Good afternoon. My name is Pam and I will be your conference operator today. At this time, I would like to welcome everyone to the M/I Homes first quarter Earnings Call. (Operator Instructions) Thank you. It is now my pleasure to turn the floor over to your host, Phil Creek. Sir, you may begin your conference.

Thank you very much. Joining me on the call today from Columbus, Ohio is Bob Schottenstein, our CEO and President; Paul Rosen, the President of our mortgage company; and Ann Marie Hunker, our Corporate Controller. First to address regulation for disclosure, we encourage you to ask any questions regarding issues that you consider material during this call because as you know, we are prohibited from discussing significant non-public items with you directly. And as to forward-looking statements, this presentation includes forward-looking statements as characterized by the Private Securities Litigation Reform Act of 1995. Any statements that are not historical in nature are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Please refer to our most recent 10-K, 10-Q and our earnings press releases for other factors that could cause results to differ. Be advised that the company undertakes no obligation to update any forward-looking statements made during this call. The audio of which will be available on our website through April 2009. I will now turn the call over to Bob.

Thank you, Phil, and good afternoon, everyone. Our first quarter results reflect the difficult and challenging conditions facing the home building industry today. While margins and earnings remain under pressure, we continue to make progress in those areas within our control, where in light of the tough operating conditions, making progress is extremely important. Specifically during the quarter, we generated $99 million of cash, resulting in a further reduction of our bank borrowings from $115 million at the December 31, 2007 to $42 million at March 31, 2008. Since the beginning of 2007, we have successfully reduced our bank borrowings by 90%. As a result, our debt-to-cap ratio at quarter's end stood at 31%. This represents one of the lowest debt levels in the home building industry. Moreover, we remain on target to reduce the borrowings on our credit facility to zero by the end of the year. Reducing our land position is another major area of emphasis during these difficult times and we believe our performance in this area has been noteworthy. During the quarter, we reduced owned lot count by 10%. This was on top of the 30% owned lot reduction which we recorded during 2007. We continue to make progress in aligning our overhead structure with current demands. We have reduced our workforce by more than 45% from peak levels. More specifically, our first quarter overhead expenses were 17% below last year's first quarter. As previously reported, we successfully amended our unsecured home building credit facility during the quarter, thereby providing us with increased financial flexibility. And as Phil will review in a few minutes, we have minimal off balance sheet exposure. The only other debt M/I Homes has is our senior notes and these do not mature until 2012. For more than two years, we have…

Thanks Bob. As we announced in December, during the fourth quarter of last year we sold substantially all of our West Palm Beach, Florida assets. Currently we have 12 units in backlog in this discontinued operation and we expect to exit this market by the end of the second quarter. New contracts for the first quarter decreased 40% to 554. Our cancellation rate for the first quarter was 23%, down from 49% last quarter and 25% for the first quarter of '07. Our traffic for the quarter decreased 35%. Our sales were down 44% in January while traffic was down 28%. Our sales were down 27% in February while traffic was down 27%. And our sales were down 52% in March while traffic was down 47%. Overall, gross new contracts were down 43% for the quarter. Our active communities decreased 5% from the prior year first quarter of 156 to 148 at 03/31/08. And as Bob stated, we are planning to open our first community in Chicago in the second quarter. We delivered 63% of our backlog this quarter compared to 48% last year. Revenue in the first quarter declined 28% when compared to last year, primarily due to a 34% decline in homes delivered and an average sales price decrease of 3% to 291,000. This decrease is partially offset by an $8.4 million increase in third-party land sales when compared to the prior year quarter. The company's results for the 2008 first quarter included pre-tax charges of $21.1 million of impairments and $1.2 million of write-offs. The impairment charges consisted of $10.2 million related to ongoing inventory, $7.2 million related to land and home building assets sold, and $3.7 million related to the company's investment in joint ventures. This quarter's write-downs impacted nearly 2000 lots in 18 communities with…

Thank you, Phil. Mortgage and title operations pre-tax income increased from $2.7 million in 2007's first quarter to $3.3 million in the same period of 2008. The quarter was positively impacted by $1.4 million gain upon the implementation of the new accounting guidance which called for the inclusion of servicing values in the fair value measurement on locked loan commitments and mortgage loans held for sale. This one-time gain was partially offset by a 25% decrease in loans originated from 464 in 2007 to 347 in 2008. Additionally, enhanced financing is being offered to M/I Homes customers to help generate sales, lowering our overall margins. Loan-to-value on our first mortgages for the first quarter was 85% in 2008 compared to 83% in 2007's first quarter. For the quarter, 80% of our loans were conventional with 20% being FHA/VA. This compares to 87% and 13% respectively with 2007 same period. Due to the enactment of the Economic Stimulus Act earlier this year, maximum FHA loan limits increased [de novo market]. They now range from 271,000 in Indiana and North Carolina to 729,000 in Virginia and Maryland. Over 80% of our communities are now eligible for FHA financing which should increase the percentage of FHA loans we originate. Less than 1% of our first quarter closings were adjustable rate mortgages. This compares to 21 in the first quarter of 2007. 1% of our first quarter 2008 applications were adjustable rate mortgages, the same as the fourth quarter of 2007. Mortgages closed by M/I Financial during the first quarter, less than 1% were interest only loans. This compares to 3% in 2007's fourth quarter. The percentage of customers that received down payment assistance in the first quarter increased to 8% versus 4% for the same period in 2007. Overall our average total mortgage…

Thanks Paul. Now as far as the balance sheet, our home building inventory at March 31 decreased $329 million or 31% below a year ago. Lots owned and controlled as of March 31 decreased 33% from the year earlier period. In the first quarter, we had a reduction of 2200 lots. 620 lots related to land sales and 550 lots related to the write-off of the joint venture and all of these lots were in Florida. With respect to our lots under contract that we do not own, we have approximately $6 million at risk and deposits, letters of credit and pre-acquisition costs at March 31. Our total unsold land investment at March 31 is $452 million, 10,300 lots compared to $745 million which was 15,600 lots a year ago. Compared to a year ago, raw land decreased 55%, land under development decreased 54% and finished unsold lots decreased 22%. At March 31, we had a $102 million in raw land, $82 million of land under development and $268 million of finished unsold lots and the finished unsold lots, the count is 4754. The market breakdown of our $452 million of unsold land is $195 million in the Midwest, $111 million in Florida and $146 million in the Mid-Atlantic region. In the first quarter, we purchased $8 million of land. Our current estimate for '08 land acquisition is approximately $30 million. And the majority of the '08 planned land purchases currently are in our Carolina markets. As to land development expenditures, we currently estimate that we will spend about $35 million this year. As of March 31, we had $34 million invested in joint ventures, down 33% from $51 million at March 31 '07 and approximately $22 million of our current investment represents joint ventures in our Florida region. These…

(Operator Instructions). Your first question is Joel Locker with FTN Securities. Please go ahead.

Hi, guys. Good job on the cash flow. Just wanted to talk about your backlog conversion rate in Florida; it jumped up to 116% versus a year ago, it was 42%. Was that just a lot of specs being closed there or--?

That was the biggest reason Joel. A lot of specs are being sold and closed. You also probably noticed that our spec level did come down quite a bit compared to the end of last year. So, yes, that's the primary reason.

Right. And your housing gross margin or maybe just your gross profit on your housing revenue, just trying to single that out from you on the regular gross margin of the land revenue or the other revenue. So if you had $131 million or so in housing revenue, what was the gross profit from just the home building?

Well, we stated in the call was that if you ignore the impairment and those type things, our gross margins were about 15%.

About 15%.

And that compares to 21% a year ago.

And I guess just one last question on your just prior impairments, do you have a number of how many of those were reversed in the first quarter?

Yeah. The number we said in the call was 6.

6 million or so. Okay. Thanks a lot. I will jump back in a queue.

Thanks Joel.

Thank you. Your next question is coming from Lee Brading with Wachovia.

Hi, guys.

Hi, Lee.

Hi Lee.

You gave helpful information on given the monthly trends and couldn't help but notice the difference between going from February to March. So I was wondering if you could comment if there's anything in particular there, and then so if could you give any comment on April at this point?

Are you talking about sales?

Well, yes, both, I mean I guess sales and traffic were the same in February?

First of all, I think conditions are very difficult. And as a result, it's not only hard but it’s probably unwise to try to speculate because of just the erratic nature of the market now and the tremendous lack of confidence that is encumbering buyers. But two things about March and over half our markets, we lost almost a full week of sales, particularly in the Midwest with a 100 year winter storm which shut down our operations from Thursday to nearly Monday in three of our cities. And that did not help. Not to mention the fact that Easter was in March this year, whereas typically it's in April. And that might have resulted in a slight skewing of the numbers. We'd like to think in the end it all works its way through the system. But typically March is the month that you don't have that kind of interference and we had two weekends where business was next to nothing.

The other comment I'd make Lee, if your look at our sales last year on a quarterly basis, we sold 940 last year in the first quarter and then we sold 689 the second and 562 the third. So we did from a comparability standpoint actually have pretty strong sales in the first quarter of last year. Demand just continues to be a problem.

Right. And is it too early to say any comment on April at this point?

No, we don't have any comment on April yet.

You also mentioned in your comments about expecting additional impairments. I am just kind of curious of what you think would drive that; is it more of a further decline in price or lower pricing or lower absorption rate or a combination of both? Because as we talk to other builders, it just seems like people are generally saying they can't bring price down much more.

I know you understand from an accounting standpoint how the impairment process works and it's very, very difficult. We would not attempt to predict what the numbers may be exactly. If you look at our average sales prices, they have been coming down. That obviously does impact impairment calculations. Your gross margins, your absorption levels, your assumption on the future, all those type things impact your impairment models. So again, we continue to see very challenging conditions and that's why we said that we may have more.

And frankly, the notion that prices can't be reduced much more, I'm not sure I understand that anymore than I'd have understood five years ago the inability to raise prices. Prices can't come down and they could and in some markets they are.

I mean if you look at our prices, our average sales price in backlog peaked at 364 in September of '06.

Right.

And then our prices basically come down pretty much every quarter to the 298 number now.

Your question is a very important one and there have been a lot of comments. Are the bulk of the impairments behind us? I think that our intuition is that we'd like to think so. But I don't have anybody who can accurately forecast that; I mean you've got to believe and I know there's been a lot of different positions espoused on that. You got to believe that there is just way too much uncertainty and the likelihood of additional impairments, the question is how many or how much? It's very difficult to answer.

Right. I appreciate that. That's helpful now. And then on the free cash flow, very good job on that and directionally the comments are very helpful too. Just kind of curious if we look quarterly, do you expect to be an increment borrow at anytime or do you expect to continue to bring down that revolver balance throughout the year?

Lee, we hope to continue to bring it down on a quarterly basis. As we said in the call, we are still working very hard on additional land sales, primarily in Florida. We did reduce our spec level about $15 million in the first quarter. We still have a number of finished lots. So again, we're working on bringing down the borrowings on a quarterly peace. And we've been able to do that the past few quarters. As Bob said, we still see us getting that down to 30 by the end of the year.

Great. Last question just more of a maintenance. Can you give me the community count by region?

I can give that to you by region. Let's see. I thought I actually gave that in the call when I first started. Let me get to that, Lee. Here it is. At 03/31/08, there were 78 in the Midwest, 32 in Florida and 38 in the Mid-Atlantic for 148.

All right.

And a year ago that number was 161.

Great. Thank you very much.

Thanks, Lee.

Thank you. Your next question is coming from David Frank with Wanger Asset Management. Please go ahead.

Hello.

Hi, David.

I have two general questions or two topics. First is, you mentioned that you're coming to Chicago. That you actually are going to open a community I believe?

In the second quarter. We announced David last I want to say June or July, we thought what we announced that we would be opening in Chicago.

Right.

And since that time we've been moving cautiously and carefully. But within the last several weeks, we have moved towards inking our first deal which will result in opening up in our first community sometime during the mid to the end of the second quarter.

But the actual location of that is not public yet?

Not. I don't think it is yet.

Okay. I'll probably take a drive out there when it is public.

Make sure you buy a house while you're there.

We're actually in the market. I'll have to talk to my wife.

Actually, it is public. It appeared in an article. It's in the Elgin area. David, it's a Crown Community called Highlands Woods.

Elgin.

Elgin, and it's crown development community.

Okay.

It's called Highlands Woods.

Highlands Woods, okay. Actually I'm afraid for compliance purposes. We could not purchase a home. But we'd certainly go out there and check it out. In terms of how you're going to allocate capital to new communities or land purchases, how do you think about the small amounts or--?

When we gave our land purchases this year in the $30 million area; we do not see a significant amount going to Chicago this year. However, we are looking at opportunities every day. You're always monitoring how our business is doing. But in the land purchases we gave you for this year we have in there today what we think we'll spend in Chicago.

And most of that [tax limit] in the Mid Atlantic?

Yes, primarily in the Carolinas.

And then my second line of questioning pertains to your existing Midwest footprint. Let's say primarily Columbus. What are you seeing there, obviously dynamics in Columbus is going to be a lot different than the dynamics in Florida because you didn't see the huge increase in home prices. On a day-to-day basis, what are you hearing from your folks on the ground as to what's happening in let's say the Columbus market or the Indianapolis market?

Well, every market is a little bit different. But I think that if you were going to brush, paint the Midwest, Columbus and Indianapolis and for that matter Cincinnati, you would do so by acknowledging that there is poor to negative job growth and excess supply of used homes on the market. And whereas as you pointed out, we didn't have the big run up in prices for the margin expansion. We did have some. So prices are dropping in all three markets. But the biggest issue is really weak demand which I think is largely as a result of poor consumer confidence. There's less in all three of those markets. There are less what I would call finished lots or either in the pipeline or coming on the pipeline. So you might think that they might come back a little quicker but you just don't know because it's going to be very much job growth driven.

Okay, thank you.

And when you look at the resells on the market, it looks like the resells in Columbus, Cincinnati peaked in the second and third quarter of last year. They do think it'd be coming down slightly.

They came down slightly since then but they're still at historically high levels.

Okay. Thank you for that insight.

Sure. Thank you.

Your next question is coming from Alan Ratner with Zelman & Associates. Alan Ratner - Zelman & Associates: Good afternoon, guys. Thanks again for all the great color. My first question to fulfill is the housekeeping one. On the tax rate which is 25%. You mentioned there were some reversals from prior benefits there I believe. Would you expect the tax rate to kind of stay in that level going forward or is just kind of a one quarter thing?

Alan, this is Ann Marie. It'll stabilize this next quarter. You always have these kinds of true-ups with tax positions and where normally we do it in the third quarter. Alan Ratner - Zelman & Associates: Okay. So you would expect it to go back to the 37%, 38% range going forward. Okay. My second question kind of relates to your core markets, especially the Midwest. It seems like every week or so there's an announcement from another public builder that seems to be exiting a market you are in. And I'm just wondering if you have any commentary on that, and if you are potentially taking advantage of the builders that are exiting those markets, and then I guess following up this, if you are committed to your current footprint as well.

Our goal is to be the last man standing in every market.

Seriously, of course, it's good to see. I mean you don't like to see it, because you'd rather see markets so strong and so vibrant that everyone wants to come there, and you are selling two competitions, I mean at some levels makes everyone better. But as markets are diminishing and there's less horses at the trough, that's better I think. We have no intentions whatsoever to leave any of the markets that we're currently in. Alan Ratner - Zelman & Associates: Okay, great. And have you been approached by any of the builders who are exiting as far as taking some of their land of the books.

Yes. Alan Ratner - Zelman & Associates: Okay. Great, thanks guys.

Okay.

Thanks Alan.

Your next question is coming from Eric Landry from MorningStar. Please go ahead.

Hi guys. Thanks.

Hi Eric.

Still gross profit and did I hear 945 grand?

That was last year. It was 195,000 this year.

I am sorry, how much Ann Marie?

195,000.

195, okay, thanks. I'd just like to address two questions from a fellow from Wanger here real quick. Seems to me that you guys have one problem but two packages, and basically that's the Midwest markets with the anemic job growth but high affordability. And then when you look at Florida and D.C. it's still pretty severe unaffordability. Yet over the long term the job growth has been pretty decent. What's worse? I would assume that the Midwest problem is worse, but how much worse is that of a problem, and how do you deal with those two different dynamics?

Can you (inaudible) with your question, because I am not really sure if I understand it.

As we model going forward, I know it's difficult in the Midwest, but I for one think that, if you want us to get any kind of job growth going forward, I think there is a decent opportunity there. If you had to make a bet, which one would possibly bounce back at a more rapid rate or quicker or something along those lines. Just your thoughts on that.

That's really hard to tell. One side of me feels like it's counterintuitive to what you suggested is that the D.C. market might start to bounce back a little sooner because of the underlying job growth there that will help eat up some of that excess supply, and just the long term fundamentals there. Each market has sort of their unique overhang, and I think -- I don't know if I could really say which ones where. I think when consumer confidence begins to come back, and I really think that you can't underestimate that. If you wake up every day for a month and everybody around you just tells you, they feel lousy, pretty soon you don't feel too good yourself. And right now, that's about what are dealing with. Now there are a lot of reasons, and there is a lot of legitimate news that is making people feel that way. But the fact is, that the get up and go associated with buying a house is incredibly hampered right now. And I think that any small dose of good news sort of creates a bright spot, and then we have the economic over hang on top of it. Home building is cyclical. When we were in the middle of the bull run people thought that would never end. We were getting hammered weekly, why don't you own more land in Florida, why don't you own more land in Florida. And now it's a different question. So I don't know that I could really say or even hazard a guess. I do think that when things begin to improve, they will generally improve in most of our markets at around the same time. Now the pricing opportunities in the margins may be a little higher in some markets than others, but I think demand will start to come back in around the same time in most of the markets around. And I may be completely wrong, but that's about what I think. And I think that largely is a consequence of sort of the national sentiment that tends to dominate our industry.

So did you indicate that you think margins may snap back quicker in the higher growth markets even though affordability is more problematic that the rest felt.

I don't know, I don't know. I think margins will be slow to come back. But margins may prove to be a little bit better, maybe in those higher growth markets ultimately because of the job growth. Those are very hard questions to answer. Right now we're not making a bet one way or the other, other than the fact that we believe everyday that goes by there's pent-up demand from people sitting on the sidelines, and that this cycle will end at some point.

Thank you.

Okay. I'm sorry not to have been more specific.

It's okay.

Thank you. (Operator Instructions). Thank you. Your next question is coming from Nitin Dahiya with Lehman Brothers. Please go ahead.

Good afternoon.

Good afternoon.

Most of my questions have been asked, but one on the cancellation rate. Obviously can rate came down to 23% this quarter. Are you seeing stabilization in that as we look into April, for example?

We don't have comments on April.

Within the quarter did you see kind of it stabilizing during the first quarter?

Again our can rate did improve the first quarter. It seems to us that the traffic is more serious buyers than before. However, our net sales have been down more than traffic. So it's kind of hard to figure out exactly what's happening, but our can rate was lower in the first quarter.

Great. And on the tax refund obviously you got 49 million in the first quarter, and you mentioned that there is some more you can gain back now. Do you expect further refunds this year, or is that just available for the future?

Available for the future.

Great. Thank you much.

Thank you.

Thank you. You have a follow-up question coming from David Frank with Wanger Asset Management. Please go ahead.

Hello, again. This time I want to ask about input costs, material costs. Have you seen any reduction in labor rates or materials costs that might help your build homes cheaper? And then also, is there anyway to de-content homes or increase density in existing parcels so that you can basically deliver a unit to somebody cheaper than you would before and therefore make it more affordable?

On the first two parts of that question, our costs aren’t coming down. They frankly can and will come down and are likely, I should say to come down further. I think we've done a good job in managing the cost side, but I think there's still work to be done there. The other part of your question about de-specking or reducing some of the features that are incorporated into homes, so as to bring the cost down is something that we have been working at and implementing for nearly two years in many of our markets. So that's something we've been doing. Now in terms of taking a piece that’s already [zoned] and re-planning and reconfiguring the density; in a couple of very, very limited isolated incidences we've been able to do that. But most of our communities do not lend themselves to that.

Okay. Thanks.

Thank you. You have a follow-up question coming from Eric Landry of the Morningstar. Please go ahead.

Hi, thanks. Real quick --

Eric, you ask the tough questions.

This is an easy one.

I'll let Phil answer it then.

With regards to Chicago, we don't see many people going the direction that you guys are going in any market. Was this a land deal that you couldn't pass up or is something wrong along those lines?

Actually not. Because when we announce that we were opening, we had no idea where our first community would be. Very candidly, we had been looking at the Chicago market for a long time, probably several years, recognized that it was one of the more dynamic and robust markets in the Midwest. We liked its proximity to our other core markets. We believe and still do that we could compete with the builders who had credit presence there since we were already competing with them in most of our markets. We felt we had product developed and under developed that would work very well there. And most importantly, we were able to somewhat opportunistically hire an individual to serve as our Chicago area President, who we felt the time to pass that opportunity up we might look back and say we shouldn’t have, knowing that at some point we were going to be there anyway. So we announced that we were opening in Chicago last year. We've yet to open up our first community, and now we're continuing to move cautiously and slowly, but we're about to open up in our first job.

I see. Is it safe to say that this deal pencils at higher than current Midwest margins?

Yes.

Okay, thank you.

You're welcome.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mr. Phil Creek for any closing comments.

Thank you very much for joining us, and we look forward to talking to you next quarter.

Thank you. And this concludes today's M/I Homes first quarter earnings conference call. You may now disconnect your lines and have a pleasant afternoon.