UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

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

 

For the transition period from ______

Commission File No. 1-12434

M/I HOMES, INC.

(Formerly M/I Schottenstein 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

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

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

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

None

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X . No___.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

As of June 30, 2003, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of voting common stock held by non-affiliates of the registrant (10,817,823 shares) was approximately $461,705,000. The number of shares of common stock of M/I Homes, Inc. outstanding on February 27, 2004 was 14,033,063.

DOCUMENT INCORPORATED BY REFERENCE

Portions of the registrant’s Definitive Proxy Statement for the 2004 Annual Meeting of Shareholders filed pursuant to Regulation 14A (Part III).

 

TABLE OF CONTENTS

		PAGE NUMBERS
Part I
	Item 1.     Business	3 - 9
	Item 2.     Properties	9
	Item 3.     Legal Proceedings	9
	Item 4.     Submission of Matters to a Vote of Security Holders	9
Part II
	Item 5.     Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of
	Equity Securities	10
	Item 6.     Selected Financial Data	11 - 12
	Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations	13 - 27
	Item 7A.  Quantitative and Qualitative Disclosures about Market Risk	28
	Item 8.      Financial Statements and Supplementary Data	29 - 46
	Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	47
	Item 9A.   Controls and Procedures	47
Part III
	Item 10.     Directors and Executive Officers of the Registrant	48
	Item 11.     Executive Compensation	48
	Item 12.     Security Ownership of Certain Beneficial Owners and Management	48
	Item 13.     Certain Relationships and Related Transactions	48
	Item 14.     Principal Accounting Fees and Services	48
Part IV
	Item 15.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K	49 - 53
Signatures		54

	2

 

 

 

 

 

 

 

PART I

ITEM 1. BUSINESS

Company

M/I Homes, Inc. and subsidiaries (the "Company" or "we") is one of the nation’s leading homebuilders. We changed our name to M/I Homes, Inc. from M/I Schottenstein Homes, Inc. effective January 12, 2004 in order to better reflect the corporate identity and brand name and enable the Company to further capitalize on the goodwill that has been earned with the M/I Homes brand name. In 2002, the latest year for which information is available, we were the 19th largest U.S. single-family homebuilder (based on homes delivered) as ranked by Builder Magazine . The Company was incorporated, through pre decessor entities, in 1973 and commenced homebuilding activities in 1976. We sell and construct single-family homes to the first-time, move-up, empty-nester and luxury buyers under the M/I Homes and Showcase Homes trade names. In 2003, our average sales price was $246,000, compared to $238,000 in 2002. During the year ended December 31, 2003, we delivered 4,148 homes and earned revenues of $1.1 billion and net income of $81.7 million, each of which represents the highest in our history.

Our homes are sold in nine geographic markets - Columbus and Cincinnati, Ohio; Tampa, Orlando and West Palm Beach, Florida; Charlotte and Raleigh, North Carolina; Indianapolis, Indiana; and the Virginia and Maryland suburbs of Washington, D.C. We are the leading homebuilder in the Columbus, Ohio market, based on revenue, and have been the number one builder of single-family detached homes in this market for each of the last fifteen years. In addition, we are one of the top ten homebuilders in the Cincinnati and Tampa markets, based on homes delivered. Our growth strategy primarily targets increasing our market position in the markets in which we currently operate. With respect to geographical diversification, we have expanded into new markets by opening new divisions rather than through acquisi tions.

We believe that we distinguish ourselves from competitors by offering homes in select areas with a high level of design and construction quality within a given price range, and by providing superior customer service. Offering homes at a variety of price points allows us to attract a wide range of buyers, including many existing M/I homeowners. We support our homebuilding operations by providing mortgage financing services through our wholly-owned subsidiary, M/I Financial Corp. ("M/I Financial") and title-related services through affiliated entities.

Our financial reporting segments consist of homebuilding and financial services. Our homebuilding operations comprise the most substantial part of our business, representing 98% of consolidated revenues in fiscal 2001, 2002 and 2003. The homebuilding segment generates the majority of its revenue from the sale of completed homes with a lesser amount from the sale of land and lots. The financial services segment generates its revenue from originating and selling mortgages and collecting fees for title insurance and closing services. Financial information, including revenue, pre-tax income and identifiable assets, for each of our reporting segments is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our business strategy emphasizes the following key objectives:

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

Superior locations. We focus on locating and controlling land in the most desirable areas of our markets. We are conservative in our land acquisition policy, and generally only acquire land that is properly zoned and serviceable by utilities. We seek to control a three- to five-year supply of land. For the past five years, we have developed a majority of the lots upon which our homes were built. We believe our expertise in developing land gives us a competitive advantage in controlling attractive locations at competitive costs. At December 31, 2003, we owned 11,908 lots and controlled an additional 11,177 lots pursuant to purchase contracts.

Maintain or increase market position in existing markets. We believe there are significant opportunities to profitably expand in our existing markets. While our primary growth strategy will focus on increasing our market position in these markets, we may, on an opportunistic basis, explore expansion into new markets through organic growth or acquisition.

Provide superior customer service. Our overriding philosophy is to provide superior customer service to our homeowners. We attempt to involve the homeowner in many phases of the building process in order to enhance customer communication, knowledge and involvement.

Our selling process focuses on the homes’ features, benefits, quality and design as opposed to merely price and square footage. In certain markets, we utilize design centers to better promote the sale of options and enable customers to make more informed choices. This enhances the selling process and increases the sale of optional features that typically carry higher margins. We believe all of this leads to a more satisfied homeowner, and based on the responses to our customer questionnaire, for the thirteenth year in a row, more than 95% of our customers would recommend us to a potential buyer.

Offer product breadth and innovative design. We devote significant resources to the research and design of our homes to better meet the needs of our customers. We offer a number of distinct product lines and approximately 500 different floor plans and elevations. In addition to providing customers with a wide variety of choices, we believe we offer a high level of design and construction quality within each of our price ranges.

Maintain decentralized operations with experienced management. Each of our markets has unique characteristics, and is managed locally by dedicated, on-site personnel. Our division presidents possess intimate knowledge of their particular market and are encouraged to be entrepreneurial to best meet the needs of that market. Our incentive compensation structure supports our overall Company goals by rewarding each division president based on financial performances, income growth and customer satisfaction.

Sales and Marketing

We market and sell our homes exclusively under the M/I Homes trade name in all markets except Columbus, where a limited number of our homes are also marketed under the Showcase Homes trade name. Company-employed sales personnel conduct home sales from on-site offices within our furnished model homes. Each sales consultant is trained and prepared to fully explain the features and benefits of our homes, to determine which home best suits each customer’s needs, to explain the construction process and to assist the customer in choosing the best financing. Significant attention is given to the ongoing training of all sales personnel to assure the highest level of professionalism and product knowledge. We currently employ 125 sales consultants and operate approximately 150 model homes.