacity within specific market areas or
subdivisions. Moratoriums experienced by us have not been of long duration and
have not had a material effect on our business.

Each of the states in which we operate has adopted a wide variety of
environmental protection laws. These laws generally regulate developments which
are of substantial size and which are in or near certain specified geographic
areas. Furthermore, these laws impose requirements for development approvals
which are more stringent than those which land developers would have to meet
outside of these geographic areas.

Increased stringent requirements may be imposed on homebuilders and
developers in the future which may have a significant impact on us and the
industry. Although we cannot predict the effect of these requirements, such
requirements could result in time-consuming and expensive compliance programs.
In addition, the continued effectiveness of current licenses, permits or
development approvals is dependent upon many factors, some of which are beyond
our control.

EMPLOYEES

At February 24, 2000, we employed 889 people (including part-time
employees), of which 261 were employed in sales, 374 in construction and 254 in
management, administrative and clerical positions. We consider our employee
relations to be very good. No employees are represented by a collective
bargaining agreement.

ITEM 2. PROPERTIES

We own and operate an approximately 85,000 square foot office building
used for our home office and lease all of our other offices. Prior to September
1998, we leased our home office space from a limited liability company in which
we had a minority equity interest. We purchased the remaining interest in this
limited liability company in September of 1998. See Notes 2, 5 and 9 to the
Consolidated Financial Statements.

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Due to the nature of our business, a substantial amount of property is
held as inventory in the ordinary course of business. See "Item 1. BUSINESS -
Available Lots and Land."

ITEM 3. LEGAL PROCEEDINGS

We are involved in routine litigation incidental to our business.
Management does not believe that any of this litigation is material to our
consolidated financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 1999, no matters were submitted to a vote
of security holders.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS