M/I HOMES,
INC.
|
(Exact
name of registrant as specified in its
charter)
|
Ohio
|
31-1210837
|
|||
(State
or other jurisdiction
|
(I.R.S.
Employer
|
|||
of
incorporation or organization)
|
Identification
No.)
|
3
Easton Oval, Suite 500, Columbus, Ohio 43219
|
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (614)
418-8000
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Name
of each exchange on
|
||
Title
of each class
|
which
registered
|
|
Common
Shares, par value $.01
|
New
York Stock Exchange
|
|
Depositary
Shares, each representing 1/1000th
of
a 9.75% Series A Preferred Share
|
New
York Stock
Exchange
|
None
|
(Title
of Class)
|
Yes | No |
Yes | No |
Yes | No |
Large
accelerated filer
|
Accelerated
filer
|
X
|
||
Non-accelerated
filer
|
Smaller
reporting company
|
|||
(Do
not check if a smaller reporting company)
|
Yes
|
No
|
X
|
PAGE
NUMBER
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Part
I
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|||
Item
1. Business
|
4
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||
Item
1A. Risk Factors
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12
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||
Item
1B. Unresolved Staff Comments
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20
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||
Item
2. Properties
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20
|
||
Item
3. Legal
Proceedings
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20
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||
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|||
Item
4. Submission of Matters to a
Vote of Security Holders
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20
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||
Part
II
|
|||
Item
5. Market for Registrant’s
Common Equity, Related Shareholder Matters and
|
21
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||
Issuer Purchases of Equity Securities
|
|||
Item
6. Selected Financial
Data
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23
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||
Item
7. Management’s Discussion and
Analysis of Financial Condition and Results
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24
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||
of Operations
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|||
Item
7A. Quantitative and Qualitative Disclosures About
Market Risk
|
49
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||
Item
8. Financial Statements and
Supplementary Data
|
51
|
||
Item
9. Changes in and Disagreements
With Accountants on Accounting and
|
83
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||
Financial Disclosure
|
|||
Item
9A. Controls and Procedures
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83
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||
Item
9B. Other Information
|
83
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||
Part
III
|
|||
Item
10. Directors, Executive Officers and
Corporate Governance
|
85
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||
Item
11. Executive Compensation
|
85
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||
Item
12. Security Ownership of Certain Beneficial
Owners and Management and
|
|||
Related Shareholder Matters
|
85
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||
Item
13. Certain Relationships and Related
Transactions, and Director Independence
|
85
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||
Item
14. Principal Accounting Fees and
Services
|
85
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||
Part
IV
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|||
Item
15. Exhibits, Financial Statement
Schedules
|
86
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||
Signatures
|
91
|
● |
Generating
cash and preserving liquidity;
|
● |
Emphasizing
our customer service, unique product designs, and premier
locations;
|
●
|
Improving
affordability through design changes and other cost reduction
efforts;
|
●
|
Decreasing
our construction costs for material and labor;
|
● |
Decreasing
our overhead expenses and headcount to reflect current business
conditions;
|
● |
Reducing
our land and lot inventory by significantly curtailing our land purchases
and transitioning more of our purchases to finished lots versus raw
ground; and
|
● |
Phasing
and/or delaying land development and selectively pursuing the sale of
certain owned
land.
|
Year
|
||
Operations
|
||
Region
|
Division
|
Commenced
|
Midwest
|
Columbus,
Ohio
|
1976
|
Midwest
|
Cincinnati,
Ohio
|
1988
|
Midwest
|
Indianapolis,
Indiana
|
1988
|
Midwest
|
Chicago,
Illinois
|
2007
|
Florida
|
Tampa,
Florida
|
1981
|
Florida
|
Orlando,
Florida
|
1984
|
Mid-Atlantic
|
Charlotte,
North Carolina
|
1985
|
Mid-Atlantic
|
Raleigh,
North Carolina
|
1986
|
Mid-Atlantic
|
Washington
D.C.
|
1991
|
Lots
Owned
|
|||||||||||
Finished
|
Lots
Under
|
Undeveloped
|
Total
Lots
|
Lots
Under
|
|||||||
Region
|
Lots
|
Development
|
Lots
|
Owned
|
Contract
|
Total
|
|||||
Midwest
|
1,858
|
149
|
3,227
|
5,234
|
521
|
5,755
|
|||||
Florida
|
1,232
|
102
|
551
|
1,885
|
73
|
1,958
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|||||
Mid-Atlantic
|
948
|
101
|
629
|
1,678
|
332
|
2,010
|
|||||
Total
|
4,038
|
352
|
4,407
|
8,797
|
926
|
9,723
|
●
|
Establish
strategy, goals and operating policies;
|
●
|
Ensure
brand integrity and consistency across all local and regional
communications;
|
●
|
Monitor
and manage the performance of our operations;
|
●
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Allocate
capital resources;
|
●
|
Provide
financing and perform all cash management functions for the Company, as
well as maintain our relationship with lenders;
|
●
|
Maintain
centralized information and communication systems; and
|
●
|
Maintain
centralized financial reporting and internal audit
functions.
|
●
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difficulty
in acquiring suitable land at acceptable prices;
|
●
|
increased
selling incentives;
|
●
|
lower
sales; or
|
●
|
delays
in
construction.
|
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER
MATTERS
|
|
AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
2008
|
HIGH
|
LOW
|
||
First
quarter
|
$19.39
|
$
7.21
|
||
Second
quarter
|
20.25
|
14.28
|
||
Third
quarter
|
26.00
|
12.62
|
||
Fourth
quarter
|
23.15
|
5.15
|
||
2007
|
||||
First
quarter
|
$38.25
|
$26.46
|
||
Second
quarter
|
31.40
|
25.11
|
||
Third
quarter
|
29.74
|
13.45
|
||
Fourth
quarter
|
18.02
|
8.91
|
|
Period
Ending
|
|||||
Index
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
12/31/07
|
12/31/08
|
M/I
Homes, Inc.
|
100.00
|
141.44
|
104.47
|
98.47
|
27.24
|
27.43
|
S&P
500
|
100.00
|
110.88
|
116.33
|
134.70
|
142.10
|
89.53
|
S&P
500 Homebuilding Index
|
100.00
|
133.64
|
169.17
|
135.34
|
55.63
|
33.99
|
Total
Number of Shares
Purchased
|
Average
Price
Paid
per
Share
|
Total
Number of Shares Purchased as Part of Publicly Announced
Program
|
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the Program
(a)
|
||||
October
1 to October 31, 2008
|
-
|
-
|
-
|
$6,715,000
|
|||
November
1 to November 30, 2008
|
-
|
-
|
-
|
$6,715,000
|
|||
December
1 to December 31, 2008
|
-
|
-
|
-
|
$6,715,000
|
|||
Total
|
-
|
-
|
-
|
$6,715,000
|
(a)
|
As
of February 18, 2009, the Company had purchased a total of 473,300 shares
at an average price of $38.63 per share pursuant to the existing
Board-approved $25 million repurchase program that was publicly announced
on November 10, 2005, and had approximately $6.7 million remaining
available for repurchase under the $25 million repurchase program, which
expires on November 8, 2010. The indenture governing our senior
notes contains a provision that restricts us from repurchasing any shares
when the calculation of the "consolidated restricted payment basket," as
defined therein, falls below zero. At December 31, 2008, the
payment basket is $(146.8) million and, therefore, we are restricted from
repurchasing any shares. We will continue to be restricted
until such time that the restricted payments basket has been restored or
our senior notes are repaid.
|
ITEM
6. SELECTED FINANCIAL DATA
(a)
|
(In
thousands, except per share amounts)
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||
Income
Statement (Year
Ended December 31):
|
|||||||||||||||
Revenue
|
$ | 607,659 | $ | 1,016,460 | $ | 1,274,145 | $ | 1,312,504 | $ | 1,132,002 | |||||
Gross
margin (b)
|
$ | (77,805 | ) | $ | 35,487 | $ | 247,719 | $ | 329,917 | $ | 286,602 | ||||
Net
(loss) income from continuing operations (b) (c)
|
$ | (245,415 | ) | $ | (92,480 | ) | $ | 29,297 | $ | 98,574 | $ | 73,516 | |||
Discontinued
operation, net of tax (a)
|
$ | (33 | ) | $ | (35,646 | ) | $ | 9,578 | $ | 2,211 | $ | 18,018 | |||
Net
(loss) income (c)
|
$ | (245,448 | ) | $ | (128,126 | ) | $ | 38,875 | $ | 100,785 | $ | 91,534 | |||
Preferred
dividends
|
$ | 4,875 | $ | 7,313 | - | - | - | ||||||||
Net
(loss) income to common shareholders (b) (c)
|
$ | (250,323 | ) | $ | (135,439 | ) | $ | 38,875 | $ | 100,785 | $ | 91,534 | |||
(Loss)
earnings per share to common shareholders:
|
|||||||||||||||
Basic:
(b) (c)
|
|||||||||||||||
Continuing
operations
|
$ | (17.86 | ) | $ | (7.14 | ) | $ | 2.10 | $ | 6.89 | $ | 5.21 | |||
Discontinued
operation
|
$ | - | $ | (2.55 | ) | $ | 0.68 | $ | 0.16 | $ | 1.28 | ||||
Total
|
$ | (17.86 | ) | $ | (9.69 | ) | $ | 2.78 | $ | 7.05 | $ | 6.49 | |||
Diluted:
(b) (c)
|
|||||||||||||||
Continuing
operations
|
$ | (17.86 | ) | $ | (7.14 | ) | $ | 2.07 | $ | 6.78 | $ | 5.10 | |||
Discontinued
operation
|
$ | - | $ | (2.55 | ) | $ | 0.67 | $ | 0.15 | $ | 1.25 | ||||
Total
|
$ | (17.86 | ) | $ | (9.69 | ) | $ | 2.74 | $ | 6.93 | $ | 6.35 | |||
Weighted
average shares outstanding:
|
|||||||||||||||
Basic
|
14,016 | 13,977 | 13,970 | 14,302 | 14,107 | ||||||||||
Diluted
|
14,016 | 13,977 | 14,168 | 14,539 | 14,407 | ||||||||||
Dividends
per common share
|
$ | 0.05 | $ | 0.10 | $ | 0.10 | $ | 0.10 | $ | 0.10 | |||||
Balance
Sheet (December 31):
|
|||||||||||||||
Inventory
|
$ | 516,029 | $ | 797,329 | $ | 1,092,739 | $ | 984,279 | $ | 761,077 | |||||
Total
assets (c)
|
$ | 693,288 | $ | 1,117,645 | $ | 1,477,079 | $ | 1,329,678 | $ | 978,526 | |||||
Notes
payable banks – homebuilding operations
|
$ | - | $ | 115,000 | $ | 410,000 | $ | 260,000 | $ | 279,000 | |||||
Note
payable bank – financial services operations
|
$ | 35,078 | $ | 40,400 | $ | 29,900 | $ | 46,000 | $ | 30,000 | |||||
Notes
payable banks - other
|
$ | 16,300 | $ | 6,703 | $ | 6,944 | $ | 7,165 | $ | 8,370 | |||||
Senior
notes – net of discount
|
$ | 199,168 | $ | 198,912 | $ | 198,656 | $ | 198,400 | - | ||||||
Shareholders’
equity (c)
|
$ | 333,061 | $ | 581,345 | $ | 617,052 | $ | 592,568 | $ | 487,611 |
(a)
|
In
December 2007, we sold substantially all of our assets in our West Palm
Beach, Florida market and announced our exit from this
market. The results of operations for this market for all years
presented have been reclassified as discontinued operation in accordance
with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets.”
|
(b)
|
2008,
2007 and 2006 include the impact of charges relating to the impairment of
inventory and investment in unconsolidated LLCs, reducing gross margin by
$153.3 million, $148.4 million and $67.2, respectively. Those
charges, along with the write-off of land deposits, intangibles and
pre-acquisition costs, reduced net (loss) income from continuing
operations by $98.3 million, $96.9 million and $46.7 million and (loss)
earnings per diluted share by $7.00, $6.71 and $3.29 for the years ended
December 31, 2008, 2007 and 2006,
respectively.
|
(c)
|
2008
net (loss) also reflects a $108.6 million valuation allowance for deferred
tax assets, or $7.75 per share.
|
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
|
|
RESULTS OF OPERATIONS
|
OVERVIEW
|
·
|
Information
Relating to Forward-Looking Statements;
|
·
|
Our
Application of Critical Accounting Estimates and
Policies;
|
·
|
Our
Results of Operations;
|
·
|
Discussion
of Our Liquidity and Capital Resources;
|
·
|
Summary
of Our Contractual Obligations;
|
·
|
Discussion
of Our Utilization of Off-Balance Sheet Arrangements;
and
|
·
|
Impact
of Interest Rates and
Inflation.
|
FORWARD-LOOKING
STATEMENTS
|
●
|
The
U.S. economy is in the midst of an unprecedented combination of economic
turmoil, uncertainty in the credit and financial markets, and worldwide
concerns of a financial collapse. Prolonged conditions of this nature
could severely impact our ability to operate;
|
●
|
The
homebuilding industry is undergoing a significant downturn, and its
duration and ultimate severity are uncertain in the current state of the
economy; continued slowdown in our business will continue to adversely
affect our operating results and financial condition;
|
●
|
Demand
for new homes is sensitive to economic conditions over which we have no
control, such as the availability of mortgage
financing;
|
●
|
Increasing
interest rates could cause defaults for homebuyers who financed homes
using non-traditional financing products, which could increase the number
of homes available for resale;
|
●
|
Our
land investment exposes us to significant risks, including potential
impairment write-downs, that could negatively impact our profits if the
market value of our inventory declines;
|
●
|
If
we are unable to successfully compete in the highly competitive
homebuilding industry, our financial results and growth may
suffer;
|
●
|
If
the current downturn becomes more severe or continues for an extended
period of time, it would have continued negative consequences on our
operations, financial position, and cash flows;
|
●
|
Inflation
can adversely affect us, particularly in a period of declining home sale
prices;
|
●
|
Our
lack of geographic diversification could adversely affect us if the
homebuilding industry in our markets declines;
|
●
|
If
we are not able to obtain suitable financing, our business may be
negatively impacted;
|
●
|
Reduced
numbers of home sales force us to absorb additional carrying
costs;
|
●
|
The
terms of our indebtedness may restrict our ability to
operate;
|
●
|
If
our financial performance further declines, we may not be able to maintain
compliance with the covenants in our credit facilities and senior
notes;
|
●
|
The
ability to incur additional indebtedness could magnify other risk
factors;
|
●
|
Our
competitive position could suffer if we were unable to take advantage of
acquisition opportunities;
|
●
|
We
could be adversely affected by a negative change in our credit
rating;
|
●
|
Errors
in estimates and judgments that affect decisions about how we operate and
on the reported amounts of assets, liabilities, revenues and expenses
could have a material impact on us;
|
●
|
We
conduct certain of our operations through unconsolidated joint ventures
with independent third parties in which we do not have a controlling
interest. These investments involve risks and are highly
illiquid;
|
●
|
The
credit agreement of our financial services segment will expire in May
2009;
|
●
|
If
our ability to resell mortgages to investors is impaired, we may be
required to broker loans;
|
●
|
Federal
laws and regulations that adversely affect liquidity in the secondary
mortgage market could hurt our business;
|
●
|
Recent
proposed rule change by the United States Department of Housing and Urban
Development could negatively impact our operations and
revenue;
|
●
|
We
compete on several levels with homebuilders that may have greater sales
and financial resources, which could hurt future
earnings;
|
●
|
Our
business requires the use of significant amounts of capital, sources for
which may include our Credit Facility. In the event we were to
amend our Credit Facility, such amendment could result in lower available
commitment amounts and less favorable terms and conditions, which could
have a negative impact on our borrowing capacity and/or cash
flows;
|
●
|
Our
net operating loss carryforwards could be substantially limited if we
experience an ownership change as defined in the Internal Revenue
Code;
|
●
|
Cash
flows and results of operations could be adversely affected if legal
claims are brought against us and are not resolved in our
favor;
|
●
|
In
the ordinary course of business, we are required to obtain performance
bonds, the unavailability of which could adversely affect our results of
operations and/or cash flows;
|
●
|
Changes
in accounting principles, interpretations and practices may affect our
reported revenues, earnings and results of operations;
|
●
|
We
can be injured by failures of persons who act on our behalf to comply with
applicable regulations and guidelines;
|
●
|
Tax
law changes could make home ownership more expensive or less
attractive;
|
●
|
Our
income tax provision and other tax liabilities may be insufficient if
taxing authorities are successful in asserting tax positions that are
contrary to our position;
|
●
|
We
experience fluctuations and variability in our operating results on a
quarterly basis and, as a result, our historical performance may not be a
meaningful indicator of future results;
|
●
|
Homebuilding
is subject to warranty and liability claims in the ordinary course of
business that can be significant;
|
●
|
Natural
disasters and severe weather conditions could delay deliveries, increase
costs, and decrease demand for homes in affected areas;
|
●
|
Supply
shortages and other risks related to the demand for skilled labor and
building materials could increase costs and delay
deliveries;
|
●
|
We
are subject to extensive government regulations, which could restrict our
homebuilding or financial services business; and
|
●
|
We
are dependent on the services of certain key employees, and the loss of
their services could hurt our
business.
|
●
|
historical
project results such as average sales price and sales rates, if closings
have occurred in the project;
|
●
|
competitors’
local market and/or community presence and their competitive
actions;
|
●
|
project
specific attributes such as location desirability and uniqueness of
product offering;
|
●
|
potential
for alternative product offerings to respond to local market
conditions;
|
●
|
current
local market economic and demographic conditions and related trends and
forecasts; and
|
●
|
community-specific
strategies regarding speculative
homes.
|
●
|
historical
project results such as average sales price and sales rates, if closings
have occurred in the project;
|
●
|
competitors’
local market and/or community presence and their competitive
actions;
|
●
|
project-specific
attributes such as location desirability and uniqueness of product
offering;
|
●
|
potential
for alternative product offerings to respond to local market
conditions;
|
●
|
current
local market economic and demographic conditions and related trends and
forecasts;
|
●
|
community-specific
strategies regarding speculative
homes.
|
●
|
Home
Builder’s Limited Warranty – warranty program which became effective for
homes closed starting with the third quarter of 2007;
|
●
|
30-year
transferable structural warranty – effective for homes closed after April
25, 1998;
|
●
|
two-year
limited warranty program – effective prior to the implementation of the
Home Builder’s Limited Warranty; and
|
●
|
20-year
transferable structural warranty – effective for homes closed between
September 1, 1989 and April 24,
1998.
|
●
|
future
reversals of existing taxable temporary differences (i.e., offset gross
deferred tax assets against gross deferred tax
liabilities);
|
●
|
taxable
income in prior carryback years;
|
●
|
tax
planning strategies; and
|
●
|
future
taxable income, exclusive of reversing temporary differences and
carryforwards.
|
●
|
a
strong earnings history exclusive of the loss that created the deductible
temporary differences, coupled with evidence indicating that the loss is
the result of an aberration rather than a continuing
condition;
|
●
|
an
excess of appreciated asset value over the tax basis of a company’s net
assets in an amount sufficient to realize the deferred tax asset;
and
|
●
|
existing
backlog that will produce more than enough taxable income to realize the
deferred tax asset based on existing sales prices and cost
structures.
|
●
|
the
existence of “cumulative losses” (defined as a pre-tax cumulative loss for
the business cycle – in our case four years);
|
●
|
a
carryback or carryforward period that is so brief that it would limit the
realization of tax benefits;
|
●
|
a
history of operating loss or tax credit carryforwards expiring unused;
and
|
●
|
unsettled
circumstances that, if unfavorably resolved, would adversely affect future
operations and profit levels on a continuing
basis.
|
●
|
additional
inventory impairments;
|
●
|
additional
pre-tax operating losses;
|
●
|
the
utilization of tax planning strategies that could accelerate the
realization of certain deferred tax assets; or
|
●
|
changes
in relevant tax law.
|
RESULTS OF
OPERATIONS
|
Midwest
|
Florida
|
Mid-Atlantic
|
Columbus,
Ohio
|
Tampa,
Florida
|
Washington,
D.C.
|
Cincinnati,
Ohio
|
Orlando,
Florida
|
Charlotte,
North Carolina
|
Indianapolis,
Indiana
|
Raleigh,
North Carolina
|
|
Chicago,
Illinois
|
●
|
For
the year ended December 31, 2008, total revenue decreased $408.8 million
(40%) to approximately $607.7 million when compared to the year ended
December 31, 2007. This decrease is largely attributable to a
decrease of $386.0 million in housing revenue, from $939.5 million in 2007
to $553.5 million in 2008 due to both a decline in homes delivered and the
average sales price of homes delivered. Homes delivered
decreased 36%, from 3,173 in 2007 to 2,025 in 2008, and the average sales
price of homes delivered decreased from $296,000 to
$274,000. Our financial services revenue also decreased $4.9
million (26%) in 2008 compared to 2007 due primarily to a 31% decrease in
the number of mortgage loans originated.
|
●
|
Loss
from continuing operations before income taxes for 2008 increased by $64.2
million from $150.9 million in 2007 to $215.1 million in
2008. During 2008, the Company incurred charges totaling $158.6
million, compared to $152.0 million in 2007 related to the impairment of
inventory, investment in unconsolidated LLCs, and abandoned land
transaction costs. Excluding the impact of the above-mentioned
charges, the Company had a pre-tax loss of $56.5 million in 2008 compared
to pre-tax income of $1.1 million in 2007. The $57.6 million
increase in pre-tax loss from 2007 was driven by the decrease in housing
revenue discussed above, along with lower pre-impairment gross margins,
which declined from 18.1% in 2007 to 12.4% in 2008. General and
administrative expenses decreased $15.6 million (17%) from 2007 to 2008
primarily due to: (1) a decrease of $7.7 million in payroll and incentive
expenses; (2) a decrease of $4.2 million in intangible amortization due to
the 2007 write-off of goodwill and other assets; (3) a decrease of $2.5
million in land related expenses, including abandoned projects and deposit
write-offs; and (4) a decrease of $0.8 million in advertising
expenses. Selling expenses decreased by $23.8 million (30%) for
the year ended December 31, 2008 when compared to the year ended December
31, 2007 primarily due to: (1) a $14.5 million decrease in variable
selling expenses; (2) a $4.8 million decrease in model home expenses; (3)
a $3.3 million decrease in advertising expenses; (4) a $0.9 million
decrease in payroll-related expenses; and (5) a $0.3 million decrease in
expenses related to our sales offices.
|
●
|
New
contracts for 2008 were 1,879, down 23% compared to 2,452 in
2007. For the year ended December 31, 2008, our cancellation
rate was 27% compared to 33% in 2007. By region, our
cancellation rates in 2008 versus 2007 were as follows: Midwest – 30% in
2008 and 31% in 2007; Florida – 21% in 2008 and 46% in 2007; and
Mid-Atlantic – 25% in 2008 and 23% in 2007.
|
●
|
Our
mortgage company’s capture rate increased from 79% for the year ended
December 31, 2007 to approximately 85% for the year ended December 31,
2008. Capture rate is influenced by financing availability and
can fluctuate up or down from period to period.
|
●
|
We
continue to deal with very weak and ever-changing market conditions that
require us to constantly monitor the value of our inventory and
investments in unconsolidated LLCs in those markets in which we operate,
in accordance with generally accepted accounting
principles. During the year ended December 31, 2008, we
recorded $158.6 million of charges relating to the impairment of inventory
and investment in unconsolidated LLCs and write-off of abandoned land
transaction costs, compared to $152.0 million of charges during the year
ended December 31, 2007. We generally believe that we will see
a gradual improvement in market conditions over the long
term. In 2009, we will continue to update our evaluation of the
value of our inventory and investments in unconsolidated LLCs for
impairment, and could be required to record additional impairment charges,
which would negatively impact earnings should market conditions
deteriorate further or results differ from management’s original
assumptions.
|
●
|
In
2008, the Company recorded a non-cash tax charge of $108.6 million for a
valuation allowance related to its deferred tax assets. This was reflected
as a charge to income tax expense and resulted in a reduction of the
Company’s net deferred tax assets. Consequently, the Company’s effective
tax rate was (14.1%) for the year ended December 31, 2008, compared to an
effective tax rate of 38.7% in 2007. Due to the uncertainty of
future market conditions, we cannot give any predictions as to our 2009
effective tax rate.
|
Years
Ended
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Revenue:
|
|||||||||
Midwest
homebuilding
|
$ | 232,715 | $ | 358,441 | $ | 493,156 | |||
Florida
homebuilding
|
151,643 | 312,930 | 496,998 | ||||||
Mid-Atlantic
homebuilding
|
202,038 | 326,451 | 260,059 | ||||||
Other
homebuilding – unallocated (a)
|
7,131 | (424 | ) | 647 | |||||
Financial
services
|
14,132 | 19,062 | 27,125 | ||||||
Intercompany
eliminations
|
- | - | (3,840 | ) | |||||
Total
revenue
|
$ | 607,659 | $ | 1,016,460 | $ | 1,274,145 | |||
|
|||||||||
Operating
(loss) income:
|
|||||||||
Midwest
homebuilding (b)
|
$ | (73,073 | ) | $ | (10,377 | ) | $ | 897 | |
Florida
homebuilding (b)
|
(71,864 | ) | (63,117 | ) | 100,390 | ||||
Mid-Atlantic
homebuilding (b)
|
(41,491 | ) | (43,547 | ) | (21,955 | ) | |||
Other
homebuilding – unallocated (a)
|
503 | 386 | 156 | ||||||
Financial
services
|
6,010 | 8,517 | 15,816 | ||||||
Less:
Corporate selling, general and administrative expense (c)
|
(29,567 | ) | (27,395 | ) | (34,191 | ) | |||
Total
operating (loss) income
|
$ | (209,482 | ) | $ | (135,533 | ) | $ | 61,113 | |
|
|||||||||
Interest
expense:
|
|||||||||
Midwest
homebuilding
|
$ | 5,197 | $ | 4,788 | $ | 6,408 | |||
Florida
homebuilding
|
2,335 | 5,877 | 4,609 | ||||||
Mid-Atlantic
homebuilding
|
3,209 | 3,815 | 4,384 | ||||||
Financial
services
|
456 | 636 | 406 | ||||||
Corporate
|
- | 227 | - | ||||||
Total
interest expense
|
$ | 11,197 | $ | 15,343 | $ | 15,807 | |||
|
|||||||||
Other
income (d)
|
$ | 5,555 | - | - | |||||
|
|||||||||
(Loss)
income from continuing operations before income taxes
|
$ | (215,124 | ) | $ | (150,876 | ) | $ | 45,306 | |
|
|||||||||
Assets:
|
|||||||||
Midwest
homebuilding
|
$ | 242,066 | $ | 354,220 | $ | 432,572 | |||
Florida
homebuilding
|
121,587 | 241,603 | 426,806 | ||||||
Mid-Atlantic
homebuilding
|
185,268 | 276,887 | 349,929 | ||||||
Financial
services
|
60,992 | 62,411 | 61,145 | ||||||
Corporate
|
83,375 | 167,926 | 110,661 | ||||||
Assets
of discontinued operation
|
- | 14,598 | 95,966 | ||||||
Total
assets
|
$ | 693,288 | $ | 1,117,645 | $ | 1,477,079 |
Investment
in unconsolidated LLCs:
|
|||||||||
Midwest
homebuilding
|
$ | 6,359 | $ | 15,705 | $ | 17,570 | |||
Florida
homebuilding
|
6,771 | 24,638 | 32,078 | ||||||
Mid-Atlantic
homebuilding
|
- | - | - | ||||||
Financial
services
|
- | - | - | ||||||
Total
investment in unconsolidated LLCs
|
$ | 13,130 | $ | 40,343 | $ | 49,648 | |||
|
|||||||||
Depreciation
and amortization:
|
|||||||||
Midwest
homebuilding
|
$ | 336 | $ | 543 | $ | 182 | |||
Florida
homebuilding
|
1,288 | 1,603 | 1,689 | ||||||
Mid-Atlantic
homebuilding
|
1,028 | 849 | 244 | ||||||
Financial
services
|
471 | 498 | 383 | ||||||
Corporate
|
4,631 | 4,495 | 4,229 | ||||||
Total
depreciation and amortization
|
$ | 7,754 | $ | 7,988 | $ | 6,727 |
At
December 31, 2008
|
||||||||||||||
Corporate,
|
||||||||||||||
Financial
Services
|
||||||||||||||
(In
thousands)
|
Midwest
|
Florida
|
Mid-Atlantic
|
and
Unallocated
|
Total
|
|||||||||
Land
purchase deposits
|
$ | 96 | $ | 32 | $ | 942 | $ | - | $ | 1,070 | ||||
Inventory
(a)
|
232,853 | 102,500 | 179,606 | - | 514,959 | |||||||||
Investments
in unconsolidated entities
|
6,359 | 6,771 | - | - | 13,130 | |||||||||
Other
assets
|
2,758 | 12,284 | 4,720 | 144,367 | 164,129 | |||||||||
Total
assets
|
$ | 242,066 | $ | 121,587 | $ | 185,268 | $ | 144,367 | $ | 693,288 |
At
December 31, 2007
|
||||||||||||||
Corporate,
|
||||||||||||||
Financial
Services
|
||||||||||||||
(In
thousands)
|
Midwest
|
Florida
|
Mid-Atlantic
|
and
Unallocated (b)
|
Total
|
|||||||||
Land
purchase deposits
|
$ | 344 | $ | 388 | $ | 3,699 | $ | - | $ | 4,431 | ||||
Inventory
(a)
|
332,991 | 205,773 | 253,468 | 666 | 792,898 | |||||||||
Investments
in unconsolidated entities
|
15,705 | 24,638 | - | - | 40,343 | |||||||||
Other
assets
|
5,180 | 10,849 | 19,720 | 244,224 | 279,973 | |||||||||
Total
assets
|
$ | 354,220 | $ | 241,648 | $ | 276,887 | $ | 244,890 | $ | 1,117,645 |
(a)
|
Inventory
includes Single-family lots, land and land development costs; land held
for sale; homes under construction; model homes and furnishings; community
development district infrastructure; and consolidated inventory not
owned.
|
(b)
|
Corporate,
Financial Services and Unallocated also includes assets of $14.6 million
related to our discontinued
operation.
|
Three
Months Ended
|
|||||||||||
December
31,
|
September
30,
|
June
30,
|
March
31,
|
||||||||
(Dollars
in thousands)
|
2008
|
2008
|
2008
|
2008
|
|||||||
Revenue
|
$ | 150,187 | $ | 160,385 | $ | 141,002 | $ | 156,085 | |||
Unit
data:
|
|||||||||||
New
contracts
|
339 | 456 | 530 | 554 | |||||||
Homes
delivered
|
554 | 555 | 466 | 450 | |||||||
Backlog
at end of period
|
566 | 781 | 880 | 816 | |||||||
Three
Months Ended
|
|||||||||||
December
31,
|
September
30,
|
June
30,
|
March
31,
|
||||||||
(Dollars
in thousands)
|
2007
|
2007
|
2007
|
2007
|
|||||||
Revenue
|
$ | 340,460 | $ | 232,983 | $ | 226,448 | $ | 216,569 | |||
Unit
data:
|
|||||||||||
New
contracts
|
293 | 546 | 682 | 931 | |||||||
Homes
delivered
|
984 | 765 | 738 | 686 | |||||||
Backlog
at end of period
|
712 | 1,403 | 1,622 | 1,678 |
Years
Ended
|
|||||||||
(Dollars
in thousands)
|
2008
|
2007
|
2006
|
||||||
Midwest
Region
|
|||||||||
Homes
delivered
|
937 | 1,436 | 1,821 | ||||||
Average
sales price per home delivered
|
$ | 244 | $ | 247 | $ | 265 | |||
Revenue
homes
|
$ | 228,728 | $ | 354,000 | $ | 481,773 | |||
Revenue
third party land sales
|
$ | 3,987 | $ | 4,441 | $ | 11,383 | |||
Operating
(loss) income homes (a)
|
$ | (64,338 | ) | $ | (10,665 | ) | $ | 2,574 | |
Operating
(loss) income land (a)
|
$ | (8,735 | ) | $ | 288 | $ | (1,677 | ) | |
Interest
expense
|
$ | 5,197 | $ | 4,788 | $ | 6,408 | |||
Depreciation
and amortization
|
$ | 336 | $ | 543 | $ | 182 | |||
Assets
|
$ | 242,066 | $ | 354,220 | $ | 432,572 | |||
Investment
in unconsolidated LLCs
|
$ | 6,359 | $ | 15,705 | $ | 17,570 | |||
New
contracts, net
|
911 | 1,195 | 1,513 | ||||||
Backlog
at end of period
|
365 | 391 | 632 | ||||||
Average
sales price of homes in backlog
|
$ | 230 | $ | 273 | $ | 274 | |||
Aggregate
sales value of homes in backlog
|
$ | 84,000 | $ | 107,000 | $ | 173,000 | |||
Number
of active communities
|
73 | 76 | 83 | ||||||
|
|||||||||
Florida
Region
|
|||||||||
Homes
delivered
|
474 | 877 | 1,389 | ||||||
Average
sales price per home delivered
|
$ | 263 | $ | 313 | $ | 333 | |||
Revenue
homes
|
$ | 124,314 | $ | 274,297 | $ | 462,316 | |||
Revenue
third party land sales
|
$ | 27,329 | $ | 38,633 | $ | 34,682 | |||
Operating
(loss) income homes (a)
|
$ | (47,990 | ) | $ | (28,071 | ) | $ | 89,614 | |
Operating
(loss) income land (a)
|
$ | (23,874 | ) | $ | (35,046 | ) | $ | 10,776 | |
Interest
expense
|
$ | 2,335 | $ | 5,877 | $ | 4,609 | |||
Depreciation
and amortization
|
$ | 1,288 | $ | 1,603 | $ | 1,689 | |||
Assets
|
$ | 121,587 | $ | 241,603 | $ | 426,806 | |||
Investment
in unconsolidated LLCs
|
$ | 6,771 | $ | 24,638 | $ | 32,078 | |||
New
contracts, net
|
430 | 505 | 615 | ||||||
Backlog
at end of period
|
77 | 121 | 493 | ||||||
Average
sales price of homes in backlog
|
$ | 265 | $ | 292 | $ | 371 | |||
Aggregate
sales value of homes in backlog
|
$ | 20,000 | $ | 35,000 | $ | 183,000 | |||
Number
of active communities
|
25 | 34 | 41 | ||||||
|
|||||||||
Mid-Atlantic
Region
|
|||||||||
Homes
delivered
|
614 | 860 | 691 | ||||||
Average
sales price per home delivered
|
$ | 327 | $ | 362 | $ | 372 | |||
Revenue
homes
|
$ | 200,455 | $ | 311,195 | $ | 257,244 | |||
Revenue
third party land sales
|
$ | 1,583 | $ | 15,256 | $ | 2,815 | |||
Operating
loss homes (a)
|
$ | (41,471 | ) | $ | (31,264 | ) | $ | (21,958 | ) |
Operating
(loss) income land (a)
|
$ | (20 | ) | $ | (12,283 | ) | $ | 3 | |
Interest
expense
|
$ | 3,209 | $ | 3,815 | $ | 4,384 | |||
Depreciation
and amortization
|
$ | 1,028 | $ | 849 | $ | 244 | |||
Assets
|
$ | 185,268 | $ | 276,887 | $ | 349,929 | |||
Investment
in unconsolidated LLCs
|
$ | - | $ | - | $ | - | |||
New
contracts, net
|
538 | 752 | 672 | ||||||
Backlog
at end of period
|
124 | 200 | 308 | ||||||
Average
sales price of homes in backlog
|
$ | 285 | $ | 388 | $ | 415 | |||
Aggregate
sales value of homes in backlog
|
$ | 35,000 | $ | 78,000 | $ | 128,000 | |||
Number
of active communities
|
30 | 36 | 34 | ||||||
|
|||||||||
Total
Homebuilding Regions
|
|||||||||
Homes
delivered
|
2,025 | 3,173 | 3,901 | ||||||
Average
sales price per home delivered
|
$ | 274 | $ | 296 | $ | 308 | |||
Revenue
homes
|
$ | 553,497 | $ | 939,492 | $ | 1,201,333 | |||
Revenue
third party land sales
|
$ | 32,899 | $ | 58,330 | $ | 48,880 | |||
Operating
(loss) income homes (a)
|
$ | (153,799 | ) | $ | (70,000 | ) | $ | 70,230 | |
Operating
(loss) income land (a)
|
$ | (32,629 | ) | $ | (47,041 | ) | $ | 9,102 | |
Interest
expense
|
$ | 10,741 | $ | 14,480 | $ | 15,401 | |||
Depreciation
and amortization
|
$ | 2,652 | $ | 2,995 | $ | 2,115 | |||
Assets
|
$ | 548,921 | $ | 872,710 | $ | 1,209,307 | |||
Investment
in unconsolidated LLCs
|
$ | 13,130 | $ | 40,343 | $ | 49,648 | |||
Years
Ended
|
|||||||||
(Dollars
in thousands)
|
2008
|
2007
|
2006
|
||||||
|
|||||||||
New
contracts, net
|
1,879 | 2,452 | 2,800 | ||||||
Backlog
at end of period
|
566 | 712 | 1,433 | ||||||
Average
sales price of homes in backlog
|
$ | 247 | $ | 308 | $ | 338 | |||
Aggregate
sales value of homes in backlog
|
$ | 139,000 | $ | 220,000 | $ | 484,000 | |||
Number
of active communities
|
128 | 146 | 158 | ||||||
|
|||||||||
Financial
Services
|
|||||||||
Number
of loans originated
|
1,623 | 2,340 | 2,729 | ||||||
Value
of loans originated
|
$ | 382,992 | $ | 586,520 | $ | 666,863 | |||
Revenue
|
$ | 14,132 | $ | 19,062 | $ | 27,125 | |||
General
and administrative expenses
|
$ | 8,122 | $ | 10,545 | $ | 11,309 | |||
Interest
expense
|
$ | 456 | $ | 636 | $ | 406 | |||
Income
before income taxes
|
$ | 5,554 | $ | 7,881 | $ | 15,410 |
December
31,
|
|||||||||
2008
|
2007
|
2006
|
|||||||
Midwest:
|
|||||||||
Homes
|
$ | 47,604 | $ | 8,803 | $ | 23,099 | |||
Land
|
8,729 | - | 1,921 | ||||||
56,333 | 8,803 | 25,020 | |||||||
|
|||||||||
Florida:
|
|||||||||
Homes
|
42,642 | 50,802 | 5,827 | ||||||
Land
|
24,264 | 37,468 | - | ||||||
66,906 | 88,270 | 5,827 | |||||||
|
|||||||||
Mid-Atlantic:
|
|||||||||
Homes
|
35,063 | 42,661 | 41,906 | ||||||
Land
|
310 | 12,255 | - | ||||||
35,373 | 54,916 | 41,906 | |||||||
|
|||||||||
Total
|
|||||||||
Homes
|
$ | 125,309 | $ | 102,266 | $ | 70,832 | |||
Land
|
$ | 33,303 | $ | 49,723 | $ | 1,921 | |||
$ | 158,612 | $ | 151,989 | $ | 72,753 |
Year-Ended
December 31,
|
|||||
(In
thousands)
|
2008
|
2007
|
2006
|
||
Midwest:
|
29.8%
|
30.9%
|
35.5%
|
||
Florida:
|
20.7%
|
45.8%
|
47.8%
|
||
Mid-Atlantic:
|
25.4%
|
23.3%
|
26.0%
|
||
|
|||||
Total
|
26.6%
|
32.7%
|
36.8%
|
|
|||
|
Expiration
Date
|
Outstanding
Balance
|
Available
Amount
|
Notes
payable banks – homebuilding
|
10/6/2010
|
$ -
|
$ 29,259
|
Note
payable bank – financial services
|
5/21/2009
|
$ 35,078
|
$ 354
|
Senior
notes
|
4/1/2012
|
$200,000
|
$ -
|
Universal
shelf registration (a)
|
-
|
$ -
|
$250,000
|
●
|
requiring
us to maintain tangible net worth (“Minimum Net Worth”) of at least (1)
$100 million plus (2) 50% of consolidated earnings (without deduction for
losses and excluding the effect of any decreases in any deferred tax
valuation allowance) earned for each completed fiscal quarter ending after
December 31, 2008 to the date of determination, excluding any quarter in
which the consolidated earnings are less than zero plus (3) the amount of
any reduction or reversal in deferred tax valuation allowance for each
completed fiscal quarter ending after December 31,
2008;
|
●
|
Maintaining
a leverage ratio not in excess of 2.00 to
1.00;
|
●
|
requiring
adjusted cash flow from operations to be greater than 1.50x, or requiring
us to maintain unrestricted cash of more than $25
million;
|
●
|
prohibiting
secured indebtedness from exceeding $25 million;
|
●
|
prohibiting
the net book value of our land and lots where construction of a home has
not commenced, less the lesser of 25% of tangible net worth or prior six
month sales times average book value of a finished lot, from exceeding
125% of tangible net worth plus 50% of the aggregate outstanding
subordinated debt (the “Total Land Restriction”);
|
●
|
limiting
the number of unsold housing units and model units that we may have in our
inventory at the end of any fiscal quarter from exceeding the greater of
40% of the number of home closings within the twelve months ending on such
date or 80% of the number of unit closings within the six months ending on
such date (the “Spec and Model Home Restriction”);
|
●
|
limiting
extension of credit on the sale of land to 10% of tangible net worth;
and
|
●
|
limiting
investment in joint ventures to 25% of tangible net
worth.
|
Financial
Covenant
|
Covenant
Requirement
|
Actual
|
||
(dollars
in millions)
|
||||
Minimum
Net Worth (a)
|
=
|
$ 100.0
|
$ 329.9
|
|
Leverage
Ratio (b)
|
≤
|
2.00
to 1.00
|
0.82
to 1.00
|
|
Adjusted
Cash Flow Ratio (c)
|
≥
|
1.50
to 1.00
|
9.20
to 1.00
|
|
Secured
Indebtedness
|
<
|
25.0
|
16.3
|
|
Permitted
Debt Based on Borrowing Base
|
≤
|
$ 29.3
|
$ 0.0
|
|
Total
Land Restriction
|
≤
|
$ 412.4
|
$ 288.9
|
|
Spec
and Model Homes Restriction
|
≤
|
887
|
475
|
|
Extension
of Credit on the Sale of Land
|
<
|
33.0
|
6.1
|
|
Investment
in Unconsolidated Limited Liability Companies
|
<
|
82.5
|
13.3
|
|
(a) Minimum
Net Worth (called “Actual Consolidated Tangible Net Worth” in the Credit
Agreement) was calculated based on the stated amount of our consolidated
equity less intangible assets of $3.1 million as of December 31,
2008.
|
|
(b) Repayment
guarantees are included in the definition of Indebtedness for purposes of
calculating the Leverage Ratio.
|
|
(c) If
the adjusted cash flow ratio is below 1.50X, the Company is required to
maintain unrestricted cash in an amount not less than $25
million.
|
Payments
due by period
|
||||||||||||||
(In
thousands)
|
Total
|
Less
than
1
year
|
1 –
3 years
|
3 –
5 years
|
More
than
5
years
|
|||||||||
Notes
payable banks – homebuilding (a)
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||
Note
payable bank – financial services (b)
|
35,078 | 35,078 | - | - | - | |||||||||
Mortgage
notes payable (including interest)
|
9,820 | 796 | 1,590 | 1,591 | 5,843 | |||||||||
Note
payable – other (c)
|
9,857 | 457 | 914 | 914 | 7,572 | |||||||||
Senior
notes (including interest)
|
248,812 | 13,941 | 27,882 | 206,989 | - | |||||||||
Obligation
for consolidated inventory not owned (d)
|
- | - | - | - | - | |||||||||
Community development
district obligations (including interest) (e)
|
678 | 678 | - | - | - | |||||||||
Capital
leases
|
89 | 89 | - | - | - | |||||||||
Operating
leases
|
14,850 | 4,213 | 5,951 | 3,485 | 1,201 | |||||||||
Purchase
obligations (f)
|
67,544 | 67,544 | - | - | - | |||||||||
Land
option agreements (g)
|
- | - | - | - | - | |||||||||
Unrecognized
tax benefits (h)
|
- | - | - | - | - | |||||||||
Total
|
$ | 386,728 | $ | 122,796 | $ | 36,337 | $ | 212,979 | $ | 14,616 |
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Weighted
|
||||||||||||||||||||||||||
Average
|
Fair
|
|||||||||||||||||||||||||
Interest
|
Value
|
|||||||||||||||||||||||||
(Dollars
in thousands)
|
Rate
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
12/31/08
|
|||||||||||||||||
ASSETS:
|
||||||||||||||||||||||||||
Mortgage
loans held for sale:
|
||||||||||||||||||||||||||
Fixed
rate
|
5.37 | % |
$
|
38,573 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 38,573 | $ | 37,772 | ||||||||
Variable
rate
|
N/A | - | - | - | - | - | - | - | - | |||||||||||||||||
LIABILITIES:
|
||||||||||||||||||||||||||
Long-term
debt – fixed rate
|
6.91 | % | $ | 283 | $ | 306 | $ | 332 | $ | 200,360 | $ | 391 | $ | 4,770 | $ | 206,442 | $ | 113,030 | ||||||||
Long-term
debt – variable rate
|
2.64 | % | 35,535 | 457 | 457 | 457 | 457 | 7,572 | 44,935 | 44,935 | ||||||||||||||||
|
/s/
DELOITTE & TOUCHE LLP
|
Deloitte
& Touche LLP
|
Years
Ended
|
||||||||
(In
thousands, except per share amounts)
|
2008
|
2007
|
2006
|
|||||
|
||||||||
Revenue
|
$ | 607,659 | $ | 1,016,460 | $ | 1,274,145 | ||
Costs,
expenses and other income:
|
||||||||
Land
and housing
|
532,164 | 832,596 | 959,226 | |||||
Impairment
of inventory and investment in unconsolidated LLCs
|
153,300 | 148,377 | 67,200 | |||||
General
and administrative
|
77,458 | 93,049 | 98,289 | |||||
Selling
|
54,219 | 77,971 | 88,317 | |||||
Interest
- net
|
11,197 | 15,343 | 15,807 | |||||
Other
income
|
(5,555 | ) | - | - | ||||
Total
costs, expenses and other income
|
822,783 | 1,167,336 | 1,228,839 | |||||
|
||||||||
(Loss)
income from continuing operations before income taxes
|
(215,124 | ) | (150,876 | ) | 45,306 | |||
|
||||||||
Provision
(benefit) for income taxes
|
30,291 | (58,396 | ) | 16,009 | ||||
|
||||||||
(Loss)
income from continuing operations
|
(245,415 | ) | (92,480 | ) | 29,297 | |||
|
||||||||
Discontinued
operation, net of tax
|
(33 | ) | (35,646 | ) | 9,578 | |||
|
||||||||
Net
(loss) income
|
(245,448 | ) | (128,126 | ) | 38,875 | |||
|
||||||||
Preferred
dividends
|
4,875 | 7,313 |
-
|
|||||
|
||||||||
Net
(loss) income to common shareholders
|
$ | (250,323 | ) | $ | (135,439 | ) | $ | 38,875 |
|
||||||||
(Loss)
income per common share:
|
||||||||
Basic:
|
||||||||
Continuing
operations
|
$ | (17.86 | ) | $ | (7.14 | ) | $ | 2.10 |
Discontinued
operation
|
$ | - | $ | (2.55 | ) | $ | 0.68 | |
Basic
(loss) income
|
$ | (17.86 | ) | $ | (9.69 | ) | $ | 2.78 |
Diluted:
|
||||||||
Continuing
operations
|
$ | (17.86 | ) | $ | (7.14 | ) | $ | 2.07 |
Discontinued
operation
|
$ | - | $ | (2.55 | ) | $ | 0.67 | |
Diluted
(loss) income
|
$ | (17.86 | ) | $ | (9.69 | ) | $ | 2.74 |
|
||||||||
Weighted
average shares outstanding:
|
||||||||
Basic
|
14,016 | 13,977 | 13,970 | |||||
Diluted
|
14,016 | 13,977 |
14,168
|
|||||
|
||||||||
Dividends
per common share
|
$ | 0.05 | $ | 0.10 | $ | 0.10 |
December
31,
|
||||||
(Dollars
in thousands, except par values)
|
2008
|
2007
|
||||
|
||||||
ASSETS:
|
||||||
Cash
|
$ | 32,518 | $ | 1,506 | ||
Cash
held in escrow
|
6,658 | 21,239 | ||||
Mortgage
loans held for sale
|
37,772 | 54,127 | ||||
Inventory
|
516,029 | 797,329 | ||||
Property
and equipment - net
|
27,732 | 35,699 | ||||
Investment
in unconsolidated limited liability companies
|
13,130 | 40,343 | ||||
Income
tax receivable
|
39,456 | 53,667 | ||||
Deferred
income taxes
|
- | 67,867 | ||||
Other
assets
|
19,993 | 31,270 | ||||
Assets of discontinued
operation
|
- | 14,598 | ||||
TOTAL ASSETS | $ | 693,288 | $ | 1,117,645 | ||
|
||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||
|
||||||
LIABILITIES:
|
||||||
Accounts
payable
|
$ | 27,542 | $ | 66,242 | ||
Accrued
compensation
|
6,762 | 9,509 | ||||
Customer
deposits
|
3,506 | 6,932 | ||||
Other
liabilities
|
55,287 | 58,473 | ||||
Community
development district obligations
|
11,035 | 12,410 | ||||
Obligation
for consolidated inventory not owned
|
5,549 | 7,433 | ||||
Liabilities
of discontinued operation
|
- | 14,286 | ||||
Notes
payable banks – homebuilding operations
|
- | 115,000 | ||||
Note
payable bank – financial services operations
|
35,078 | 40,400 | ||||
Notes
payable - other
|
16,300 | 6,703 | ||||
Senior
notes – net of discount of $832 and $1,088, respectively, at December 31,
2008 and 2007
|
199,168 | 198,912 | ||||
TOTAL
LIABILITIES
|
360,227 | 536,300 | ||||
|
||||||
Commitments
and contingencies
|
- | - | ||||
|
||||||
SHAREHOLDERS’
EQUITY:
|
||||||
Preferred
shares – $.01 par value; authorized 2,000,000
shares; issued 4,000 shares
|
96,325 | 96,325 | ||||
Common
shares – $.01 par value; authorized 38,000,000
shares; issued 17,626,123 shares
|
176 | 176 | ||||
Additional
paid-in capital
|
82,146 | 79,428 | ||||
Retained
earnings
|
225,956 | 477,339 | ||||
Treasury
shares – at cost – 3,602,141 and 3,621,333 shares, respectively, at
December 31, 2008 and 2007
|
(71,542 | ) | (71,923 | ) | ||
TOTAL
SHAREHOLDERS’ EQUITY
|
333,061 | 581,345 | ||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 693,288 | $ | 1,117,645 |
Preferred
Shares
|
Common
Shares
|
Additional
|
Total
|
|||||||||||||||||||
Shares
|
Shares
|
Paid-In
|
Retained
|
Treasury
|
Shareholders’
|
|||||||||||||||||
(Dollars
in thousands, except per share amounts)
|
Outstanding
|
Amount
|
Outstanding
|
Amount
|
Capital
|
Earnings
|
Shares
|
Equity
|
||||||||||||||
|
||||||||||||||||||||||
Balance
at December 31, 2005
|
- | - | 14,327,265 |
$
|
176 |
$
|
72,470 |
$
|
576,726 |
$
|
(56,804 | ) |
$
|
592,568 | ||||||||
Net
income
|
- | - | - | - | - | 38,875 | - | 38,875 | ||||||||||||||
Dividends
on common shares,
$0.10
per share
|
- | - | - | - | - | (1,415 | ) | - | (1,415 | ) | ||||||||||||
Income
tax benefit from stock
options
and deferred
compensation
distributions
|
- | - | - | - | 229 | - | - | 229 | ||||||||||||||
Share
repurchases
|
- | - | (463,500 | ) | - | - | - | (17,893 | ) | (17,893 | ) | |||||||||||
Stock
options exercised
|
- | - | 28,200 | - | 83 | - | 558 | 641 | ||||||||||||||
Stock-based
compensation
expense
|
- | - | - | 3,057 | - | - | 3,057 | |||||||||||||||
Deferral
of executive and
director
compensation
|
- | - | - | - | 990 | - | - | 990 | ||||||||||||||
Executive
and director deferred
compensation
distributions
|
- | - | 28,783 | - | (547 | ) | - | 547 | - | |||||||||||||
Balance
at December 31, 2006
|
- | - | 13,920,748 |
$
|
176 |
$
|
76,282 |
$
|
614,186 |
$
|
(73,592 | ) |
$
|
617,052 | ||||||||
Net
loss
|
- | - | - | - | - | (128,126 | ) | - | (128,126 | ) | ||||||||||||
Preferred
shares issued, net of
issuance
costs of $3,675
|
4,000 |
$
|
96,325 | - | - | - | - | - | 96,325 | |||||||||||||
Dividends
on preferred shares,
$609.375
per share
|
- | - | - | - | - | (7,313 | ) | - | (7,313 | ) | ||||||||||||
Dividends
on common shares,
$0.10
per share
|
- | - | - | - | - | (1,408 | ) | - | (1,408 | ) | ||||||||||||
Income
tax benefit from stock
options
and deferred
compensation
distributions
|
- | - | - | - | 72 | - | - | 72 | ||||||||||||||
Stock
options exercised
|
- | - | 37,400 | - | 62 | - | 742 | 804 | ||||||||||||||
Restricted
shares issued, net of
forfeitures
|
- | - | 3,001 | - | (60 | ) | - | 60 | - | |||||||||||||
Share-based
compensation
expense
|
- | - | - | - | 3,167 | - | - | 3,167 | ||||||||||||||
Deferral
of executive and
director
compensation
|
- | - | - | - | 772 | - | - | 772 | ||||||||||||||
Executive
and director deferred
compensation
distributions
|
- | - | 43,641 | - | (867 | ) | - | 867 | - | |||||||||||||
Balance
at December 31, 2007
|
4,000 |
$
|
96,325 | 14,004,790 |
$
|
176 |
$
|
79,428 |
$
|
477,339 |
$
|
(71,923 | ) |
$
|
581,345 | |||||||
Net
loss
|
- | - | - | - | - | (245,448 | ) | - | (245,448 | ) | ||||||||||||
Dividends
on preferred shares,
$1,218.75
per share
|
- | - | - | - | - | (4,875 | ) | - | (4,875 | ) | ||||||||||||
Dividends
on common shares,
$0.05
per share
|
- | - | - | - | - | (1,060 | ) | - | (1,060 | ) | ||||||||||||
Income
tax benefit from stock
options
and deferred
compensation
distributions
|
- | - | - | - | (97 | ) | - | - | (97 | ) | ||||||||||||
Stock
options exercised – net of restricted stock forfeitures
|
- | - | 5,527 | - | (35 | ) | - | 110 | 75 | |||||||||||||
Share-based
compensation
expense
|
- | - | - | - | 2,983 | - | - | 2,983 | ||||||||||||||
Deferral
of executive and
director
compensation
|
- | - | - | - | 138 | - | - | 138 | ||||||||||||||
Executive
and director deferred
compensation
distributions
|
- | - | 13,665 | - | (271 | ) | - | 271 | - | |||||||||||||
Balance
at December 31, 2008
|
4,000 |
$
|
96,325 | 14,023,982 |
$
|
176 |
$
|
82,146 |
$
|
225,956 |
$
|
(71,542 | ) |
$
|
333,061 |
Years
Ended
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES:
|
|||||||||
Net
(loss) income
|
$ | (245,448 | ) | $ | (128,126 | ) | $ | 38,875 | |
Adjustments
to reconcile net (loss) income to net cash provided by (used) in operating
activities:
|
|||||||||
Inventory
valuation adjustments and abandoned land transaction
write-offs
|
134,160 | 196,952 | 76,326 | ||||||
Impairment
of investment in unconsolidated limited liability
companies
|
24,452 | 13,125 | 2,440 | ||||||
Impairment
of goodwill and intangible assets
|
- | 5,175 | - | ||||||
Impairment
of property and equipment
|
3,283 | - | - | ||||||
Mortgage
loan originations
|
(382,992 | ) | (586,520 | ) | (666,863 | ) | |||
Proceeds
from the sale of mortgage loans
|
405,107 | 586,846 | 675,531 | ||||||
Fair
value adjustment of mortgage loans held for sale
|
(2,395 | ) | 487 | 443 | |||||
Net
(gain) loss from property disposals
|
(5,524 | ) | 373 | 112 | |||||
Bad
debt expense
|
1,255 | - | - | ||||||
Depreciation
|
6,197 | 5,912 | 3,936 | ||||||
Amortization
of intangibles, debt discount and debt issue costs
|
1,557 | 2,081 | 2,795 | ||||||
Stock-based
compensation expense
|
2,983 | 3,167 | 3,057 | ||||||
Deferred
income tax benefit
|
(40,740 | ) | (28,144 | ) | (28,216 | ) | |||
Deferred
tax asset valuation allowance
|
108,607 | - | - | ||||||
Income
tax receivable
|
14,211 | (53,667 | ) | - | |||||
Excess
tax benefits from stock-based payment arrangements
|
97 | (72 | ) | (229 | ) | ||||
Equity
in undistributed loss of limited liability companies
|
431 | 892 | 62 | ||||||
Write-off
of unamortized debt discount and financing costs
|
1,059 | 534 | 195 | ||||||
Change
in assets and liabilities:
|
|||||||||
Cash
held in escrow
|
14,597 | 37,720 | (27,152 | ) | |||||
Inventory
|
161,087 | 180,517 | (158,236 | ) | |||||
Other
assets
|
8,695 | (930 | ) | (6,030 | ) | ||||
Accounts
payable
|
(42,882 | ) | (10,776 | ) | 7,495 | ||||
Customer
deposits
|
(4,798 | ) | (11,110 | ) | (16,167 | ) | |||
Accrued
compensation
|
(2,848 | ) | (12,257 | ) | (3,050 | ) | |||
Other
liabilities
|
(11,276 | ) | 32 | (9,336 | ) | ||||
Net
cash provided by (used in) operating activities
|
148,875 | 202,211 | (104,012 | ) | |||||
|
|||||||||
INVESTING
ACTIVITIES:
|
|||||||||
Purchase
of property and equipment
|
(3,947 | ) | (4,461 | ) | (4,806 | ) | |||
Proceeds
from the sale of property
|
9,454 | - | - | ||||||
Investment
in unconsolidated limited liability companies
|
(5,196 | ) | (9,978 | ) | (17,041 | ) | |||
Return
of investment from unconsolidated limited liability
companies
|
431 | 578 | 89 | ||||||
Net
cash provided by (used in) investing activities
|
742 | (13,861 | ) | (21,758 | ) | ||||
|
|||||||||
FINANCING
ACTIVITIES:
|
|||||||||
Net
(repayments of) proceeds from bank borrowings
|
(110,465 | ) | (284,500 | ) | 133,900 | ||||
Principal
repayments of mortgage notes payable and community
development
|
|||||||||
district
bond obligations
|
(331 | ) | (509 | ) | (1,357 | ) | |||
Proceeds
from preferred shares issuance – net of issuance costs
of $3,675
|
- | 96,325 | - | ||||||
Debt
issue costs
|
(1,063 | ) | (847 | ) | (1,721 | ) | |||
Payments
on capital lease obligations
|
(789 | ) | (984 | ) | (183 | ) | |||
Dividends
paid
|
(5,935 | ) | (8,721 | ) | (1,415 | ) | |||
Proceeds
from exercise of stock options
|
75 | 804 | 641 | ||||||
Excess
tax benefits from stock-based payment arrangements
|
(97 | ) | 72 | 229 | |||||
Common
share repurchases
|
- | - | (17,893 | ) | |||||
Net
cash (used in) provided by financing activities
|
(118,605 | ) | (198,360 | ) | 112,201 | ||||
Net
increase (decrease) in cash
|
31,012 | (10,010 | ) | (13,569 | ) | ||||
Cash
balance at beginning of year
|
1,506 | 11,516 | 25,085 | ||||||
Cash
balance at end of year
|
$ | 32,518 | $ | 1,506 | $ | 11,516 | |||
|
|||||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|||||||||
Cash
paid during the year for:
|
|||||||||
Interest
– net of amount capitalized
|
$ | 3,455 | $ | 16,272 | $ | 14,337 | |||
Income
taxes
|
$ | 525 | $ | 10,246 | $ | 57,918 | |||
|
|||||||||
NON-CASH
TRANSACTIONS DURING THE YEAR:
|
|||||||||
Community
development district infrastructure
|
$ | (1,304 | ) | $ | (6,899 | ) | $ | 10,891 | |
Consolidated
inventory not owned
|
$ | (1,884 | ) | $ | 2,407 | $ | 934 | ||
Capital
lease obligations
|
$ | - | $ | (1,457 | ) | $ | 753 | ||
Distribution
of single-family lots from unconsolidated limited liability
companies
|
$ | 9,969 | $ | 7,912 | $ | 16,609 | |||
Non-monetary
exchange of fixed assets
|
$ | 13,000 | - | - | |||||
Contribution
of property to unconsolidated limited liability companies
|
- | 958 | - | ||||||
Deferral
of executive and director compensation
|
$ | 138 | $ | 772 | $ | 990 | |||
Executive
and director deferred stock distributions
|
$ | 271 | $ | 867 | $ | 547 | |||
|
●
|
historical
project results such as average sales price and sales rates, if closings
have occurred in the project;
|
●
|
competitors’
local market and/or community presence and their competitive
actions;
|
●
|
project-specific
attributes such as location desirability and uniqueness of product
offering;
|
●
|
potential
for alternative product offerings to respond to local market
conditions;
|
●
|
current
local market economic and demographic conditions and related trends and
forecasts;
|
●
|
community-specific
strategies regarding speculative
homes.
|
Year
Ended December 31,
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Capitalized
interest, beginning of year
|
$ | 29,212 | $ | 29,492 | $ | 16,787 | |||
Interest
capitalized to inventory
|
9,593 | 18,118 | 24,946 | ||||||
Capitalized
interest charged to cost of sales
|
(12,969 | ) | (18,398 | ) | (12,241 | ) | |||
Capitalized
interest, end of year
|
$ | 25,836 | $ | 29,212 | $ | 29,492 | |||
|
|||||||||
Interest
incurred – continuing operations
|
$ | 20,790 | $ | 33,461 | $ | 40,753 |
December
31,
|
||||||
(In
thousands)
|
2008
|
2007
|
||||
Land,
building and improvements
|
$ | 11,823 | $ | 11,823 | ||
Office
furnishings, leasehold improvements, computer equipment and computer
software
|
21,542 | 18,153 | ||||
Transportation
and construction equipment
|
10,015 | 22,528 | ||||
Property
and equipment
|
43,380 | 52,504 | ||||
Accumulated
depreciation
|
(15,648 | ) | (16,805 | ) | ||
Property
and equipment, net
|
$ | 27,732 | $ | 35,699 |
Estimated
Useful
Lives
|
|
Building
and improvements
|
35
years
|
Office
furnishings, leasehold improvements, computer equipment and computer
software
|
3-7
years
|
Transportation
and construction equipment
|
5-20
years
|
●
|
Home
Builder’s Limited Warranty –warranty program, which became effective for
homes closed starting with the third quarter of 2007;
|
●
|
30-year
transferable structural warranty – effective for homes closed after April
25, 1998;
|
●
|
two-year
limited warranty program – effective prior to the implementation of the
new Home Builder’s Limited Warranty; and
|
●
|
20-year
transferable structural warranty – effective for homes closed between
September 1, 1989 and April 24,
1998.
|
Year
Ended December 31,
|
|||||||||||||||||||||||
(In
thousands, except per share amounts)
|
2008
|
2007
|
2006
|
||||||||||||||||||||
Loss
|
Shares
|
EPS
|
Loss
|
Shares
|
EPS
|
Income
|
Shares
|
EPS
|
|||||||||||||||
Basic
(loss) earnings from continuing
|
|||||||||||||||||||||||
operations
|
$ | (245,415 | ) | $ | (92,480 | ) | $ | 29,297 | |||||||||||||||
Less:
preferred stock dividends
|
4,875 | 7,313 | - | ||||||||||||||||||||
(Loss)
income to common
|
|||||||||||||||||||||||
shareholders
from continuing
operations
|
$ | (250,290 | ) | 14,016 | $ | (17.86 | ) | $ | (99,793 | ) | 13,977 | $ | (7.14 | ) | $ | 29,297 | 13,970 | $ | 2.10 | ||||
Effect
of dilutive securities:
|
|||||||||||||||||||||||
Stock
options awards
|
- | - | 71 | ||||||||||||||||||||
Deferred
compensation awards
|
- | - | 127 | ||||||||||||||||||||
Diluted
(loss) earnings
|
|||||||||||||||||||||||
to
common shareholders from
|
|||||||||||||||||||||||
continuing
operations
|
$ | (250,290 | ) | 14,016 | $ | (17.86 | ) | $ | (99,793 | ) | 13,977 | $ | (7.14 | ) | $ | 29,297 | 14,168 | $ | 2.07 | ||||
Anti-dilutive
stock equivalent awards
|
|||||||||||||||||||||||
not
included in the calculation
|
|||||||||||||||||||||||
of
diluted (loss) earnings per share
|
1,386 | 1,159 | 707 |
●
|
future
reversals of existing taxable temporary differences (i.e., offset gross
deferred tax assets against gross deferred tax
liabilities);
|
●
|
taxable
income in prior carryback years;
|
●
|
tax
planning strategies; and
|
●
|
future
taxable income, exclusive of reversing temporary differences and
carryforwards.
|
●
|
a
strong earnings history exclusive of the loss that created the deductible
temporary differences, coupled with evidence indicating that the loss is
the result of an aberration rather than a continuing
condition;
|
●
|
an
excess of appreciated asset value over the tax basis of a company’s net
assets in an amount sufficient to realize the deferred tax asset;
and
|
●
|
existing
backlog that will produce more than enough taxable income to realize the
deferred tax asset based on existing sales prices and cost
structures.
|
●
|
the
existence of “cumulative losses” (defined as a pre-tax cumulative loss for
the business cycle – in our case, four years);
|
●
|
an
expectation of being in a cumulative loss position in a future reporting
period;
|
●
|
a
carryback or carryforward period that is so brief that it would limit the
realization of tax benefits;
|
●
|
a
history of operating loss or tax credit carryforwards expiring unused;
and
|
●
|
unsettled
circumstances that, if unfavorably resolved, would adversely affect future
operations and profit levels on a continuing
basis.
|
●
|
additional
inventory impairments;
|
●
|
additional
pre-tax operating losses; or
|
●
|
the
utilization of tax planning strategies that could accelerate the
realization of certain deferred tax
assets.
|
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term (Years)
|
Aggregate
Intrinsic
Value (a)
(In
thousands)
|
||||||
Options
outstanding at December 31, 2007
|
998,350 | $ |
39.31
|
7.20
|
$ |
48
|
|||
Granted
|
408,500 |
17.66
|
|||||||
Exercised
|
(5,700 | ) |
12.89
|
||||||
Forfeited
|
(209,950 | ) |
33.80
|
||||||
Options
outstanding at December 31, 2008
|
1,191,200 | $ |
32.98
|
7.05
|
$ |
41
|
|||
Options
vested or expected to vest at December 31, 2008
|
1,096,666 | $ |
33.21
|
6.96
|
$ |
41
|
|||
Options
exercisable at December 31, 2008
|
686,816 | $ |
37.09
|
6.06
|
$ |
41
|
(a)
|
Intrinsic
value is defined as the amount by which the fair value of the underlying
common shares exceeds the exercise price of the
option.
|
Year Ended December 31,
|
|||||||||||
2008
|
2007
|
2006
|
|||||||||
Expected
dividend yield
|
0.40 | % | 0.25 | % | 0.20 | % | |||||
Risk-free
interest rate
|
2.71 | % | 4.80 | % | 4.35 | % | |||||
Expected
volatility
|
41.98 | % | 33.9 | % | 34.8 | % | |||||
Expected
term (in years)
|
6.2 | 5.0 | 6.5 | ||||||||
Weighted
average grant date fair value of options granted during the
period
|
$ | 7.61 | $ | 12.60 | $ | 17.71 |
Year Ended December
31,
|
|||||||||
2008
|
2007
|
2006
|
|||||||
Expected
dividend yield
|
-
|
0.25 | % |
-
|
|||||
Risk-free interest rate |
-
|
4.84 | % |
-
|
|||||
Expected
volatility
|
-
|
31.9 | % |
-
|
|||||
Expected
term (in years)
|
-
|
3.0 |
-
|
||||||
Weighted
average grant date fair value of options granted during the
period
|
-
|
$ | 9.19 |
-
|
Shares
|
Weighted
Average
Grant
Date
Fair Value
|
|||
Nonvested
restricted shares at December 31, 2007
|
3,001 | $ | 33.86 | |
Grants
|
- | - | ||
Vested
|
(998 | ) | 33.86 | |
Forfeited
|
(173 | ) | 33.86 | |
Nonvested
restricted shares at December 31, 2008
|
1,830 | $ | 33.86 |
December
31,
|
|||||
(In
thousands)
|
2008
|
2007
|
|||
Single-family
lots, land and land development costs
|
$ | 333,651 | $ | 489,953 | |
Land
held for sale
|
2,804 | 8,523 | |||
Homes
under construction
|
150,949 | 264,912 | |||
Model
homes and furnishings - at cost (less accumulated
depreciation: December 31, 2008 - $2,130;
|
|||||
December
31, 2007 - $1,236)
|
12,928 | 11,750 | |||
Community
development district infrastructure
|
10,376 | 11,625 | |||
Land
purchase deposits
|
1,070 | 4,431 | |||
Consolidated
inventory not owned
|
4,251 | 6,135 | |||
Total
inventory
|
$ | 516,029 | $ | 797,329 |
Fair
Value
|
Quoted
Prices in Active
|
Significant
|
|||||||||
Measurements
|
Markets
for Identical
|
Significant
Other
|
Unobservable
|
||||||||
Description
of Financial Instrument
|
December
31,
|
Assets
|
Observable
Inputs
|
Inputs
|
|||||||
(In
thousands)
|
2008
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||
Mortgage
loans held for sale
|
$ | 1,464 | $ |
-
|
$ | 1,464 | $ |
-
|
|||
Forward
sales of mortgage-backed securities
|
(1,104 | ) |
-
|
(1,104 | ) |
-
|
|||||
Interest
rate lock commitments
|
638 |
-
|
638 |
-
|
|||||||
Best-efforts
contracts
|
73 |
-
|
73 |
-
|
|||||||
Total
|
$ | 1,071 | $ |
-
|
$ | 1,071 | $ |
-
|
Year
Ended December 31,
|
||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
|||||
Impairment
of operating communities:
|
||||||||
Midwest
|
$ | 44,359 | $ | 6,600 | $ | 17,747 | ||
Florida
|
14,770 | 22,985 | 1,366 | |||||
Mid-Atlantic
|
30,225 | 33,691 | 33,670 | |||||
Total
impairment of operating communities (a)
|
$ | 89,354 | $ | 63,276 | $ | 52,783 | ||
Impairment
of future communities:
|
||||||||
Midwest
|
$ | 1,524 | $ | 1,527 | $ | 1,077 | ||
Florida
|
4,380 | 12,619 | 1,375 | |||||
Mid-Atlantic
|
- | 6,923 | 7,604 | |||||
Total
impairment of future communities (a)
|
$ | 5,904 | $ | 21,069 | $ | 10,056 | ||
Impairment
of land held for sale:
|
||||||||
Midwest
|
$ | 8,727 | $ | - | $ | 1,921 | ||
Florida
|
24,554 | 37,701 | - | |||||
Mid-Atlantic
|
309 | 13,206 | - | |||||
Total
impairment of land held for sale (a)
|
$ | 33,590 | $ | 50,907 | $ | 1,921 | ||
Option
deposits and pre-acquisition costs write-offs:
|
||||||||
Midwest
|
$ | 311 | $ | 676 | $ | 3,713 | ||
Florida
(b)
|
162 | 1,840 | 1,208 | |||||
Mid-Atlantic
|
4,839 | 1,096 | 632 | |||||
Total
option deposits and pre-acquisition costs write-offs (c)
|
$ | 5,312 | $ | 3,612 | $ | 5,553 | ||
Impairment
of investments in unconsolidated LLCs:
|
||||||||
Midwest
|
$ | 1,413 | $ | - | $ | 562 | ||
Florida
|
23,039 | 13,125 | 1,878 | |||||
Mid-Atlantic
|
- | - | - | |||||
Total
impairment of investments in unconsolidated LLCs (a)
|
$ | 24,452 | $ | 13,125 | $ | 2,440 | ||
Total
impairments and write-offs of option deposits and
|
||||||||
pre-acquisition
costs (d)
|
$ | 158,612 | $ | 151,989 | $ | 72,753 |
December
31,
|
|||||
(In
thousands)
|
2008
|
2007
|
|||
Assets:
|
|||||
Single-family
lots, land and land development costs
|
$ | 41,255 | $ | 165,646 | |
Other
assets
|
1,829 | 3,989 | |||
Total
assets
|
$ | 43,084 | $ | 169,635 | |
Liabilities
and partners’ equity:
|
|||||
Liabilities:
|
|||||
Notes
payable
|
$ | 11,678 | $ | 71,490 | |
Other
liabilities
|
687 | 8,429 | |||
Total
liabilities
|
12,365 | 79,919 | |||
Partners’
equity:
|
|||||
Company’s
equity
|
13,130 | 40,343 | |||
Other
equity
|
17,589 | 49,373 | |||
Total
partners’ equity
|
30,719 | 89,716 | |||
Total
liabilities and partners’ equity
|
$ | 43,084 | $ | 169,635 |
Year
Ended December 31,
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Revenue
|
$ | 2,417 | $ | 1,081 | $ | 275 | |||
Costs
and expenses
|
16,143 | 2,713 | 301 | ||||||
Loss
|
$ | (13,726 | ) | $ | (1,632 | ) | $ | (26 | ) |
Year-Ended
December 31,
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Warranty
accruals, beginning of year
|
$ | 12,006 | $ | 14,095 | $ | 13,940 | |||
Warranty
expense on homes delivered during the period
|
4,791 | 7,709 | 9,899 | ||||||
Changes
in estimates for pre-existing warranties
|
1,279 | 18 | (272 | ) | |||||
Settlements
made during the period
|
(8,558 | ) | (9,816 | ) | (9,472 | ) | |||
Warranty
accruals, end of year
|
$ | 9,518 | $ | 12,006 | $ | 14,095 |
Issue
Date
|
Maturity
Date
|
Interest
Rate
|
Principal
Amount
(in
thousands)
|
|||
7/15/2004
|
12/1/2022
|
6.00%
|
$
|
4,374
|
||
7/15/2004
|
12/1/2036
|
6.25%
|
10,060
|
|||
5/1/2004
|
5/1/2035
|
6.00%
|
9,135
|
|||
3/15/2007
|
5/1/2037
|
5.20%
|
7,005
|
|||
Total
CDD bond obligations issued and outstanding as of December 31,
2008
|
$
|
30,574
|
Year
Ended December 31,
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Federal
|
$ | 26,448 | $ | (48,955 | ) | $ | 12,309 | ||
State
and local
|
3,843 | (9,441 | ) | 3,700 | |||||
Total
|
$ | 30,291 | $ | (58,396 | ) | $ | 16,009 |
Year
Ended December 31,
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Current
|
$ | (37,576 | ) | $ | (31,585 | ) | $ | 46,085 | |
Deferred
|
67,867 | (26,811 | ) | (30,076 | ) | ||||
Total
|
$ | 30,291 | $ | (58,396 | ) | $ | 16,009 |
Year
Ended December 31,
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Federal
taxes at statutory rate
|
$ | (75,312 | ) | $ | (52,807 | ) | $ | 15,857 | |
State
and local taxes – net of federal tax benefit
|
2,498 | (6,137 | ) | 2,405 | |||||
Change
in FIN 48 reserve
|
(1,469 | ) | (641 | ) | - | ||||
Manufacturing
credit
|
(1,269 | ) | 1,519 | (1,354 | ) | ||||
Change
in valuation allowance
|
108,608 | 250 | - | ||||||
Other
|
(2,765 | ) | (580 | ) | (899 | ) | |||
Total
|
$ | 30,291 | $ | (58,396 | ) | $ | 16,009 |
(In
thousands)
|
|||
Balance
at January 1, 2008
|
$ | 6,146 | |
Additions
based on tax positions related to the current year
|
- | ||
Additions
for tax positions of prior years
|
471 | ||
Reductions
for tax positions of prior years
|
(827 | ) | |
Settlements
|
(1,113 | ) | |
Balance
at December 31, 2008
|
$ | 4,677 |
December
31,
|
|||||
(In
thousands)
|
2008
|
2007
|
|||
Deferred
tax assets:
|
|||||
Warranty,
insurance and other accruals
|
$ | 12,177 | $ | 18,231 | |
Inventory
|
61,493 | 49,188 | |||
State
taxes
|
27 | 20 | |||
Net
operating loss carryforward
|
35,893 | 5,500 | |||
Deferred
charges
|
2,126 | 2,431 | |||
Total
deferred tax assets
|
111,716 | 75,370 | |||
Deferred
tax liabilities:
|
|||||
Depreciation
|
2,421 | 6,732 | |||
Prepaid
expenses
|
437 | 521 | |||
Total
deferred tax liabilities
|
2,858 | 7,253 | |||
Less
valuation allowance
|
108,858 | 250 | |||
Net
deferred tax asset
|
$ | - | $ | 67,867 |
December
31, 2008
|
December
31, 2007
|
||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
||||||||
(In
thousands)
|
Amount
|
Value
|
Amount
|
Value
|
|||||||
Assets:
|
|||||||||||
Cash,
including cash in escrow
|
$ | 39,176 | $ | 39,176 | $ | 22,745 | $ | 22,745 | |||
Mortgage
loans held for sale
|
37,772 | 37,772 | 54,127 | 54,127 | |||||||
Other
assets
|
14,282 | 13,813 | 18,516 | 24,745 | |||||||
Notes
receivable
|
5,000 | 5,356 | 12,528 | 12,321 | |||||||
Commitments
to extend real estate loans
|
638 | 638 | 226 | 226 | |||||||
Best-efforts
contracts for committed IRLCs and mortgage loans
|
|||||||||||
held
for sale
|
73 | 73 | - | - | |||||||
Forward
sale of mortgage-backed securities
|
- | - | - | - | |||||||
Liabilities:
|
|||||||||||
Notes
payable - banks
|
35,078 | 35,078 | 155,400 | 155,400 | |||||||
Mortgage
notes payable
|
6,442 | 9,819 | 6,703 | 7,055 | |||||||
Notes
payable - other
|
9,857 | 9,857 | |||||||||
Senior
notes
|
199,168 | 105,000 | 198,912 | 163,000 | |||||||
Commitments
to extend real estate loans
|
- | - | - | - | |||||||
Best-efforts
contracts for committed IRLCs and mortgage loans
|
|||||||||||
held
for sale
|
- | - | 107 | 107 | |||||||
Forward
sale of mortgage-backed securities
|
1,104 | 1,104 | 617 | 617 | |||||||
Other
liabilities
|
54,183 | 54,183 | 57,749 | 57,749 | |||||||
Off-Balance
Sheet Financial Instruments:
|
|||||||||||
Letters
of credit
|
- | 727 | - | 551 |
Midwest
|
Florida
|
Mid-Atlantic
|
Columbus,
Ohio
|
Tampa,
Florida
|
Washington,
D.C.
|
Cincinnati,
Ohio
|
Orlando,
Florida
|
Charlotte,
North Carolina
|
Indianapolis,
Indiana
|
Raleigh,
North Carolina
|
|
Chicago,
Illinois
|
Years
Ended
|
|||||||||
(In
thousands)
|
2008
|
2007
|
2006
|
||||||
Revenue:
|
|||||||||
Midwest
homebuilding
|
$ | 232,715 | $ | 358,441 | $ | 493,156 | |||
Florida
homebuilding
|
151,643 | 312,930 | 496,998 | ||||||
Mid-Atlantic
homebuilding
|
202,038 | 326,451 | 260,059 | ||||||
Other
homebuilding – unallocated (a)
|
7,131 | (424 | ) | 647 | |||||
Financial
services
|
14,132 | 19,062 | 27,125 | ||||||
Intercompany
eliminations
|
- | - | (3,840 | ) | |||||
Total
revenue
|
$ | 607,659 | $ | 1,016,460 | $ | 1,274,145 | |||
|
|||||||||
Operating
(loss) income:
|
|||||||||
Midwest
homebuilding (b)
|
$ | (73,073 | ) | $ | (10,377 | ) | $ | 897 | |
Florida
homebuilding (b)
|
(71,864 | ) | (63,117 | ) | 100,390 | ||||
Mid-Atlantic
homebuilding (b)
|
(41,491 | ) | (43,547 | ) | (21,955 | ) | |||
Other
homebuilding – unallocated (a)
|
503 | 386 | 156 | ||||||
Financial
services
|
6,010 | 8,517 | 15,816 | ||||||
Less:
Corporate selling, general and administrative expense (c)
|
(29,567 | ) | (27,395 | ) | (34,191 | ) | |||
Total
operating (loss) income
|
$ | (209,482 | ) | $ | (135,533 | ) | $ | 61,113 | |
|
|||||||||
Interest
expense:
|
|||||||||
Midwest
homebuilding
|
$ | 5,197 | $ | 4,788 | $ | 6,408 | |||
Florida
homebuilding
|
2,335 | 5,877 | 4,609 | ||||||
Mid-Atlantic
homebuilding
|
3,209 | 3,815 | 4,384 | ||||||
Financial
services
|
456 | 636 | 406 | ||||||
Corporate
|
- | 227 | - | ||||||
Total
interest expense
|
$ | 11,197 | $ | 15,343 | $ | 15,807 |
|
||
|
|||||||||
Other
income (d)
|
$ | 5,555 | - | - | |||||
(Loss) income
from continuing operations before income taxes
|
$ | (215,124 | ) | $ | (150,876 | ) | $ | 45,306 | |
|
|||||||||
Assets:
|
|||||||||
Midwest
homebuilding
|
$ | 242,066 | $ | 354,220 | $ | 432,572 | |||
Florida
homebuilding
|
121,587 | 241,603 | 426,806 | ||||||
Mid-Atlantic
homebuilding
|
185,268 | 276,887 | 349,929 | ||||||
Financial
services
|
60,992 | 62,411 | 61,145 | ||||||
Corporate
|
83,375 | 167,926 | 110,661 | ||||||
Assets
of discontinued operation
|
- | 14,598 | 95,966 | ||||||
Total
assets
|
$ | 693,288 | $ | 1,117,645 | $ | 1,477,079 | |||
|
|||||||||
Investment
in unconsolidated LLCs:
|
|||||||||
Midwest
homebuilding
|
$ | 6,359 | $ | 15,705 | $ | 17,570 | |||
Florida
homebuilding
|
6,771 | 24,638 | 32,078 | ||||||
Mid-Atlantic
homebuilding
|
- | - | - | ||||||
Financial
services
|
- | - | - | ||||||
Total
investment in unconsolidated LLCs
|
$ | 13,130 | $ | 40,343 | $ | 49,648 | |||
|
|||||||||
Depreciation
and amortization:
|
|||||||||
Midwest
homebuilding
|
$ | 336 | $ | 543 | $ | 182 | |||
Florida
homebuilding
|
1,288 | 1,603 | 1,689 | ||||||
Mid-Atlantic
homebuilding
|
1,028 | 849 | 244 | ||||||
Financial
services
|
471 | 498 | 383 | ||||||
Corporate
|
4,631 | 4,495 | 4,229 | ||||||
Total
depreciation and amortization
|
$ | 7,754 | $ | 7,988 | $ | 6,727 |
Three
Months Ended
|
||||||||||||
December
31,
|
September
30,
|
June
30,
|
March
31,
|
|||||||||
2008
|
2008
|
2008
|
2008
|
|||||||||
(In
thousands)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||
Revenue
|
$ | 150,187 | $ | 160,385 | $ | 141,002 | $ | 156,085 | ||||
Gross
margin (a)
|
$ | (35,832 | ) | $ | (24,280 | ) | $ | (21,103 | ) | $ | 3,410 | |
Net
loss from continuing operations (b)
|
$ | (75,360 | ) | $ | (58,655 | ) | $ | (91,250 | ) | $ | (20,150 | ) |
Discontinued
operation, net of tax (c)
|
$ | - | $ | - | $ | (413 | ) | $ | 380 | |||
Net
loss
|
$ | (75,360 | ) | $ | (58,655 | ) | $ | (91,663 | ) | $ | (19,770 | ) |
Three
Months Ended
|
||||||||||||
December
31,
|
September
30,
|
June
30,
|
March
31,
|
|||||||||
2007
|
2007
|
2007
|
2007
|
|||||||||
(Dollars
in thousands)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||
Revenue
|
$ | 340,460 | $ | 232,983 | $ | 226,448 | $ | 216,569 | ||||
Gross
margin (a)
|
$ | (20,388 | ) | $ | 20,858 | $ | (10,226 | ) | $ | 45,243 | ||
Net
(loss) income from continuing operations (b)
|
$ | (42,315 | ) | $ | (16,805 | ) | $ | (35,431 | ) | $ | 2,071 | |
Discontinued
operation, net of tax (c)
|
$ | (26,145 | ) | $ | (4,912 | ) | $ | (4,748 | ) | $ | 159 | |
Net
(loss) income
|
$ | (68,460 | ) | $ | (21,717 | ) | $ | (40,179 | ) | $ | 2,230 |
(a)
|
First,
second, third and fourth quarters of 2008 include the impact of charges
relating to the impairment of inventory and investment in unconsolidated
LLCs of $21.1 million, $39.9 million, $43.1 million and $49.2 million,
respectively. First, second, third and fourth quarters of 2007
include the impact of charges relating to the impairment of inventory and
investment in unconsolidated LLCs of $1.2 million, $58.2 million, $24.2
million and $64.8 million,
respectively.
|
(b)
|
First,
second, third and fourth quarters of 2008 include the impact of charges
relating to the impairment of inventory and investment in unconsolidated
LLCs and the write-off of land deposits and pre-acquisition costs of $22.3
million, $39.9 million, $43.5 million and $52.9 million,
respectively. First, second, third and fourth quarters of 2007
include the impact of charges relating to the impairment of inventory and
investment in unconsolidated LLCs, the write-off of land deposits and
pre-acquisition costs and the write-off of goodwill and intangible assets
of $1.4 million, $39.8 million, $15.4 million and $40.4 million,
respectively.
|
(c)
|
There
were no charges relating to the impairment of inventory and investment in
unconsolidated LLCs, write-offs of land deposits and pre-acquisition costs
or the write-off of goodwill and intangible assets included in
discontinued operation in 2008 or for the first quarter of
2007. Discontinued operation for the second, third and fourth
quarters of 2007 includes the impact of charges relating to the impairment
of inventory and investment in unconsolidated LLCs, write-offs of land
deposits and pre-acquisition costs and the write-off of goodwill and
intangible assets of $4.9 million, $5.0 million and $26.3 million,
respectively.
|
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL
DISCLOSURE
|
ITEM
9A. CONTROLS AND
PROCEDURES
|
ITEM
9B. OTHER
INFORMATION
|
/s/
DELOITTE & TOUCHE LLP
|
Deloitte
& Touche
LLP
|
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
ITEM
11. EXECUTIVE
COMPENSATION
|
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
(a)
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
||
Equity
compensation plans approved by shareholders (1)
|
1,216,182
|
$32.98
|
468,436
|
||
Equity
compensation plans not approved by shareholders (2)
|
95,782
|
-
|
675,237
|
||
Total
|
1,311,964
|
$32.98
|
1,143,673
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR
|
ITEM
14. PRINCIPAL ACCOUNTING FEES AND
SERVICES
|
(a) Documents filed as part of this
report
|
||||
(1) The
following financial statements are contained in Item 8:
|
||||
Page
in
|
||||
this
|
||||
Financial Statements
|
Report
|
|||
Report
of Independent Registered Public Accounting Firm
|
51
|
|||
Consolidated
Statements of Operations for the Years Ended December 31, 2008, 2007 and
2006
|
52
|
|||
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
53
|
|||
Consolidated
Statements of Shareholders’ Equity for the Years Ended December 31, 2008,
2007
|
||||
and
2006
|
54
|
|||
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and
2006
|
55
|
|||
Notes
to Consolidated Financial Statements
|
56-82
|
|||
(2)
|
Financial
Statement Schedules:
|
|||
|
||||
None
required.
|
||||
|
||||
(3)
|
Exhibits:
|
Exhibit
Number
|
Description
|
|
|
||
3.1
|
Amended
and Restated Articles of Incorporation of the Company, hereby incorporated
by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 1993.
|
|
|
||
3.2
|
Amended
and Restated Regulations of the Company, hereby incorporated by reference
to Exhibit 3.4 of the Company’s Annual Report on Form 10-K of the fiscal
year ended December 31, 1998.
|
|
|
||
3.3
|
Amendment
of Article I(f) of the Company’s Amended and Restated Code of Regulations
to permit shareholders to appoint proxies in any manner permitted by Ohio
law, hereby incorporated by reference to Exhibit 3.1(b) of the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30,
2001.
|
|
|
||
3.4
|
Amendment
to Article First of the Company’s Amended and Restated Articles of
Incorporation dated January 9, 2004, hereby incorporated by reference to
Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2006.
|
|
|
||
3.5
|
Certificate
of Amendment by Directors to Article Fourth of the Company’s Amended and
Restated Articles of Incorporation dated March 13, 2007, incorporated
herein by reference to Exhibit 3.1 of the Company’s Current Report on From
8-K filed March 15, 2007.
|
|
|
||
4.1
|
Specimen
of Stock Certificate, hereby incorporated by reference to Exhibit 4 of the
Company’s Registration Statement on Form S-1, Commission File No.
33-68564.
|
|
|
||
4.2
|
Indenture
dated as of March 24, 2005 by and among M/I Homes, Inc., its guarantors as
named in the Indenture and U.S. Bank National Association, as trustee of
the 6 7/8% Senior Notes due 2012, hereby incorporated by reference to
Exhibit 4.1 of the Company’s Current Report on Form 8-K dated as of March
24, 2005.
|
|
|
||
4.3
|
Registration
Rights Agreement dated as of March 24, 2005, among the Company, the
Guarantors listed on the signature page thereof and the Initial Purchasers
listed on the signature page thereof, incorporated herein by reference to
Exhibit 4.2 of the Company’s Current Report on Form 8-K dated as of March
24, 2005.
|
|
|
||
4.4
|
Specimen
certificate representing the 9.75% Series A Preferred Shares, par value
$0.1 per share, of the Company, incorporated herein by reference to
Exhibit 4.1 of the Company’s Current Report on Form 8-K filed March 15,
2007.
|
10.1*
|
The
M/I Homes, Inc. 401(k) Profit Sharing Plan as Amended and Restated,
adopted as of January 1, 1997, hereby incorporate by reference to Exhibit
10.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2003.
|
|
10.2*
|
Amendment
Number 1 of the M/I Homes, Inc. 401(k) Profit Sharing Plan for the
Economic Growth and Tax Relief Reconciliation Act of 2001 dated November
12, 2002, hereby incorporated by reference to Exhibit 10.1 of the
Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2002.
|
|
10.3*
|
Second
Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated November
11, 2003, hereby incorporated by reference to Exhibit 10.3 of the
Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2003.
|
|
10.4*
|
Third
Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated January
26, 2005, hereby incorporated by reference to Exhibit 10.4 of the
Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2004.
|
|
10.5*
|
Fourth
Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated July 1,
2005, hereby incorporated by reference to Exhibit 10.1 of the Company’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2005.
|
|
10.6*
|
Fifth
Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated November
7, 2006, incorporated herein by reference to Exhibit 10.6 to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2006.
|
|
10.7*
|
Sixth
Amendment to the M/I Homes, Inc. 401(k) Profit Sharing Plan dated December
13, 2006, incorporated herein by reference to Exhibit 10.7 to the
Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2006.
|
|
10.8
|
Second
Amended and Restated Credit Agreement effective as of October 6, 2006 by
and among M/I Homes, Inc., as borrower; JPMorgan Chase Bank, N.A. as agent
for the lenders and Wachovia Bank National Association, as syndication
agent; The Huntington National Bank, KeyBank National Association, Charter
One Bank, N.A. SunTrust Bank, AmSouth Bank, Bank of Montreal, Guaranty
Bank, National City Bank and U.S. Bank National Association, as co-agents;
JPMorgan Chase Bank, N.A., Wachovia Bank, National Association, The
Huntington National Bank, KeyBank National Association, Charter One Bank,
N.A., SunTrust Bank, AmSouth Bank, Bank of Montreal, Guaranty Bank,
National City Bank, U.S. Bank National Association, LaSalle Bank National
Association, PNC Bank, N.A., City National Bank, Fifth Third Bank,
Franklin Bank, S.S.B., Comerica Bank, and Bank United, F.S.B., as banks;
and J.P. Morgan Securities Inc., as lead arranger and sole bookrunner,
incorporated by reference to Exhibit 10 of the Company’s Current Report on
Form 8-K dated as of October 6, 2006.
|
|
10.9
|
Amendment
to Second Amended and Restated Credit Agreement effective as of December
22, 2006 by and among M/I Homes, Inc. as borrower and JPMorgan Chase Bank,
N.A. as agent, and the lenders party to that certain Second Amended and
Restated Credit Agreement dated October 6, 2006, incorporated herein by
reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2006.
|
|
10.10
|
First
Amendment to Second Amended and Restated Credit Agreement dated August 28,
2007, incorporated herein by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on August 31, 2007.
|
|
10.11
|
Second
Amendment to Second Amended and Restated Credit Agreement dated March 27,
2008, incorporated herein by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed April 1, 2008.
|
|
10.12
|
Third
Amendment to Second Amended and Restated Credit Agreement, dated January
15, 2009 incorporated herein by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on January 20, 2009.
|
|
10.13
|
Collateral
Agreement made by M/I Homes, Inc., and certain of its subsidiaries in
favor of PNC Bank, Nation Association, as Collateral Agent dated as of
January 15, 2009, incorporated herein by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K filed on January 20,
2009.
|
10.14
|
First
Amended and Restated Revolving Credit Agreement Among M/I Financial, Corp.
and M/I Homes, Inc., as the Borrowers, and Guaranty Bank, hereby
incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K filed on April 28, 2006.
|
|
10.15
|
First
Amendment to First Amended and Restated Revolving Credit Agreement
effective as of November 13, 2006, by and among M/I Financial Corp., the
Company and Guaranty Bank, hereby incorporated by reference to Exhibit
10.12 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007.
|
|
10.16
|
Second
Amendment to First Amended and Restated Revolving Credit Agreement
effective as of April 27, 2007 by and among M/I Financial Corp., the
Company and Guaranty Bank, hereby incorporated by reference to Exhibit
10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2007.
|
|
10.17
|
Third
Amendment to First Amended and Restated Revolving Credit Agreement
effective as of August 8, 2007 by and among M/I Financial Corp., the
Company and Guaranty Bank, hereby incorporated by reference to Exhibit
10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 31, 2007.
|
|
10.18
|
Fourth
Amendment to First Amended and Restated Revolving Credit Agreement
effective as of April 18, 2008 by and among M/I Financial Corp, the
Company and Guaranty Bank, incorporated herein by reference to Exhibit
10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2008.
|
|
10.19
|
Credit
Agreement by and among M/I Financial Corp., as borrower, the lenders party
thereto and Guaranty Bank, as administrative agent dated May 2, 2008,
incorporated herein by reference to Exhibit 10.1 of the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30,
2008.
|
|
10.20*
|
M/I
Homes, Inc. 1993 Stock Incentive Plan As Amended dated April 22, 1999,
hereby incorporated by reference to Exhibit 4 of the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30,
1999.
|
|
10.21*
|
First
Amendment to M/I Homes, Inc. 1993 Stock Incentive Plan As Amended dated
August 11, 1999, hereby incorporated by reference to Exhibit 10.1 of the
Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 1999.
|
|
10.22*
|
Second
Amendment to the Company’s 1993 Stock Incentive Plan as Amended dated
February 13, 2001, hereby incorporated by reference to Exhibit 10.2 of the
Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2002.
|
|
10.23*
|
Third
Amendment to the Company’s 1993 Stock Incentive Plan as Amended dated
April 27, 2006, hereby incorporated by reference to Exhibit 10.1 of the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2006.
|
|
10.24*
|
Fourth
Amendment to M/I Homes, Inc. 1993 Stock Incentive Plan, as amended,
effective as of August 28, 2008, incorporated herein by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2008.
|
|
10.25
|
Form
of M/I Homes, Inc. 2006 Director Equity Incentive Plan Stock Units Award
Agreements, incorporated herein by reference to Exhibit 10.1 to the
Company’s Current Report of Form 8-K filed on August 21,
2006.
|
|
10.26
|
M/I
Homes, Inc. Amended and Restated 2006 Director Equity Incentive Plan,
effective as of August 28, 2008, incorporated herein by reference to
Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2008.
|
|
10.27
|
M/I
Homes, Inc. Amended and Restated Director Deferred Compensation Plan,
effective as of August 28, 2008, incorporated herein by reference to
Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2008.
|
|
10.28*
|
M/I
Homes, Inc. Amended and Restated Executives’ Deferred Compensation Plan,
effective as of August 28, 2008, incorporated herein by reference to
Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30,
2008.
|
10.29*
|
Collateral
Assignment Split-Dollar Agreement by and among the Company and Robert H.
Schottenstein, and Janice K. Schottenstein as Trustee, of the Robert H.
Schottenstein 1996 Insurance Trust dated September 24, 1997, hereby
incorporated by reference to Exhibit 10.28 of the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 1997. In
2004, the Trustee changed to Steven Schottenstein but did not require
amendment to the original agreement.
|
|
10.30*
|
Change
of Control Agreement between the Company and Robert H. Schottenstein dated
July 3, 2008, incorporated herein by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed on July 3,
2008.
|
|
10.31*
|
Change
of Control Agreement between the Company and Phillip G. Creek dated July
3, 2008, incorporated herein by reference to Exhibit 10.2 of the Company’s
Current Report on Form 8-K filed on July 3, 2008.
|
|
10.32*
|
Change
of Control Agreement between the Company and J. Thomas Mason dated July 3,
2008, incorporated herein by reference to Exhibit 10.3 of the Company’s
Current Report on Form 8-K filed on July 3, 2008.
|
|
10.33*
|
M/I
Homes, Inc. 2004 Executive Officers Compensation Plan, hereby incorporated
by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2004.
|
|
10.34*
|
M/I
Homes, Inc. President’s Circle Bonus Pool Plan, hereby incorporated by
reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K
dated February 13, 2006.
|
|
10.35*
|
Form
of 2008 Award Formulas and Performance Goals Under the 2004 Executive
Officer Compensation Plan, incorporated herein by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on February 19,
2008.
|
|
10.36*
|
Form
of Performance-Based Restricted Stock Award Agreement Under the 1993 Stock
Incentive Plan as Amended, incorporated herein by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed on February 16,
2007.
|
|
10.37*
|
Form
of Performance-Based Stock Option Award Agreement Under the 1993 Stock
Incentive Plan as Amended, incorporated herein by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed on February 16,
2007.
|
|
10.38
|
Agreement
for Purchase and Sale, dated as of December 21, 2007, by and between M/I
Homes of West Palm Beach, LLC, as seller, and KLP East LLC, as purchaser,
incorporated herein by reference to Exhibit 10.43 to the Company’s Annual
Report on Form 10-K for the year ended December 31,
2007.
|
|
10.39
|
Amendment
to Agreement for Purchase and Sale, dated as of December 27, 2007, by and
between M/I Homes of West Palm Beach, LLC, as seller, and KLP East LLC, as
purchaser, incorporated by reference to Exhibit 10.44 to the Company’s
Annual Report on Form 10-K for the year ended December 31,
2007.
|
|
21
|
Subsidiaries
of Company. (Filed herewith.)
|
|
23
|
Consent
of Deloitte & Touche LLP. (Filed
herewith.)
|
|
24
|
Powers
of Attorney. (Filed herewith.)
|
|
31.1
|
Certification
by Robert H. Schottenstein, Chief Executive Officer, pursuant to Item 601
of Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)
|
|
31.2
|
Certification
by Phillip G. Creek, Chief Financial Officer, pursuant to Item 601 of
Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)
|
|
32.1
|
Certification
by Robert H. Schottenstein, Chief Executive Officer, pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)
|
|
32.2
|
Certification
by Phillip G. Creek, Chief Financial Officer, pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)
|
|
*
Management contract or compensatory plan or
arrangement.
|
(b) Exhibits
|
||
Reference
is made to Item 15(a)(3) above. The following is a list of
exhibits, included in Item 15(a)(3) above, that are filed concurrently
with this report.
|
Exhibit
Number
|
Description
|
|
21
|
Subsidiaries
of Company.
|
|
23
|
Consent
of Deloitte & Touche LLP.
|
|
24
|
Powers
of Attorney.
|
|
31.1
|
Certification
by Robert H. Schottenstein, Chief Executive Officer, pursuant to Item 601
of Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
31.2
|
Certification
by Phillip G. Creek, Chief Financial Officer, pursuant to Item 601 of
Regulation S-K as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
32.1
|
Certification
by Robert H. Schottenstein, Chief Executive Officer, pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
32.2
|
Certification
by Phillip G. Creek, Chief Financial Officer, pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
(c) Financial Statement
Schedules
|
||
None
required.
|
M/I
Homes, Inc.
|
|
(Registrant)
|
|
By:
|
/s/Robert
H. Schottenstein
|
Robert
H. Schottenstein
|
|
Chairman
of the Board,
|
|
Chief
Executive Officer and President
|
|
(Principal
Executive
Officer)
|
NAME AND TITLE
|
NAME AND TITLE
|
|
JOSEPH
A. ALUTTO*
|
/s/Robert
H. Schottenstein
|
|
Joseph
A. Alutto
|
Robert
H. Schottenstein
|
|
Director
|
Chairman
of the Board,
|
|
Chief
Executive Officer and President
|
||
FRIEDRICH
K. M. BÖHM*
|
(Principal
Executive Officer)
|
|
Friedrich
K. M. Böhm
|
||
Director
|
/s/Phillip
G. Creek
|
|
Phillip
G. Creek
|
||
YVETTE
MCGEE BROWN*
|
Executive
Vice President,
|
|
Yvette
McGee Brown
|
Chief
Financial Officer and Director
|
|
Director
|
(Principal
Financial Officer)
|
|
THOMAS
D. IGOE*
|
/s/Ann
Marie W. Hunker
|
|
Thomas
D. Igoe
|
Ann
Marie W. Hunker
|
|
Director
|
Vice
President, Corporate Controller
|
|
(Principal
Accounting Officer)
|
||
J.
THOMAS MASON*
|
||
J.
Thomas Mason
|
||
Executive
Vice President, General
|
||
Counsel
and Director
|
||
JEFFREY
H. MIRO*
|
||
Jeffrey
H. Miro
|
||
Director
|
||
NORMAN
L. TRAEGER*
|
||
Norman
L. Traeger
|
||
Director
|
||
By:
|
/s/Robert
H. Schottenstein
|
By:
|
/s/Phillip
G. Creek
|
|
Robert
H. Schottenstein, Attorney-In-Fact
|
Phillip
G. Creek, Attorney-In-Fact
|