1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1996
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OR
[ ] 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 33-44914, 33-68564
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M/I SCHOTTENSTEIN HOMES, INC.
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(Exact name of registrant as specified in its charter)
Ohio 31-1210837
---- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
41 S. High Street, Suite 2410, Columbus, Ohio 43215
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(Address of principal executive offices) (Zip Code)
(614) 221-5700
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(Telephone number)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, par value $.01 per share: 8,800,000 shares
outstanding as of November 12, 1996
2
M/I SCHOTTENSTEIN HOMES, INC.
FORM 10-Q
INDEX
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PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and
December 31, 1995 3
Consolidated Statements of Income
for the Three Months and Nine Months Ended
September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 1996 and 1995 5
Notes to Interim Unaudited Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
Exhibit Index 23
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CONSOLIDATED BALANCE SHEETS
M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARY
- ----------------------------------------------------------------------------------------------------
SEPTEMBER 30, December 31,
(Dollars in thousands) 1996 1995
- ----------------------------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
Cash, including cash in escrow $ 4,738 $ 8,136
Receivables 23,618 23,612
Inventories:
Single family lots, land and land development costs 117,910 120,806
Houses under construction 121,655 86,110
Model homes and furnishings (less accumulated depreciation:
September 30, 1996 - $855;
December 31, 1995 - $823) 20,683 20,971
Land purchase deposits 445 381
Office furnishings, transportation and construction
equipment - at cost (less accumulated depreciation:
September 30, 1996 - $7,010;
December 31, 1995 - $6,106) 1,765 2,392
Investment in unconsolidated joint ventures and limited partnerships 13,202 11,641
Other assets 9,348 7,094
- ----------------------------------------------------------------------------------------------------
TOTAL $313,364 $281,143
- ----------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable banks - home-building operations $ 99,000 $ 87,000
Note payable bank - financial operations 14,375 15,200
Mortgage notes payable 104 349
Subordinated notes 24,513 24,513
Accounts payable 35,809 29,219
Accrued compensation 6,708 7,336
Income taxes payable 616 2,771
Accrued interest, warranty and other 13,819 9,787
Customer deposits 9,275 5,472
- ----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 204,219 181,647
- ----------------------------------------------------------------------------------------------------
Commitments and contingencies
- ----------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock - $.01 par value;
authorized 2,000,000 shares;
none outstanding -- --
Common stock - $.01 par value;
authorized 38,000,000 shares;
issued and outstanding - 8,800,000 shares 88 88
Additional paid-in capital 50,573 50,573
Retained earnings 58,484 48,835
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TOTAL STOCKHOLDERS' EQUITY 109,145 99,496
- ----------------------------------------------------------------------------------------------------
TOTAL $313,364 $281,143
====================================================================================================
See Notes to Interim Unaudited Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF INCOME
M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARY
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(Dollars in thousands, except per share information) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
Revenue $ 156,932 $ 137,092 $ 390,147 $ 357,973
- -------------------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Land and housing 127,241 112,269 315,171 293,455
General and administrative 8,973 7,988 22,491 20,371
Selling 10,192 8,688 26,935 24,007
Interest 3,590 3,853 9,618 10,434
- -------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 149,996 132,798 374,215 348,267
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 6,936 4,294 15,932 9,706
- -------------------------------------------------------------------------------------------------------------------------------
Income taxes:
Current 2,971 1,781 7,096 3,842
Deferred (425) (62) (813) 30
- -------------------------------------------------------------------------------------------------------------------------------
Total income taxes 2,546 1,719 6,283 3,872
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 4,390 $ 2,575 $ 9,649 $ 5,834
- -------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .50 $ .29 $ 1.10 $ .66
- -------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares
outstanding 8,800,000 8,800,000 8,800,000 8,800,000
===============================================================================================================================
See Notes to Interim Unaudited Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARY
(Unaudited)
- ---------------------------------------------------------------------------------------------------------
NINE-MONTHS ENDED SEPTEMBER 30,
(Dollars in thousands) 1996 1995
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,649 $ 5,834
Adjustments to reconcile net income to net cash
used by operating activities:
Loss from property disposals 95 --
Depreciation and amortization 1,080 1,306
Deferred income taxes (813) 30
Increase (decrease) in receivables (6) 417
Increase in inventories (23,980) (28,808)
Increase (decrease) in other assets (1,576) 423
Increase in accounts payable 6,590 8,117
Decrease in income taxes payable (2,155) (1,162)
Increase in accrued liabilities 3,404 1,463
Equity in undistributed income of
unconsolidated joint ventures and limited partnerships (113) (31)
- ---------------------------------------------------------------------------------------------------------
Net cash used by operating activities (7,825) (12,411)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to model and office furnishings,
transportation and construction equipment (429) (526)
Proceeds from property disposals 63 60
Investment in unconsolidated joint ventures and limited partnerships (10,452) (6,802)
Distributions from unconsolidated joint ventures and limited partnerships 671 816
- ---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (10,147) (6,452)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable banks:
Cash proceeds from borrowings 229,376 206,485
Principal repayments (218,201) (192,740)
Principal repayments of mortgage notes payable (404) (360)
Increase in customer deposits 3,803 2,008
- ---------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 14,574 15,393
- ---------------------------------------------------------------------------------------------------------
Net decrease in cash (3,398) (3,470)
Cash balance at beginning of year 8,136 14,059
- ---------------------------------------------------------------------------------------------------------
Cash balance at end of period $ 4,738 $ 10,589
=========================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 7,925 $ 9,418
Income taxes $ 9,318 $ 4,764
NON-CASH TRANSACTIONS DURING THE YEAR:
Single family lots distributed from unconsolidated joint ventures $ 8,333 $ 2,227
Land acquired with mortgage notes payable $ 159 $ 374
=======================================================================================================
See Notes to Interim Unaudited Consolidated Financial Statements.
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M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARY
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated financial statements and notes thereto have
been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission for interim financial information. The results of
operations for the nine months ended September 30, 1996 and 1995 are not
necessarily indicative of the results for the full year.
It is suggested that these financial statements be read in conjunction with
the financial statements, accounting policies and financial notes thereto
included in the Company's Annual Report to Shareholders for the year ended
December 31, 1995.
In the opinion of management, the accompanying unaudited financial statements
reflect all adjustments (consisting only of normal recurring accruals) which
are necessary for a fair presentation of financial results for the interim
periods presented.
NOTE 2. NOTES PAYABLE BANKS
On July 19, 1996, M/I Financial entered into a new bank loan agreement. The
amount available and other terms of the new agreement remain substantially
the same as the previous agreement. This agreement terminates on June 20,
1997 and the unpaid balance is payable on this date.
The Company has reached an agreement in principal with its lenders to amend
the Company's bank loan agreement. Pursuant to such amendment, the maturity
date will be extended to September 30, 2001 and limits on certain restrictive
covenants will be increased. The amount available and other terms of the
agreement will remain substantially the same as those in the agreement that
it replaces.
NOTE 3. SUBORDINATED DEBT
On September 30, 1996, the Company executed a $25 million Subordinated Note
Purchase Agreement with a bank. The proceeds will be used to redeem 100% of
the Company's $24.5 million 14% Subordinated Notes currently outstanding. The
Note Purchase Agreement provides for funding between December 1 and December
31, 1996. In accordance with the indenture governing the 14% Subordinated
Notes, the Company gave notice to the trustees of its intention to make a
redemption on December 3, 1996. The maturity date of the new Subordinated
Note is December 15, 2001 and can be extended two additional years at the
Company's option. The new Subordinated Note is redeemable, in whole or in
part, after one year without penalty or premium. Each partial payment must be
equal to or in excess of $5 million. Interest on the new Subordinated Note
adjusts every three months and is at LIBOR plus 3.50%. Upon the actual
redemption of the existing 14% Subordinated Notes, the Company expects to
incur a $1.3 million expense, net of tax.
In compliance with the terms of the new Subordinated Note, the Company
purchased a three-year, 9% interest rate cap agreement, effective December 2,
1996 through December 2, 1999. The agreement provides that if the interest
rate in effect for each three month period is greater than the cap rate, the
bank will pay to the Company the excess interest computed.
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NOTE 4. INTEREST
The Company capitalizes interest during development and construction.
Capitalized interest is charged to interest expense as the related inventory
is delivered. The summary of total interest for the three and nine months
ended September 30, 1996 and 1995 is as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(Dollars in thousands) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------
Interest capitalized, beginning of period $ 7,734 $ 7,899 $ 7,560 $ 7,322
Interest incurred 3,207 3,857 9,409 11,014
Interest expensed 3,591 3,854 9,619 10,434
- -------------------------------------------------------------------------------------------------------------
Interest capitalized, end of period $ 7,350 $ 7,902 $ 7,350 $ 7,902
=============================================================================================================
NOTE 5. IMPACT OF ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." SFAS 121 amends the impairment provisions of the existing
accounting literature which required the Company's home-building inventories
to be carried at the lower of cost or net realizable value. Under the new
provisions, if the Company's home-building inventories are determined to be
impaired, the impairment loss is measured based upon the difference between
the fair value of the asset and its carrying amount.
The Company adopted SFAS 121 during the first quarter of 1996. Based on the
Company's analysis of its home-building inventories, nothing of significance
was found to be impaired and, therefore, the implementation of this statement
had no impact on the financial condition or results of operations of the
Company.
NOTE 6. CONTINGENCIES
At September 30, 1996, the Company had options and contingent purchase
contracts to acquire land and developed lots with an aggregate purchase price
of approximately $180.2 million.
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M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARY
FORM 10-Q - PART I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
CONSOLIDATED
Total Revenue. Total revenue for the three months ended September 30,
1996 increased $19.8 million and for the nine months ended September 30, 1996
increased $32.2 million from the comparable periods of 1995. An increase for the
three-month period in housing revenue of $21.9 million was partially offset by a
$2.1 million decrease in land revenue. Increases for the nine-month period in
housing revenue of $36.4 million and other revenue of $1.3 million were
partially offset by a $5.5 million decrease in land revenue. The increase in
housing revenue for both the three- and nine-month periods was attributable to
an increase in the number of Homes Delivered. The Company delivered 122 and 218
more homes during the three and nine months ended September 30, 1996 than the
comparable periods of 1995. For the nine months ended September 30, 1996, the
increase in other revenue is primarily attributable to M/I Financial, where both
the number of loans originated and the gains recognized from the sale of loans
increased in the current year. The decrease in land revenue for both the three
and nine months ended September 30, 1996 was primarily due to a significant
decrease in the number of lots sold to third parties in the Maryland division
from the comparable periods of 1995.
Income Before Income Taxes. Income before income taxes for the three
months ended September 30, 1996 increased 61.5% and for the nine months ended
September 30, 1996 increased 64.1% from the comparable periods of 1995. The
increase for the three months ended September 30, 1996 related to both housing,
where income before income taxes increased from $3.5 to $5.7 million, and M/I
Financial, where income before income taxes increased from $0.8 to $1.2 million.
The increase for the nine months ended September 30, 1996 also related to both
housing, where income before income taxes increased from $8.0 to $12.6 million,
and M/I Financial, where income before income taxes increased from $1.7 to $3.3
million. The increase in housing for both the three- and nine-month periods was
primarily due to the increase in the number of Homes Delivered along with
improved margins. Housing margins for the three months ended September 30, 1996
increased 0.5% and for the nine months ended September 30, 1996 increased 1.0%
from the comparable periods of 1995. The increase in M/I Financial for the three
months ended September 30, 1996 was primarily due to an increase in the number
of loans originated. The increase in M/I Financial for the nine months ended
September 30, 1996 was primarily due to the significant increase in income from
the sale of servicing and marketing gains due to the favorable interest rate
environment during the last half of 1995 and first nine months of 1996 as
compared to the same periods of 1994 and 1995.
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HOME-BUILDING SEGMENT
The following table sets forth certain information related to the Company's
home-building segment:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(Dollars in thousands) 1996 1995 1996 1995
============================================================================================
Revenue:
Housing sales $153,614 $131,748 $378,607 $342,234
Land and lot sales 1,624 3,704 6,099 11,549
Other income 124 175 552 456
- --------------------------------------------------------------------------------------------
Total Revenue $155,362 $135,627 $385,258 $354,239
============================================================================================
Revenue:
Housing sales 98.9 % 97.1 % 98.3 % 96.6 %
Land and lot sales 1.0 2.8 1.6 3.3
Other income 0.1 0.1 0.1 0.1
- --------------------------------------------------------------------------------------------
Total Revenue 100.0 100.0 100.0 100.0
Land and housing costs 82.4 83.1 82.2 83.2
- --------------------------------------------------------------------------------------------
Gross Margin 17.6 16.9 17.8 16.8
General and administrative expenses 2.9 3.4 2.8 3.0
Selling expenses 6.5 6.4 7.0 6.8
- --------------------------------------------------------------------------------------------
Operating Income 8.2 % 7.1 % 8.0 % 7.0 %
============================================================================================
MIDWEST REGION
Unit Data:
New contracts 441 510 1,487 1,392
Homes delivered 538 436 1,336 1,167
Backlog at end of period 1,088 993 1,088 993
Average sales price of homes in backlog $ 173 $ 161 $ 173 $ 161
Aggregate sales value of homes in backlog $188,000 $160,000 $188,000 $160,000
Number of active subdivisions 70 70 70 70
============================================================================================
FLORIDA REGION
Unit Data:
New contracts 142 142 483 460
Homes delivered 157 161 437 428
Backlog at end of period 271 295 271 295
Average sales price of homes in backlog $ 167 $ 172 $ 167 $ 172
Aggregate sales value of homes in backlog $ 45,000 $ 51,000 $ 45,000 $ 51,000
Number of active subdivisions 40 40 40 40
============================================================================================
NORTH CAROLINA, VIRGINIA AND MARYLAND REGION
Unit Data:
New contracts 147 159 476 469
Homes delivered 192 168 456 416
Backlog at end of period 279 279 279 279
Average sales price of homes in backlog $ 242 $ 220 $ 242 $ 220
Aggregate sales value of homes in backlog $ 68,000 $ 61,000 $ 68,000 $ 61,000
Number of active subdivisions 40 40 40 40
============================================================================================
TOTAL
Unit Data:
New contracts 730 811 2,446 2,321
Homes delivered 887 765 2,229 2,011
Backlog at end of period 1,638 1,567 1,638 1,567
Average sales price of homes in backlog $ 184 $ 174 $ 184 $ 174
Aggregate sales value of homes in backlog $301,000 $272,000 $301,000 $272,000
Number of active subdivisions 150 150 150 150
============================================================================================
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A home is included in "New Contracts" when the Company's standard sales
contract, which requires a deposit and generally has no contingencies other than
for buyer financing, is executed. In the Midwest Region, contracts are sometimes
accepted contingent upon the sale of an existing home. "Homes Delivered"
represents units for which the closing of the sale has occurred and title has
transferred to the buyer. Revenue and cost of revenue for a home sale are
recognized at the time of such closing.
"Backlog" represents homes for which the Company's standard sales
contract has been executed, but which are not included in Homes Delivered
because closings for the sale of such homes have not yet occurred as of the end
of the periods specified. Most cancellations of contracts for homes in Backlog
occur because customers cannot qualify for financing. These cancellations
usually occur prior to the start of construction. Since the Company arranges
financing with guaranteed rates for many of its customers, the incidence of
cancellations after the start of construction is low. In the first nine months
of 1996, the Company delivered 2,229 homes. Of the 1,421 contracts in Backlog at
December 31, 1995, 14.4% have been canceled as of September 30, 1996. For homes
in Backlog at December 31, 1994, 15.5% had been canceled as of September 30,
1995. For homes in Backlog at December 31, 1994, the final cancellation
percentage was 15.6%. Unsold speculative homes owned by the Company at September
30, 1996 and 1995 totaled 165 and 155, respectively. As the Company generally
starts more speculative homes towards the end of the year to generate additional
closings by year-end, the majority of these homes are in the initial stages of
construction.
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Total Revenue. Total revenue for the three months ended September 30,
1996 increased 14.6% compared to the three months ended September 30, 1995. This
increase was due to a 16.6% increase in housing revenue and was offset by a
slight decrease in lot and land sales. The increase in housing revenue was due
to a 16.0% increase in the number of Homes Delivered. The increase in Homes
Delivered was primarily due to increased deliveries in the Columbus, Cincinnati
and Raleigh markets, however, the majority of the divisions experienced
increased deliveries. This was due to increased sales in the last half of 1995
and first quarter of 1996 which were aided by an overall strong economy and
relatively low interest rates. The decrease in land revenue was primarily
attributable to the Maryland division. The Maryland division had significant lot
sales to outside homebuilders from its Willows land development project in the
three months ended September 30, 1995 which did not occur in the current year.
The Company is developing an additional phase of this project and anticipates
selling a portion of these lots in the fourth quarter of 1996.
Home Sales and Backlog. The Company recorded a 10.0% decrease in the
number of New Contracts in the three months ended September 30, 1996 as compared
to the same period of 1995. New Contracts in the third quarter of 1996 were
lower in all divisions except Tampa, Palm Beach County and Virginia. The Company
believes the decrease in New Contracts was primarily due to a record number of
New Contracts in the Columbus market in 1995. New Contracts in the third quarter
in the Columbus market decreased 16.0% from 1995 to 1996. The number of New
Contracts in future periods will be dependent on future economic conditions,
consumer confidence and interest rates available to potential home buyers.
At September 30, 1996, the total sales value of the Company's Backlog
of 1,638 homes was approximately $301.0 million, representing a 10.7% increase
in sales value and a 4.5% increase in units from the levels reported at
September 30, 1995. The average sales price of homes in Backlog increased 5.7%
from September 30, 1995 to September 30, 1996. The increase in the average sales
price of homes was due to increases in the Columbus, Charlotte, Cincinnati and
Indianapolis divisions where the Company is building in more upscale
subdivisions.
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Gross Margin. The overall gross margin for the home-building segment
was 17.6% for the three months ended September 30, 1996 as compared to 16.9% for
the comparable period of 1995. This increase was due to the increased emphasis
placed on improving margins during 1995 and 1996 and improved market conditions
in 1996. Management continues to focus on maintaining accurate, up-to-date
costing information so that sales prices can be set to achieve the desired
margins. The Company has also focused on acquiring or developing lots in premier
locations so that it can obtain higher margins. Gross margins were also higher
due to the national accounts program which the Company has expanded
significantly in the past year. Through this program, the Company has been able
to lower costs on many of the components used in building its homes through
volume discounts and other negotiated price reductions from its suppliers. The
Company's ability to maintain these levels of margins is dependent on a number
of factors, some of which are beyond the Company's control. Due to the increased
level of sales during the last quarter of 1995 and the first half of 1996, some
of the Company's divisions are beginning to experience shortages of qualified
subcontractors in certain construction trades. This could negatively impact
gross margins by requiring the Company to pay premiums to expedite construction
work or delaying construction, thus delaying revenue recognition and increasing
carrying costs. In addition, due to the competitive sales environment, the
Company is offering promotions in selected cities which could negatively impact
gross margins in the first half of 1997.
General and Administrative Expenses. General and administrative
expenses as a percentage of total revenue decreased to 2.9% for the three months
ended September 30, 1996 from 3.4% for the comparable period in the prior year.
However, this decrease resulted from an increase in total revenue.
Selling Expenses. Selling expenses as a percentage of total revenue
increased slightly to 6.5% for the three months ended September 30, 1996 from
6.4% for the comparable period of 1995. The increase was primarily due to
increases in sales commissions paid to internal salespeople as a result of the
increase in sales volume.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Total Revenue. Total revenue for the nine months ended September 30,
1996 increased 8.8% compared to the nine months ended September 30, 1995. This
increase was due to a 10.6% increase in housing revenue and was offset by a
47.2% decrease in lot and land sales. The increase in housing revenue was due to
a 10.8% increase in the number of Homes Delivered. The increase in Homes
Delivered was due primarily to increased deliveries in the Indianapolis and
Cincinnati markets, in which the introduction of the lower priced Horizon
product into new areas has had a positive impact. In addition, Columbus and
Raleigh had large increases in Homes Delivered during the nine months ended
September 30, 1996, however, the majority of the divisions experienced increased
deliveries. This was partially due to an overall strong economy and relatively
low interest rates. The decrease in land revenue was primarily attributable to
the Maryland division. The Maryland division had significant lot sales to
outside homebuilders from its Willows land development project in the nine
months ended September 30, 1995 which did not occur in the current year. The
Company is developing an additional phase of this project and anticipates
selling a portion of these lots in the fourth quarter of 1996.
Home Sales and Backlog. The Company recorded a 5.4% increase in the
number of New Contracts in the nine months ended September 30, 1996 as compared
to the same period of 1995. New Contracts in the first nine months of 1996 were
higher in all of the Company's Regions, led by the Midwest Region where the
number of New Contracts increased 6.8%. The Company believes the increase in the
number of New Contracts is attributable to the more favorable interest rate
environment in the current year as
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compared to the first nine months of 1995. The introduction of the Company's
lower priced Horizon product line into several new markets during 1995 also had
a positive impact on the number of New Contracts for the current year. The
number of New Contracts in future periods will be dependent on future economic
conditions, consumer confidence and interest rates available to potential home
buyers.
Gross Margin. The overall gross margin for the home-building segment
was 17.8% for the nine months ended September 30, 1996 as compared to 16.8% for
the comparable period of 1995. The gross margin from housing sales was 18.1% as
compared to 17.1% recorded for the comparable period in the prior year. The
gross margin from lot and land sales was higher in the current year as compared
to the same period in the prior year. The gross margin recorded in the current
year is higher due partially to the sale of a tract of commercial real estate
which produced a gross margin significantly higher than normal lot sales. The
increase in housing gross margins was due to the increased emphasis placed on
improving margins during 1995 and improved market conditions in 1996. Management
continues to focus on maintaining accurate, up-to-date costing information so
that sales prices can be set to achieve the desired margins. The Company has
also focused on acquiring or developing lots in premier locations so that it can
obtain higher margins. Gross margins were also higher due to the national
accounts program which the Company has expanded significantly in the past year.
Through this program, the Company has been able to lower costs on many of the
components used in building its homes through volume discounts and other
negotiated price reductions from its suppliers. The Company's ability to
maintain these levels of margins are dependent on a number of factors, some of
which are beyond the Company's control. Due to the increased level of sales
during the last quarter of 1995 and the first half of 1996, some of the
Company's divisions are beginning to experience shortages of qualified
subcontractors in certain construction trades. This could negatively impact
gross margins by requiring the Company to pay premiums to expedite construction
work, or delaying construction, thus delaying revenue recognition and increasing
carrying costs. In addition, due to the competitive sales environment, the
Company is offering promotions in selected cities which could negatively impact
gross margins in the first half of 1997.
General and Administrative Expenses. General and administrative
expenses as a percentage of total revenue decreased to 2.8% for the nine months
ended September 30, 1996 from 3.0% for the comparable period in the prior year.
However, this decrease resulted from an increase in total revenue.
Selling Expenses. Selling expenses as a percentage of total revenue
increased slightly to 7.0% for the nine months ended September 30, 1996 from
6.8% for the comparable period of 1995. The increase was primarily due to
increases in sales commissions to internal salespeople as a result of the
increase in sales volume.
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FINANCIAL SERVICES SEGMENT - M/I FINANCIAL
The following table sets forth certain information related to the Company's
financial services segment:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(Dollars in thousands) 1996 1995 1996 1995
- ---------------------------------------------------------------------------------
Number of Loans Originated 659 496 1,666 1,260
Revenue:
Loan origination fees $ 852 $ 588 $2,075 $1,486
Sale of servicing and marketing gains 815 817 2,857 2,085
Other 628 521 1,680 1,354
- ---------------------------------------------------------------------------------
Total Revenue 2,295 1,926 6,612 4,925
- ---------------------------------------------------------------------------------
Selling expenses 5 3 12 6
Interest expense 82 156 167 308
General and administrative expenses 1,014 1,012 3,148 2,861
- ---------------------------------------------------------------------------------
Operating Income $1,194 $ 755 $3,285 $1,750
=================================================================================
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Total Revenue. Total revenue for the three months ended September 30,
1996 was $2.3 million, a 19.2% increase over the $1.9 million recorded for the
comparable period of 1995. Loan origination fees increased 44.9% from the third
quarter of 1995 to the comparable period of 1996, primarily due to the 32.9%
increase in the number of loans originated. The increase in the number of loans
originated was due to an increase in the percentage of the Company's Homes
Delivered which were financed through M/I Financial and an increase in the
number of Homes Delivered by the Company. Additionally, a new branch office of
M/I Financial was opened in Raleigh in 1996 which expanded the Company's markets
for loan origination.
Revenue from the sale of servicing and marketing gains was $0.8 million
for the three months ended September 30, 1996 and 1995.
General and Administrative Expenses. General and administrative
expenses remained constant at $1.0 million for the three months ended September
30, 1996 and 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Total Revenue. Total revenue for the nine months ended September 30,
1996 was $6.6 million, a 34.3% increase over the $4.9 million recorded for the
comparable period of 1995. Loan origination fees increased 39.6% from the first
three quarters of 1995 to the comparable period of 1996, primarily due to the
32.2% increase in the number of loans originated. The increase in the number of
loans originated was due to an increase in the percentage of the Company's Homes
Delivered which were financed through M/I Financial and an increase in the
number of Homes Delivered by the Company. Additionally, a new branch office of
M/I Financial was opened in Raleigh in 1996 which expanded the Company's markets
for loan origination.
Revenue from the sale of servicing and marketing gains increased from
$2.1 million to $2.9 million for the nine months ended September 30, 1995 to the
comparable period of 1996. The increase of 37.0% was primarily due to an
increase in servicing fees due to more fixed rate mortgages originated during
the first nine months of 1996 as compared to the comparable period of 1995.
During the first nine months of
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1995 the Company originated primarily adjustable rate mortgages due to a higher
interest rate environment. The Company earns higher premiums on fixed rate
mortgages as opposed to adjustable rate mortgages. The increase was also due to
the falling interest rate environment during the last part of 1995, which
increased marketing gains on loans that closed during the nine months ended
September 30, 1996. Revenue from the sale of servicing and marketing gains was
also higher due to the increased volume of loans closed and sold during the nine
months ended September 30, 1996 as compared to the same period of 1995.
General and Administrative Expenses. General and administrative
expenses for the nine months ended September 30, 1996 were $3.1 million, a 10.0%
increase over the comparable period of 1995. This increase was primarily
attributable to personnel and other variable expenses which increased due to the
significantly higher volume of loans processed during the current year.
OTHER OPERATING RESULTS
Corporate General and Administrative Expenses. Corporate general and
administrative expenses for the three and nine months ended September 30, 1996
totaled $3.4 and $8.7 million, respectively, or 2.2% and 2.2% of total revenue.
This is an increase from the $2.4 and $6.9 million, or 1.8% and 1.9% of total
revenue recorded for the comparable periods of 1995. These increases are
primarily due to higher amounts recorded for certain employee expenses in the
current year. These expenses are generally based on pre-tax net income of the
Company which increased significantly in the three and nine months ended
September 30, 1996.
Interest Expense. Corporate and home-building interest expense for the
three and nine months ended September 30, 1996 decreased to $3.6 and $9.6
million from $3.9 and $10.4 million for the comparable periods of 1995. Interest
expense was lower in the current year due to decreases in the weighted average
interest rate and the average borrowings outstanding. These decreases were
partially offset by a decrease in the net amount of interest capitalized during
the three and nine months ended September 30, 1996 as compared to the same
periods of 1995.
Income Taxes. The effective tax rate for the three and nine months
ended September 30, 1996 decreased to 36.7% and 39.4% from 40.0% and 39.9% for
the comparable periods of 1995. In the third quarter, the Company made a
significant charitable contribution of commercial land, owned since 1986,
decreasing the effective rate. The land had a fair market value of $2.5 million
and was sold for $850,000.
LIQUIDITY AND CAPITAL RESOURCES
Notes Payable Banks. The Company's financing needs depend upon its
sales volume, asset turnover, land acquisition and inventory balances. The
Company continues to incur substantial indebtedness, and expects to incur
indebtedness in the future, to fund the growth of its home-building activities.
Historically, the Company's principal source of funds for construction and
development activities has been from internally generated cash and from bank
borrowings which are primarily unsecured.
At September 30, 1996, the Company had bank borrowings outstanding of
$99.0 million under its loan agreement relating to its home-building operations
which permits aggregate borrowings not to exceed the lesser of: $166.0 million
in revolving credit loans, including $30.0 million of seasonal loans which are
available from March 1st through December 31st during each year of the
agreement, and $25.0 million, including $4.0 million for joint ventures in which
the Company is a partner, in the form of letters of credit; or the Company's
borrowing base which is calculated based on specified percentages of certain
types of assets held by the Company as of each month end. The loan agreement
matures September 30, 2000, at
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which time the unpaid balance of the revolving credit loans outstanding shall be
due and payable. Under the terms of the loan agreement, the banks make an annual
determination as to whether or not to extend the maturity date of the
commitments by one year. At September 30, 1996, borrowings under the loan
agreement were at LIBOR plus a margin of between 1.75% and 2.5% based on the
Company's ratio of EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) to consolidated interest incurred and were primarily unsecured.
The loan agreement contains restrictive covenants which require the Company,
among other things, to maintain minimum net worth and working capital amounts,
to maintain a minimum ratio of EBITDA to consolidated interest incurred and to
maintain certain other financial ratios. The loan agreement also places
limitations on the amount of additional indebtedness that may be incurred by the
Company, the acquisition of undeveloped land, on dividends that may be paid and
on the aggregate cost of certain types of inventory the Company can hold at any
one time.
The Company has reached an agreement in principal with its lenders to
amend the Company's bank loan agreement. Pursuant to such amendment, the
maturity date will be extended to September 30, 2001 and limits on certain
restrictive covenants will be increased. The amount available and other terms of
the agreement will remain substantially the same as those in the agreement that
it replaces.
An additional $14.4 million was outstanding as of September 30, 1996
under the M/I Financial loan agreement, which permits borrowings of $25.0
million to finance mortgage loans initially funded by M/I Financial for
customers of the Company and a limited amount for loans to others. This
agreement limits the borrowings to 95% of the aggregate face amount of the
mortgages and contains restrictive covenants requiring M/I Financial to maintain
minimum net worth and certain minimum financial ratios. At September 30, 1996,
borrowings under this agreement were at the bank's prime rate less 0.25% and
were unsecured.
On July 19, 1996, M/I Financial entered into a new loan agreement with
its lender. The agreement terminates on June 20, 1997 and the unpaid balance of
such borrowings are payable on this date. The remaining terms of the agreement
remain substantially the same as those in the agreement that it replaces.
At September 30, 1996, the Company had the right to borrow up to $187.9
million under its credit facilities, including $30.0 million of seasonal loans,
available from March 1st through December 31st during each year of the loan
agreement, and $21.9 million under the M/I Financial loan agreement (95% of the
aggregate face amount of eligible mortgage loans). At September 30, 1996, the
Company had $74.5 million of unused borrowing availability under its loan
agreements. The Company may increase its borrowings under such agreements or
otherwise.
Subordinated Notes. In addition, there were outstanding 14%
Subordinated Notes in the principal amount of $24.5 million at September 30,
1996. If the 14% Subordinated Notes are not previously redeemed, annual sinking
fund payments of approximately $3.7 million will commence December 1, 1997, with
the remaining balance due at maturity on December 1, 2001. The Notes are
redeemable, in whole or in part, at the option of the Company on or after
December 1, 1996 at 106% of the principal amount until December 1, 1997 and
declining to par by 1 1/2% annually through 2000.
On September 30, 1996, the Company executed a $25 million Subordinated
Note Purchase Agreement with a bank. The proceeds will be used to redeem 100% of
the Company's $24.5 million 14% Subordinated Notes currently outstanding. The
Note Purchase Agreement provides for funding between December 1 and December 31,
1996. In accordance with the indenture governing the 14% Subordinated Notes, the
Company gave notice to the trustees of its intention to make a redemption on
December 3, 1996. The maturity date of the new Subordinated Note is December 15,
2001 and can be extended two additional
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years at the Company's option. The new Subordinated Note is redeemable, in whole
or in part, after one year without penalty or premium. Each partial payment must
be equal to or in excess of $5 million. Interest on the new Subordinated Notes
adjusts every three months and is at LIBOR plus 3.50%. Upon the actual
redemption of the existing 14% Subordinated Notes, the Company expects to incur
a $1.3 million expense, net of tax.
In compliance with the terms of the new Subordinated Note, the Company
purchased a three-year, 9% interest rate cap agreement, effective December 2,
1996 through December 2, 1999. The agreement provides that if the interest rate
in effect for each three month period is greater than the cap rate, the bank
will pay to the Company the excess interest computed.
Mortgage Notes Payable. At September 30, 1996, mortgage notes payable
outstanding were $104,000, secured by lots and land with a recorded book value
of $314,000. The Company also had approximately $19.5 million of completion
bonds and letters of credit outstanding at September 30, 1996.
Cash. Net income from housing and lot and land sales are the Company's
primary sources of net cash provided by operating activities. Net cash used by
operating activities in the nine months ended September 30, 1996 was $7.8
million compared to $12.4 million for the comparable period of the prior year.
The decrease in net cash used by operating activities was primarily due to a
large increase in accounts payable and accrued liabilities.
Land and Land Development. Over the past several years, the Company's
land development activities and land holdings have increased significantly and
the Company expects this trend to continue into the foreseeable future. These
increases are primarily due to the shortage of qualified land developers in
certain of the Company's markets as well as the competitive advantages that can
be achieved by developing land internally rather than purchasing lots from
developers or other competing homebuilders. This is particularly true for the
Company's Horizon product line where, due to the price points the Company
targets, lots are generally not available from third party developers at
economically feasible prices. The Company continues to purchase lots from
outside developers under option contracts, when possible, to limit its risk;
however, the Company will continue to evaluate all of its alternatives to
satisfy the Company's demand for lots in the most cost effective manner.
The $11.2 million increase in notes payable to banks from December 31,
1995 to September 30, 1996 reflects increased borrowings primarily attributable
to a significant seasonal increase in houses under construction offset by a
decrease in single family lots, land and land development costs. However, single
family lots, land and land development costs increased $13.2 million in the
third quarter, and it is expected that borrowing needs will increase as the
Company continues to increase its investment in land under development and
developed lots and as its investment in houses under construction increases due
to the higher backlog.
In 1994, the Company entered into a land purchase contract which
required a greater investment than the Company normally commits and could
significantly impact the Company's liquidity. On January 31, 1994, the Company
closed on the first phase of a six phase land purchase contract in the Maryland
division. This first phase was purchased for $6.6 million and was developed into
106 single family and townhouse lots. Based on the demand for lots in this area
and the strong sales in the first phase of this development, the Company
purchased the second phase of this development through a series of three
closings in May, June and July of 1995. The total purchase price for the second
phase was approximately $6.4 million and this section was developed into 122
single family and townhouse lots. On July 1, 1996, the Company purchased the
third phase for $5.6 million which will provide an additional 95 single family
and
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townhouse lots. The Company sold a portion of the developed lots from the first
and second phases to outside homebuilders and will be entering into similar
contracts to sell a portion of the lots in the third phase to outside
homebuilders. The Company has an option to purchase each of the remaining three
phases. If the Company purchases all six phases, the total purchase price will
be approximately $38.9 million and the land will be developed into approximately
710 lots.
As its capital requirements increase, the Company may increase its
borrowings under its bank line of credit. In addition, the Company continually
explores and evaluates alternative sources from which to obtain additional
capital. The Company has initiated discussions with its lenders to eliminate the
seasonal aspect of the loan agreement and increase the amount of the lines of
credit by $20.0 million; however, there is no assurance that such terms can be
obtained.
The Company executed an agreement with certain unrelated parties for
the development and occupancy of an approximately 85,000 square foot building to
be used as the Company's headquarters. The four current office locations in
Columbus, Ohio will be consolidated into one building in an effort to improve
operating efficiencies. The building will be built, owned and operated by a
limited liability company in which the Company has invested $1.1 million and
holds a 1/3 interest (the "LLC"). The building will be financed primarily
through borrowings of the LLC. The LLC has obtained financing for the
construction of the building and also has obtained commitments for the permanent
financing. The construction financing has been jointly and severally guaranteed
by the members of the LLC. The Company has entered into a long-term operating
lease for the premises with the LLC. Construction of the building has commenced
and is expected to be completed late in the fourth quarter of 1996. The Company
believes that any commitments arising from this transaction would not
significantly affect its liquidity or capital resources.
INTEREST RATES AND INFLATION
The Company's business is significantly affected by general economic
conditions of the United States and, particularly, by the impact of interest
rates. Higher interest rates may decrease the potential market by making it more
difficult for home buyers to qualify for mortgages or to obtain mortgages at
interest rates acceptable to them. Increases in interest rates also would
increase the Company's interest expense as the rate on the revolving loans is
based upon floating rates of interest. The weighted average interest rate on the
Company's outstanding debt, including the 14% Subordinated Notes, for the nine
months ended September 30, 1996 was 9.7% as compared to 10.2% for 1995.
In conjunction with its mortgage banking operations, the Company uses
hedging methods to reduce its exposure to interest rate fluctuations between the
commitment date of the loan and the time the loan closes.
In recent years, the Company generally has been able to raise prices by
amounts at least equal to its cost increases and, accordingly, has not
experienced any detrimental effect from inflation. Where the Company develops
lots for its own use, inflation may increase the Company's profits because land
costs are fixed well in advance of sales efforts. The Company is generally able
to maintain costs with subcontractors from the date a home sales contract is
accepted; however, in certain situations, unanticipated costs may occur between
the time a sales contract is executed and the time a home is constructed,
resulting in lower gross profit margins.
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company wishes to take advantage of the safe harbor provisions
included in the Private Securities Litigation Reform Act of 1995. Accordingly,
in addition to historical information, this Management's Discussion and Analysis
of Financial Condition and Results of Operations contains certain
forward-looking statements. These statements involve a number of risks and
uncertainties. Any forward-looking statements made by the Company herein and in
future reports and statements are not guarantees of future performance, and
actual results may differ materially from those in such forward-looking
statements as a result of various factors including, but not limited to, those
referred to below.
General Real Estate, Economic and Other Conditions. The home-building
industry is significantly affected by changes in national and local economic and
other conditions, including employment levels, changing demographic
considerations, availability of financing, interest rates, consumer confidence
and housing demand. In addition, homebuilders are subject to various risks, many
of them outside the control of the homebuilder, including competitive
overbuilding, availability and cost of building lots, availability of materials
and labor, adverse weather conditions which can cause delays in construction
schedules, cost overruns, changes in government regulations, and increases in
real estate taxes and other local government fees. The Company has benefited
during the current fiscal year from a relatively strong national economy and
strong local economies in its markets. The Company has benefited as well from
steadily low interest rates. If such trends do not continue, the Company's
business will be adversely affected.
Present and Future Subdivisions. The Company intends for its
subdivisions to be built out over time. Therefore, the medium- and long-term
financial success of the Company will be dependent on the Company's ability to
develop and market its subdivisions successfully. Acquiring land and committing
the financial and managerial resources to develop a subdivision involves
significant risks. Before a subdivision generates any revenue, material
expenditures are required for items such as acquiring land; obtaining
development approvals; and constructing project infrastructure (such as roads
and utilities), model homes and sales facilities. It generally takes several
years for subdivisions to achieve cumulative positive cash flow.
Long-term Nature of Projects; Period-to-Period Fluctuations. The
Company's subdivisions are long-term projects. Sales activity at the Company's
subdivisions varies from period to period, and the ultimate success of any
subdivision cannot necessarily be judged by results in any particular period or
periods. A subdivision may generate significantly higher sales levels at
inception (whether because of local pent-up demand in the area or other reasons)
than it does during later periods over the life of the subdivision. Revenues and
earnings of the Company will also be affected by period-to-period fluctuations
in the mix of product and home closings among the Company's subdivisions.
The Company's Markets. The Company's operations are concentrated in the
Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Tampa, Orlando and Palm
Beach County, Florida; Charlotte and Raleigh, North Carolina; and Virginia and
Maryland metropolitan areas. Although these are stable, established markets in
which the Company has operated successfully, there can be no assurance that the
stability of these markets or the Company's favorable results there will
continue. Adverse general economic conditions in these markets could have a
material adverse impact on the operations of the Company. For the nine months
ended September 30, 1996, approximately 38% of the Company's housing revenue and
a significant portion of the Company's operating income was derived from
operations in its Columbus, Ohio market. The Company's performance could be
significantly affected by changes in this market. The Company may also expand
into new geographic markets which could reduce the Company's dependence
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upon the health of its existing markets. However, any new markets may prove to
be less stable and may involve delays, problems and expenses not typically found
by the Company in the existing markets with which it is familiar. Such delays,
problems, and expenses would be likely to occur in any new market and may
include, without limitation, the development of relationships with local
contractors and suppliers, land acquisition and development, construction of new
model homes, acquiring local office facilities and hiring additional personnel.
Competition. The home-building industry is highly competitive. The
Company competes in each of its local market areas with numerous national,
regional and local homebuilders, some of which have greater financial,
marketing, land acquisition, and sales resources than the Company. Builders of
new homes compete not only for home buyers, but also for desirable properties,
financing, raw materials and skilled subcontractors. The Company also competes
with the resale market for existing homes which provides certain attraction for
home buyers over building a new home. The Company attempts to meet this
competition from the home resale market by offering benefits which the resale
market for existing homes cannot provide: new home warranties and the
flexibility to select precise location, style and elevation, and interior and
exterior finishes.
Governmental Regulation and Environmental Considerations. The
home-building industry is subject to increasing local, state and Federal
statutes, ordinances, rules and regulations concerning zoning, resource
protection (preservation of woodlands and hillside areas), building design, and
construction and similar matters, including local regulations which impose
restrictive zoning and density requirements in order to limit the number of
homes that can eventually be built within the boundaries of a particular
location. Such regulation affects construction activities, including
construction materials which must be used in certain aspects of building design,
as well as sales activities and other dealings with homebuyers. The Company must
also obtain licenses, permits and approvals from various governmental agencies
for its development activities, the granting of which are beyond the Company's
control. Furthermore, increasingly stringent requirements may be imposed on
homebuilders and developers in the future. Although the Company cannot predict
the impact on the Company of compliance with any such requirements, such
requirements could result in time consuming and expensive compliance programs.
The Company is also subject to a variety of local, state and Federal
statutes, ordinances, rules and regulations concerning the protection of health
and the environment. The particular environmental laws which apply to any given
project vary greatly according to the project site and the present and former
uses of the property. These environmental laws may result in delays, cause the
Company to incur substantial compliance costs, including substantial
expenditures for pollution and water quality control, and prohibit or severely
restrict development in certain environmentally sensitive regions. Although
there can be no assurance that it will be successful in all cases, the Company
has a general practice of requiring an environmental audit and resolution of
environmental issues prior to purchasing land in an effort to avoid major
environmental issues in the Company's developments.
In addition, the Company has been, and in the future may be, subject to
periodic delays or may be precluded from developing certain projects due to
building moratoriums. These moratoriums generally relate to insufficient water
supplies, sewage facilities, delays in utility hook-ups, or inadequate road
capacity within the specific market area or subdivision. These moratoriums can
occur prior to, or subsequent to, commencement of operations by the Company
without notice to, or recourse by, the Company. Although the Company's practice
of resolving such issues before committing to purchase property tends to reduce
the Company's exposure to financial risk as a result of such moratoriums, the
Company must utilize its resources in dealing with them.
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Construction. The Company has from time to time experienced shortages
of materials or qualified subcontractors and volatile increases in the cost of
certain materials (particularly increases in the price of lumber and framing,
which are significant components of home construction costs), resulting in
longer than normal construction periods and increased costs not reflected in the
prices of homes. Generally, the Company's home sale contracts do not contain
provisions for price increases if the Company's costs of construction increase.
Additional information on factors which could affect the
Company's financial results may be included in the Company's most recently filed
Annual Report or Form 10-K, and subsequent reports, filed with the Securities
and Exchange Commission.
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PART II - OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
The exhibits required to be filed herewith are set forth below. No reports
were filed on Form 8-K for the quarter for which this report is filed.
Exhibit
Number Description
- ------ -----------
10.1 Note Purchase Agreement between the Company and The First National
Bank of Boston, dated September 30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
M/I Schottenstein Homes, Inc.
-----------------------------
(Registrant)
Date: November __, 1996 by: /s/ Robert H. Schottenstein
---------------------------
Robert H. Schottenstein
President
Date: November __, 1996 by: /s/ Kerrii B. Anderson
---------------------------
Kerrii B. Anderson
Senior Vice President,
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE #
10.1 Note Purchase Agreement between the Company and The First National
Bank of Boston, dated September 30, 1996.
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