At this time, I would like to welcome everyone to the M/I Homes Yearend Earnings Conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Mr. Phil Creek, sir, you may begin your conference.

Thank you for joining us from Columbus, Ohio. Joining me on the call today call today 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. 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 February 2009. I will now turn the call over to Bob.

Conditions continue to be challenging in most of our markets, and we believe we are likely to remain so throughout 2008. For nearly two years now, we have been engaged in what we refer to as a predominantly defensive operating mode, focusing on improving our balance sheet, rightsizing our operation, reducing our own lots, our operating cost, and reducing our debt levels. Market conditions are clearly difficult. Demand is weak, fire confidence is low, and the difficulty surrounding the used-home market continue to serve as a major barrier for new home purchases. In the face of what many feel are unprecedented industry conditions, we believe that M/I Homes has made significant progress on a number of fronts during the past year, all of which will serve to better position our company as we look towards the future. First of all, we successfully reduced our own lots during 2007 by nearly 30%, generating cash for land sales of $89 million and net cash from home building operations of an additional $113 million. In addition, as a result of our land sales, we were able to monetize the lots on sale using carry-backs for federal income tax purposes and expect to receive a $50 million check from the federal government during the first quarter of this year. Second, during 2007’s First Quarter, we successfully completed the issuance of $100 million of preferred stock which we believe improved our capital structure significantly. The results of these first two points that I have made was that our net at the cap now stands at 0.33 versus 0.44 a year ago. We plan to further reduce our inventory of owned lots with additional land sales throughout 2008, along with limiting our land and lot purchases and land development spending. We expect to generate positive cash…

As we announced in December of ’07, we sold substantially all of our West Palm Beach asset and expect to exit the market by June of ’08. The results of operations of our West Palm Beach division have been classified as Discontinued Operations in the quarters with statement of Financial Accounting Standards No. 144, Accounting for the Impairment of Disposal of Long-Lived Assets, and prior periods had been reclassified to conform with the current year presentation. Unless otherwise noted, the information included in this conference call excludes Palm Beach and focuses on our results from our continuing operations. First, new contracts. New contracts for the ’07 Fourth Quarter decreased 23%. Our cancellation rate in the fourth quarter was 49%, compared to 59% in the ’06 Fourth Quarter and 37% in the ’07 Third Quarter. Our traffic for the quarter decreased 25%. Our sales were down 34% in October, while traffic was down 27%. Sales were up 28% in November while traffic was down 17%, and our sales were down 46% in December and traffic was down 29%. Overall gross new contracts were down 38% for the quarter. For the year, our new contracts declined to 2452 or 12%, and our gross new contracts declined 18%. Our annual cancellation rate was 33% in ’07, compared to 37% in ’06. Our active communities decreased 12% from our peak of 166 at 09/30/06 to 146 today. Our breakdown today by a region is 76 in the Midwest, 34 in Florida, and 36 in the Mid-Atlantic. Our projection for 2008 is to be at about 144 by yearend, broken down by a region, 79 in the Midwest which includes opening a couple of communities in Chicago, 29 communities in Florida, and 36 in the Mid-Atlantic. We delivered 70% of our backlog this quarter, compared…

Mortgage and title operations pretax income decreased from $4.7 million in 2006’s Fourth Quarter to $1 million in the same period with 2007. The change was partially the result of an 11% decrease in loans originated from $908.00 in 2006 to $812.00 in 2007. Additionally, enhanced financing programs are being offered to M/I Homes customers. Competitive market conditions also contributed to low margins. Loan to value on our first mortgages for the fourth quarter was 85% in 2007, compared to 81% in 2006’s Fourth Quarter due to fewer second mortgages. For the quarter, 90% of our loans were conventional with 10% being FHAVA. This compares to 91% and 9% respectively with 2006 same period. The FHA mortgage limits in the markets that we operate range from 200,000 in Indiana and North Carolina to 363,000 in Virginia and Maryland. The 2008 trend indicates that FHA financing has increased to approximately 30% of our business. Approximately 3% of our fourth quarter closings were adjustable rate mortgages. This compares to 29% in the fourth quarter of 2006. 19% of first, 12% of our second, and 7% of our third, and 1% fourth quarter 2007 applications for adjustable rate mortgages. The mortgage is closed by M/I Financial during the fourth quarter, 3% for interest-only loans. This compares to 11% in 2007’s Third Quarter and 17% in 2007’s Second Quarter. The percentage of customers that received down payment assistance in the fourth quarter decreased to 5% versus 6% for the same period in 2006. Overall, our average total mortgage amount was $253,000.00 in 2007’s Fourth Quarter. Active borrower credit score on mortgages originated by M/I Financial with 728 in the Fourth Quarter of 2007, compared to 726 in 2007’s Third Quarter. This scores compared to 733 in 2006’s Fourth Quarter and 732 in 2006’s Third…

As far as the balance sheet total home building inventories of 12/31/07 decreased $295 million or 27% below last year, total building sites owned and controlled as of 12/31/07 decreased 28% from a year earlier. With respect to our lots under contract that we do not own, we have approximately $9 million at risk and deposited letters of credit and pre-acquisition cost at 12/31/07. Our total unsold land investment at 12/31/07 is $484 million, compared to $773 million a year ago. Compared to a year ago, raw land decreased 44%, land under development decreased 55%, and finished unsold lots decreased 22%. At 12/31/07, we have $127 million of raw land, $95 million of land under development, and $262 million of finished unsold lots. Also, the $262 million of finished unsold lots represents about 4,800 lots. The market breakdown of our $484 million of unsold land is $202 million in the Midwest, $132 million in Florida, and $150 million in the Mid-Atlantic region. In the fourth quarter, we purchased $4 million of land. Our current estimate for ’08 land acquisitions is approximately $30 million, compared to $23 million in ’07. A majority of the ’07 actual and ’08 plan land purchases are in our Carolina market. As to land development expenditures, we currently estimate that we will spend about $35 million in ’08, compared to approximately $100 million last year. At 12/31/07, we have $40 million invested in joint ventures with approximately $25 million of these being in Florida. These JVs are for land acquisition and development purposes only, and all are with home building partners. We are 50/50 partners in three joint ventures with non-recourse financing, and our partners are large public builders. These three ventures have a total debt of $75 million with equity of $43 million or 37%…

(Operator Instructions) Alex Barron – Agency Trading Group: I know you gave the percentage of communities’ impaired total. I think you said 57%. I was wondering if you had a breakdown by region.

On the press release, we disclosed impairments on dollar amounts, Alex. We have not given that as far community count by region but if you want to give us a call later, we will try to give you an estimate of that. Alex Barron – Agency Trading Group: In terms of SG&A, I guess you guys mentioned some efforts to reduce that, but I was wondering if you could elaborate on that a little bit. What specific things you think you could do this year, maybe that are different or going to continue to do, and give us some sense of how much you think you can reduce SG&A.

Obviously, we are not going to estimate any number specifically but we talked about, in the past year, to about 20% of our G&A has been related to land. So, as we reduce our owned land inventory, that will bring down our G&A. Also, as we talked, unfortunately, we continued to reduce our headcounts. We have continued that reduction in January and February. Those are the tight things we are doing to bring G&A down along with the normal, only spend dollars absolutely when we have to in general. We made all of our company very aware of that. We have been making quite a bit of progress and expect to continue that, Alex. Alex Barron – Agency Trading Group: Phil, I do not know if you mentioned the cancellation rate for the quarter. I think I got the one for the year but I do not know if you mentioned the one for the quarter.

Yes, I though I did. Our cancellation rate for the quarter was 49%, compared to 37% in the third quarter, and it was 59% in ’06’s First Quarter, Alex. Alex Barron – Agency Trading Group: I know you guys have a program that helps people, I guess, to get a lower rate. I guess you guys are buying down the rate. So, where does that incentive—how does that get accounted? Is that just kind of increases costs to good sold?

In the revenue line, we build a certain amount in our houses to cover financing. A part of that that is there, if we do spend some other amounts that would go to the cost of sales line, it is all in the margin line, some in the revenue line, some in the cost of sales line.

Your next question comes from Dennis McGill of Salman & Associates Dennis McGill – Salman & Associates: I just want to take on two numbers real quick that you had mentioned to make sure that I wrote them down correctly. What was the gross margin on orders in the Midwest running right now?

We said 12% to 15% on new order. Dennis McGill – Salman & Associates: To be clear with that, that includes interest, right?

What that includes is interest while we are actually building the house. Yes, it does. Dennis McGill – Salman & Associates: The other number you had mentioned, I think you said you reversed about $165 million of the impairments this year and just to make sure I am comparing that to the right number you have incurred about a total of $265 or so through ’06 and ’07?

Yes, since day 1, that is right. Dennis McGill – Salman & Associates: So, the difference between the two is basically the balance of what you have on the books right now?

That is right, round figures. Dennis McGill – Salman & Associates: On the land sales that you guys are looking for ’08, you mentioned you had $6 million or so under contract. Is that the only thing that has been agreed to sale so far this year?

The $6 million represents what was under contract above 12/31/07, we are obviously working on other transactions but that is all that was under contract as of 12/31/07. Dennis McGill – Salman & Associates: Anything else that has gone final so far on the first month?

Nothing we could talk about there, Dennis. Dennis McGill – Salman & Associates: I guess, I realized it is kind of a moving target. The last couple of years being around $50 million or $60 million before West Palm and land sales, is that a fair assumption for ’08?

I am not giving any projections on this like that, Dennis, but we are continued to focus on land sales especially in Florida. Dennis McGill – Salman & Associates: You have mentioned on the senior notes, I believe you said you have restricted payment cushion of $95 million. Could you just talk about what that relates to?

You have a restricted payments basket and that basket is used as far as allowing you to do things such paid dividends, buyback stock, and those types of things. Dennis McGill – Salman & Associates: Assuming you did not want to buy back any stock or pay any dividend in addition to the preferred, there is nothing that would trip that covenant?

Right now, there is $95 million in that basket so theoretically, we could spend $95 million. You go through a calculation every quarter, the basket goes up by income, it goes down by losses, and those types of things. Dennis McGill – Salman & Associates: Maybe those losses include impairments?

Yes, it does. Dennis McGill – Salman & Associates: Is there anything else on the senior notes that you would have to worry about operationally, as far as covenant violation would go?

No. Dennis McGill – Salman & Associates: On the revolver, tangible net worth covenant where you have a $40 million cushion, I assume that you would be proactive in talking with your banks in March ahead of any violation there?

Absolutely. We meet with our banks twice a year. We think we have a very, very good bank group. We have been led by JPMorgan and Wachovia for a number of years. We do not anticipate any significant issues with them. Again, we do meet with them twice a year, the upcoming meetings in March, and we will talk to how things look, get their input, and so forth. Dennis McGill – Salman & Associates: So, you really expect to have some resolution prior to announcing first quarter results, one way or another?

I would not say that. I am not going to predict when and if we are going to have any issues, or we just said at their most restrictive covenant we have is minimum net worth. There is $40 million in there and again, that depends on how the first and second quarter go over next year and so forth. But, we will work through that on a perspective basis like we try to any issues. Dennis McGill – Salman & Associates: I appreciate all the color, guys, I just wanted the number. I wanted to verify on the developments spend in ’08. Did you say $35 million?

Yes, that is the approximate number we have of ’08. Last year, we spend about $100 million, Dennis. Dennis McGill – Salman & Associates: For acquisition and development combined, you are going to be somewhere around 65 versus almost 125 on ’07.

That is the current estimate, yes.

Your next question comes from Lee Brading of Wachovia. Lee Brading – Wachovia: I want on the pre-cash flow, if you can give any quarterly kind of guide. It sounds like with the tax refund here in coming Q-1 and I imagined it is typically a drawdown period for you guys. Are you looking to be positive cash flow here in Q-1 and then sequentially going forward as well?

I do not really give quarterly-type estimates. Obviously, the first quarter, with our backlog simply going in, probably, will not be doing a whole lot of cash flow in the first quarter due primarily just to those low level of closings but like you say, we do expect to get that cash taxed and refund in. We are working on land sales. Who knows when some of them will happen? The only projection we really gave is that we do plan to have the home building line down to zero by the end of the year. A lot of it, it depends on housing sales, how our sales are, as well as land sales. Lee Brading – Wachovia: On the tax line item, you mentioned 68, I think or so on the deferred tax asset?

That is right. Lee Brading – Wachovia: I was wondering on the timing of that. If you have any kind of guidance on that, because you mentioned also in ’06, you paid for $45 million. An assumption that we should be able to go back, I guess by ’09, get the refund for taxes paid on ’08 or something that regard to that for tax asset.

The reason I gave you the $45 million that we paid in ’06 under current law, I am not sure what is happening exactly this minute with the new legislation, but we paid $45 million in cash taxes in ’06. So, right now, there is a two-year carry-back. So, whatever we do in ’08 from a tax loss standpoint, we can go back to the ’06 number and get the 45. Just like in ’07, we are going back to ’05 and get into 50. That is the reason I gave you the $45 million we paid in ’06. As far as the deferred tax asset turning, you also have a 20-year carryforward to recover those deferred taxes. We have not really given any projections, Lee, as far as when we are going to be able to recover the whole 68 but obviously, we expect to recover it all. Lee Brading – Wachovia: I missed the breakout of the region on the community count, I guess you mentioned the Midwest, Florida, Mid-Atlantic for the 146. I apologize, I missed that.

On the community count? Lee Brading – Wachovia: Right. Where you are is ’07, I got the ’08 forecast, but adhere the ’07 where you are.

In ’07, 76 in the Midwest, 34 in Florida, and 36 in the Mid-Atlantic for the 146. Lee Brading – Wachovia: Can you give any comment you can make on January. I know there is probably not much that you can really give from a visibility from January. But any comments on January as we start the year?

As far as January, we sold about 160 homes which were better than the three months individually of the Fourth Quarter of ’07. So, we did have about 160 net sales in January of ’08 but that was about 40% below January of last year. You may recall that in the first quarter of last, we actually had pretty good sales. Lee Brading – Wachovia: Right. On the Florida margin, I got the other margin in region and areas but I missed Florida. 15, is that right?

12 to 15.

Your next question comes from Eric Landry of Morningstar. Eric Landry – Morningstar: Did you say there were 4,800 finished lots?

That is right. Eric Landry – Morningstar: And the total owned lots was around 14,000, is that correct?

Yes. Eric Landry – Morningstar: So, that is 30 some percent. Did you not say that last quarter, about 705 of your owned lots were finished?

No, what I said was it was about 30% was finished lots. Eric Landry – Morningstar: My next question is about dominion, do you plan on any different type of behavior? I know you do not see him head to head a lot, but basically, Columbus has done it to you folks and a bunch of smaller guys, do you anticipate any different type of behavior now that they are going to be private?

No. Our approach towards this market has not changed for over 20 years. We feel very good about our market position. We wish this market were larger. It is a contracting market but in the phase of that contraction, our market share today stands at over 30% as the highest at any time and company history and we have a very strong reputation to this market and we feel, about as good as we could feel about what we do and we do it here. Eric Landry – Morningstar: I agree. I guess I am relatively positive about Columbus. I think it was in 2003, it topped at over 12,000 permits and now it is down to about a third of that, basically the same on permits as in mid 80s. If you had to guess, would you bet that Columbus turns around before Florida or vice versa? I am just trying to sort of gauge where your biggest market is.

I do not know. First of all, I am not sure how do you define turnaround. Eric Landry – Morningstar: How long can long can Columbus stock along with 4,500 permits annually?

I do not know. It could be a long time. There are really a number of questions on that point. For one thing, the job growth prospects in Columbus are not nearly as strong on a relative basis as they are in either Tampa or Orlando. Number two, even if Columbus were to remain at this 3,000 to 4,000 permit level for the foreseeable future, the question is what will happen to pricing and will it be an opportunity, perhaps as the market begins to gain a little bit more confidence in itself as opposed to maybe outright demand and as the used home inventory begins to reduce itself, it has reduced itself somewhat. Will there be a little bit more pricing opportunity for new home builders like us so that we can begin to move back towards a more respectable level of profitability. It is very difficult for us to know or what to project whether the Midwest markets will come back before Florida. They never enjoyed the same level of price appreciation even though they had fallen on a relative basis. They have not fallen as far but I do not know that I could really project that with any level of confidence and it will just be a guess anyway. Eric Landry – Morningstar: But I would argue that the pricing is much more realistic there than Florida, Arizona, California, or anywhere else.

I do not know about Arizona or California but I hope that you are right. I think you might be. I think we might be closer to a more long-term equilibrium here than in some other places but I am not sure. Eric Landry – Morningstar: Last question, Phil, you mentioned that there was a component in the revenue line to make up for that subsidized 30-year mortgage, is that correct?

What I said was when we price a home; we build in the price of our home a certain amount for financing. Eric Landry – Morningstar: Did this reflect an average sale price?

Yes, it is.

(Operator Instructions) You have a follow up question from Alex Barron of Agency Trading Group. Alex Barron – Agency Trading Group: I think in the press release that you put at the end of the year, I though you said you were going to get like $82 million from the land sales and I think you only booked $42 million. Is that just the delay in that revenue?

No, when we had our land sales in the fourth quarter, Alex, we got almost all of that cashed in the fourth quarter. Some of it, a little bit one over in the first quarter or so.

That there is $43 million in the discount line and he is looking at the $42 million from continuing operations. That is why you are missing the 83.

I think it is an issue of what is in the discontinued operations line, Alex, I think is the difference that now, from a cash standpoint, we realize that all those entire $80 million in cash in the fourth quarter. Alex Barron – Agency Trading Group: Okay, so a part of it went through discontinued operations?

Yes. Like we said, when you look at our land sales in the fourth quarter, when we sold almost 4,000 of lots, about 500 of the lots were Palm Beach. So, the Palm Beach is in discontinued operations but the others are not. Also, when you look at the land sales on the fourth quarter, there was about 2/3 rolling, 1/3 finished lots. You can not really compare “Was Palm Beach more finished lots or roll out?” You got to again look through it that way, but again, we got almost all the cash in the fourth quarter. Alex Barron – Agency Trading Group: Okay, got it. Now, I think you mentioned that you felt comfortable with your interest coverage covenant and you said that the more restrictive was the attended. Can you remind me what those two are?

The minimum net worth coverage today, we have about $40 million of cushion in there. And again, that goes up by income, it goes down by losses and dividends you pay and those types of things. In interest coverage covenant, we actually tweak that covenant last August with our bank group. When we checked our line from 650 to 500 and did some other things, when we think we are going to be okay today, our best estimate is we are going to be okay in the interest coverage covenant through ’08. Alex Barron – Agency Trading Group: What is the covenant thing?

There is a rolling 12-month covenant and then there is also a quarterly covenant, Alex, I do not have what exactly those numbers are in front of me. But again, we think we will be okay with those two ’08 and again, we are meeting with our banks in March for our semiannual meeting. Alex Barron – Agency Trading Group: I have a question on the preferred equity. Are those dividends cumulative?

No, they are not.

Your final question comes from Thomas Herring of Pine River Capital. Thomas Herring – Pine River Capital: Could you discuss any covenants that you may have on your bank and/or bond, any covenants that may restrict your ability pay dividends on the preferred stock?

What we said in the presentation part was “Our most restricted debt covenant currently is minimum net worth and our current cushion in minimum net worth is about $40 million. As far as interest coverage, our rolling 12-month coverage for the quarter was 1.6 times and our quarterly interest coverage was 1.7. We currently estimate that we will be in compliance with the interest coverage covenant through 2008. We are having our semiannual bank meeting in March where we get all of our banks together. Under our public senior notes, the most restrictive issue is the restricted payments basket but at the end of ’07, we had $95 million of cushion there.

Your next question comes from Jim Wilson of JMP Securities.

What are your pre-impairment gross margins looked like, and then if you could give a little color on how they compare originally.

There were about 13% for the quarter, and I would say that the color that Bob gave on new orders today is pretty much the same color as far as the higher ones and the lower ones.

What we said, Jim, was in the Midwest on sales today, we are running 12% to 15% gross margins. In Florida, we are running a little closer to 12 and in the Mid-Atlantic and Charlotte and Raleigh were in the 16% to 18% range and in D.C., it is close to the 12% range.

So, obviously, I guess the question to follow is as you can in the future, your strategic reallocation of assets will keep moving towards the Mid-Atlantic in a little one more stable markets.

We are just trying to make certain that every house we sell is strictly in Charlotte and Raleigh. No, but seriously, Phil passed on restoring his remarks. It was schedule to buy about $30 million worth of land this year and the large bulk of it is in Charlotte and Raleigh.

Okay, that makes sense. Alright, very good, thanks.

Thanks Jim.

There appears to be no further questions at this time. I am mounting the floor back over to the management for any finishing remarks.

Thank you very much for joining us. We look forward to speaking to you with our first quarter results.

This does conclude today’s M/I Homes Conference Call, you may now disconnect.