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 June 30, 1998
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 1-12434
M/I SCHOTTENSTEIN HOMES, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-1210837
---- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
3 Easton Oval, Suite 500, Columbus, Ohio 43219
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(614) 418-8000
--------------
(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: 8,810,961 shares
outstanding as of August 11, 1998
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M/I SCHOTTENSTEIN HOMES, INC.
FORM 10-Q
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1998 and
December 31, 1997 3
Consolidated Statements of Income
for the Three Months and Six Months Ended
June 30, 1998 and 1997 4
Consolidated Statement of Stockholders' Equity
for the Six Months Ended
June 30, 1998 5
Consolidated Statements of Cash Flows
for the Six Months Ended
June 30, 1998 and 1997 6
Notes to Interim Unaudited Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
Exhibit Index 22
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CONSOLIDATED BALANCE SHEETS
M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARIES
- ----------------------------------------------------------------------------------------------------------------
JUNE 30, December 31,
(Dollars in thousands, except par values) 1998 1997
- ----------------------------------------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
Cash $ 11,811 $ 10,836
Cash held in escrow 358 2,537
Receivables 32,981 43,819
Inventories:
Single-family lots, land and land development costs 161,629 151,905
Houses under construction 157,378 100,916
Model homes and furnishings - at cost (less accumulated depreciation:
June 30, 1998 - $44;
December 31, 1997 - $47) 18,013 17,788
Land purchase deposits 1,084 645
Office furnishings, transportation and construction equipment - at cost (less
accumulated depreciation:
June 30, 1998 - $4,366;
December 31, 1997 - $4,328) 8,325 8,647
Investment in unconsolidated joint ventures and limited liability companies 16,876 15,236
Other assets 11,761 13,691
- --------------------------------------------------------------------------------------------------------------
TOTAL $ 420,216 $ 366,020
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable banks - homebuilding operations $ 105,000 $ 78,000
Note payable bank - financial operations 17,160 30,000
Mortgage notes payable 6,292 5,950
Subordinated notes 50,000 50,000
Accounts payable 52,256 42,793
Accrued compensation 6,919 13,042
Income taxes payable 2,362 4,072
Accrued interest, warranty and other 16,625 19,103
Customer deposits 12,627 7,554
- --------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 269,241 250,514
- --------------------------------------------------------------------------------------------------------------
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 - 8,810,961 shares at June 30, 1998;
issued - 8,800,000 shares at December 31, 1997 88 88
Additional paid-in capital 61,046 50,573
Retained earnings 89,841 79,095
Treasury stock - at cost - 1,202,439 shares are held in treasury at
December 31, 1997 - (14,250)
- --------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 150,975 115,506
- --------------------------------------------------------------------------------------------------------------
TOTAL $ 420,216 $ 366,020
==============================================================================================================
See Notes to Interim Unaudited Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF INCOME
M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARIES
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(Dollars in thousands, except per share information) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------
Revenue $175,606 $146,014 $292,836 $251,843
- ---------------------------------------------------------------------------------------------------------------
Costs and expenses:
Land and housing 140,307 117,459 231,578 201,532
General and administrative 9,494 8,388 16,481 14,798
Selling 11,576 9,620 20,397 17,537
Interest 3,011 2,699 5,659 5,061
- ---------------------------------------------------------------------------------------------------------------
Total costs and expenses 164,388 138,166 274,115 238,928
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes 11,218 7,848 18,721 12,915
- ---------------------------------------------------------------------------------------------------------------
Income taxes:
Current 4,570 3,213 6,069 4,364
Deferred 23 - 1,526 864
- ---------------------------------------------------------------------------------------------------------------
Total income taxes 4,593 3,213 7,595 5,228
- ---------------------------------------------------------------------------------------------------------------
Net income $ 6,625 $ 4,635 $ 11,126 $ 7,687
===============================================================================================================
Per share data:
Basic $ 0.80 $ 0.56 $ 1.40 $ 0.90
Diluted $ 0.79 $ 0.56 $ 1.38 $ 0.90
===============================================================================================================
Weighted average shares outstanding:
Basic 8,323,049 8,300,000 7,965,576 8,507,182
Diluted 8,419,804 8,323,321 8,061,186 8,530,252
===============================================================================================================
See Notes to Interim Unaudited Consolidated Financial Statements.
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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARIES
(Unaudited)
=============================================================================================================
SIX MONTHS ENDED JUNE 30, 1998
=============================================================================================================
Common Stock
------------ Additional
Shares Paid-In Retained Treasury
(Dollars in thousands) Outstanding Amount Capital Earnings Stock
- -------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 7,597,561 $88 $ 50,573 $79,095 ($14,250)
Net income - - - 11,126 -
Stock options exercised 13,400 - 164 - -
Dividends to stockholders - - - (380) -
Sale of treasury shares, net of
expenses 1,200,000 - 10,338 - 14,221
Retirement of treasury shares - - (29) - 29
- -------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1998 8,810,961 $88 $ 61,046 $89,841 -
=============================================================================================================
See Notes to Interim Unaudited Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARIES
(Unaudited)
===============================================================================================================
SIX MONTHS ENDED JUNE 30,
(Dollars in thousands) 1998 1997
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,126 $ 7,687
Adjustments to reconcile net income to net cash
used by operating activities:
Loss from property disposals 131 121
Depreciation and amortization 804 774
Deferred income tax 1,503 864
Decrease (increase) in cash held in escrow 2,179 (803)
Decrease in receivables 10,838 8,750
Increase in inventories (61,335) (38,242)
Increase (decrease) in other assets 346 (132)
Increase in accounts payable 9,463 10,121
Decrease in income taxes payable (1,710) (340)
Decrease in accrued liabilities (8,601) (8,626)
Equity in undistributed income of unconsolidated joint
ventures, limited liability companies and limited partnerships (255) (151)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (35,511) (19,977)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to model and office furnishings,
transportation and construction equipment (515) (7,329)
Investment in unconsolidated joint ventures and limited liability companies (7,556) (4,680)
Distributions from unconsolidated joint ventures, limited liability companies
and limited partnerships 639 519
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (7,432) (11,490)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable banks:
Proceeds from borrowings 168,830 131,490
Principal repayments (154,670) (93,210)
Mortgage notes payable:
Proceeds from borrowings 342 -
Principal repayments - (29)
Net increase in customer deposits 5,073 2,026
Dividends paid (380) -
Proceeds from exercise of stock options 164 -
Proceeds from sale of treasury stock-net of expenses 24,559 -
Payments to acquire treasury stock - (5,250)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 43,918 35,027
- ------------------------------------------------------------------------------------------------------------------
Net increase in cash 975 3,560
Cash balance at beginning of year 10,836 6,368
- ------------------------------------------------------------------------------------------------------------------
Cash balance at end of period $ 11,811 $ 9,928
==================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 4,821 $ 4,555
Income taxes $ 7,761 $ 4,810
NON-CASH TRANSACTIONS DURING THE PERIOD:
Land acquired with mortgage notes payable $ 342 $ -
Single-family lots distributed from unconsolidated joint ventures and
limited liability companies $ 5,856 $ 4,482
==================================================================================================================
See Notes to Interim Unaudited Consolidated Financial Statements.
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M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARIES
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 six months ended June 30, 1998 and 1997 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, 1997.
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. AMENDED LOAN AGREEMENTS
On May 27, 1998, the Company entered into a new bank loan agreement.
Borrowing capacity was increased from $186.0 million to $204.5 million and
certain covenants were modified. The maturity date of the loan was extended
from September 30, 2001 to September 30, 2002.
On June 22, 1998, the Company and M/I Financial entered into a new bank loan
agreement with the existing lender, pursuant to which the Company and M/I
Financial have the ability to borrow at (a) the prime rate less 0.50%, or (b)
LIBOR plus 1.60% or (c) a combination of (a) and (b). The new agreement
terminates on June 22, 2001, at which time the unpaid balance is due.
NOTE 3. 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 six months
ended June 30, 1998 and 1997 is as follows:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
(Dollars in thousands) 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------
Interest capitalized, beginning of period $ 8,307 $ 7,125 $ 7,620 $ 6,862
Interest incurred 3,599 3,172 6,934 5,797
Interest expensed (3,011) (2,699) (5,659) (5,061)
- -------------------------------------------------------------------------------------------------------------
Interest capitalized, end of period $ 8,895 $ 7,598 $ 8,895 $ 7,598
=============================================================================================================
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NOTE 4. CONTINGENCIES
At June 30, 1998, the Company had options and contingent purchase contracts
to acquire land and developed lots with an aggregate purchase price of
approximately $165.0 million.
NOTE 5. PER SHARE DATA
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per
Share." SFAS 128 replaced the presentation of primary and fully diluted EPS
with a presentation of basic and diluted EPS. All EPS amounts for all periods
have been presented to conform to SFAS 128 requirements.
Basic EPS is computed by dividing net income available to common shareholders
by the weighted average number of common shares outstanding during each
period. Diluted computations include common share equivalents, when dilutive.
NOTE 6. ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133 (SFAS 133), "Disclosure
about Segments of an Enterprise and Related Information". SFAS 133 is
required to be adopted for the Company's 2000 annual financial statements.
The Company has not yet determined what, if any, impact the adoption of this
standard will have on its financial statements.
NOTE 7. SALE OF TREASURY SHARES
On April 27, 1998, the Company filed a registration statement with the
Securities and Exchange Commission for up to 1,200,000 shares of common stock
of the Company. All of such shares were sold on May 5, 1998. The Company
received approximately $24.6 million, which was used to repay a portion of
existing indebtedness.
NOTE 8. DIVIDENDS
On April 22, 1998, the Company paid to the stockholders of record on April 1,
1998, the first cash dividend in the Company's history of $0.05 per share
(aggregate dividends paid of $380,000). On April 28, 1998, the Board of
Directors approved a $0.05 per share cash dividend payable to stockholders of
record of its common stock on July 1, 1998, which was paid on July 22, 1998
(aggregate dividends paid of $440,000).
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M/I SCHOTTENSTEIN HOMES, INC. AND SUBSIDIARIES
FORM 10-Q - PART I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
CONSOLIDATED
Total Revenue. Total revenue for the three months ended June 30, 1998
increased $29.6 million and for the six months ended June 30, 1998 increased
$41.0 million over the comparable periods of 1997. For the three-month period,
housing revenue, other revenue and land revenue increased $27.4 million, $0.5
million and $1.7 million, respectively. Increases for the six-month period in
housing revenue of $40.9 million and other revenue of $1.1 million were
partially offset by a $1.0 million decrease in land revenue. The increase in
housing revenue for both the three- and six-month periods was attributable to an
increase in the number of Homes Delivered of 100 and 152, respectively, and an
increase in the average sales price of Homes Delivered of 5.8% and 5.1%,
respectively. For both periods, the increase in other revenue is primarily
attributable to financial services where both the number of loans originated and
the gains recognized from the sale of loans increased in the current year. The
increase in land revenue for the three months ended June 30, 1998 was primarily
due to an increase in the number of lots sold to third parties in the
Washington, D.C. and Charlotte markets over the comparable period of 1997. The
decrease in land revenue for the six months ended June 30, 1998 was primarily
due to a decrease in the number of lots sold to third parties in the Washington,
D.C. market from the comparable period of 1997.
Income Before Income Taxes. Income before income taxes for the three
months ended June 30, 1998 increased 42.9% and for the six months ended June 30,
1998 increased 45.0% over the comparable periods of 1997. The increase for the
three months ended June 30, 1998 related primarily to housing, where income
before income taxes increased from $6.4 million to $9.1 million and financial
services, where income before income taxes increased from $1.4 million to $2.1
million. The increase for the six months ended June 30, 1998 also related
primarily to housing, where income before income taxes increased from $9.8
million to $14.4 million and financial services, where income before income
taxes increased from $3.1 million to $4.3 million. The increase in housing for
both the three- and six-month periods was due to the increase in the number of
Homes Delivered and an increase in the average sales price of Homes Delivered.
The increase in housing was also due to an increase in gross margin. Housing
gross margin increased from 18.1% for both the three- and six-months ended June
30, 1997 to 18.9% and 19.4% for the three- and six-months ended June 30, 1998.
The increase in financial services was primarily due to an increase in the
number of loans originated and the significant increase in income from the sale
of servicing and marketing gains due to increased loan volume and the favorable
interest rate environment during the last half of 1997 and the first half of
1998.
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HOMEBUILDING SEGMENT
The following table sets forth certain information related to the Company's
homebuilding segment:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(Dollars in thousands) 1998 1997 1998 1997
====================================================================================================================
Revenue:
Housing sales $168,333 $140,908 $280,456 $239,588
Land and lot sales 4,451 2,793 6,355 7,395
Other income 87 408 563 704
- --------------------------------------------------------------------------------------------------------------------
Total Revenue $172,871 $144,109 $287,374 $247,687
====================================================================================================================
Revenue:
Housing sales 97.4 % 97.8 % 97.6 % 96.7 %
Land and lot sales 2.5 1.9 2.2 3.0
Other income 0.1 0.3 0.2 0.3
- --------------------------------------------------------------------------------------------------------------------
Total Revenue 100.0 100.0 100.0 100.0
Land and housing costs 81.7 81.9 81.1 81.8
- --------------------------------------------------------------------------------------------------------------------
Gross Margin 18.3 18.1 18.9 18.2
General and administrative expenses 2.6 2.9 3.0 3.1
Selling expenses 6.7 6.7 7.1 7.1
- --------------------------------------------------------------------------------------------------------------------
Operating Income 9.0 8.5 8.8 8.0
====================================================================================================================
MIDWEST REGION
Unit Data:
New contracts, net 626 442 1,347 1,029
Homes delivered 535 464 911 806
Backlog at end of period 1,493 1,131 1,493 1,131
Average sales price of homes in backlog $180 $177 $180 $177
Aggregate sales value of homes in backlog $268,000 $200,000 $268,000 $200,000
Number of active subdivisions 75 75 75 75
====================================================================================================================
FLORIDA REGION
Unit Data:
New contracts, net 195 193 388 365
Homes delivered 182 165 308 277
Backlog at end of period 335 309 335 309
Average sales price of homes in backlog $187 $181 $187 $181
Aggregate sales value of homes in backlog $63,000 $56,000 $63,000 $56,000
Number of active subdivisions 35 35 35 35
====================================================================================================================
NORTH CAROLINA, VIRGINIA, MARYLAND AND ARIZONA REGION
Unit Data:
New contracts, net 218 133 449 281
Homes delivered 159 147 266 250
Backlog at end of period 415 239 415 239
Average sales price of homes in backlog $326 $263 $326 $263
Aggregate sales value of homes in backlog $135,000 $63,000 $135,000 $63,000
Number of active subdivisions 35 35 35 35
====================================================================================================================
TOTAL
Unit Data:
New contracts, net 1,039 768 2,184 1,675
Homes delivered 876 776 1,485 1,333
Backlog at end of period 2,243 1,679 2,243 1,679
Average sales price of homes in backlog $208 $190 $208 $190
Aggregate sales value of homes in backlog $466,000 $319,000 $466,000 $319,000
Number of active subdivisions 145 145 145 145
====================================================================================================================
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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 a limited number of markets, 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 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 these 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 six months of 1998, the
Company delivered 1,485 homes, most of which were homes under contract in
Backlog at December 31, 1997. Of the 1,544 contracts in Backlog at December 31,
1997, 11.7% have been canceled as of June 30, 1998. For homes in Backlog at
December 31, 1996, 12.3% had been canceled as of June 30, 1997. For the homes in
Backlog at December 31, 1996, the final cancellation percentage was 14.1%.
Unsold speculative homes, which are in various stages of construction, totaled
148 and 131 at June 30, 1998 and 1997, respectively.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Total Revenue. Total revenue for the homebuilding segment for the three
months ended June 30, 1998 increased 20.0% over the three months ended June 30,
1997. The increase was due to a 19.5% increase in housing revenue and a 59.4%
increase in land revenue. The increase in housing revenue was partially due to a
12.9% increase in the number of Homes Delivered. Homes Delivered were higher in
all of the Company's regions, led by the Midwest Region where the number of
Homes Delivered increased 15.3%. The increase in housing revenue was also due to
a 5.8% increase in the average sales price of Homes Delivered. The average sales
price of Homes Delivered increased in all of the Company's markets, with the
exception of Charlotte, due to product mix and higher land and regulatory costs
which have been passed on to the home buyer. The increase in land revenue from
$2.8 million to $4.5 million was primarily attributable to the Washington, D.C.
and Charlotte markets. The Virginia and Charlotte divisions had significant lot
sales to outside homebuilders in the three months ended June 30, 1998 which did
not occur in the prior year.
Home Sales and Backlog. The Company recorded a 35.3% increase in the
number of New Contracts in the three months ended June 30, 1998 as compared to
the corresponding period of 1997. New Contracts recorded in the second quarter
of 1998 were higher in nearly all of the Company's markets. The Company believes
the increase in New Contracts was partially due to favorable market conditions
and low interest rates. The number of New Contracts recorded in future periods
will be dependent on numerous factors, including future economic conditions,
timing of land development, consumer confidence and interest rates available to
potential home buyers.
At June 30, 1998, the total sales value of the Company's Backlog of
2,243 homes was approximately $466.0 million, representing a 46.1% increase in
sales value and a 33.6% increase in units over the levels reported at June 30,
1997. The increase in units at June 30, 1998 is a result of record high new
contracts recorded in the first half of 1998. The average sales price of homes
in Backlog increased 9.5% from June 30, 1997 to June 30, 1998. This increase was
primarily due to increases in the Maryland and Phoenix markets where the Company
is building in more upscale and certain niche subdivisions.
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Gross Margin. The overall gross margin for the homebuilding segment was
18.3% for the three months ended June 30, 1998 compared to 18.1% for the three
months ended June 30, 1997. The gross margin from housing sales was 18.9% in the
second quarter of 1998 as compared to 18.1% in the second quarter of 1997. The
gross margin from lot and land sales decreased from 27.4% to 13.8%. Gross
margins in the current year were higher than the prior year in nearly all of the
Company's markets. 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. 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, including possible shortages of
qualified subcontractors.
General and Administrative Expenses. General and administrative
expenses increased from $4.2 million for the three months ended June 30, 1997 to
$4.5 million for the three months ended June 30, 1998. However, general and
administrative expenses as a percentage of total revenue decreased from 2.9% for
the three months ended June 30, 1997 to 2.6% for the three months ended June 30,
1998. The increase in expense was primarily attributable to the increase in
incentive compensation recorded in the second quarter of 1998 compared to the
second quarter of 1997 due to the significant increase in net income.
Additionally, real estate taxes increased in the current year as the Company's
investment in land development activities increased over prior year balances.
Selling Expenses. Selling expenses increased from $9.6 million for the
three months ended June 30, 1997 to $11.6 million for the three months ended
June 30, 1998. Selling expenses as a percentage of total revenue remained
constant at 6.7% for the three months ended June 30, 1997 and 1998. The increase
in expense was primarily due to an increase in advertising and model expenses.
There were also increases in sales commissions paid to outside Realtors and
internal salespeople as a result of the increase in sales volume.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Total Revenue. Total revenue for the six months ended June 30, 1998
increased 16.0% from the comparable period of 1997. This increase was due to a
17.l% increase in housing revenue and was offset by a 14.1% decrease in land
revenue. The increase in housing revenue was partially due to an 11.4% increase
in the number of Homes Delivered. Homes Delivered were higher in all of the
Company's regions, led by the Midwest Region where the number of Homes Delivered
increased 13.0%. The increase in housing revenue was also due to a 5.1% increase
in the average sales price of Homes Delivered. The average sales price of Homes
Delivered increased in all of the Company's markets with the exception of
Indianapolis and Virginia, due to product mix and higher land and regulatory
costs which have been passed on to the home buyer. The decrease in land revenue
from $7.4 million to $6.4 million was primarily attributable to the Washington,
D.C. market. The Maryland division had significant lot sales to outside
homebuilders in the six months ended June 30, 1997 which did not occur in the
current year.
Home Sales and Backlog. The Company recorded a 30.4% increase in the
number of New Contracts recorded in the first half of 1998 compared to the
corresponding period of 1997. New Contracts recorded in the current year were
higher than the prior year in nearly all of the Company's markets. The Company
believes the increase in New Contracts was partially due to favorable market
conditions and low interest rates. The number of New Contracts recorded in
future periods will be dependent on numerous factors, including future economic
conditions, timing of land development, consumer confidence and interest rates
available to potential home buyers.
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Gross Margin. The overall gross margin for the homebuilding segment was
18.9% for the six months ended June 30, 1998 compared to 18.2% for the
comparable period of 1997. The gross margin from housing sales was 19.4% in the
first half of 1998 compared to 18.1% in the first half of 1997. The gross margin
from lot and land sales decreased from 27.7% to 14.5%. 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. 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, including possible shortages of qualified subcontractors. The decrease
in gross margin from lot and land sales was primarily due to the Washington,
D.C. market. The Maryland division had significant lot sales to outside
homebuilders in the first half of 1997 at very high margins which did not occur
in the current year.
General and Administrative Expenses. General and administrative
expenses increased from $7.6 million for the six months ended June 30, 1997 to
$8.6 million for the six months ended June 30, 1998. However, general and
administrative expenses as a percentage of total revenue decreased from 3.1% for
the six months ended June 30, 1997 to 3.0% for the comparable period in the
current year. The increase in expense was primarily attributable to the increase
in real estate tax expense, incentive compensation and rent expense. Real estate
taxes increased in the current year as the Company's investment in land
development activities increased over prior year balances. More incentive
compensation was recorded in the first half of 1998 compared to the first half
of 1997 due to the significant increase in net income. The increase in rent was
primarily due to increased costs for office space compared to 1997 in the
Columbus market.
Selling Expenses. Selling expenses increased from $17.5 million for the
six months ended June 30, 1997 to $20.4 million for the six months ended June
30, 1998. Selling expenses as a percentage of total revenue remained constant at
7.1% for the six months ended June 30, 1998 compared to the same period of the
prior year. The increase in expense was primarily due to an increase in
advertising and model expenses. There were also increases in sales commissions
paid to outside Realtors and internal salespeople as a result of the increase in
sales volume.
FINANCIAL SERVICES SEGMENT - M/I FINANCIAL
The following table sets forth certain information related to the Company's
financial services segment:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
(Dollars in thousands) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
Number of loans originated 712 567 1,245 990
Revenue:
Loan origination fees $ 999 $ 750 $ 1,821 $1,312
Sale of servicing and marketing gains 1,439 1,176 3,247 2,721
Other 1,182 630 2,020 1,258
- ----------------------------------------------------------------------------------------------------------
Total Revenue 3,620 2,556 7,088 5,291
- ----------------------------------------------------------------------------------------------------------
General and administrative expenses 1,514 1,123 2,765 2,159
- ----------------------------------------------------------------------------------------------------------
Operating Income $2,106 $ 1,433 $4,323 $ 3,132
==========================================================================================================
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Total Revenue. Total revenue for the three months ended June 30, 1998
was $3.6 million, a 41.6% increase over the $2.6 million recorded for the
comparable period of 1997. Loan origination fees increased
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33.2% from $0.8 million for the three months ended June 30, 1997 to $1.0 million
for the three months ended June 30, 1998. The increase was due to a 25.6%
increase in the number of loans originated over the comparable period of the
prior year, along with an increase in the average loan amount.
Revenue from the sale of servicing and marketing gains increased 22.4%
from $1.2 million for the three months ended June 30, 1997 to $1.4 million for
the three months ended June 30, 1998. The increase was primarily due to an
increase of 25.6% in the number of loans originated during the second quarter of
1998 compared to the comparable period of 1997.
Revenue from other sources increased 87.6% from $0.6 million for the
three months ended June 30, 1997 to $1.2 million for the three months ended June
30, 1998. The increase was primarily due to earnings from the Company's interest
in a limited liability company that provides title services that expanded into
Florida late in 1997. Revenue from other sources also increased because of an
increase in loan application fees received during the period over the number
received during the prior year. There were 247 more applications taken in the
second quarter of 1998 than in the second quarter of 1997.
General and Administrative Expenses. General and administrative
expenses for the three months ended June 30, 1998 were $1.5 million, a 34.8%
increase from the comparable period of the prior year. The increase was
primarily due to an increase in loan application expenses. There were 247 more
applications taken in the second quarter of 1998 than in the second quarter of
1997. General and administrative expenses also increased because of expenses
related to the expansion of title services into Florida late in 1997.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Total Revenue. Total revenue for the six months ended June 30, 1998 was
$7.1 million, a 34.0% increase over the $5.3 million recorded for the comparable
period of 1997. Loan origination fees increased 38.8% from $1.3 million for the
six months ended June 30, 1997 to $1.8 million for the six months ended June 30,
1998. This increase was due to a 25.8% increase in the number of loans
originated over the comparable period of the prior year, along with an increase
in the average loan amount.
Revenue from the sale of servicing and marketing gains increased 19.3%
from $2.7 million for the six months ended June 30, 1997 to $3.2 million for the
six months ended June 30, 1998. This was primarily due to a 25.8% increase in
the number of loans originated during the first half of 1998 compared to the
comparable period of 1997. The increase in servicing fees was due to more fixed
rate mortgages originated during the six months ended June 30, 1998 from the
comparable period of 1997. The company earns higher premiums on fixed rate
mortgages as opposed to adjustable rate mortgages. The increase in marketing
gains was primarily due to favorable market conditions during the last part of
1997 and early part of 1998 that increased marketing gains on loans that closed
during the first quarter of 1998. The increase in marketing and service fees was
also due to an increase in average loan amounts. M/I Financial uses hedging
methods whereby it has the option, but is not required, to complete the hedging
transaction. This allowed the Company to record servicing and marketing gains
during a period of falling interest rates while limiting the risk of loss from a
rising interest rate market.
Revenue from other sources increased 60.6% from $1.3 million for the
six months ended June 30, 1997 to $2.0 million for the six months ended June 30,
1998. This increase was primarily due to earnings from the Company's interest in
a limited liability company that provides title services that expanded into
Florida late in 1997. Revenue from other sources also increased because of an
increase in
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loan application fees received during the period over the number received during
the prior year. There were 428 more applications taken in the first six months
of 1998 over the comparable period of the prior year.
General and administrative expenses. General and administrative
expenses for the six months ended June 30, 1998 were $2.8 million, a 28.1%
increase over the comparable period of the prior year. The increase was
primarily due to an increase in loan application expenses. There were 428 more
applications taken in the first six months of 1998 over the comparable period of
the prior year. General and administrative expenses also increased because of
expenses related to the expansion of title services into Florida in 1997.
OTHER OPERATING RESULTS
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased to $3.5 million and $5.3 million for the three
and six months ended June 30, 1998, respectively, from $3.1 million and $5.1
million recorded for the comparable periods of 1997. As a percentage of total
revenue, general and administrative expenses for the three and six months ended
June 30, 1998 increased to 2.0% and 1.8%, respectively, from 2.1% and 2.0% for
the comparable periods in the prior year. These increases were primarily
attributable to increases in incentive compensation, profit sharing and
charitable contributions expensed in the current year due to the significant
increase in net income.
Interest Expense. Corporate and homebuilding interest expense for the
three and six months ended June 30, 1998 increased to $2.9 and $5.5 million,
respectively, from $2.7 and $5.0 million recorded for the comparable periods of
the prior year. Interest expense was higher in the current year due to an
increase in the average borrowings outstanding. This was partially offset by an
increase in the net amount of interest capitalized during the first half of 1998
compared to the first half of 1997. Average borrowings outstanding and
capitalized interest increased due to a significant increase in the Company's
backlog and land development activities.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financing needs depend upon its sales volume, asset
turnover, land acquisition and inventory balances. The Company has incurred
substantial indebtedness, and may incur substantial indebtedness in the future,
to fund the growth of its homebuilding activities. 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. Additionally, in May 1998, the Company sold treasury shares and
received approximately $24.6 million.
Notes Payable Banks. On May 27, 1998, the Company entered into a new
bank loan agreement. Borrowing capacity was increased from $186.0 million to
$204.5 million and certain covenants were modified. The maturity date of the
loan was extended from September 30, 2001 to September 30, 2002.
At June 30, 1998, the Company had bank borrowings outstanding of $105.0
million under its Bank Credit Facility, which permits aggregate borrowings,
other than for the issuance of letters of credit, not to exceed the lesser of:
(i) $204.5 million and (ii) 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, less the sum of (A) outstanding letters of credit issued for
purposes other than to satisfy bonding requirements and (B) the aggregate amount
of outstanding letters of credit, other than letters of credit issued for the
purpose of satisfying bonding requirements, for joint ventures in which the
Company is a partner and which are
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guaranteed by the Company. The Bank Credit Facility matures September 30, 2002,
at which time the unpaid balance of the revolving credit loans outstanding will
be due and payable. Under the terms of the Bank Credit Facility, the banks will
determine annually whether or not to extend the maturity date of the commitments
by one year. At June 30, 1998, borrowings under the Bank Credit Facility were at
the prime rate or, at the Company's option, LIBOR plus a margin of between 1.60%
and 2.35% based on the Company's ratio of Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA") to consolidated interest incurred and
were primarily unsecured. The Bank Credit Facility 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 Bank Credit Facility also places limitations on the amount of additional
indebtedness that may be incurred by the Company, the acquisition of undeveloped
land, dividends that may be paid and the aggregate cost of certain types of
inventory the Company can hold at any one time.
An additional $17.2 million was outstanding as of June 30, 1998 under
the M/I Financial loan agreement, which permits borrowings of $30.0 million to
finance mortgage loans initially funded by M/I Financial for customers of the
Company and a limited amount for loans to others. The Company and M/I Financial
are co-borrowers under the M/I Financial loan agreement. This agreement limits
the borrowings to 95% of the aggregate face amount of certain qualified
mortgages and contains restrictive covenants requiring M/I Financial to maintain
minimum net worth and certain minimum financial ratios. On June 22, 1998, the
Company and M/I Financial entered into a new bank loan agreement with the
existing lender, pursuant to which the Company and M/I Financial have the
ability to borrow at (a) the prime rate less 0.50%, or (b) LIBOR plus 1.60% or
(c) a combination of (a) and (b). The new agreement terminates on June 22, 2001,
at which time the unpaid balance is due.
At June 30, 1998, the Company had the right to borrow up to $234.5
million under its credit facilities, including $30.0 million under the M/I
Financial loan agreements. At June 30, 1998, the Company had $112.3 million of
unused borrowing availability under its loan agreements. The Company also had
approximately $33.2 million of completion bonds and letters of credit
outstanding at June 30, 1998.
Subordinated Notes. At June 30, 1998, there was outstanding $50.0
million of Senior Subordinated Notes. The notes bear interest at a fixed rate of
9.51% and mature August 29, 2004.
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 will continue in the foreseeable future.
Single-family lots, land and land development increased 6.4% from December 31,
1997 to June 30, 1998. These increases are primarily due to the shortage of
qualified land developers in certain of the Company's markets as well as the
Company developing more land due to the competitive advantages that can be
achieved by developing land internally rather than purchasing lots from
developers or competing homebuilders. This is particularly true for the
Company's Horizon product line, in which lots are generally not available from
third party developers at economically feasible prices due to the price points
the Company targets. 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 $27.0 million increase in notes payable banks - homebuilding
operations, from December 31, 1997 to June 30, 1998 reflects increased
borrowings primarily attributable to the increase in houses under construction,
along with an increase in single-family lots, land
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and land development costs. Houses under construction increased $56.5 million
from December 31, 1997 to June 30, 1998, and single-family lots, land and land
development costs increased $9.7 million. It is expected that borrowing needs
will increase as the Company continues to increase its investment in land under
development and developed lots. As of June 30, 1998, the Company had closed on
five phases of a six-phase land purchase contract in the Maryland division. This
contract was entered into in 1994 and required a greater investment than the
Company generally commits. It has been the Company's policy to sell a portion of
these lots to outside homebuilders. The Company has an option to purchase the
remaining phase.
At June 30, 1998, mortgage notes payable outstanding were $6.3 million,
secured by lots and land with a recorded book value of $10.7 million.
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.
Sale of Treasury Shares. On April 27, 1998, the Company filed a
registration statement with the Securities and Exchange Commission for up to
1,200,000 shares of common stock of the Company. All of such shares were sold on
May 5, 1998. The Company received approximately $24.6 million, which was used to
repay a portion of existing indebtedness.
Year 2000 Compliance. The Company is currently in the process of
modifying or replacing certain management information systems to address issues
regarding the year 2000. In accordance with current accounting guidance,
modification costs for the year 2000 will be charged to expense as incurred
while replacement costs will be capitalized and amortized over the asset's
useful life. It is not presently believed that these changes will have an
adverse impact on operations or that the expenditures related thereto will be
material to the Company's financial position or results of operations in any
given year.
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 for the six months ended June 30, 1998 was 8.5%
compared to 8.4% for the six months ended June 30, 1997.
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, which
results 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 Results of Operations and Financial Condition contains certain
forward-looking statements, including, but not limited to, statements regarding
the Company's future financial performance and financial condition. 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 homebuilding
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 cannot predict
whether interest rates will be at levels attractive to prospective home buyers.
If interest rates increase, and in particular mortgage interest rates, the
Company's business could be adversely affected.
Land Development Activities. The Company develops the lots for a
majority of its subdivisions. Therefore, the medium- and long-term financial
success of the Company will be dependent on the Company's ability to develop 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 and constructing subdivision infrastructure (such
as roads and utilities).
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; Virginia and
Maryland metropolitan areas; and Phoenix, Arizona. Adverse general economic
conditions in these markets could have a material adverse impact on the
operations of the Company. For the six months ended June 30, 1998, approximately
45% of the Company's housing revenue and a significant portion of the Company's
operating income were derived from operations in its Columbus, Ohio market. The
Company's performance could be significantly affected by changes in this market.
Competition. The homebuilding 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 attractions for
home buyers over building a new home.
Governmental Regulation and Environmental Considerations. The
homebuilding 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
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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
home buyers. 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.
Risk of Material and Labor Shortages. The Company is presently not
experiencing any serious material or labor shortages. However, the residential
construction industry in the past has, from time to time, experienced serious
material and labor shortages in insulation, drywall, certain carpentry and
framing work and cement, as well as fluctuating lumber prices and supplies.
Delays in construction of homes due to these shortages could adversely affect
the Company's business.
Significant Voting Control by Principal Shareholders. As of June 30,
1998, members of the Irving E. Schottenstein family owned approximately 31% of
the outstanding Common Shares of the Company. Therefore, members of the Irving
E. Schottenstein family have significant voting power with respect to the
election of the Board of Directors of the Company and, in general, the
determination of the outcome of various matters submitted to the shareholders of
the Company for approval.
Dependence on Key Executives. The Company is managed by a relatively
small number of executive officers. The loss of the services of one or more of
these executive officers could have an adverse effect on the Company's business
and operations.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings - none.
Item 2. Changes in Securities - none.
Item 3. Defaults upon Senior Securities - none.
Item 4. Submission of Matters to a Vote of Security Holders
On April 28, 1998, the Company held its 1998 annual meeting of
shareholders. The shareholders voted on the election of three directors to
three-year terms and whether to amend and restate the Regulations of M/I
Schottenstein Homes, Inc. The results of the voting are as follows:
1. Election of Directors
For Withheld
--- --------
Friedrich K.M. Bohm 7,103,136 45,170
Jeffrey H. Miro 7,103,036 45,270
Robert H. Schottenstein 7,103,836 44,470
2. To amend and restate the Regulations of M/I Schottenstein Homes,
Inc.
For 4,442,436
Against 1,965,049
Abstain 4,775
Broker non-votes 736,046
Item 5. Other Information - none.
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 Third restated revolving credit loan, swingline loan and
standby letter of credit agreement by and among the Company;
Bank One, NA; The Huntington National Bank; The First National
Bank of Chicago; National City Bank; BankBoston, N.A.; The
Fifth Third Bank of Columbus; Suntrust Bank, Central Florida,
N.A. and Bank One, NA as agent for the banks, dated May 27,
1998.
10.2 Revolving Credit Agreement by and among the Company, M/I
Financial Corp. and Bank One, NA, dated June 22, 1998.
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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: August 11, 1998 by: /s/ ROBERT H. SCHOTTENSTEIN
---------------------------
Robert H. Schottenstein
President
Date: August 11, 1998 by: /s/ KERRII B. ANDERSON
----------------------
Kerrii B. Anderson
Senior Vice President,
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------ ----------- --------
10.1 Third restated revolving credit loan, swingline loan and
standby letter of credit agreement by and among the Company;
Bank One, NA; The Huntington National Bank; The First National
Bank of Chicago; National City Bank; BankBoston, N.A.; The
Fifth Third Bank of Columbus; Suntrust Bank, Central Florida,
N.A. and Bank One, NA as agent for the banks, dated May 27,
1998.
10.2 Revolving Credit Agreement by and among the Company, M/I
Financial Corp. and Bank One, NA, dated June 22, 1998.
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23
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: August __, 1998 by: _________________________
Robert H. Schottenstein
President
Date: August __, 1998 by: _________________________
Kerrii B. Anderson
Senior Vice President,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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