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Item 8. Financial Statements and Supplementary Data

2023-02-17 compared with 2022-02-17 · 112 added, 154 removed, 1045 unchanged (20% of the section changed)

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Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Inventory - Refer to Notes 1, 3 and 4 to the financial statements

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Deferred income tax asset

18,019 10,251

Goodwill 16,400 16,400

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Senior notes due 2030 - net 296,361 295,937

Senior notes due 2030 - net 295,937 —

TOTAL LIABILITIES $ 1,644,198 $ 1,615,669

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Amortization of mortgage servicing rights 1,624 1,640 2,427

Gain on sale of mortgage servicing rights ( 1,135 ) ( 33 ) —

Loss (gain) on sale of mortgage servicing rights 318 ( 1,135 ) ( 33 )

Depreciation 12,982 12,691 12,636

Amortization of debt discount and debt issue costs 2,584 2,515 2,712

Loss on early extinguishment of debt, including transaction costs 2,040 950 —

Amortization of debt issue costs 2,568 2,584 2,515

Loss on early extinguishment of debt — 2,040 950

Stock-based compensation expense 8,787 8,559 7,138

Deferred income tax expense ( 4,068 ) 3,448 3,851

Deferred income tax (benefit) expense ( 7,767 ) ( 4,068 ) 3,448

Change in assets and liabilities:

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Other liabilities 34,342 27,682 20,465

Net cash (used in) provided by operating activities ( 16,823 ) 168,334 65,631

Net cash provided by (used in) operating activities 184,071 ( 16,823 ) 168,334

INVESTING ACTIVITIES:

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Repayments of bank borrowings - homebuilding operations ( 362,000 ) — ( 372,800 )

Net proceeds from (net repayments of) bank borrowings - financial services operations 40,526 88,730 ( 16,264 )

Proceeds from (principal repayments of) notes payable-other and community development

(Net repayments of) net proceeds from bank borrowings - financial services operations ( 20,419 ) 40,526 88,730

(Principal repayments of) proceeds from notes payable-other and community development

district bond obligations ( 4,549 ) 478 ( 1,756 )

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Proceeds from exercise of stock options 1,366 11,241 9,906

Net cash provided by (used in) financing activities 44,103 120,263 ( 53,483 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 24,442 ) 254,727 ( 15,446 )

Net cash (used in) provided by financing activities ( 81,517 ) 44,103 120,263

Net increase (decrease) in cash, cash equivalents and restricted cash 75,174 ( 24,442 ) 254,727

Cash, cash equivalents and restricted cash balance at beginning of period 236,368 260,810 6,083

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Detroit, Michigan;

Tampa, Orlando and Sarasota, Florida;

Tampa, Orlando, Fort Myers/Naples, and Sarasota, Florida;

Austin, Dallas/Fort Worth, Houston and San Antonio, Texas;

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Because each inventory asset is unique, there are numerous inputs and assumptions used in our valuation techniques, including estimated average selling price, construction and development costs, absorption pace (reflecting any product mix change strategies implemented or to be implemented), selling strategies, alternative land uses (including disposition of all or a portion of the land owned), or discount rates, which could materially impact future cash flow and fair value estimates.

As of December 31, 2021, our projections generally assume a gradual improvement in market conditions over time.

If communities are not recoverable based on estimated future undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.

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For example, construction in progress inventory, which is closer to completion, will generally require a lower discount rate than land under development in communities consisting of multiple phases spanning several years of development.

During the fourth quarter of 2022, we recorded an aggregate loss of $ 18.4 million that included $ 10.2 million of write-offs of land deposits for land we no longer intend to purchase in order to right-size our land portfolio and $ 8.2 million of asset impairment charges.

Our quarterly assessments reflect management’s best estimates.

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Total revenue $ 4,131,393 $ 3,745,887 $ 3,046,145

(a) Revenues include hedging gains of $ 1.6 million for the year ended December 31, 2021 and losses of $ 19.0 million and $ 12.1 million for the years ended December 31, 2020 and 2019, respectively.

(a) Revenues include hedging gains of $ 49.4 million for the year ended December 31, 2022, hedging gains of $ 1.6 million for the year ended December 31, 2021, and hedging losses of $ 19.0 million for the year ended December 31, 2020.

Hedging gains (losses) do not represent revenues recognized from contracts with customers.

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In determining the future tax consequences of events that have been recognized in the consolidated financial statements or tax returns, judgment is required.

This assessment gives appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets and considers, among other matters, the nature, frequency and

severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, our experience with operating losses and our experience of utilizing tax credit carryforwards and tax planning alternatives.

This assessment gives appropriate consideration to all positive and negative

evidence related to the realization of the deferred tax assets and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, our experience with operating losses and our experience of utilizing tax credit carryforwards and tax planning alternatives.

See Note 14 to our Consolidated Financial Statements for more information regarding our deferred tax assets.

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See Note 13 to our Consolidated Financial Statements for more information regarding our earnings per share calculation.

Recently Adopted Accounting Standards and SEC Guidance.

In March 2020, the FASB issued ASU No.

2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”).

ASU 2020-03 improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016.

ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP that are intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications.

The amendments have different effective dates.

Our adoption of this guidance did not have a material impact on our Consolidated Financial Statements and disclosures.

In March 2020, the FASB issued ASU No.

Recently Adopted Accounting Standards.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

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This guidance became effective on March 12, 2020 and can be applied prospectively through December 31, 2022.

In January 2021, the FASB issued Accounting Standards Update 2021-01, “Reference Rate Reform (Topic 848):

In January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848):

Scope (“ASU 2021-01”), which clarified the scope and application of the original guidance.

We plan to adopt ASU 2020-04 and ASU 2021-01 when LIBOR is discontinued.

We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (“ASU 2020-06”), to address the complexity associated with applying GAAP to certain financial instruments with characteristics of liabilities and equity.

The ASU includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20.

Additionally, the ASU will require entities to use the “if-converted” method when calculating diluted earnings per share for convertible instruments.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

We adopted the guidance on January 1, 2022 and the adoption did not have a material impact on our consolidated financial statements and disclosures.

In November 2020, the Securities and Exchange Commission (the “SEC”) issued Final Rule Release No.

33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information (“SEC Release No.

The rule was effective on February 10, 2021.

Registrants are required to comply with the new rules beginning with the first fiscal year ending on or after August 9, 2021 but may early adopt the amended rules at any time after the effective date (on an item-by-item basis), as long as they provide disclosure responsive to an amended item in its entirety.

Therefore, we elected to early adopt Items 301 and 302 of this rule on December 31, 2020, which eliminated the disclosure of certain selected financial data and supplementary financial data, which did not have a material impact on our consolidated financial statements and disclosures.

We adopted the amendments related to Item 303 on December 31, 2021, which included (i) clarification of the objective of MD&A;

(ii) enhancement and clarification of the disclosure requirements for liquidity and capital resources;

(iii) elimination of tabular disclosure of contractual obligations;

(iv) integration of disclosure of off-balance sheet arrangements within the context of the MD&A;

(v) codification of prior SEC guidance on critical accounting estimates;

and (vi) flexibility in comparison of the most recently completed quarter to either the corresponding quarter of the prior year or to the immediately preceding quarter.

The adoption did not have a material impact on our consolidated financial statements and disclosures.

We fully adopted ASU 2020-04 and ASU 2021-01 in October 2022 after we amended our $90 million mortgage repurchase agreement, dated October 30, 2017, as amended (the “MIF Mortgage Repurchase Facility”), which discontinued the use of LIBOR and replaced it with One-Month Term SOFR.

The adoption of this guidance did not have a material impact on our consolidated financial statements and disclosures.

Stock-Based and Deferred Compensation

We measure and recognize compensation expense associated with our grant of equity-based awards in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”), which generally requires that companies measure and recognize stock-based compensation expense in an amount equal to the fair value of share-based awards granted under compensation

arrangements over the related vesting period.

We have granted share-based awards to certain of our employees and directors in the form of stock options, director stock units, director restricted stock units and performance share units (“PSU’s”).

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Exercised ( 49,900 ) 27.36

Forfeited ( 14,200 ) 37.94

Options outstanding at December 31, 2022

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Treasury constant maturity rate at the date of the grant.

Expected volatility is based on an average of (1) historical volatility of the Company’s stock and (2) implied volatility from traded options on the

Company’s stock.

Expected volatility is based on an average of (1) historical volatility of the Company’s stock and (2) implied volatility from traded options on the Company’s stock.

The risk-free rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon U.S.

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Director Restricted Stock Units and Stock Units

In 2021, the Company awarded each non-employee director 2,910 restricted stock units ( 20,370 restricted stock units in total) under the 2018 LTIP which will vest on the first anniversary of the date of grant (subject to the non-employee director’s continued service on the Board of Directors on the vesting date (except in the case of death or disability)) and will be settled in common shares (on a one-for-one basis) upon the director’s termination of service as a director.

The Company awarded its non-employee directors a total of 24,000 stock units under the 2018 LTIP during each of the years ended December 31, 2020 and 2019.

In 2022, the Company awarded each non-employee director 4,571 restricted stock units (with the exception of a newly elected board member who was awarded 3,198 restricted stock units in August 2022), for a total of 35,195 restricted stock units, under the 2018 LTIP which will vest on the first anniversary of the date of grant (subject to the non-employee director’s continued service on the Board of Directors on the vesting date (except in the case of death or disability)) and will be settled in common shares (on a one-for-one basis) upon the director’s termination of service as a director.

The Company awarded its non-employee directors a total of 20,370 and 24,000 stock units under the 2018 LTIP during the years ended December 31, 2021 and 2020, respectively.

Each stock unit is the equivalent of one common share, vests immediately and will be converted into a common share upon termination of service as a director.

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Stock-based compensation expense for our director restricted stock units is recognized over the period of the award (amortized over one year).

Stock-based compensation expense for our director stock units, which vest immediately, is fully recognized on the day the award is granted.

The Company recognized the stock-based compensation expense related to the awards of $ 0.9 million in 2021, and $0.7 million in both 2020 and 2019.

Stock-based compensation expense for our director stock units, which vest immediately, is fully

recognized on the day the award is granted.

The Company recognized the stock-based compensation expense related to the awards of $ 1.4 million in 2022, $ 0.9 million in 2021 and $ 0.7 million in 2020.

On May 5, 2009, the Company’s board of directors terminated the M/I Homes, Inc.

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The grant date fair value of the portion of the PSU’s subject to the Performance Condition and the Market Condition component was $ 47.59 and $ 50.51 , respectively, for the 2022 PSU’s, $ 51.82 and $ 56.44 , respectively, for the 2021 PSU’s, and $ 42.23 and $ 37.51 , respectively, for the 2020 PSU’s.

In accordance with ASC 718, for the portion of the PSU’s subject to a Market Condition, stock-based compensation expense is derived using the Monte Carlo simulation methodology and is recognized ratably over the service period regardless of whether or not the

attainment of the Market Condition is probable.

Therefore, the Company recognized $ 0.2 million in stock-based compensation expense during 2022 related to the Market Condition portion of the 2022, 2021 and 2020 PSU awards.

There was a total of $ 0.2 million of unrecognized stock-based compensation expense related to the Market Condition portion of the 2022 and 2021 PSU awards as of December 31, 2022.

At December 31, 2021, the Market Condition for the 2019 PSU awards was met, and the Company recorded $ 0.3 million of stock-based compensation expense.

Based on these results and board approval, 12,433 PSU’s vested during the first quarter of 2022 with respect to the portion of the 2019 PSU’s subject to the Market Condition.

At December 31, 2022, the Market Condition for the 2020 PSU awards was not met;

therefore, no PSU’s vested during the first quarter of 2023 with respect to the portion of the 2020 PSU’s subject to the Market Condition.

For the portion of the PSU’s subject to a Performance Condition, we recognize stock-based compensation expense on a straight-line basis over the Performance Period based on the probable outcome of the related Performance Condition.

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If actual results differ significantly from these estimates, stock-based compensation expense could be higher and have a material impact on our consolidated financial statements.

The Company recognized $ 0.2 million and $ 1.4 million of stock-based compensation expense related to the Performance Condition portion of the 2021 and 2020 PSU awards, respectively, during 2021 based on the probability of attaining the Performance Conditions.

The Company has $ 0.4 million and $ 0.7 million of unrecognized stock-based compensation expense related to the Performance Condition portion of the 2021 and 2020 PSU awards, respectively, at December 31, 2021.

The Company recognized $ 1.0 million of stock-based compensation expense related to the Performance Condition portion of the 2019 PSU awards as of December 31, 2021 based on the achievement of the maximum performance level.

As of December 31, 2022, the Company had not recognized any stock-based compensation expense related to the Performance Condition portion of the 2022 PSU awards.

If the Company achieves the minimum performance levels for the Performance Condition to be met for the 2022 PSU awards, the Company would record unrecognized stock-based compensation expense of $ 0.6 million as of December 31, 2022, for which $ 0.2 million would be immediately recognized as if attainment had been probable at December 31, 2022.

The Company recognized $ 1.3 million of stock-based compensation expense related to the Performance Condition portion of the 2021 PSU awards during 2022 based on the probability of attaining the Performance Condition.

The Company has $ 0.6 million of unrecognized stock-based compensation expense related to the Performance Condition portion of the 2021 PSU awards at December 31, 2022.

The Company recognized $ 0.7 million of stock-based compensation expense related to the Performance Condition portion of the 2020 PSU awards as of December 31, 2022 based on

the achievement of the maximum performance level.

Based on these results and board approval, 54,954 PSU’s vested during the first quarter of 2023 with respect to the portion of the 2020 PSU awards subject to the Performance Condition.

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The purpose of the Company’s Amended and Restated Director Deferred Compensation Plan (the “Director Plan”) is to provide its directors with an opportunity to defer their director compensation and to invest in the Company’s common shares.

Compensation expense deferred into the Executive Plan and the Director Plan (together the “Plans”) totaled $ 0.3 million for the year ended December 31, 2021 and $ 0.2 million for the years ended December 31, 2020 and 2019.

Compensation expense deferred into the Executive Plan and the Director Plan (together the “Plans”) totaled $ 1.1 million for the year ended December 31, 2022, $ 0.3 million in 2021 and $ 0.2 million in 2020.

The portion of cash compensation deferred by employees and directors under the Plans is invested in fully-vested equity units in the Plans.

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Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for similar assets and liabilities in active

markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

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Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to an investor.

To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to broker/dealers.

To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into optional or mandatory delivery forward

sale contracts to sell whole loans and mortgage-backed securities to broker/dealers.

The forward sale contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments.

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Impairment, if any, is recognized through a valuation allowance and a reduction of revenue.

Both the carrying value and fair value of mortgage servicing rights was $ 8.4 million at December 31, 2021.

The carrying value and fair value of mortgage servicing rights was $ 9.4 million and $ 9.2 million, respectively, at December 31, 2020.

This $ 0.2 million decrease in the value of our mortgage servicing rights was caused by the disruption in the mortgage industry as a result of the COVID-19 pandemic, and was recorded as a decrease in revenue to bring the carrying value down to the fair value, for a net valuation allowance and impairment of $ 0.2 million for the year ended December 31, 2020.

Both the carrying value and fair value of mortgage servicing rights was $ 15.8 million and $ 8.4 million at December 31, 2022 and 2021, respectively.

The fair value of the Company’s forward sales contracts to broker/dealers solely considers the market price movement of the same type of security between the trade date and the balance sheet date.

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Whole loan contracts ( 323 ) 353 ( 360 )

Total gain (loss) recognized $ 1,741 $ ( 382 ) $ 511

Total (loss) gain recognized $ ( 6,116 ) $ 1,741 $ ( 382 )

The following tables set forth the fair value of the Company’s derivative instruments and their location within the Consolidated Balance Sheets for the periods indicated (except for mortgage loans held for sale which are disclosed as a separate line item):

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Forward sales of mortgage-backed securities Level 2 — — 4,477 4,477

Notes payable - homebuilding operations Level 2 — — — —

Notes payable - financial services operations Level 2 245,741 245,741 266,160 266,160

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Level 2 300,000 240,750 300,000 294,375

Senior notes due 2030 (a)

Level 2 300,000 294,375 — —

Interest rate lock commitments Level 2 — — 487 487

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The carrying amounts of these items approximate fair value because they are short-term by nature.

Mortgage Loans Held for Sale, Forward Sales of Mortgage-Backed Securities, Interest Rate Lock Commitments, Whole loan Contracts for Committed IRLCs and Mortgage Loans Held for Sale, Senior Notes due 2025, Senior Notes due 2028, and Senior Notes due 2030.

The fair value of these financial instruments was determined based upon market quotes at December 31, 2022 and 2021.

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Notes Payable - Homebuilding Operations.

The interest rate available to the Company during 2021 under the Company’s $ 550 million unsecured revolving credit facility, dated July 18, 2013 , as amended mostly recently in June 2021 (the “Credit Facility”), fluctuated daily with the one-month LIBOR rate plus a margin of 175 basis points, and thus the carrying value is a reasonable estimate of fair value.

The interest rate available to the Company during 2022 under the Company’s $ 650 million unsecured revolving credit facility, dated July 18, 2013 , as amended mostly recently in December 2022 (the “Credit Facility”), fluctuated daily with SOFR plus a margin of 175 basis points, and thus the carrying value is a reasonable estimate of fair value.

See Note 11 to our Consolidated Financial Statements for additional information regarding the Credit Facility.

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M/I Financial is a party to two credit agreements:

(1) a $ 175 million secured mortgage warehousing agreement (which increased to $ 210 million from September 25, 2021 to October 15, 2021 and to $ 235 million from November 15, 2021 to February 4, 2022, which are periods of increased volume of mortgage originations), dated June 24, 2016 , as amended (the “MIF Mortgage Warehousing Agreement”);

(1) a $ 200 million secured mortgage warehousing agreement (which increased to $ 275 million from September 19, 2022 to November 13, 2022 and to $ 300 million from November 14, 2022 to February 6, 2023, which are periods of increased volume of mortgage originations), dated May 27, 2022 , as amended (the “MIF Mortgage Warehousing Agreement”);

and (2) a $ 90 million mortgage repurchase agreement, dated October 30, 2017 , as amended (the “MIF Mortgage Repurchase Facility”).

For each of these credit facilities, the interest rate is based on a variable rate index, and thus their carrying value is a reasonable estimate of fair value.

The interest rate available to M/I Financial during 2021 fluctuated with LIBOR.

The interest rate available to M/I Financial during 2022 fluctuated with SOFR or BSBY, as applicable.

See Note 11 to our Consolidated Financial Statements for additional information regarding the MIF Mortgage Warehousing Agreement and the MIF Mortgage Repurchase Facility.

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See Notes 1 and 3 to our Consolidated Financial Statements for additional details relating to our procedures for evaluating our inventories for impairment.

During the fourth quarter of 2022, we incurred $ 8.2 million of asset impairment charges.

Land purchase deposits include both refundable and non-refundable amounts paid to third party sellers relating to the purchase of land.

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The Company expenses any deposits and accumulated pre-acquisition costs relating to such agreements in the period when the Company makes the decision not to proceed with the purchase of land under an agreement.

During the fourth quarter of 2022, we wrote off $ 10.2 million of such costs related to land we no longer intend to purchase.

Capitalized Interest

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As of December 31, 2022 and 2021, our investment in such joint venture arrangements totaled $ 51.6 million and $ 57.1 million, respectively, and was reported as Investment in Joint Venture Arrangements on our Consolidated Balance Sheets.

The increase from prior year was driven primarily by our cash contributions to our joint venture arrangements during 2021 of $ 51.6 million offset, in part, by lot distributions from our joint venture arrangements during 2021 of $ 28.1 million.

The decrease from prior year was driven primarily by lot distributions from our joint venture arrangements during 2022 of $ 23.8 million offset, in part, by our cash contributions to our joint venture arrangements during 2022 of $ 20.1 million.

The majority of our investment in joint venture arrangements for both 2022 and 2021 consisted of joint ownership and development agreements for which a special purpose entity was not established (“JODAs”).

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As of December 31, 2022 and 2021, the Company had $ 5.7 million and $ 6.5 million, respectively, of equity invested in LLCs.

The Company’s percentage of ownership in these LLCs as of December 31, 2021 ranged from 25 % to 50 % and as of December 31, 2020 ranged from 25 % to 74 %.

The Company’s percentage of ownership in these LLCs as of both December 31, 2022 and 2021 ranged from 25 % to 50 %.

We use the equity method of accounting for investments in LLCs and other joint venture arrangements, including JODAs, over which we exercise significant influence but do not have a controlling interest.

Under the equity method, our share of the LLCs’ earnings or loss, if any, is included in our Consolidated Statements of Income.

The Company’s equity in income relating to

earnings from its LLCs was $ 0.1 million for year ended December 31, 2021, $ 0.5 million for the year ended December 31, 2020 and $ 0.3 million for the year ended December 31, 2019.

The Company’s equity in income relating to earnings from its LLCs was less than $ 0.1 million for the year ended December 31, 2022, $ 0.1 million for the year ended December 31, 2021 and $ 0.5 million for the year ended December 31, 2020.

Our share of the profit relating to lots we purchase from our LLCs is deferred until homes are delivered by us and title passes to a homebuyer.

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(2) the financial condition and near-term prospects of the joint venture arrangement;

and (3) the intent and ability of the Company to retain its investment in the joint venture arrangements for a period of time sufficient to allow for any anticipated recovery in market value.

and (3) the intent and ability of the Company to retain its investment in the joint venture arrangements for a period of time sufficient to allow for any

anticipated recovery in market value.

Due to uncertainties in the estimation process and the significant volatility in demand for new housing, actual results could differ significantly from such estimates.

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(a) This represents charges of $ 1.6 million for additional stucco-related repair costs, net of $ 0.7 million of recoveries for past stucco-related claims, during 2020.

We have received claims related to stucco installation from homeowners in certain of our communities in our Tampa and Orlando, Florida markets and have been named as a defendant in legal proceedings initiated by certain of such homeowners.

These claims primarily relate to homes built prior to 2014 which have second story elevations with frame construction.

During 2019, we did not record any charges for stucco-related repair costs, and we received a total of $ 1.1 million of recoveries that were recorded directly to income as they related to past stucco-related claims and we had no current charges.

During 2020, we incurred $ 1.6 million of additional stucco-related charges, and we received a total of $ 0.7 million of recoveries for past stucco-related claims, resulting in a net charge of $ 0.9 million.

Stucco-related recoveries are reflected in our financial statements in the period the reimbursement is received.

During 2021, we did not record any additional warranty charges or receive any additional recoveries for stucco-related repair costs.

The remaining reserve at December 31, 2021, for (1) homes in our Florida communities that we had identified as needing repair but had not yet completed the repair and (2) estimated repair costs for homes in our Florida communities that we had not yet identified as needing repair but that may require repair in the future included within our warranty reserve was $ 2.7 million.

We believe that this amount is sufficient to cover both known and estimated future repair costs as of December 31, 2021.

Our remaining stucco-related reserve is gross of any recoveries.

Our estimate of future costs of stucco-related repairs is based on our judgment, various assumptions and internal data.

Due to the degree of judgment and the potential for variability in our underlying assumptions and data, we may revise our estimate, including to reflect additional estimated future stucco-related repairs costs, which revision could be material.

Performance Bonds and Letters of Credit

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(2) $ 7.9 million of financial letters of credit, of which $ 7.4 million represent deposits on land and lot purchase agreements;

and (3) $ 4.7 million of financial bonds.

(3) $ 4.9 million of financial bonds;

and (4) $ 3.4 million of corporate notes.

The development agreements under which we are required to provide completion bonds or letters of credit are generally not subject to a required completion date and only require that the improvements are in place in phases as houses are built and sold.

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At December 31, 2022 and 2021, the corresponding liability of $ 17.0 million and $ 2.8 million, respectively, has been classified as Obligation for Consolidated Inventory Not Owned on the Consolidated Balance Sheets.

The decrease in this balance from December 31, 2020 is related primarily to a decrease in the number of land purchase agreements that had deposits and prepaid acquisition and development costs that exceeded certain thresholds resulting in the remaining purchase price of the lots to be recorded in inventory not owned, as well as a decrease in the aggregate purchase amount of land contracts with specific performance requirements.

The increase in this balance from December 31, 2021 is related primarily to an increase in the number of land purchase agreements that had deposits and prepaid acquisition and development costs that exceeded certain thresholds resulting in the remaining purchase price of the lots to be recorded in inventory not owned, as well as an increase in the aggregate purchase amount of land contracts with specific performance requirements.

Legal Matters

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However, the possibility exists that the costs to resolve these legal proceedings could differ from the recorded estimates and, therefore, have a material effect on the Company’s net income for the periods in which they are resolved.

At December 31, 2021 and 2020, we had $ 1.2 million and $ 0.8 million reserved for legal expenses, respectively.

At both December 31, 2022 and 2021, we had $ 1.2 million reserved for legal expenses.

Operating Leases

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Our lease agreements do not contain any residual value guarantees or material restrictive covenants.

During the twelve months ended December 31, 2021, the Company’s operating ROU asset and operating lease liability decreased by $ 1.3 million and $ 1.0 million, respectively, as a result of $ 8.5 million of additional ROU asset amortization and $ 8.2 million of additional periodic lease expense, offset partially by $ 7.2 million in additional leases and modifications to existing leases throughout the period (which is recorded within its Consolidated Statement of Cash Flows in the change in Other Assets and Other Liabilities).

As of December 31, 2021, the Company’s ROU asset was $ 51.0 million and its operating lease liability had a balance of $ 51.5 million on its Consolidated Balance Sheets.

During the twelve months ended December 31, 2022, the Company’s operating ROU asset and operating lease liability increased by $ 9.5 million and $ 9.8 million, respectively, as a result of $ 17.0 million in additional leases and modifications to existing leases throughout the period (which is recorded within its Consolidated Statement of Cash Flows in the change in Other Assets and Other Liabilities), offset partially by $ 7.6 million of additional ROU asset amortization and $ 7.2 million of additional periodic lease expense.

As of December 31, 2022, the Company’s ROU asset was $ 60.4 million and its operating

lease liability had a balance of $ 61.3 million on its Consolidated Balance Sheets.

The weighted-average remaining lease term was 10.9 years, and the weighted-average discount rate was 3.7 %.

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In connection with the development of certain of the Company’s communities, CDDs have been established and bonds have been issued to finance a portion of the related infrastructure.

Following are details relating to such CDD bond obligations issued and outstanding as of December 31, 2021:

Following are details relating to such CDD bond obligations issued and outstanding as of December 31, 2022 and 2021:

Maturity Date

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4/1/2022 5/1/2051 4.23 % 3,750 —

4/1/2022 5/1/2053 4.24 % 2,125 —

6/1/2022 5/1/2052 5.40 % 5,010 —

6/1/2022 5/1/2053 5.40 % 3,365 —

Total CDD bond obligations issued and outstanding $ 45,600 $ 36,555

The Company records a liability for the estimated developer obligations that are probable and estimable and user fees that are required to be paid or transferred at the time the parcel or unit is sold to an end user.

The Company reduces this liability by the corresponding Assessment assumed by property purchasers and the amounts paid by the Company at the time of closing and the transfer of the property.

The Company reduces this liability by the corresponding Assessment assumed by property purchasers and the amounts paid by the Company at the time of closing and the

transfer of the property.

The Company recorded a $ 29.7 million and $ 20.1 million liability related to these CDD bond obligations as of December 31, 2022 and December 31, 2021, respectively, along with the related inventory infrastructure.

Notes Payable - Homebuilding

The Credit Facility provides for an aggregate commitment amount of $ 550 million and also includes an accordion feature pursuant to which the maximum borrowing availability may be increased to an aggregate of $ 700 million, subject to obtaining additional commitments from lenders.

The Credit Facility matures on July 18, 2025 .

Interest on amounts borrowed under the Credit Facility is payable at a rate which is adjusted daily and is equal to the sum of the one-month LIBOR (subject to a floor of 0.25 %) plus a margin of 175 basis points (subject to adjustment in subsequent quarterly periods based on the Company’s leverage ratio).

The Credit Facility includes a provision for the replacement of LIBOR under certain circumstances where one-month LIBOR is no longer available.

On December 9, 2022, the Company entered into an amendment to the Credit Facility which, among other things (1) increased the commitments from lenders to $ 650 million from $ 550 million, (2) extended the maturity to December 9, 2026 , (3) increased the accordion feature pursuant to which the maximum borrowing availability may be increased to an aggregate of $ 800 million, subject to obtaining additional commitments from lenders, (4) increased the sub-facility for letters of credit included in the Credit Facility to $ 250 million from $ 150 million, and (5) replaced LIBOR with SOFR as an interest rate bench mark (subject to a floor of 0.25 %) and permitted the Company to select an index rate for each borrowing from multiple interest rate options, including one, three or six month adjusted term SOFR, plus a margin of 175 basis points (subject to adjustment in subsequent quarterly periods based on the Company’s then applicable leverage ratio).

The available amount under the Credit Facility is computed in accordance with a borrowing base, which is calculated by applying various advance rates for different categories of inventory, and totaled $ 1.6 billion of availability for additional senior debt at December 31, 2022.

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The MIF Mortgage Warehousing Agreement is used to finance eligible residential mortgage loans originated by M/I Financial.

The MIF Mortgage Warehousing Agreement provides for a maximum borrowing availability of $ 175 million, which increased to $ 210 million from September 25, 2021 to October 15, 2021 and increased to $ 235 million from November 15, 2021 to February 4, 2022 (periods of increases in the volume of mortgage originations).

The MIF Mortgage Warehousing Agreement provides for a maximum borrowing availability of $ 200 million, which increased to $ 275 million from September 19, 2022 to November 13, 2022 and increased to $ 300 million from November 14, 2022 to February 6, 2023 (periods of increases in the volume of mortgage originations).

The MIF Mortgage Warehousing Agreement expires on May 26, 2023 .

Interest on amounts borrowed under the MIF Mortgage Warehousing Agreement is payable at a per annum rate equal to the one-month LIBOR rate (subject to a floor of 0.5 %) plus a spread of 190 basis points.

Interest on amounts borrowed under the MIF Mortgage Warehousing Agreement is payable at a per annum rate equal to the one-month BSBY rate (adjusting daily) (subject to a floor of 0.25 %) plus a spread of 190 basis points.

The MIF Mortgage Warehousing Agreement also contains certain financial covenants.

At December 31, 2022, M/I Financial was in compliance with all financial covenants of the MIF Mortgage Warehousing Agreement.

The MIF Mortgage Warehousing Agreement includes a provision for the replacement of LIBOR under certain circumstances where one-month LIBOR is no longer available.

The MIF Mortgage Repurchase Facility is used to finance eligible residential mortgage loans originated by M/I Financial.

The MIF Mortgage Repurchase Facility provides for a mortgage repurchase facility with a maximum borrowing availability of $ 90 million.

The MIF Mortgage Repurchase Facility provides for a mortgage repurchase facility with a maximum borrowing availability of

$ 90 million.

The MIF Mortgage Repurchase Facility expires on October 23, 2023 .

M/I Financial pays interest on each advance under the MIF Mortgage Repurchase Facility at a per annum rate equal to the one-month LIBOR rate (subject to a floor of

0.75 % or 0.625 % based on the type of loan) plus 175 or 200 basis points depending on the loan type.

M/I Financial pays interest on each advance under the MIF Mortgage Repurchase Facility at a per annum rate equal to One-Month Term SOFR (subject to an all-in floor of 2.375 % or 2.75 % based on the type of loan) and adjusts certain financial covenant limits, plus 150 or 200 basis points depending on the loan type.

The MIF Mortgage Repurchase Facility also contains certain financial covenants.

At December 31, 2022, M/I Financial was in compliance with all financial covenants of the MIF Mortgage Repurchase Facility.

The MIF Mortgage Repurchase Facility includes a provision for the replacement of LIBOR under certain circumstances where one-month LIBOR is no longer available.

At December 31, 2022 and 2021, M/I Financial’s total combined maximum borrowing availability under the two credit facilities were $ 390.0 million and $ 325.0 million, respectively.

At December 31, 2022 and December 31, 2021, M/I Financial had $ 245.7 million and $ 266.2 million outstanding on a combined basis under its credit facilities, respectively.

On August 23, 2021, the Company issued $ 300.0 million aggregate principal amount of the 2030 Senior Notes.

The 2030 Senior Notes bear interest at a rate of 3.95 % per year, payable semiannually in arrears on February 15 and August 15 of each year (commencing on February 15, 2022), and mature on February 15, 2030 .

As of both December 31, 2022 and 2021, we had $ 300.0 million of our 2030 Senior Notes outstanding.

The 2030 Senior Notes bear interest at a rate of 3.95 % per year, payable semiannually in arrears on February 15 and August 15 of each year, and mature on February 15, 2030 .

The Company may redeem some or all of the 2030 Senior Notes at any time prior to August 15, 2029 (the date that is six months prior to the maturity of the 2030 Senior Notes), at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole” amount set forth in the indenture governing the 2030 Senior Notes.

In addition, on or after August 15, 2029 (the date that is six months prior to the maturity of the 2030 Senior Notes), the Company may redeem some or all of the 2030 Senior Notes at a redemption price equal to 100.000 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

The Company used a portion of the net proceeds from the issuance of the 2030 Senior Notes to redeem all $ 250.0 million aggregate principal amount of its then outstanding 5.625 % Senior Notes due 2025 (the “2025 Senior Notes”) at a redemption price of 102.813 % of the principal amount, plus accrued and unpaid interest thereon, on August 24, 2021.

As of both December 31, 2022 and 2021, we had $ 400.0 million of our 2028 Senior Notes outstanding.

2 unchanged sentences

The redemption price will initially be 103.713 % of the principal amount outstanding, but will decline to 102.475 % of the principal amount outstanding if redeemed during the 12 month period beginning on February 1, 2024, will further decline to 101.238 % of the principal amount outstanding if redeemed during the 12-month period beginning on February 1, 2025 and will further decline to 100.000 % of the principal amount outstanding if redeemed on or after February 1, 2026, but prior to maturity.

As of December 31, 2020, we had $ 250.0 million of our 2025 Senior Notes outstanding.

The 2025 Senior Notes paid interest at a rate of 5.625 % per year, semiannually in arrears on February 1 and August 1 of each year, and were scheduled to mature on August 1, 2025 .

As stated above, the Company redeemed all of the 2025 Senior Notes on August 24, 2021.

The 2030 Senior Notes contain certain covenants, as more fully described and defined in the indenture governing the 2030 Senior Notes, which limit the ability of the Company and the restricted subsidiaries to, among other things:

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The 2030 Senior Notes and the 2028 Senior Notes are general, unsecured senior obligations of the Company and the Subsidiary Guarantors and rank equally in right of payment with all our and the Subsidiary Guarantors’ existing and future unsecured senior indebtedness.

The 2030 Senior Notes and the 2028 Senior Notes are

effectively subordinated to our and the Subsidiary Guarantors’ existing and future secured indebtedness with respect to any assets comprising security or collateral for such indebtedness.

The 2030 Senior Notes and the 2028 Senior Notes are effectively subordinated to our and the Subsidiary Guarantors’ existing and future secured indebtedness with respect to any assets comprising security or collateral for such indebtedness.

The indenture governing the 2028 Senior Notes limits our ability to pay dividends on, and repurchase, our common shares and any of our preferred shares then outstanding to the amount of the positive balance in our “restricted payments basket,” as defined in the indenture.

The “restricted payments basket” is equal to $ 125.0 million plus (1) 50 % of our aggregate consolidated net income (or minus 100 % of our aggregate consolidated net loss) from October 1, 2015, excluding income or loss from Unrestricted Subsidiaries (as defined in the indenture), plus (2) 100 % of the net cash proceeds from either contributions to the common equity of the Company after December 1, 2015 or the sale of qualified equity interests after December 1, 2015, plus other items and subject to other exceptions.

contributions to the common equity of the Company after December 1, 2015 or the sale of qualified equity interests after December 1, 2015, plus other items and subject to other exceptions.

The positive balance in our restricted payments basket was $ 661.7 million and $ 487.5 million at December 31, 2022 and 2021, respectively.

1 unchanged sentence

Notes Payable - Other

The Company had other borrowings, which are reported in Notes Payable - Other in our Consolidated Balance Sheets, totaling $ 4.5 million and $ 4.1 million as of December 31, 2021 and 2020, respectively, which are comprised of notes payable acquired in the normal course of business.

These other borrowings are included in the debt maturities schedule below.

The Company had other borrowings, which are reported in Notes Payable - Other in our Consolidated Balance Sheets, totaling $ 4.5 million as of December 31, 2021, which are comprised of notes payable acquired in the normal course of business.

There were no other borrowings in Notes Payable - Other as of December 31, 2022.

Maturities over the next five years with respect to the Company’s debt as of December 31, 2022 are as follows:

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If the reporting unit’s carrying value exceeds its fair value, then an impairment loss is recognized for the amount of the excess of the carrying amount over the reporting unit’s fair value.

The Company performed its annual goodwill impairment analysis during the fourth quarter of 2021, and there were no indicators of impairment or impairment charges recorded at December 31, 2021, and no impairment was recorded at December 31, 2020.

The Company performed its annual goodwill impairment analysis via a quantitative test during the fourth quarter of 2022, and there was no impairment recorded at December 31, 2022.

There were no indicators of impairment or impairment charges recorded at December 31, 2021.

The evaluation of goodwill for possible impairment includes estimating fair value using one or a combination of valuation techniques, such as discounted cash flows.

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Based upon a review of all available evidence, we believe our deferred tax assets were fully realizable in all periods presented.

At December 31, 2021, the Company’s total deferred tax assets were $ 30.3 million which is offset by $ 20.1 million of total deferred tax liabilities for a $ 10.3 million net deferred tax asset which is reported on the Company’s Consolidated Balance Sheets.

The Inflation Reduction Act (IRA) was enacted August 16, 2022 to address the high cost of prescription drugs, healthcare availability, climate change and inflation.

The IRA extended the energy efficient homes credit through 2032 and, as a result, the Company recognized a $ 10.0 million year-to-date tax benefit during 2022.

At December 31, 2022, the Company’s total deferred tax assets were $ 41.5 million which were offset by $ 23.5 million of total deferred tax liabilities for a $ 18.0 million net deferred tax asset which is reported on the Company’s Consolidated Balance Sheets.

The tax effects of the significant temporary differences that comprise the deferred tax assets and liabilities are as follows:

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Prepaid expenses 534 810

Deferred charges — 685

Total deferred tax liabilities $ 23,499 $ 20,085

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For 2022, 2021 and 2020, the Company’s effective tax rate was 22.76 %, 22.05 %, and 22.63 %, respectively.

The decrease in 2021’s effective tax rate from 2020 and 2020’s effective tax rate from 2019 was primarily attributable to an increased tax benefit from energy tax credits.

Reconciliation of the differences between income taxes computed at the federal statutory tax rate and consolidated benefit from income taxes are as follows:

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The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense.

At December 31, 2021, 2020 and 2019, we had no unrecognized tax benefits due to the lapse of the statute of limitations and completion of audits in prior years.

At December 31, 2022, 2021 and 2020, we had no unrecognized tax benefits due to the lapse of the statute of limitations and completion of audits

in prior years.

We believe that our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change.

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Columbus, Ohio Tampa, Florida

Indianapolis, Indiana Austin, Texas

Indianapolis, Indiana Fort Myers/Naples, Florida

Minneapolis/St.

Paul, Minnesota Dallas/Fort Worth, Texas

Detroit, Michigan Houston, Texas

Paul, Minnesota Austin, Texas

Detroit, Michigan Dallas/Fort Worth, Texas

Houston, Texas

San Antonio, Texas

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Total revenue $ 4,131,393 $ 3,745,887 $ 3,046,145

Operating income:

Northern homebuilding (b)

$ 211,958 $ 125,588 $ 96,239

Southern homebuilding (c)

Operating income (loss):

Northern homebuilding $ 217,499 $ 211,958 $ 125,588

Southern homebuilding (b)

451,874 312,661 202,561

2 unchanged sentences

Corporate selling, general and administrative expense ( 76,304 ) ( 68,614 ) ( 62,283 )

Total operating income (b) (c) (d)

Total operating income (a) (b) (c)

$ 637,451 $ 518,296 $ 319,261

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Total interest expense $ 2,250 $ 2,156 $ 9,684

Other income (e)

Other income (d)

$ ( 6 ) $ ( 2,046 ) $ ( 466 )

Loss on early extinguishment of debt (f)

Loss on early extinguishment of debt (e)

Income before income taxes $ 635,207 $ 509,114 $ 310,043

6 unchanged sentences

(a) Our financial services operational results should be viewed in connection with our homebuilding business as its operations originate loans and provide title services primarily for our homebuying customers, with the exception of an immaterial amount of mortgage refinancing.

(b) Includes $ 0.6 million of acquisition-related charges taken during 2019 as a result of our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

(c) Includes a $ 0.9 million net charge for stucco-related repair costs in certain of our Florida communities (as more fully discussed in Note 8 to our Consolidated Financial Statements) taken during 2020.

(d) For the years ended December 31, 2020 and 2019, total operating income was reduced by $ 8.4 million and $ 5.0 million, respectively, related to asset impairment charges taken during the period.

(e) Other income is comprised of the gain on the sale of a non-operating asset during the fourth quarter of 2021 as well as equity in income from joint venture arrangements.

(f) Loss on early extinguishment of debt relates to the early redemption of our 2025 Senior Notes during the third quarter of 2021, consisting of a prepayment premium due to early redemption and a write-off of unamortized debt issuance costs.

(b) Includes a $ 0.9 million net charge for stucco-related repair costs in certain of our Florida communities (as more fully discussed in Note 8 to our Consolidated Financial Statements) taken during 2020.

(c) For the years ended December 31, 2022 and 2020, total operating income was reduced by $ 18.4 million and $ 8.4 million, respectively, related to asset impairment charges taken during the period.

(d) Other income is comprised of the gain on the sale of a non-operating asset during the fourth quarter of 2021 as well as equity in income from joint venture arrangements.

(e) Loss on early extinguishment of debt relates to the early redemption of our 5.625% senior notes due 2025 (the “2025 Senior Notes”) during the third quarter of 2021, consisting of a prepayment premium due to early redemption and a write-off of unamortized debt issuance costs.

The following tables show total assets by segment at December 31, 2022 and 2021:

24 unchanged sentences

Share Repurchase Program

On July 28, 2021, the Company announced that its Board of Directors approved a new share repurchase program (the “2021 Share Repurchase Program”), which replaced and superseded the share repurchase program authorized by the Board of Directors in 2018 (the “2018 Share Repurchase Program”).

Prior to its replacement, the Company did not repurchase any outstanding common shares under the 2018 Share Repurchase Program during 2021.

Pursuant to the 2021 Share Repurchase Program, the Company may purchase up to $ 100 million of its outstanding common shares through open market transactions, privately negotiated transactions or otherwise in accordance with all applicable laws.

On July 28, 2021, the Company announced that its Board of Directors authorized the 2021 Share Repurchase Program pursuant to which the Company may purchase up to $100 million of its outstanding common shares through open market transactions, privately negotiated transactions or otherwise in accordance with all applicable laws.

On February 17, 2022, the Company announced that its Board of Directors approved an increase to its 2021 Share Repurchase Program by an additional $100 million.

During the year ended December 31, 2022, the Company repurchased 1.2 million outstanding common shares at an aggregate purchase price of $ 55.3 million under the 2021 Share Repurchase Program.

The Company did not repurchase any shares during the first or second quarters of 2021.

The Company did not repurchase any shares during the fourth quarter of 2022.

During the year ended December 31, 2021, the Company repurchased 0.8 million outstanding common shares at an aggregate purchase price of $ 51.5 million under the 2021 Share Repurchase Program.

As of December 31, 2022, $ 93.1 million remained available for repurchases under the 2021 Share Repurchase Program.

1 unchanged sentence

The 2021 Share Repurchase Program does not have an expiration date and the Board may modify, discontinue or suspend it at any time.

See Note 17 for additional information.

Subsequent Event

On February 16, 2022, the Company amended its Credit Facility to eliminate specified limits on the Company to make investments in its subordinated debt and capital stock.

Such investments are subject to the Company’s compliance with the other covenants and provisions in the Credit Facility.

On February 17, 2022, the Company announced that its Board of Directors approved an increase to its 2021 Share Repurchase Program by an additional $ 100 million, leaving up to $ 148.5 million available for repurchase.

See Note 16 for additional information.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data