Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 29, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'Meritage Homes CORP | ' |
Entity Central Index Key | '0000833079 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 39,125,006 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
Assets: | ' | ' | |
Cash and cash equivalents | $84,105 | $274,136 | |
Investments and securities | 9,857 | 89,687 | |
Other receivables | 56,178 | 38,983 | |
Real estate | 1,865,051 | 1,405,299 | |
Real estate not owned | 4,999 | 289 | |
Deposits on real estate under option or contract | 80,263 | [1],[2] | 51,595 |
Investments in unconsolidated entities | 9,900 | 11,638 | |
Property and equipment, net | 31,979 | 22,099 | |
Deferred tax asset | 65,538 | 70,404 | |
Prepaids, other assets and goodwill | 64,942 | 39,231 | |
Total assets | 2,272,812 | 2,003,361 | |
Liabilities: | ' | ' | |
Accounts payable | 105,068 | 68,018 | |
Accrued liabilities | 168,584 | 166,611 | |
Home sale deposits | 33,535 | 21,996 | |
Liabilities related to real estate not owned | 4,299 | 289 | |
Senior, convertible senior notes and other borrowings | 904,629 | 905,055 | |
Total liabilities | 1,216,115 | 1,161,969 | |
Stockholders' Equity: | ' | ' | |
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at September 30, 2014 and December 31, 2013 | 0 | 0 | |
Common stock, par value $0.01. Authorized 125,000,000 shares; issued 39,125,006 and 36,244,071 shares at September 30, 2014 and December 31, 2013, respectively | 391 | 362 | |
Additional paid-in capital | 535,204 | 412,961 | |
Retained earnings | 521,102 | 428,069 | |
Total stockholders' equity | 1,056,697 | 841,392 | |
Total liabilities and stockholders' equity | $2,272,812 | $2,003,361 | |
[1] | (3)Except for our specific performance option contracts recorded on our balance sheet as Real estate not owned, none of our option agreements require us to purchase lots. | ||
[2] | Amount is reflected in our consolidated balance sheet in the line item Deposits on real estate under option or contract as of September 30, 2014. |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 39,125,006 | 36,244,071 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Home closing revenue | $545,524 | $483,147 | $1,454,103 | $1,249,897 | ||||
Land closing revenue | 11,252 | 8,933 | 16,622 | 28,568 | ||||
Total closing revenue | 556,776 | [1] | 492,080 | [1] | 1,470,725 | [1] | 1,278,465 | [1] |
Cost of home closings | -434,286 | -372,772 | -1,140,305 | -981,557 | ||||
Cost of land closings | -11,729 | -6,126 | -18,084 | -24,139 | ||||
Total cost of closings | -446,015 | -378,898 | -1,158,389 | -1,005,696 | ||||
Home Closing Gross Profit | 111,238 | 110,375 | 313,798 | 268,340 | ||||
Land Closing Gross Loss Profit | -477 | 2,807 | -1,462 | 4,429 | ||||
Total closing gross profit | 110,761 | 113,182 | 312,336 | 272,769 | ||||
Financial Services Revenue | 2,749 | 1,684 | 7,099 | 3,960 | ||||
Financial Services Expenses | -1,238 | -901 | -3,444 | -2,229 | ||||
Earnings from financial services unconsolidated entities and other, net | 2,783 | 3,511 | 7,281 | 9,784 | ||||
Financial Services Profit | 4,294 | 4,294 | 10,936 | 11,515 | ||||
Commissions and other sales costs | -40,211 | -33,467 | -107,250 | -90,526 | ||||
General and administrative expenses | -29,218 | -24,412 | -75,460 | -66,587 | ||||
(Loss)/earnings from other unconsolidated entities, net | -134 | 46 | -364 | -229 | ||||
Interest expense | -460 | -3,462 | -4,569 | -13,113 | ||||
Other income, net | 1,998 | 605 | 6,395 | 1,760 | ||||
Loss on early extinguishment of debt | 0 | 0 | 0 | -3,796 | ||||
Earnings before income taxes | 47,030 | 56,786 | 142,024 | 111,793 | ||||
Provision for income taxes | -14,453 | -18,595 | -48,991 | -33,418 | ||||
Net earnings | $32,577 | $38,191 | $93,033 | $78,375 | ||||
Earnings per common share: | ' | ' | ' | ' | ||||
Basic | $0.83 | $1.05 | $2.39 | $2.17 | ||||
Diluted | $0.79 | [2] | $0.99 | [2] | $2.27 | [2] | $2.05 | [2] |
Weighted average number of shares: | ' | ' | ' | ' | ||||
Basic | 39,123 | 36,226 | 38,977 | 36,060 | ||||
Diluted | 41,656 | 38,865 | 41,564 | 38,771 | ||||
[1] | (1)Homebuilding revenue includes the following land closing revenue, by segment: Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 2014 2013Land closing revenue: West$10,105 $5,875 $11,155 $11,616Central1,147 3,058 3,244 13,482East— — 2,223 3,470Consolidated total$11,252 $8,933 $16,622 $28,568 | |||||||
[2] | (1)In accordance with ASC Subtopic 260-10, Earnings Per Share, we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net earnings as reported | $93,033 | $78,375 |
Adjustments to reconcile net earnings to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 8,154 | 7,169 |
Stock-based compensation | 9,035 | 7,040 |
Loss on early extinguishment of debt | 0 | 3,796 |
Excess income tax benefit from stock-based awards | -2,197 | -1,733 |
Equity in earnings from unconsolidated entities | -6,917 | -9,555 |
Deferred tax asset valuation benefit | 0 | -4,614 |
Distributions of earnings from unconsolidated entities | 8,784 | 10,796 |
Other | 8,361 | 3,071 |
Changes in assets and liabilities: | ' | ' |
Increase in real estate | -350,868 | -221,668 |
Increase in deposits on real estate under option or contract | -27,552 | -20,425 |
Increase in receivables and prepaid expenses and other assets | -19,502 | -14,224 |
Increase in accounts payable and accrued liabilities | 34,501 | 106,862 |
Increase in home sale deposits | 9,015 | 15,584 |
Net cash used in operating activities | -236,153 | -39,526 |
Cash flows from investing activities: | ' | ' |
Investments in unconsolidated entities | -245 | -107 |
Distributions of capital from unconsolidated entities | 0 | 79 |
Purchases of property and equipment | -16,367 | -9,717 |
Proceeds from sales of property and equipment | 173 | 39 |
Maturities of investments and securities | 115,584 | 132,900 |
Payments to purchase investments and securities | -35,697 | -139,672 |
Cash paid for acquisitions | -130,677 | -18,379 |
Increase in restricted cash | 0 | -1,966 |
Net cash used in investing activities | -67,229 | -36,823 |
Cash flows from financing activities: | ' | ' |
Repayment of senior subordinated notes | 0 | -102,822 |
Proceeds from issuance of senior notes | 0 | 175,000 |
Debt issuance costs | 0 | -1,403 |
Excess income tax benefit from stock-based awards | 2,197 | 1,733 |
Noncontrolling interest acquisition | 0 | -257 |
Proceeds from issuance of common stock, net | 110,420 | 0 |
Proceeds from stock option exercises | 734 | 11,225 |
Net cash provided by financing activities | 113,351 | 83,476 |
Net (decrease)/increase in cash and cash equivalents | -190,031 | 7,127 |
Cash and cash equivalents at beginning of period | 274,136 | 170,457 |
Cash and cash equivalents at end of period | $84,105 | $177,584 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||||||||||
ORGANIZATION AND BASIS OF PRESENTATION | ' | |||||||||||||||
ORGANIZATION AND BASIS OF PRESENTATION | ||||||||||||||||
Organization. Meritage Homes is a leading designer and builder of single-family detached homes based on the number of home closings. We primarily build in the historically high-growth regions of the western, southern and southeastern United States and offer a variety of homes that are designed to appeal to a wide range of homebuyers, including first-time, move-up, active adult and luxury. We have homebuilding operations in three regions: West, Central and East, which are comprised of nine states: Arizona, Texas, California, Colorado, Florida, North Carolina, South Carolina, Georgia and Tennessee. In August 2014, we entered the Atlanta, Georgia and Greenville, South Carolina markets through the acquisition of the homebuilding assets and operations of Legendary Communities ("Legendary"). With this acquisition, we acquired control of approximately 4,800 lots, of which 700 are owned and 4,100 are under option contracts with third parties. The acquisition of Legendary contributed 185 units to our backlog as of September 30, 2014. We also operate a wholly-owned title company, Carefree Title Agency, Inc. ("Carefree Title"). Carefree Title's core business includes title insurance and closing/settlement services we offer to our homebuyers. Through our predecessors, we commenced our homebuilding operations in 1985. Meritage Homes Corporation was incorporated in 1988 in the state of Maryland. | ||||||||||||||||
Our homebuilding and marketing activities are conducted under the name of Meritage Homes in each of our homebuilding markets, other than Tennessee, where we operate under the Phillips Builders brand, and in the Atlanta and Greenville markets where we currently operate under the Legendary Communities brand. We also operate as Monterey Homes in some markets. At September 30, 2014, we were actively selling homes in 225 communities, with base prices ranging from approximately $127,000 to $859,000. | ||||||||||||||||
Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013. The consolidated financial statements include the accounts of Meritage Homes Corporation and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying financial statements include all adjustments (consisting only of normal recurring entries), necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. Certain reclassifications have been made to the prior year to conform with current year presentation, including any adjustments recorded to previously established warranty reserves. | ||||||||||||||||
Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. Amounts in transit from title companies for home closings of approximately $36.9 million and $26.4 million are included in cash and cash equivalents at September 30, 2014 and December 31, 2013, respectively. Included in our cash and cash equivalents balance as of September 30, 2014 and December 31, 2013 are $0.3 million and $68.3 million, respectively, of money market funds that are invested in short term (three months or less) U.S. government securities. | ||||||||||||||||
Investments and Securities. Our investments and securities are comprised of both treasury securities and deposits with banks that are FDIC-insured and secured by U.S. government treasury-backed investments, and therefore we believe bear a limited risk of loss. All of our investments are classified as held-to-maturity and are recorded at amortized cost as we have both the ability and intent to hold them until their respective maturities. The contractual lives of these investments are greater than three months but not exceeding 18 months. Due to their short duration and low contractual interest rates, the amortized cost of the investments approximates fair value with no unrecognized gains and losses or other-than-temporary impairments. | ||||||||||||||||
Real Estate. Real estate is stated at cost unless the asset is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). Inventory includes the costs of land acquisition, land development, home construction, capitalized interest, real estate taxes, capitalized direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes under construction when construction begins. Home construction costs are accumulated on a per-home basis, while most selling costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in the community or phase. When a home closes, we may have incurred costs for goods and services that have not yet been paid. Therefore, we record an accrued liability to capture such obligations in connection with the home closing and charged directly to cost of sales. | ||||||||||||||||
We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. It is possible that actual results could differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, increases in costs that have not yet been committed, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate construction and land costs. | ||||||||||||||||
Typically, a community’s life cycle ranges from three to five years, commencing with the acquisition of the land, continuing through the land development phase, if applicable, and concluding with the sale, construction and closing of the homes. Actual community lives will vary based on the location and size of the community, the sales absorption rate and whether the land purchased was raw, partially-developed or in finished status. Master-planned communities encompassing several phases and super-block land parcels may have significantly longer lives and projects involving a small number of finished lots may be shorter. | ||||||||||||||||
All of our land inventory and related real estate assets are reviewed for recoverability, as our inventory is considered “long-lived” in accordance with GAAP. Impairment charges are recorded to write down an asset to its estimated fair value if the undiscounted cash flows expected to be generated by the asset are lower than its carrying amount. Our determination of fair value is based on projections and estimates. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. Our analysis is conducted if indicators of a decline in value of our land and real estate assets exist. If an asset is deemed to be impaired, the impairment recognized is measured as the amount by which the assets’ carrying amount exceeds their fair value. The impairment of a community is allocated to each lot on a straight-line basis. | ||||||||||||||||
Deposits. Deposits paid related to purchase contracts and land options are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of real estate inventory at the time the deposit is used to offset the acquisition price of the lots based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are charged to expense if the land acquisition is terminated or no longer considered probable. Since the acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of the non-refundable deposits and any ancillary capitalized costs. Our deposits were $80.3 million and $51.6 million as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||
Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on at least an annual basis through a qualitative assessment to determine whether it is necessary to perform a two-step goodwill impairment test. ASC 350 states that an entity may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, the two-step impairment testing in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. | ||||||||||||||||
Off-Balance Sheet Arrangements —Joint Ventures. In the past, we have participated in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile and leveraging our capital base; however, in recent years, such ventures have not been a significant avenue for us to access lots. See Note 4 for additional discussion of our investments in unconsolidated entities. | ||||||||||||||||
Off-Balance Sheet Arrangements — Other. We may acquire lots from various development and land bank entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators). See Note 3 for further discussion. | ||||||||||||||||
Surety Bonds and Letters of Credit. We may provide letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. We may also utilize surety bonds to guarantee our performance of certain development and construction activities. Surety bonds are generally posted in lieu of letters of credit or cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Bonds are generally not released until all development activities under the applicable bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon. | ||||||||||||||||
The table below outlines our surety bond and letter of credit obligations (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Outstanding | Estimated work | Outstanding | Estimated work | |||||||||||||
remaining to | remaining to | |||||||||||||||
complete | complete | |||||||||||||||
Surety Bonds: | ||||||||||||||||
Surety bonds related to joint ventures | $ | 87 | $ | 87 | $ | 87 | $ | 87 | ||||||||
Surety bonds related to owned projects and lots under contract | 249,510 | 95,778 | 191,742 | 86,115 | ||||||||||||
Total surety bonds | $ | 249,597 | $ | 95,865 | $ | 191,829 | $ | 86,202 | ||||||||
Letters of Credit (“LOCs”): | ||||||||||||||||
LOCs in lieu of deposits for contracted lots | $ | 1,200 | N/A | $ | 1,685 | N/A | ||||||||||
LOCs for land development | 18,586 | N/A | 35,883 | N/A | ||||||||||||
LOCs for general corporate operations | 4,500 | N/A | 4,500 | N/A | ||||||||||||
Total LOCs | $ | 24,286 | N/A | $ | 42,068 | N/A | ||||||||||
Accrued Liabilities. Accrued liabilities consist of the following (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Accruals related to real-estate development and construction activities | $ | 38,463 | $ | 29,992 | ||||||||||||
Payroll and other benefits | 34,942 | 36,232 | ||||||||||||||
Accrued taxes | 12,878 | 22,902 | ||||||||||||||
Warranty reserves | 21,454 | 21,971 | ||||||||||||||
Legal reserves | 15,747 | 16,463 | ||||||||||||||
Real-estate notes payable (1) | 16,574 | 15,993 | ||||||||||||||
Other accruals | 28,526 | 23,058 | ||||||||||||||
Total | $ | 168,584 | $ | 166,611 | ||||||||||||
(1) Reflects balance of non-recourse notes payable made in connection with land purchases. | ||||||||||||||||
Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty typically during the first year after the close of the home and a structural warranty that typically extends up to 10 years subsequent to the close of the home. With the assistance of an actuary, we estimate these reserves for the structural warranty based on the number of homes still under warranty and historical warranty data and trends for our communities. We also use industry data with respect to similar product types and geographic areas in markets where our experience may not be sufficient to draw a meaningful conclusion. We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available. A summary of changes in our warranty reserves follows (in thousands): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Balance, beginning of period | $ | 20,882 | $ | 21,844 | $ | 21,971 | $ | 22,064 | ||||||||
Additions to reserve from new home deliveries | 3,023 | 2,818 | 8,058 | 8,055 | ||||||||||||
Warranty claims | (2,451 | ) | (2,405 | ) | (9,075 | ) | (7,862 | ) | ||||||||
Adjustments to pre-existing reserves | — | — | 500 | — | ||||||||||||
Balance, end of period | $ | 21,454 | $ | 22,257 | $ | 21,454 | $ | 22,257 | ||||||||
Warranty reserves are included in Accrued liabilities on the accompanying consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the general liability insurance we maintain, are sufficient to cover our general warranty obligations. However, unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates. | ||||||||||||||||
Recently Issued Accounting Pronouncements. | ||||||||||||||||
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"), which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. We will be required to perform the going concern assessment under ASU 2014-15 beginning with the year ending December 31, 2016. | ||||||||||||||||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation — Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for us on January 1, 2016. Early adoption is permitted. We do not anticipate the adoption of ASU 2014-12 will have a material effect on our consolidated financial statements or disclosures. | ||||||||||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASU 2014-09”). ASU 2014-09 requires entities to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services by applying the following steps: (1) identify the contract(s) with a customer; (2 )identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 supersedes the revenue recognition requirements in ASU 605, Revenue Recognition, most industry-specific guidance throughout the industry topics of the Accounting Standards Codification, and some cost guidance related to construction-type and production-type contracts. ASU 2014-09 is effective for us on January 1, 2017. Early adoption is not permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. | ||||||||||||||||
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which changes the criteria for classifying activities as discontinued operations and increases the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. If the disposal does qualify as a discontinued operation under ASU 2014-08, the entity will be required to provide expanded disclosures. The guidance will be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. ASU 2014-08 is effective for us on January 1, 2015. We do not anticipate the adoption of ASU 2014-08 will have a material effect on our consolidated financial statements or disclosures. |
Real_Estate_and_Capitalized_In
Real Estate and Capitalized Interest | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Inventory Disclosure [Abstract] | ' | |||||||||||||||
REAL ESTATE AND CAPITALIZED INTEREST | ' | |||||||||||||||
REAL ESTATE AND CAPITALIZED INTEREST | ||||||||||||||||
Real estate consists of the following (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Homes under contract under construction (1) | $ | 440,033 | $ | 262,633 | ||||||||||||
Unsold homes, completed and under construction (1) | 283,883 | 147,889 | ||||||||||||||
Model homes (1) | 100,027 | 81,541 | ||||||||||||||
Finished home sites and home sites under development (2) | 1,041,108 | 913,236 | ||||||||||||||
$ | 1,865,051 | $ | 1,405,299 | |||||||||||||
(1) Includes the allocated land and land development costs associated with each lot for these homes. | ||||||||||||||||
-2 | Includes land held for development and land held for sale. Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we may have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. | |||||||||||||||
Subject to sufficient qualifying assets, we capitalize interest incurred in connection with the development and construction of real estate. Completed homes and land not actively under development do not qualify for interest capitalization. Capitalized interest is allocated to real estate when incurred and charged to cost of closings when the related property is delivered to our customers. To the extent our debt exceeds our qualified assets base, we expense a proportionate share of the interest incurred. | ||||||||||||||||
A summary of our capitalized interest is as follows (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Capitalized interest, beginning of period | $ | 44,355 | $ | 26,294 | $ | 32,992 | $ | 21,600 | ||||||||
Interest incurred | 14,695 | 12,508 | 43,333 | 37,876 | ||||||||||||
Interest expensed | (460 | ) | (3,462 | ) | (4,569 | ) | (13,113 | ) | ||||||||
Interest amortized to cost of home and land closings | (8,135 | ) | (6,342 | ) | (21,301 | ) | (17,365 | ) | ||||||||
Capitalized interest, end of period (1) | $ | 50,455 | $ | 28,998 | $ | 50,455 | $ | 28,998 | ||||||||
-1 | Approximately $511,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities on our consolidated balance sheets as of September 30, 2014 and December 31, 2013. |
Variable_Interest_Entities_and
Variable Interest Entities and Consolidated Real Estate Not Owned | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] | ' | ||||||||||||
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | ' | ||||||||||||
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | |||||||||||||
We enter into purchase and option agreements for land or lots as part of our normal course of business. These purchase and option agreements enable us to acquire land at one or multiple future dates at pre-determined prices. We believe these acquisition structures reduce the financial risk associated with land acquisitions and holdings and allow us to better maximize our liquidity. | |||||||||||||
Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into purchase or option agreements to acquire land or lots from an entity, a variable interest entity, or “VIE”, may be created. We evaluate all purchase and option agreements for land to determine whether they are a VIE. ASC 810, Consolidations, requires that for each VIE, we assess whether we are the primary beneficiary and, if we are, we consolidate the VIE in our financial statements and reflect such assets and liabilities as “Real estate not owned.” Historically, such consolidations have been immaterial to our financial statements, and the liabilities related to consolidated VIEs are excluded from our debt covenant calculations. | |||||||||||||
In substantially all cases, the entities with which we have option agreements and their creditors have no recourse against us and the maximum exposure to loss in our option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Often, we are at risk for items over budget related to land development on property we have under option if we are the land developer. In these cases, we have contracted to complete development at a fixed cost on behalf of the land owner and we bear any budget shortfalls and maintain any budget savings. Some of our option deposits may be refundable to us if certain contractual conditions are not performed by the party selling the lots. | |||||||||||||
The table below presents a summary of our lots under option or contract at September 30, 2014 (dollars in thousands): | |||||||||||||
Projected | Purchase | Option/Earnest | |||||||||||
Number of | Price | Money Deposits | |||||||||||
Lots | Cash | ||||||||||||
Purchase and option contracts recorded on balance sheet as Real estate not owned | 70 | $ | 4,999 | $ | 700 | ||||||||
Option contracts not recorded on balance sheet - non-refundable deposits, committed (1) | 5,891 | 430,970 | 55,422 | ||||||||||
Purchase contracts not recorded on balance sheet — non-refundable deposits, committed (1) | 4,124 | 241,093 | 21,012 | ||||||||||
Purchase contracts not recorded on balance sheet — refundable deposits, committed | 641 | 25,434 | 1,227 | ||||||||||
Total committed (on and off balance sheet) | 10,726 | 702,496 | 78,361 | ||||||||||
Total purchase and option contracts not recorded on balance sheet — refundable deposits, uncommitted (2) | 5,048 | 163,581 | 2,602 | ||||||||||
Total lots under contract or option | 15,774 | $ | 866,077 | $ | 80,963 | ||||||||
Total option contracts not recorded on balance sheet (3) | 15,704 | $ | 861,078 | $ | 80,263 | (4 | ) | ||||||
-1 | Deposits are generally non-refundable except if certain contractual conditions fail or certain contractual obligations are not performed by the selling party. | ||||||||||||
-2 | Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. | ||||||||||||
-3 | Except for our specific performance option contracts recorded on our balance sheet as Real estate not owned, none of our option agreements require us to purchase lots. | ||||||||||||
-4 | Amount is reflected in our consolidated balance sheet in the line item Deposits on real estate under option or contract as of September 30, 2014. | ||||||||||||
Generally, our option contracts to purchase lots remain effective so long as we purchase a pre-established minimum number of lots each month or quarter, as determined by the respective agreement. The pre-established number is typically structured to approximate our expected rate of home construction starts. Purchase contracts generally involve bulk purchase terms where we purchase all or a large portion of the lots at one time and are typically short-term in nature. |
Investments_in_Unconsolidated_
Investments in Unconsolidated Entities | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ' | |||||||||||||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES | ' | |||||||||||||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES | ||||||||||||||||
In the past, we have entered into land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile and leveraging our capital base. While purchasing land through a joint venture can be beneficial, currently we do not view these ventures as critical to the success of our homebuilding operations and have not entered into any new land joint ventures since 2008. Based on the structure of these joint ventures, they may or may not be consolidated into our results. Our joint venture partners generally are other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with, or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. As of September 30, 2014, we had two active equity-method land development ventures. | ||||||||||||||||
For land development joint ventures, we, and in some cases our joint venture partners, usually receive an option or other similar arrangement to purchase portions of the land held by the joint venture. Option prices are generally negotiated prices that approximate market value when we enter into the option contract or similar arrangement. For these ventures, our share of the joint venture profit relating to lots we purchase from the joint ventures is deferred until homes are delivered by us and title passes to a homebuyer. Therefore, we allocate the portion of such joint venture profit to the land acquired by us as a reduction in the basis of the property. | ||||||||||||||||
In connection with our land development joint ventures, we may also provide certain types of guarantees to lenders financing the joint ventures. These guarantees can be classified into two categories: Repayment Guarantees and Completion Guarantees, described in more detail below. Additionally, we have classified separately a guarantee related to our minority ownership in the South Edge joint venture, as there is pending litigation with the successors -in-trust to the venture’s lender group and other venture partners regarding that guarantee. | ||||||||||||||||
(In thousands) | At September 30, 2014 | At December 31, 2013 | ||||||||||||||
Repayment guarantees | $ | — | $ | — | ||||||||||||
Completion guarantees (1) | — | — | ||||||||||||||
South Edge guarantee (2) | 13,243 | 13,243 | ||||||||||||||
Total guarantees | $ | 13,243 | $ | 13,243 | ||||||||||||
-1 | As our completion guarantees are typically backed by funding from a third party, we do not believe these guarantees represent a potential cash obligation for us, as they require only non-financial performance. | |||||||||||||||
-2 | See Note 14 regarding outstanding litigation related to a joint venture project known as “South Edge” or "Inspirada" and the corresponding reserves and charges we have recorded relating thereto. | |||||||||||||||
Repayment Guarantees. We and/or our land development joint venture partners occasionally provide limited repayment guarantees on a pro rata basis on the debt of land development joint ventures. If such a guarantee were ever to be called or triggered, the maximum exposure to Meritage would generally be only our pro-rata share of the amount of debt outstanding that was in excess of the fair value of the underlying land securing the debt. We had no repayment guarantees as of September 30, 2014 or December 31, 2013. | ||||||||||||||||
Completion Guarantees. If there is development work to be completed, we and our joint venture partners are also typically obligated to the project lender(s) to complete construction of the land development improvements if the joint venture does not perform the required development. Provided we and the other joint venture partners are in compliance with these completion obligations, the project lenders are generally obligated to fund these improvements through any financing commitments available under the applicable joint venture development and construction loans. In addition, we and our joint venture partners have from time to time provided unsecured indemnities to joint venture project lenders. These indemnities generally obligate us to reimburse the project lenders only for claims and losses related to matters for which such lenders are held responsible and our exposure under these indemnities is limited to specific matters such as environmental claims. A part of our project acquisition due diligence process is to determine potential environmental risks and generally we or the joint venture entity obtain an independent environmental review. Per the guidance of ASC 460-10, Guarantees, we believe these guarantees are either not applicable or not material to our financial results. | ||||||||||||||||
Surety Bonds. We and our joint venture partners also indemnify third party surety providers with respect to performance bonds issued on behalf of certain of our joint ventures. If a joint venture does not perform its obligations, the surety bond could be called. If these surety bonds are called and the joint venture fails to reimburse the surety, we and our joint venture partners may be obligated to make such payments. These surety indemnity arrangements are generally joint and several obligations with our joint venture partners. Although a majority of the required work may have been performed, these bonds are typically not released until all development specifications under the bond have been met. None of these bonds have been called to date and we believe it is unlikely that any of these bonds will be called or if called, that any such amounts would be material to us. See the table in Note 1 for more information on our surety bonds. | ||||||||||||||||
The joint venture obligations, guarantees and indemnities discussed above are generally provided by us or our subsidiaries. In joint ventures involving other homebuilders or developers, support for these obligations is generally provided by the parent companies of the joint venture partners. Upon the occurrence of specific events, we may accrue for any such commitments where we believe our obligation to pay is probable and can be reasonably estimated. In such situations, our accrual would represent the portion of the total joint venture obligation related to our relative ownership percentage. Except as noted above and in Note 14 to these unaudited consolidated financial statements, as of September 30, 2014 and December 31, 2013, we did not have any such reserves. | ||||||||||||||||
We also participate in one mortgage joint venture, which is engaged in mortgage activities and provides services to both our homebuyers as well as other buyers. Our investment in this joint venture as of September 30, 2014 and December 31, 2013 was $1.3 million and $2.9 million, respectively. Prior year balances included investments in wind down title joint ventures that are no longer in operation. | ||||||||||||||||
The joint venture financial information below represent the most recent information available to us. | ||||||||||||||||
Summarized condensed financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Assets: | ||||||||||||||||
Cash | $ | 4,759 | $ | 7,299 | ||||||||||||
Real estate | 34,445 | 34,949 | ||||||||||||||
Other assets | 2,807 | 3,067 | ||||||||||||||
Total assets | $ | 42,011 | $ | 45,315 | ||||||||||||
Liabilities and equity: | ||||||||||||||||
Accounts payable and other liabilities | $ | 4,349 | $ | 2,889 | ||||||||||||
Notes and mortgages payable | 13,347 | 13,453 | ||||||||||||||
Equity of: | ||||||||||||||||
Meritage (1) | 7,838 | 10,332 | ||||||||||||||
Other | 16,477 | 18,641 | ||||||||||||||
Total liabilities and equity | $ | 42,011 | $ | 45,315 | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue | $ | 7,982 | $ | 8,975 | $ | 19,905 | $ | 25,373 | ||||||||
Costs and expenses | (3,744 | ) | (3,256 | ) | (9,609 | ) | (9,466 | ) | ||||||||
Net earnings of unconsolidated entities | $ | 4,238 | $ | 5,719 | $ | 10,296 | $ | 15,907 | ||||||||
Meritage’s share of pre-tax earnings (1)(2) | $ | 2,649 | $ | 3,578 | $ | 6,917 | $ | 9,583 | ||||||||
-1 | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) income deferrals as discussed in Note (2) below and (iv) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. | |||||||||||||||
-2 | Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net and Loss from other unconsolidated entities, net on our consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. | |||||||||||||||
The joint venture assets and liabilities noted in the table above primarily represent two active land ventures, one mortgage venture and various inactive ventures in which we have a total investment of $9.9 million. As of September 30, 2014, we believe these ventures are in compliance with their respective debt agreements, if applicable, and such debt is non-recourse to us. |
Senior_Convertible_Senior_Note
Senior, Convertible Senior Notes | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
SENIOR, SENIOR SUBORDINATED, CONVERTIBLE SENIOR NOTES AND OTHER BORROWINGS | ' | |||||||
SENIOR, CONVERTIBLE SENIOR NOTES AND OTHER BORROWINGS | ||||||||
Senior, convertible senior notes and other borrowings consist of the following (in thousands): | ||||||||
At September 30, 2014 | At December 31, 2013 | |||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 175,000 | ||||
7.15% senior notes due 2020. At September 30, 2014 and December 31, 2013 there was approximately $3,129 and $3,555 in net unamortized premium, respectively | 303,129 | 303,555 | ||||||
7.00% senior notes due 2022 | 300,000 | 300,000 | ||||||
1.875% convertible senior notes due 2032 | 126,500 | 126,500 | ||||||
$400 million unsecured revolving credit facility | — | — | ||||||
$ | 904,629 | $ | 905,055 | |||||
In the second quarter of 2014, we entered into an amended and restated unsecured, four year revolving credit facility (the “Credit Facility”). The Credit Facility provides for total lending commitments of up to $400 million, $200 million of which is available for letters of credit. In addition, the Credit Facility has an accordion feature under which we may increase the total commitment by a maximum aggregate amount of $100 million, subject to certain conditions, including the availability of additional bank commitments. The Credit Facility matures June 13, 2018 and amends, restates and replaces our previous $200 million unsecured revolving credit facility. No amounts were drawn under the current or previous Credit Facility as of September 30, 2014 or December 31, 2013 or at any time during the nine months ended September 30, 2014. As of September 30, 2014, we had outstanding letters of credit totaling $24.3 million issued through the Credit Facility, leaving $375.7 million under the Credit Facility available to be drawn. | ||||||||
Borrowings under our unsecured revolving Credit Facility are subject to, among other things, a borrowing base. The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $670.3 million (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. In addition, we are required to maintain either (i) an interest coverage ratio (EBITDA to interest expense, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than our consolidated interest incurred during the trailing 12 months. | ||||||||
The indentures for our 4.50%, 7.15% and 7.00% senior notes (collectively, "the senior notes") contain covenants including, among others, limitations on the amount of secured debt we may incur, and limitations on sale and leaseback transactions and mergers. Our convertible senior notes do not have any financial covenants. | ||||||||
Obligations to pay principal and interest on our notes listed in the table above are guaranteed by all of our wholly-owned subsidiaries (each a “Guarantor” and, collectively, the “Guarantor Subsidiaries”), each of which is directly or indirectly 100% owned by Meritage Homes Corporation. Such guarantees are full and unconditional, and joint and several. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the equity interests of any Guarantor then held by Meritage and its subsidiaries, then that Guarantor will be released and relieved of any obligations under its note guarantee. There are no significant restrictions on our ability or the ability of any Guarantor to obtain funds from their respective subsidiaries, as applicable, by dividend or loan. We do not provide separate financial statements of the Guarantor Subsidiaries because Meritage (the parent company) has no independent assets or operations and the guarantees are full and unconditional and joint and several. Subsidiaries of Meritage Homes Corporation that are nonguarantor subsidiaries, if any, are, individually and in the aggregate, inconsequential. | ||||||||
The convertible senior notes are convertible into shares of our common stock at a conversion rate of 17.1985 shares of our common stock per $1,000 principal amount of Convertible Notes, or a conversion price of $58.14 per share. |
Fair_Value_Disclosures
Fair Value Disclosures | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||
FAIR VALUE DISCLOSURES | ' | |||||||||||||||||
FAIR VALUE DISCLOSURES | ||||||||||||||||||
We account for the non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10, Fair Value Measurement and Disclosure ("ASC 820"). This guidance defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows: | ||||||||||||||||||
• | Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities. | |||||||||||||||||
• | Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. | |||||||||||||||||
• | Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the company’s own estimates about the assumptions that market participants would use to value the asset or liability. | |||||||||||||||||
If the only observable inputs are from inactive markets or for transactions which the company evaluates as “distressed”, the use of Level 1 inputs should be modified by the company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs. Refer to Notes 1 and 2 for additional information regarding the valuation of our non-financial assets. | ||||||||||||||||||
Financial Instruments. The fair value of our fixed-rate debt is derived from quoted market prices by independent | ||||||||||||||||||
dealers and is as follows (in thousands): | ||||||||||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||||||||||
Hierarchy | Aggregate | Estimated | Aggregate | Estimated | ||||||||||||||
Principal | Fair Value | Principal | Fair Value | |||||||||||||||
4.50% senior notes | Level 2 | $ | 175,000 | $ | 174,563 | $ | 175,000 | $ | 174,125 | |||||||||
7.15% senior notes | Level 2 | $ | 300,000 | $ | 322,500 | $ | 300,000 | $ | 325,500 | |||||||||
7.00% senior notes | Level 2 | $ | 300,000 | $ | 321,750 | $ | 300,000 | $ | 318,750 | |||||||||
1.875% convertible senior notes | Level 2 | $ | 126,500 | $ | 125,551 | $ | 126,500 | $ | 142,154 | |||||||||
Due to the short-term nature of other financial assets and liabilities, we consider the carrying amounts of our other short-term financial instruments to approximate fair value. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
EARNINGS/(LOSS) PER SHARE | ' | |||||||||||||||
EARNINGS PER SHARE | ||||||||||||||||
Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Basic weighted average number of shares outstanding | 39,123 | 36,226 | 38,977 | 36,060 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Convertible debt (1) | 2,176 | 2,176 | 2,176 | 2,176 | ||||||||||||
Stock options and unvested restricted stock | 357 | 463 | 411 | 535 | ||||||||||||
Diluted weighted average shares outstanding | 41,656 | 38,865 | 41,564 | 38,771 | ||||||||||||
Net earnings as reported | $ | 32,577 | $ | 38,191 | $ | 93,033 | $ | 78,375 | ||||||||
Interest attributable to convertible senior notes, net of income taxes | 378 | 393 | 1,135 | 1,180 | ||||||||||||
Net earnings for diluted earnings per share | $ | 32,955 | 38,584 | $ | 94,168 | 79,555 | ||||||||||
Basic earnings per share | $ | 0.83 | $ | 1.05 | $ | 2.39 | $ | 2.17 | ||||||||
Diluted earnings per share (1) | $ | 0.79 | $ | 0.99 | $ | 2.27 | $ | 2.05 | ||||||||
Antidilutive stock options not included in the calculation of diluted earnings per share | 22 | 10 | 24 | 5 | ||||||||||||
-1 | In accordance with ASC Subtopic 260-10, Earnings Per Share, we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Acquisitions_and_Goodwill_Note
Acquisitions and Goodwill (Notes) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Acquisitions and Goodwill [Abstract] | ' | |||||||||||||||||||||||
Goodwill Disclosure [Text Block] | ' | |||||||||||||||||||||||
ACQUISITIONS AND GOODWILL | ||||||||||||||||||||||||
Phillips Builders. In August 2013, we entered the Nashville, Tennessee market through the acquisition of the assets and operations of Phillips Builders LLC and selected assets of Phillips Development LLC ("Phillips Builders"). The purchase price was approximately $18.4 million in cash. The results of Phillips Builders operations have been included in our financial statements since September 1, 2013, the effective date of the acquisition. As a result of the transaction, we recorded approximately $10.2 million of goodwill (all of which is tax deductible) which relates to expected synergies from establishing a market presence in Tennessee and the experience and reputation of the acquired management team. | ||||||||||||||||||||||||
Legendary Communities. In August 2014, we entered the Atlanta, Georgia and Greenville, South Carolina markets as well as increased our existing Charlotte, North Carolina presence through the acquisition of the homebuilding assets and operations of Legendary Communities ("Legendary"). The purchase price was approximately $130.7 million in cash. In addition, the agreement entitles the selling parties to an earn-out over the next three years based on operational performance. The initial estimate of the total earn-out is approximately $10.0 million. The results of Legendary operations have been included in our financial statements since August 1, 2014, the effective date of the acquisition. As a result of the transaction, we recorded approximately $22.7 million of goodwill (all of which is tax deductible) which relates to expected synergies from establishing a market presence in Georgia and South Carolina, the experience and knowledge of the acquired workforce and the capital efficient operating structure of the business acquired. The remaining basis of the $108.0 million is almost entirely comprised of the fair value of the acquired inventory with limited other assets and liabilities. | ||||||||||||||||||||||||
Goodwill. Goodwill represents the excess of the purchase price of our acquisitions over the fair value of the net assets acquired. The acquisitions of Phillips Builders and Legendary were recorded in accordance with ASC 805, Business Combinations ("ASC 805") and ASC 820, using the acquisition method of accounting. The purchase price for the acquisition was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price over the fair value of the net assets of $33.0 million was recorded as goodwill, which is included in our consolidated balance sheet in Prepaids, other assets and goodwill. | ||||||||||||||||||||||||
A summary of changes in the carrying amount of goodwill follows (in thousands): | ||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate | Total | |||||||||||||||||||
Balance at January 1, 2013 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Additions | — | — | 10,247 | — | — | 10,247 | ||||||||||||||||||
Balance at December 31, 2013 | — | — | 10,247 | — | — | 10,247 | ||||||||||||||||||
Additions | — | — | 22,715 | — | — | 22,715 | ||||||||||||||||||
Balance at September 30, 2014 | $ | — | $ | — | $ | 32,962 | $ | — | $ | — | $ | 32,962 | ||||||||||||
Under the guidelines contained in ASC 350, we selected January 1 as the date of our annual goodwill impairment test. During 2014, we performed an analysis of qualitative factors for potential impairment of goodwill carried and determined that no impairment existed. |
Stockholders_Equity
Stockholders' Equity | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||||||||
STOCKHOLDERS' EQUITY | ' | ||||||||||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||
A summary of changes in shareholders’ equity is presented below (dollars in thousands): | |||||||||||||||||||
Nine Months Ended September 30, 2014 | |||||||||||||||||||
Number of | Common | Additional | Retained | Total | |||||||||||||||
Shares | Stock | Paid-In | Earnings | ||||||||||||||||
Capital | |||||||||||||||||||
Balance at December 31, 2013 | 36,244 | $ | 362 | $ | 412,961 | $ | 428,069 | $ | 841,392 | ||||||||||
Net earnings | — | — | — | 93,033 | 93,033 | ||||||||||||||
Exercise/vesting of equity awards | 351 | 4 | 730 | — | 734 | ||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 2,197 | — | 2,197 | ||||||||||||||
Equity award compensation expense | — | — | 9,035 | — | 9,035 | ||||||||||||||
Issuance of stock (1) | 2,530 | 25 | 110,395 | — | 110,420 | ||||||||||||||
Other | — | — | (114 | ) | — | (114 | ) | ||||||||||||
Balance at September 30, 2014 | 39,125 | $ | 391 | $ | 535,204 | $ | 521,102 | $ | 1,056,697 | ||||||||||
Nine Months Ended September 30, 2013 | |||||||||||||||||||
Number of | Common | Additional | Retained | Total | |||||||||||||||
Shares | Stock | Paid-In | Earnings | ||||||||||||||||
Capital | |||||||||||||||||||
Balance at December 31, 2012 | 35,613 | $ | 356 | $ | 390,249 | $ | 303,605 | $ | 694,210 | ||||||||||
Net earnings | — | — | — | 78,375 | 78,375 | ||||||||||||||
Exercise/vesting of equity awards | 618 | 6 | 11,219 | — | 11,225 | ||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 1,733 | — | 1,733 | ||||||||||||||
Equity award compensation expense | — | — | 7,040 | — | 7,040 | ||||||||||||||
Non-controlling interest acquisition | — | — | (257 | ) | — | (257 | ) | ||||||||||||
Balance at September 30, 2013 | 36,231 | $ | 362 | $ | 409,984 | $ | 381,980 | $ | 792,326 | ||||||||||
(1) In January 2014, we issued 2,530,000 shares of common stock in a secondary public offering, par value $0.01 per share, at a price of $45.75 per share. |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||||
We have a stock compensation plan, the Amended and Restated 2006 Stock Incentive Plan (the “Plan”), that was adopted in 2006 and was amended and restated effective May 2014. The Plan was approved by our stockholders and is administered by our Board of Directors. The provisions of the Plan allow for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. The Plan authorizes awards to officers, key employees, non-employee directors and consultants for up to 10,050,000 shares of common stock, of which 1,620,260 shares remain available for grant at September 30, 2014. The remaining shares available for grant are inclusive of a stockholder approved share increase of 1,100,000 shares that occurred at our May 2014 annual meeting of stockholders. We believe that such awards provide a means of performance-based compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders. Non-vested stock awards and stock options granted in previous years are typically granted with a five-year ratable vesting period. Non-vested stock awards and performance-based awards granted to our executive management team and our Board of Directors are typically granted with a three-year cliff vesting. We have not granted any stock option awards since 2009. | ||||||||||||||||
Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation, which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award’s vesting period. | ||||||||||||||||
Below is a summary of compensation expense and stock award activity (dollars in thousands): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Stock-based compensation expense | $ | 3,771 | $ | 3,099 | $ | 9,035 | $ | 7,040 | ||||||||
Non-vested shares granted | — | 3,600 | 374,683 | 345,700 | ||||||||||||
Performance-based non-vested shares granted | — | — | 52,083 | 62,500 | ||||||||||||
Stock options exercised | 1,200 | 12,400 | 41,445 | 334,500 | ||||||||||||
Restricted stock awards vested (includes performance-based awards) | 2,100 | 2,550 | 309,490 | 283,350 | ||||||||||||
The following table includes additional information regarding the Plan (dollars in thousands): | ||||||||||||||||
As of | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||||||||
Unrecognized stock-based compensation cost | $ | 23,826 | $ | 17,385 | ||||||||||||
Weighted average years remaining vesting period | 2.38 | 2.18 | ||||||||||||||
Total equity awards outstanding (1) | 1,285,301 | 1,317,710 | ||||||||||||||
(1) Includes vested and unvested options outstanding and unvested restricted stock awards. |
Income_Taxes
Income Taxes | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
INCOME TAXES | ' | |||||||||||||||
INCOME TAXES | ||||||||||||||||
Components of the income tax (provision)/benefit are as follows (in thousands): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Federal | $ | (12,622 | ) | $ | (18,153 | ) | $ | (43,480 | ) | $ | (33,846 | ) | ||||
State, net of federal benefit | (1,831 | ) | (442 | ) | (5,511 | ) | 428 | |||||||||
Total | $ | (14,453 | ) | $ | (18,595 | ) | $ | (48,991 | ) | $ | (33,418 | ) | ||||
The effective tax rate for the three months ended September 30, 2014 was 30.7% versus 32.7% in 2013, reflecting the benefit of energy tax credits and greater homebuilder manufacturing deductions from qualified production activities. The effective tax rate for the nine months ended September 30, 2014 was 34.5% as compared to 29.9% for the same period in the prior year. The prior year results benefited from a partial reversal of the state valuation allowance on our deferred tax assets. | ||||||||||||||||
At September 30, 2014 and December 31, 2013, we have no unrecognized tax benefits. We believe that our current income tax filing positions and deductions would be sustained on audit and do not anticipate any adjustments that would result in a material change. Our policy is to accrue interest and penalties on unrecognized tax benefits and include them in federal income tax expense. | ||||||||||||||||
In accordance with ASC 740-10, we determine our net deferred tax assets by taxing jurisdiction. We evaluate our net deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. Companies must assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, a company's experience with operating losses and experiences of utilizing tax credit carryforwards and tax planning alternatives. We have no valuation allowance against any of our deferred tax assets and state NOL carryovers at this time. | ||||||||||||||||
At September 30, 2014, we had no federal NOL carryforward benefit and no federal tax credit carryforwards and net tax benefits for state NOL carryforwards of approximately $7.2 million that expire at various times from 2014 to 2031 depending on the state jurisdiction. | ||||||||||||||||
At September 30, 2014, we have income taxes payable of $7.9 million, which primarily consists of current federal and state tax accruals as well as tax and interest amounts that we expect to pay within one year for amending any prior-year tax returns. This amount is recorded in Accrued liabilities in the accompanying balance sheet as of September 30, 2014. | ||||||||||||||||
We conduct business and are subject to tax in the U.S. and several states. With few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years prior to 2010. We are not subject to any federal income tax examinations at this time. We have one state income tax examination pending. | ||||||||||||||||
The tax benefits from any future NOLs, built-in losses, and tax credits would be materially reduced or potentially eliminated if we experience an “ownership change” as defined under Internal Revenue Code (“IRC”) §382. Based on our analysis performed as of September 30, 2014, we do not believe that we have experienced an ownership change. As a protective measure, our stockholders held a Special Meeting of Stockholders on February 16, 2009 and approved an amendment to our Articles of Incorporation that restricts certain transfers of our common stock. The amendment is intended to help us avoid an unintended ownership change and thereby preserve the value of our tax benefits for future utilization. | ||||||||||||||||
On January 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 (the “Act”), which the President signed into law on January 2, 2013. The Act extended certain tax provisions which had a retroactive effect on 2012. Among other things, the Act extended for two years the availability of a business tax credit under IRC §45L for building new energy efficient homes, which originally was set to expire at the end of 2011. Under ASC 740, the effects of new legislation are recognized in the period that includes the date of enactment, regardless of the retroactive benefit. In accordance with this guidance, we recorded a tax benefit of approximately $1.7 million in 2013 related to the extension of the IRC §45L tax credit for the qualifying new energy efficient homes that we closed in 2012. Additional IRC §45L credits for qualifying homes sold in 2013 produced an estimated net benefit of $2.0 million in 2013. At this time, Congress has not extended the benefit of §45L beyond 2013. However, we have substantially completed a project to qualify more homes sold in 2012 and 2013. The results of that project produced an additional net tax benefit of $2.1 million which was recorded in the quarter ending September 30, 2014. |
Supplemental_Disclosure_of_Cas
Supplemental Disclosure of Cash Flow Information | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Supplemental Cash Flow Elements [Abstract] | ' | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ' | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
The following presents certain supplemental cash flow information (in thousands): | ||||||||
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
Cash paid during the period for: | ||||||||
Interest, net of interest capitalized | $ | 3,801 | $ | 2,876 | ||||
Income taxes | $ | 51,668 | $ | 5,192 | ||||
Non-cash operating activities: | ||||||||
Real estate not owned | $ | 4,710 | $ | 481 | ||||
Real estate acquired through notes payable | $ | 581 | $ | 9,588 | ||||
Operating_and_Reporting_Segmen
Operating and Reporting Segments | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||||||
OPERATING AND REPORTING SEGMENTS | ' | |||||||||||||||||||||||
OPERATING AND REPORTING SEGMENTS | ||||||||||||||||||||||||
We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting, we have nine homebuilding operating segments. These segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer services. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows: | ||||||||||||||||||||||||
West: Arizona, California and Colorado (1) | ||||||||||||||||||||||||
Central: Texas | ||||||||||||||||||||||||
East: Florida, Georgia, North Carolina, South Carolina and Tennessee | ||||||||||||||||||||||||
(1) Activity for our wind-down Nevada operations is reflected in the West Region's results. | ||||||||||||||||||||||||
Management's evaluation of homebuilding segment performance is based on segment operating income, which we define as homebuilding and land revenues less cost of home construction, commissions and other sales costs, land development and other land sales costs and other costs incurred by or allocated to each segment. Each reportable segment follows the same accounting policies described in our 2013 Form 10-K in Note 1, “Business and Summary of Significant Accounting Policies.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. The following segment information is in thousands: | ||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Homebuilding revenue (1): | ||||||||||||||||||||||||
West | $ | 234,950 | $ | 259,669 | $ | 659,596 | $ | 695,615 | ||||||||||||||||
Central | 179,761 | 139,307 | 459,619 | 357,406 | ||||||||||||||||||||
East | 142,065 | 93,104 | 351,510 | 225,444 | ||||||||||||||||||||
Consolidated total | $ | 556,776 | $ | 492,080 | $ | 1,470,725 | $ | 1,278,465 | ||||||||||||||||
Homebuilding segment operating income: | ||||||||||||||||||||||||
West | $ | 22,204 | $ | 41,298 | $ | 74,398 | $ | 95,356 | ||||||||||||||||
Central | 19,323 | 12,677 | 47,512 | 22,320 | ||||||||||||||||||||
East | 9,295 | 9,990 | 30,539 | 19,991 | ||||||||||||||||||||
Total homebuilding segment operating income | 50,822 | 63,965 | 152,449 | 137,667 | ||||||||||||||||||||
Financial services profit | 4,294 | 4,294 | 10,936 | 11,515 | ||||||||||||||||||||
Corporate and unallocated (2) | (9,490 | ) | (8,662 | ) | (22,823 | ) | (22,011 | ) | ||||||||||||||||
(Loss)/earnings from other unconsolidated entities, net | (134 | ) | 46 | (364 | ) | (229 | ) | |||||||||||||||||
Interest expense | (460 | ) | (3,462 | ) | (4,569 | ) | (13,113 | ) | ||||||||||||||||
Other income, net | 1,998 | 605 | 6,395 | 1,760 | ||||||||||||||||||||
Loss on early extinguishment of debt | — | — | — | (3,796 | ) | |||||||||||||||||||
Earnings before income taxes | $ | 47,030 | $ | 56,786 | $ | 142,024 | $ | 111,793 | ||||||||||||||||
-1 | Homebuilding revenue includes the following land closing revenue, by segment: | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Land closing revenue: | ||||||||||||||||||||||||
West | $ | 10,105 | $ | 5,875 | $ | 11,155 | $ | 11,616 | ||||||||||||||||
Central | 1,147 | 3,058 | 3,244 | 13,482 | ||||||||||||||||||||
East | — | — | 2,223 | 3,470 | ||||||||||||||||||||
Consolidated total | $ | 11,252 | $ | 8,933 | $ | 16,622 | $ | 28,568 | ||||||||||||||||
-2 | Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments. | |||||||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | |||||||||||||||||||
Unallocated | ||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 22,569 | $ | 26,956 | $ | 30,738 | $ | — | $ | — | $ | 80,263 | ||||||||||||
Real estate | 945,921 | 464,158 | 454,972 | — | — | 1,865,051 | ||||||||||||||||||
Investments in unconsolidated entities | 203 | 8,451 | — | — | 1,246 | 9,900 | ||||||||||||||||||
Other assets | 45,005 | 83,378 | 63,916 | 607 | 124,692 | -1 | 317,598 | |||||||||||||||||
Total assets | $ | 1,013,698 | $ | 582,943 | $ | 549,626 | $ | 607 | $ | 125,938 | $ | 2,272,812 | ||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | |||||||||||||||||||
Unallocated | ||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 26,415 | $ | 12,198 | $ | 12,982 | $ | — | $ | — | $ | 51,595 | ||||||||||||
Real estate | 800,288 | 369,464 | 235,547 | — | — | 1,405,299 | ||||||||||||||||||
Investments in unconsolidated entities | 204 | 8,941 | 50 | — | 2,443 | 11,638 | ||||||||||||||||||
Other assets | 26,900 | 165,403 | -1 | 31,372 | 497 | 310,657 | -1 | 534,829 | ||||||||||||||||
Total assets | $ | 853,807 | $ | 556,006 | $ | 279,951 | $ | 497 | $ | 313,100 | $ | 2,003,361 | ||||||||||||
(1) Balance consists primarily of cash and securities and our deferred tax asset. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | |
We are involved in various routine legal proceedings incidental to our business, some of which are covered by insurance. With respect to most pending litigation matters, our ultimate legal and financial responsibility, if any, cannot be estimated with certainty and our actual future expenditure to resolve those matters could prove to be different from the amount that we accrued or reserved. On a quarterly basis, our senior management and legal team conduct an in-depth review of all active legal claims and litigation matters and we record a legal or warranty accrual representing the estimated total expense required to resolve each such matter. As of September 30, 2014, we have reserved approximately $15.7 million related to non-warranty related litigation and asserted claims, which includes reserves for the Joint Venture Litigation discussed below. In addition, our $21.5 million warranty reserve includes accruals for our warranty obligations as well as construction defect claims that are similarly recorded in an amount we believe will be necessary to resolve those construction defect claims. Except as may be specifically disclosed herein, we believe that any reasonably possible additional losses from existing claims and litigation in excess of our existing reserves and accruals would be immaterial, individually and in the aggregate, to our financial results. | |
Joint Venture Litigation | |
We are a defendant in a lawsuit filed by the lenders related to a project known as “South Edge” or “Inspirada”. We are also a party to a demand for arbitration made by an entity controlled by certain co-venturers, which demand was made by that entity as Estate Representative of bankrupt South Edge, LLC. The project involves a large master-planned community located in Henderson, Nevada, which was acquired by an unconsolidated joint venture with capital supplied by us and our co-venturers, and a syndicated loan for the project. In connection with the loan obtained by the venture, we provided a narrowly crafted repayment guarantee that could only be triggered upon a “bankruptcy event”. That guarantee covers our 3.53% pro rata share of the project financing. | |
On December 9, 2010, three of the lenders filed a petition seeking to place the venture into an involuntary bankruptcy. On June 6, 2011, we received a demand letter from the lenders, requesting full payment of $13.2 million, including past-due interest and penalties, the lenders claimed to be owed under the springing repayment guarantee. The lenders claim that the involuntary bankruptcy filed by three of the lenders triggered the “springing” repayment guarantee. We do not believe the lenders have an enforceable position associated with their $13.2 million claim and do not believe we should be required to pay such amount because, among other reasons, the lenders breached their contract with us by refusing to accept the April 2008 full tender of our performance and by refusing to release their lien in connection with our second and final takedown in this project and we do not believe the repayment guarantee was triggered by the lenders’ filing of the involuntary bankruptcy. As a result, on August 19, 2011, we filed a lawsuit against JP Morgan Chase Bank, NA (“JP Morgan”) in the Court of Common Pleas in Franklin County, Ohio (Case No. 11CVH0810353) regarding the repayment guarantee. In reaction to that lawsuit, on August 25, 2011, JP Morgan filed a lawsuit against us in the US District Court of Nevada, which is currently being prosecuted in the name of JP Morgan's agent, ISG Insolvency Group, Inc. regarding the same issues addressed in the Ohio litigation. The Ohio action and the Nevada action have been consolidated. On October 26, 2011, the Bankruptcy Court approved a Plan pursuant to which (i) the lenders have received all payments to which they are entitled, (ii) the project has been conveyed to Inspirada Builders, LLC, which is an entity owned by four of the co-venturers in the South Edge entity (KB Home, Toll Brothers, Pardee Homes and Beazer Homes), and (iii) the four co-venturer builders claim to have succeeded to the lenders' repayment guarantee claim against Meritage. | |
On September 4, 2012, the Court ruled on a motion for summary judgment that JP Morgan has standing to pursue its repayment guarantee claims against Meritage, that Meritage was liable thereunder to JP Morgan and that the parties should be permitted to conduct discovery with respect to the amount of damages to which JP Morgan is entitled under the repayment guarantee. Following limited discovery, JP Morgan filed a motion for summary judgment with respect to damages, and on June 17, 2013 the Court granted the motion, ruling that Meritage owes JP Morgan $15,053,857. Later, on July 8, 2013, the Court entered Judgment in favor of JP Morgan in the amount of $15,753,344, which included an additional $699,487 for pre-judgment interest that accrued between December 6, 2012 and the date of the Judgment. We immediately appealed the Court's rulings, which is currently pending. On July 17, 2013 we posted a supersedeas bond in the amount of $16,050,604 staying enforcement of the Judgment, which was approved by the Court on July 17, 2013. Pursuant to a stipulation between the parties, the bond amount included the amount of the Judgment and additional sums for a potential award of post-judgment interest and attorneys' fees on appeal. On February 14, 2014 the Court awarded JP Morgan an additional $877,241 for pre-judgment attorneys’ fees. Meritage has appealed this Judgment as well, and per stipulation of the parties, has posted an amended bond in the total amount of $16,930,477, covering both judgments. We disagree with many of the conclusions and findings contained in the Court's order, and have challenged and will continue to challenge the rulings. In addition, we believe that the four above-named builders are liable to Meritage for any amounts that Meritage may ultimately be required to pay under the repayment guarantee, and we have filed claims against those builders to, among other things, recover from them any amounts Meritage is required to pay under the repayment guarantee. | |
In March 2012, Inspirada Builders, LLC, as Estate Representative of South Edge, LLC (the original joint venture) filed demand for arbitration in the United States Bankruptcy Court in the District of Nevada against Meritage Homes of Nevada, Inc. seeking: (1) $13.5 million, relating to alleged breaches of the Operating Agreement of South Edge, LLC, for an alleged failure to pay the amounts Meritage Homes of Nevada fully tendered but South Edge rejected in April 2008; and (2) $9.8 million relating to our supposed pro rata share of alleged future infrastructure improvement costs to be incurred by Inspirada Builders, LLC (the new owner of the project and which is owned by the four builders identified above). The $13.5 million component of this claim represents the same alleged obligation and amount that is the subject of the above described pending repayment guarantee litigation between us and JP Morgan. Meritage filed a response to Inspirada Builders' arbitration claims denying liability, together with cross-claims against each of the four above-named co-venture builders for breach of contract, breach of the implied covenant of good faith and fair dealing, and indemnity. On June 27, 2013, the $9.8 million claim for future infrastructure costs was dismissed. Although the balance of the parties' claims are currently pending and were set to be resolved at a hearing in late 2013, per the parties' stipulation the Arbitration has now been stayed pending resolution of the pending appeal of the Court's rulings in favor of JP Morgan in the federal court action. In connection with these on-going legal proceedings, we have established a reserve in an amount that we believe is appropriate for this matter. Our 3.53% investment in the venture has previously been fully impaired. We do not believe that the ultimate disposition of these matters will have a material adverse effect on our financial condition. |
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation (Policies) | 9 Months Ended | |
Sep. 30, 2014 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |
Basis of Presentation | ' | |
Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013. The consolidated financial statements include the accounts of Meritage Homes Corporation and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying financial statements include all adjustments (consisting only of normal recurring entries), necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. Certain reclassifications have been made to the prior year to conform with current year presentation, including any adjustments recorded to previously established warranty reserves. | ||
Cash and Cash Equivalents | ' | |
Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. Amounts in transit from title companies for home closings of approximately $36.9 million and $26.4 million are included in cash and cash equivalents at September 30, 2014 and December 31, 2013, respectively. Included in our cash and cash equivalents balance as of September 30, 2014 and December 31, 2013 are $0.3 million and $68.3 million, respectively, of money market funds that are invested in short term (three months or less) U.S. government securities. | ||
Investments and Securities | ' | |
Investments and Securities. Our investments and securities are comprised of both treasury securities and deposits with banks that are FDIC-insured and secured by U.S. government treasury-backed investments, and therefore we believe bear a limited risk of loss. All of our investments are classified as held-to-maturity and are recorded at amortized cost as we have both the ability and intent to hold them until their respective maturities. The contractual lives of these investments are greater than three months but not exceeding 18 months. Due to their short duration and low contractual interest rates, the amortized cost of the investments approximates fair value with no unrecognized gains and losses or other-than-temporary impairments. | ||
Real Estate | ' | |
Real Estate. Real estate is stated at cost unless the asset is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) Subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). Inventory includes the costs of land acquisition, land development, home construction, capitalized interest, real estate taxes, capitalized direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes under construction when construction begins. Home construction costs are accumulated on a per-home basis, while most selling costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in the community or phase. When a home closes, we may have incurred costs for goods and services that have not yet been paid. Therefore, we record an accrued liability to capture such obligations in connection with the home closing and charged directly to cost of sales. | ||
We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. It is possible that actual results could differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, increases in costs that have not yet been committed, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate construction and land costs. | ||
Typically, a community’s life cycle ranges from three to five years, commencing with the acquisition of the land, continuing through the land development phase, if applicable, and concluding with the sale, construction and closing of the homes. Actual community lives will vary based on the location and size of the community, the sales absorption rate and whether the land purchased was raw, partially-developed or in finished status. Master-planned communities encompassing several phases and super-block land parcels may have significantly longer lives and projects involving a small number of finished lots may be shorter. | ||
All of our land inventory and related real estate assets are reviewed for recoverability, as our inventory is considered “long-lived” in accordance with GAAP. Impairment charges are recorded to write down an asset to its estimated fair value if the undiscounted cash flows expected to be generated by the asset are lower than its carrying amount. Our determination of fair value is based on projections and estimates. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. Our analysis is conducted if indicators of a decline in value of our land and real estate assets exist. If an asset is deemed to be impaired, the impairment recognized is measured as the amount by which the assets’ carrying amount exceeds their fair value. The impairment of a community is allocated to each lot on a straight-line basis. | ||
Deposits | ' | |
Deposits. Deposits paid related to purchase contracts and land options are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of real estate inventory at the time the deposit is used to offset the acquisition price of the lots based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are charged to expense if the land acquisition is terminated or no longer considered probable. Since the acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of the non-refundable deposits and any ancillary capitalized costs. Our deposits were $80.3 million and $51.6 million as of September 30, 2014 and December 31, 2013, respectively. | ||
Goodwill and Intangible Assets | ' | |
Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on at least an annual basis through a qualitative assessment to determine whether it is necessary to perform a two-step goodwill impairment test. ASC 350 states that an entity may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, the two-step impairment testing in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. | ||
Off-Balance Sheet Arrangements | ' | |
Off-Balance Sheet Arrangements —Joint Ventures. In the past, we have participated in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile and leveraging our capital base; however, in recent years, such ventures have not been a significant avenue for us to access lots. See Note 4 for additional discussion of our investments in unconsolidated entities. | ||
Off-Balance Sheet Arrangements — Other. We may acquire lots from various development and land bank entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators). See Note 3 for further discussion. | ||
Surety Bonds and Letters of Credit. We may provide letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. We may also utilize surety bonds to guarantee our performance of certain development and construction activities. Surety bonds are generally posted in lieu of letters of credit or cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Bonds are generally not released until all development activities under the applicable bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon. | ||
Warranty Reserves | ' | |
Warranty reserves are included in Accrued liabilities on the accompanying consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the general liability insurance we maintain, are sufficient to cover our general warranty obligations. However, unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates. | ||
Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty typically during the first year after the close of the home and a structural warranty that typically extends up to 10 years subsequent to the close of the home. With the assistance of an actuary, we estimate these reserves for the structural warranty based on the number of homes still under warranty and historical warranty data and trends for our communities. We also use industry data with respect to similar product types and geographic areas in markets where our experience may not be sufficient to draw a meaningful conclusion. We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available. | ||
Recently Issued Accounting Pronouncements | ' | |
Recently Issued Accounting Pronouncements. | ||
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"), which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. We will be required to perform the going concern assessment under ASU 2014-15 beginning with the year ending December 31, 2016. | ||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation — Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for us on January 1, 2016. Early adoption is permitted. We do not anticipate the adoption of ASU 2014-12 will have a material effect on our consolidated financial statements or disclosures. | ||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASU 2014-09”). ASU 2014-09 requires entities to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services by applying the following steps: (1) identify the contract(s) with a customer; (2 )identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 supersedes the revenue recognition requirements in ASU 605, Revenue Recognition, most industry-specific guidance throughout the industry topics of the Accounting Standards Codification, and some cost guidance related to construction-type and production-type contracts. ASU 2014-09 is effective for us on January 1, 2017. Early adoption is not permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. | ||
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which changes the criteria for classifying activities as discontinued operations and increases the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. If the disposal does qualify as a discontinued operation under ASU 2014-08, the entity will be required to provide expanded disclosures. The guidance will be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. ASU 2014-08 is effective for us on January 1, 2015. We do not anticipate the adoption of ASU 2014-08 will have a material effect on our consolidated financial statements or disclosures. | ||
Fair Value Measurements | ' | |
We account for the non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10, Fair Value Measurement and Disclosure ("ASC 820"). This guidance defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows: | ||
• | Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities. | |
• | Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. | |
• | Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the company’s own estimates about the assumptions that market participants would use to value the asset or liability. | |
If the only observable inputs are from inactive markets or for transactions which the company evaluates as “distressed”, the use of Level 1 inputs should be modified by the company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs. Refer to Notes 1 and 2 for additional information regarding the valuation of our non-financial assets. | ||
Stock Based Compensation | ' | |
Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation, which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award’s vesting period. | ||
Income Taxes | ' | |
In accordance with ASC 740-10, we determine our net deferred tax assets by taxing jurisdiction. We evaluate our net deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. Companies must assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, a company's experience with operating losses and experiences of utilizing tax credit carryforwards and tax planning alternatives. | ||
Segment Reporting | ' | |
As defined in ASC 280-10, Segment Reporting, we have nine homebuilding operating segments. These segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer services. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. |
Organization_and_Basis_of_Pres2
Organization and Basis of Presentation (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||||||||||
Letter of credit and surety bond obligations | ' | |||||||||||||||
The table below outlines our surety bond and letter of credit obligations (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Outstanding | Estimated work | Outstanding | Estimated work | |||||||||||||
remaining to | remaining to | |||||||||||||||
complete | complete | |||||||||||||||
Surety Bonds: | ||||||||||||||||
Surety bonds related to joint ventures | $ | 87 | $ | 87 | $ | 87 | $ | 87 | ||||||||
Surety bonds related to owned projects and lots under contract | 249,510 | 95,778 | 191,742 | 86,115 | ||||||||||||
Total surety bonds | $ | 249,597 | $ | 95,865 | $ | 191,829 | $ | 86,202 | ||||||||
Letters of Credit (“LOCs”): | ||||||||||||||||
LOCs in lieu of deposits for contracted lots | $ | 1,200 | N/A | $ | 1,685 | N/A | ||||||||||
LOCs for land development | 18,586 | N/A | 35,883 | N/A | ||||||||||||
LOCs for general corporate operations | 4,500 | N/A | 4,500 | N/A | ||||||||||||
Total LOCs | $ | 24,286 | N/A | $ | 42,068 | N/A | ||||||||||
Accrued liabilities | ' | |||||||||||||||
Accrued liabilities consist of the following (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Accruals related to real-estate development and construction activities | $ | 38,463 | $ | 29,992 | ||||||||||||
Payroll and other benefits | 34,942 | 36,232 | ||||||||||||||
Accrued taxes | 12,878 | 22,902 | ||||||||||||||
Warranty reserves | 21,454 | 21,971 | ||||||||||||||
Legal reserves | 15,747 | 16,463 | ||||||||||||||
Real-estate notes payable (1) | 16,574 | 15,993 | ||||||||||||||
Other accruals | 28,526 | 23,058 | ||||||||||||||
Total | $ | 168,584 | $ | 166,611 | ||||||||||||
(1) Reflects balance of non-recourse notes payable made in connection with land purchases. | ||||||||||||||||
Warranty reserves | ' | |||||||||||||||
A summary of changes in our warranty reserves follows (in thousands): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Balance, beginning of period | $ | 20,882 | $ | 21,844 | $ | 21,971 | $ | 22,064 | ||||||||
Additions to reserve from new home deliveries | 3,023 | 2,818 | 8,058 | 8,055 | ||||||||||||
Warranty claims | (2,451 | ) | (2,405 | ) | (9,075 | ) | (7,862 | ) | ||||||||
Adjustments to pre-existing reserves | — | — | 500 | — | ||||||||||||
Balance, end of period | $ | 21,454 | $ | 22,257 | $ | 21,454 | $ | 22,257 | ||||||||
Real_Estate_and_Capitalized_In1
Real Estate and Capitalized Interest (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Inventory Disclosure [Abstract] | ' | |||||||||||||||
Real estate properties | ' | |||||||||||||||
Real estate consists of the following (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Homes under contract under construction (1) | $ | 440,033 | $ | 262,633 | ||||||||||||
Unsold homes, completed and under construction (1) | 283,883 | 147,889 | ||||||||||||||
Model homes (1) | 100,027 | 81,541 | ||||||||||||||
Finished home sites and home sites under development (2) | 1,041,108 | 913,236 | ||||||||||||||
$ | 1,865,051 | $ | 1,405,299 | |||||||||||||
(1) Includes the allocated land and land development costs associated with each lot for these homes. | ||||||||||||||||
-2 | Includes land held for development and land held for sale. Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we may have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. | |||||||||||||||
Summary of capitalized interest | ' | |||||||||||||||
A summary of our capitalized interest is as follows (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Capitalized interest, beginning of period | $ | 44,355 | $ | 26,294 | $ | 32,992 | $ | 21,600 | ||||||||
Interest incurred | 14,695 | 12,508 | 43,333 | 37,876 | ||||||||||||
Interest expensed | (460 | ) | (3,462 | ) | (4,569 | ) | (13,113 | ) | ||||||||
Interest amortized to cost of home and land closings | (8,135 | ) | (6,342 | ) | (21,301 | ) | (17,365 | ) | ||||||||
Capitalized interest, end of period (1) | $ | 50,455 | $ | 28,998 | $ | 50,455 | $ | 28,998 | ||||||||
-1 | Approximately $511,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities on our consolidated balance sheets as of September 30, 2014 and December 31, 2013. |
Variable_Interest_Entities_and1
Variable Interest Entities and Consolidated Real Estate Not Owned (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] | ' | ||||||||||||
Summary of lots under option or contract | ' | ||||||||||||
The table below presents a summary of our lots under option or contract at September 30, 2014 (dollars in thousands): | |||||||||||||
Projected | Purchase | Option/Earnest | |||||||||||
Number of | Price | Money Deposits | |||||||||||
Lots | Cash | ||||||||||||
Purchase and option contracts recorded on balance sheet as Real estate not owned | 70 | $ | 4,999 | $ | 700 | ||||||||
Option contracts not recorded on balance sheet - non-refundable deposits, committed (1) | 5,891 | 430,970 | 55,422 | ||||||||||
Purchase contracts not recorded on balance sheet — non-refundable deposits, committed (1) | 4,124 | 241,093 | 21,012 | ||||||||||
Purchase contracts not recorded on balance sheet — refundable deposits, committed | 641 | 25,434 | 1,227 | ||||||||||
Total committed (on and off balance sheet) | 10,726 | 702,496 | 78,361 | ||||||||||
Total purchase and option contracts not recorded on balance sheet — refundable deposits, uncommitted (2) | 5,048 | 163,581 | 2,602 | ||||||||||
Total lots under contract or option | 15,774 | $ | 866,077 | $ | 80,963 | ||||||||
Total option contracts not recorded on balance sheet (3) | 15,704 | $ | 861,078 | $ | 80,263 | (4 | ) | ||||||
-1 | Deposits are generally non-refundable except if certain contractual conditions fail or certain contractual obligations are not performed by the selling party. | ||||||||||||
-2 | Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. | ||||||||||||
-3 | Except for our specific performance option contracts recorded on our balance sheet as Real estate not owned, none of our option agreements require us to purchase lots. | ||||||||||||
-4 | Amount is reflected in our consolidated balance sheet in the line item Deposits on real estate under option or contract as of September 30, 2014. |
Investments_in_Unconsolidated_1
Investments in Unconsolidated Entities (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ' | |||||||||||||||
Schedule of Guarantor Obligations [Table Text Block] | ' | |||||||||||||||
(In thousands) | At September 30, 2014 | At December 31, 2013 | ||||||||||||||
Repayment guarantees | $ | — | $ | — | ||||||||||||
Completion guarantees (1) | — | — | ||||||||||||||
South Edge guarantee (2) | 13,243 | 13,243 | ||||||||||||||
Total guarantees | $ | 13,243 | $ | 13,243 | ||||||||||||
-1 | As our completion guarantees are typically backed by funding from a third party, we do not believe these guarantees represent a potential cash obligation for us, as they require only non-financial performance. | |||||||||||||||
-2 | See Note 14 regarding outstanding litigation related to a joint venture project known as “South Edge” or "Inspirada" and the corresponding reserves and charges we have recorded relating thereto. | |||||||||||||||
Financial information related to unconsolidated joint ventures, Balance sheets | ' | |||||||||||||||
Summarized condensed financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): | ||||||||||||||||
At September 30, 2014 | At December 31, 2013 | |||||||||||||||
Assets: | ||||||||||||||||
Cash | $ | 4,759 | $ | 7,299 | ||||||||||||
Real estate | 34,445 | 34,949 | ||||||||||||||
Other assets | 2,807 | 3,067 | ||||||||||||||
Total assets | $ | 42,011 | $ | 45,315 | ||||||||||||
Liabilities and equity: | ||||||||||||||||
Accounts payable and other liabilities | $ | 4,349 | $ | 2,889 | ||||||||||||
Notes and mortgages payable | 13,347 | 13,453 | ||||||||||||||
Equity of: | ||||||||||||||||
Meritage (1) | 7,838 | 10,332 | ||||||||||||||
Other | 16,477 | 18,641 | ||||||||||||||
Total liabilities and equity | $ | 42,011 | $ | 45,315 | ||||||||||||
Financial information related to unconsolidated joint ventures, operations | ' | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue | $ | 7,982 | $ | 8,975 | $ | 19,905 | $ | 25,373 | ||||||||
Costs and expenses | (3,744 | ) | (3,256 | ) | (9,609 | ) | (9,466 | ) | ||||||||
Net earnings of unconsolidated entities | $ | 4,238 | $ | 5,719 | $ | 10,296 | $ | 15,907 | ||||||||
Meritage’s share of pre-tax earnings (1)(2) | $ | 2,649 | $ | 3,578 | $ | 6,917 | $ | 9,583 | ||||||||
-1 | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) income deferrals as discussed in Note (2) below and (iv) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. | |||||||||||||||
-2 | Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net and Loss from other unconsolidated entities, net on our consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. |
Senior_Convertible_Senior_Note1
Senior, Convertible Senior Notes (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Components of senior and senior subordinated notes | ' | |||||||
Senior, convertible senior notes and other borrowings consist of the following (in thousands): | ||||||||
At September 30, 2014 | At December 31, 2013 | |||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 175,000 | ||||
7.15% senior notes due 2020. At September 30, 2014 and December 31, 2013 there was approximately $3,129 and $3,555 in net unamortized premium, respectively | 303,129 | 303,555 | ||||||
7.00% senior notes due 2022 | 300,000 | 300,000 | ||||||
1.875% convertible senior notes due 2032 | 126,500 | 126,500 | ||||||
$400 million unsecured revolving credit facility | — | — | ||||||
$ | 904,629 | $ | 905,055 | |||||
Fair_Value_Disclosures_Tables
Fair Value Disclosures (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||
Fair value of our fixed-rate debt | ' | |||||||||||||||||
The fair value of our fixed-rate debt is derived from quoted market prices by independent | ||||||||||||||||||
dealers and is as follows (in thousands): | ||||||||||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||||||||||
Hierarchy | Aggregate | Estimated | Aggregate | Estimated | ||||||||||||||
Principal | Fair Value | Principal | Fair Value | |||||||||||||||
4.50% senior notes | Level 2 | $ | 175,000 | $ | 174,563 | $ | 175,000 | $ | 174,125 | |||||||||
7.15% senior notes | Level 2 | $ | 300,000 | $ | 322,500 | $ | 300,000 | $ | 325,500 | |||||||||
7.00% senior notes | Level 2 | $ | 300,000 | $ | 321,750 | $ | 300,000 | $ | 318,750 | |||||||||
1.875% convertible senior notes | Level 2 | $ | 126,500 | $ | 125,551 | $ | 126,500 | $ | 142,154 | |||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Basic and diluted (loss)/earnings per common share | ' | |||||||||||||||
Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Basic weighted average number of shares outstanding | 39,123 | 36,226 | 38,977 | 36,060 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Convertible debt (1) | 2,176 | 2,176 | 2,176 | 2,176 | ||||||||||||
Stock options and unvested restricted stock | 357 | 463 | 411 | 535 | ||||||||||||
Diluted weighted average shares outstanding | 41,656 | 38,865 | 41,564 | 38,771 | ||||||||||||
Net earnings as reported | $ | 32,577 | $ | 38,191 | $ | 93,033 | $ | 78,375 | ||||||||
Interest attributable to convertible senior notes, net of income taxes | 378 | 393 | 1,135 | 1,180 | ||||||||||||
Net earnings for diluted earnings per share | $ | 32,955 | 38,584 | $ | 94,168 | 79,555 | ||||||||||
Basic earnings per share | $ | 0.83 | $ | 1.05 | $ | 2.39 | $ | 2.17 | ||||||||
Diluted earnings per share (1) | $ | 0.79 | $ | 0.99 | $ | 2.27 | $ | 2.05 | ||||||||
Antidilutive stock options not included in the calculation of diluted earnings per share | 22 | 10 | 24 | 5 | ||||||||||||
-1 | In accordance with ASC Subtopic 260-10, Earnings Per Share, we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Acquisitions_and_Goodwill_Tabl
Acquisitions and Goodwill (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Acquisitions and Goodwill [Abstract] | ' | |||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | ' | |||||||||||||||||||||||
A summary of changes in the carrying amount of goodwill follows (in thousands): | ||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate | Total | |||||||||||||||||||
Balance at January 1, 2013 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Additions | — | — | 10,247 | — | — | 10,247 | ||||||||||||||||||
Balance at December 31, 2013 | — | — | 10,247 | — | — | 10,247 | ||||||||||||||||||
Additions | — | — | 22,715 | — | — | 22,715 | ||||||||||||||||||
Balance at September 30, 2014 | $ | — | $ | — | $ | 32,962 | $ | — | $ | — | $ | 32,962 | ||||||||||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||||||||
Summary of changes in shareholders' equity | ' | ||||||||||||||||||
A summary of changes in shareholders’ equity is presented below (dollars in thousands): | |||||||||||||||||||
Nine Months Ended September 30, 2014 | |||||||||||||||||||
Number of | Common | Additional | Retained | Total | |||||||||||||||
Shares | Stock | Paid-In | Earnings | ||||||||||||||||
Capital | |||||||||||||||||||
Balance at December 31, 2013 | 36,244 | $ | 362 | $ | 412,961 | $ | 428,069 | $ | 841,392 | ||||||||||
Net earnings | — | — | — | 93,033 | 93,033 | ||||||||||||||
Exercise/vesting of equity awards | 351 | 4 | 730 | — | 734 | ||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 2,197 | — | 2,197 | ||||||||||||||
Equity award compensation expense | — | — | 9,035 | — | 9,035 | ||||||||||||||
Issuance of stock (1) | 2,530 | 25 | 110,395 | — | 110,420 | ||||||||||||||
Other | — | — | (114 | ) | — | (114 | ) | ||||||||||||
Balance at September 30, 2014 | 39,125 | $ | 391 | $ | 535,204 | $ | 521,102 | $ | 1,056,697 | ||||||||||
Nine Months Ended September 30, 2013 | |||||||||||||||||||
Number of | Common | Additional | Retained | Total | |||||||||||||||
Shares | Stock | Paid-In | Earnings | ||||||||||||||||
Capital | |||||||||||||||||||
Balance at December 31, 2012 | 35,613 | $ | 356 | $ | 390,249 | $ | 303,605 | $ | 694,210 | ||||||||||
Net earnings | — | — | — | 78,375 | 78,375 | ||||||||||||||
Exercise/vesting of equity awards | 618 | 6 | 11,219 | — | 11,225 | ||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 1,733 | — | 1,733 | ||||||||||||||
Equity award compensation expense | — | — | 7,040 | — | 7,040 | ||||||||||||||
Non-controlling interest acquisition | — | — | (257 | ) | — | (257 | ) | ||||||||||||
Balance at September 30, 2013 | 36,231 | $ | 362 | $ | 409,984 | $ | 381,980 | $ | 792,326 | ||||||||||
(1) In January 2014, we issued 2,530,000 shares of common stock in a secondary public offering, par value $0.01 per share, at a price of $45.75 per share. |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Summary of compensation expense and stock award activity | ' | |||||||||||||||
Below is a summary of compensation expense and stock award activity (dollars in thousands): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Stock-based compensation expense | $ | 3,771 | $ | 3,099 | $ | 9,035 | $ | 7,040 | ||||||||
Non-vested shares granted | — | 3,600 | 374,683 | 345,700 | ||||||||||||
Performance-based non-vested shares granted | — | — | 52,083 | 62,500 | ||||||||||||
Stock options exercised | 1,200 | 12,400 | 41,445 | 334,500 | ||||||||||||
Restricted stock awards vested (includes performance-based awards) | 2,100 | 2,550 | 309,490 | 283,350 | ||||||||||||
Summary of stock based compensation agreements | ' | |||||||||||||||
The following table includes additional information regarding the Plan (dollars in thousands): | ||||||||||||||||
As of | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||||||||
Unrecognized stock-based compensation cost | $ | 23,826 | $ | 17,385 | ||||||||||||
Weighted average years remaining vesting period | 2.38 | 2.18 | ||||||||||||||
Total equity awards outstanding (1) | 1,285,301 | 1,317,710 | ||||||||||||||
(1) Includes vested and unvested options outstanding and unvested restricted stock awards |
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
Components of income tax provision | ' | |||||||||||||||
Components of the income tax (provision)/benefit are as follows (in thousands): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Federal | $ | (12,622 | ) | $ | (18,153 | ) | $ | (43,480 | ) | $ | (33,846 | ) | ||||
State, net of federal benefit | (1,831 | ) | (442 | ) | (5,511 | ) | 428 | |||||||||
Total | $ | (14,453 | ) | $ | (18,595 | ) | $ | (48,991 | ) | $ | (33,418 | ) |
Supplemental_Disclosure_of_Cas1
Supplemental Disclosure of Cash Flow Information (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Supplemental Cash Flow Elements [Abstract] | ' | |||||||
Supplemental cash flow information | ' | |||||||
The following presents certain supplemental cash flow information (in thousands): | ||||||||
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
Cash paid during the period for: | ||||||||
Interest, net of interest capitalized | $ | 3,801 | $ | 2,876 | ||||
Income taxes | $ | 51,668 | $ | 5,192 | ||||
Non-cash operating activities: | ||||||||
Real estate not owned | $ | 4,710 | $ | 481 | ||||
Real estate acquired through notes payable | $ | 581 | $ | 9,588 | ||||
Operating_and_Reporting_Segmen1
Operating and Reporting Segments (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||||||
Segment information on operating results | ' | |||||||||||||||||||||||
The following segment information is in thousands: | ||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Homebuilding revenue (1): | ||||||||||||||||||||||||
West | $ | 234,950 | $ | 259,669 | $ | 659,596 | $ | 695,615 | ||||||||||||||||
Central | 179,761 | 139,307 | 459,619 | 357,406 | ||||||||||||||||||||
East | 142,065 | 93,104 | 351,510 | 225,444 | ||||||||||||||||||||
Consolidated total | $ | 556,776 | $ | 492,080 | $ | 1,470,725 | $ | 1,278,465 | ||||||||||||||||
Homebuilding segment operating income: | ||||||||||||||||||||||||
West | $ | 22,204 | $ | 41,298 | $ | 74,398 | $ | 95,356 | ||||||||||||||||
Central | 19,323 | 12,677 | 47,512 | 22,320 | ||||||||||||||||||||
East | 9,295 | 9,990 | 30,539 | 19,991 | ||||||||||||||||||||
Total homebuilding segment operating income | 50,822 | 63,965 | 152,449 | 137,667 | ||||||||||||||||||||
Financial services profit | 4,294 | 4,294 | 10,936 | 11,515 | ||||||||||||||||||||
Corporate and unallocated (2) | (9,490 | ) | (8,662 | ) | (22,823 | ) | (22,011 | ) | ||||||||||||||||
(Loss)/earnings from other unconsolidated entities, net | (134 | ) | 46 | (364 | ) | (229 | ) | |||||||||||||||||
Interest expense | (460 | ) | (3,462 | ) | (4,569 | ) | (13,113 | ) | ||||||||||||||||
Other income, net | 1,998 | 605 | 6,395 | 1,760 | ||||||||||||||||||||
Loss on early extinguishment of debt | — | — | — | (3,796 | ) | |||||||||||||||||||
Earnings before income taxes | $ | 47,030 | $ | 56,786 | $ | 142,024 | $ | 111,793 | ||||||||||||||||
-1 | Homebuilding revenue includes the following land closing revenue, by segment: | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Land closing revenue: | ||||||||||||||||||||||||
West | $ | 10,105 | $ | 5,875 | $ | 11,155 | $ | 11,616 | ||||||||||||||||
Central | 1,147 | 3,058 | 3,244 | 13,482 | ||||||||||||||||||||
East | — | — | 2,223 | 3,470 | ||||||||||||||||||||
Consolidated total | $ | 11,252 | $ | 8,933 | $ | 16,622 | $ | 28,568 | ||||||||||||||||
-2 | Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments. | |||||||||||||||||||||||
Total assets from segment | ' | |||||||||||||||||||||||
At September 30, 2014 | ||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | |||||||||||||||||||
Unallocated | ||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 22,569 | $ | 26,956 | $ | 30,738 | $ | — | $ | — | $ | 80,263 | ||||||||||||
Real estate | 945,921 | 464,158 | 454,972 | — | — | 1,865,051 | ||||||||||||||||||
Investments in unconsolidated entities | 203 | 8,451 | — | — | 1,246 | 9,900 | ||||||||||||||||||
Other assets | 45,005 | 83,378 | 63,916 | 607 | 124,692 | -1 | 317,598 | |||||||||||||||||
Total assets | $ | 1,013,698 | $ | 582,943 | $ | 549,626 | $ | 607 | $ | 125,938 | $ | 2,272,812 | ||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | |||||||||||||||||||
Unallocated | ||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 26,415 | $ | 12,198 | $ | 12,982 | $ | — | $ | — | $ | 51,595 | ||||||||||||
Real estate | 800,288 | 369,464 | 235,547 | — | — | 1,405,299 | ||||||||||||||||||
Investments in unconsolidated entities | 204 | 8,941 | 50 | — | 2,443 | 11,638 | ||||||||||||||||||
Other assets | 26,900 | 165,403 | -1 | 31,372 | 497 | 310,657 | -1 | 534,829 | ||||||||||||||||
Total assets | $ | 853,807 | $ | 556,006 | $ | 279,951 | $ | 497 | $ | 313,100 | $ | 2,003,361 | ||||||||||||
(1) Balance consists primarily of cash and securities and our deferred tax asset. |
Organization_and_Basis_of_Pres3
Organization and Basis of Presentation (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Sureties: | ' | ' |
Outstanding | $249,597 | $191,829 |
Estimated work remaining to complete | 95,865 | 86,202 |
Letters of Credit ("LOCs"): | ' | ' |
Total LOCs | 24,286 | 42,068 |
Sureties related to joint ventures [Member] | ' | ' |
Sureties: | ' | ' |
Outstanding | 87 | 87 |
Estimated work remaining to complete | 87 | 87 |
Sureties related to owned projects and lots under contract [Member] | ' | ' |
Sureties: | ' | ' |
Outstanding | 249,510 | 191,742 |
Estimated work remaining to complete | 95,778 | 86,115 |
Letter of Credit in lieu of deposit for contracted lots [Member] [Domain] | ' | ' |
Letters of Credit ("LOCs"): | ' | ' |
Total LOCs | 1,200 | 1,685 |
LOCs for land development [Member] | ' | ' |
Letters of Credit ("LOCs"): | ' | ' |
Total LOCs | 18,586 | 35,883 |
LOCs for general corporate operations [Member] | ' | ' |
Letters of Credit ("LOCs"): | ' | ' |
Total LOCs | $4,500 | $4,500 |
Organization_and_Basis_of_Pres4
Organization and Basis of Presentation (Details 2) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | ||
In Thousands, unless otherwise specified | ||||||||
Accrued Liabilities | ' | ' | ' | ' | ' | ' | ||
Accruals related to real-estate development and construction activities | $38,463 | ' | $29,992 | ' | ' | ' | ||
Payroll and other benefits | 34,942 | ' | 36,232 | ' | ' | ' | ||
Accrued taxes | 12,878 | ' | 22,902 | ' | ' | ' | ||
Warranty reserves | 21,454 | 20,882 | 21,971 | 22,257 | 21,844 | 22,064 | ||
Legal reserves | 15,747 | ' | 16,463 | ' | ' | ' | ||
Real-estate notes payable | 16,574 | [1] | ' | 15,993 | [1] | ' | ' | ' |
Other accruals | 28,526 | ' | 23,058 | ' | ' | ' | ||
Total | $168,584 | ' | $166,611 | ' | ' | ' | ||
[1] | (1) Reflects balance of non-recourse notes payable made in connection with land purchases |
Organization_and_Basis_of_Pres5
Organization and Basis of Presentation (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Warranty Reserves | ' | ' | ' | ' |
Balance, beginning of period | $20,882 | $21,844 | $21,971 | $22,064 |
Additions to reserve from new home deliveries | 3,023 | 2,818 | 8,058 | 8,055 |
Warranty claims | -2,451 | -2,405 | -9,075 | -7,862 |
Adjustments to pre-existing reserves | 0 | 0 | 500 | 0 |
Balance, end of period | $21,454 | $22,257 | $21,454 | $22,257 |
Organization_and_Basis_of_Pres6
Organization and Basis of Presentation (Details Textual) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | ||
Communities | Maximum [Member] | Maximum [Member] | Minimum [Member] | Minimum [Member] | Legendary Communities Acquisition [Member] | Legendary Communities Acquisition [Member] | Owned Lots [Member] | Option Lots [Member] | |||
Region | Lot | Lot | Legendary Communities Acquisition [Member] | Legendary Communities Acquisition [Member] | |||||||
State | Lot | Lot | |||||||||
Organization and Presentation [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Entity operations in number of regions | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Number of states in regions | 9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Business acquisition lots acquired | ' | ' | ' | ' | ' | ' | ' | 4,800 | 700 | 4,100 | |
Business acquisition sales order backlog lots acquired | ' | ' | ' | ' | ' | ' | 185 | ' | ' | ' | |
Number of communities in which homes are sold | 225 | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Base price per house for sale range | ' | ' | $859,000 | ' | $127,000 | ' | ' | ' | ' | ' | |
Maximum maturity period to classify liquid investments as cash equivalents | '3 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Amounts in transit from title companies for home closings | 36,900,000 | 26,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | |
Money Market Funds, at Carrying Value | 300,000 | 68,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | |
Investment Maturity Period | ' | ' | ' | '18 months | ' | '3 months | ' | ' | ' | ' | |
Unrecognized gains or losses or other-than-temporary impairments | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Community life cycle range | ' | ' | ' | '5 years | ' | '3 years | ' | ' | ' | ' | |
Deposits on real estate under option or contract | $80,263,000 | [1],[2] | $51,595,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Warranty period following home closings | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | |
[1] | (3)Except for our specific performance option contracts recorded on our balance sheet as Real estate not owned, none of our option agreements require us to purchase lots. | ||||||||||
[2] | Amount is reflected in our consolidated balance sheet in the line item Deposits on real estate under option or contract as of September 30, 2014. |
Real_Estate_and_Capitalized_In2
Real Estate and Capitalized Interest (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Real Estate Properties | ' | ' | ||
Finished home sites and home sites under development | $1,041,108 | [1] | $913,236 | [1] |
Real estate | 1,865,051 | 1,405,299 | ||
Homes under contract [Member] | ' | ' | ||
Homes under contract under construction | 440,033 | [2] | 262,633 | [2] |
Speculative homes not under contract [Member] | ' | ' | ||
Homes under contract under construction | 283,883 | [2] | 147,889 | [2] |
Model homes [Member] | ' | ' | ||
Homes under contract under construction | $100,027 | [2] | $81,541 | [2] |
[1] | Includes land held for development and land held for sale. Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we may have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. | |||
[2] | Includes the allocated land and land development costs associated with each lot for these homes. |
Real_Estate_and_Capitalized_In3
Real Estate and Capitalized Interest (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Summary of capitalized interest | ' | ' | ' | ' | ||||
Capitalized interest, beginning of period | $44,355 | $26,294 | $32,992 | $21,600 | ||||
Interest incurred | 14,695 | 12,508 | 43,333 | 37,876 | ||||
Interest expense | -460 | -3,462 | -4,569 | -13,113 | ||||
Interest amortized to cost of home and land closings | -8,135 | -6,342 | -21,301 | -17,365 | ||||
Capitalized interest, end of period | $50,455 | [1] | $28,998 | [1] | $50,455 | [1] | $28,998 | [1] |
[1] | Approximately $511,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities on our consolidated balance sheets as of September 30, 2014 and December 31, 2013. |
Real_Estate_and_Capitalized_In4
Real Estate and Capitalized Interest (Details Textual) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Real Estate and Capitalized Interest (Textual) [Abstract] | ' | ' |
Capitalized interest related to joint venture investments | $511,000 | $511,000 |
Variable_Interest_Entities_and2
Variable Interest Entities and Consolidated Real Estate Not Owned (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | Lot | ||
Summary of lots under option or contract | ' | ' | |
Number of lots of Option contracts recorded on balance sheet as Real estate not owned | 70 | ' | |
Land under Purchase Options, Recorded | $4,999 | $289 | |
Option/earnest money deposits related to option contracts recorded on balance sheet as Real estate not owned | 700 | ' | |
Number of lots not recorded | 15,704 | [1] | ' |
Purchase Price not recorded | 861,078 | [1] | ' |
Deposits on real estate under option or contract | 80,263 | [1],[2] | 51,595 |
Number of lots recorded and unrecorded | 15,774 | ' | |
Purchase Price recorded and unrecorded | 866,077 | ' | |
Option/Earnest Money Deposits Cash recorded and unrecorded | 80,963 | ' | |
Option Contracts Not Recorded On Balance Sheet Non Refundable Deposits Committed [Member] [Member] | ' | ' | |
Summary of lots under option or contract | ' | ' | |
Number of lots not recorded | 5,891 | [3] | ' |
Purchase Price not recorded | 430,970 | [3] | ' |
Deposits on real estate under option or contract | 55,422 | [3] | ' |
Purchase Contracts Not Recorded On Balance Sheet Non Refundable Deposits Committed [Member] [Member] | ' | ' | |
Summary of lots under option or contract | ' | ' | |
Number of lots not recorded | 4,124 | [3] | ' |
Purchase Price not recorded | 241,093 | [3] | ' |
Deposits on real estate under option or contract | 21,012 | [3] | ' |
Purchase Contracts not recorded on balance sheet-refundable deposits, committed [Member] | ' | ' | |
Summary of lots under option or contract | ' | ' | |
Number of lots not recorded | 641 | ' | |
Purchase Price not recorded | 25,434 | ' | |
Deposits on real estate under option or contract | 1,227 | ' | |
Total committed (on and off balance sheet) [Member] | ' | ' | |
Summary of lots under option or contract | ' | ' | |
Number of lots recorded and unrecorded | 10,726 | ' | |
Purchase Price recorded and unrecorded | 702,496 | ' | |
Option/Earnest Money Deposits Cash recorded and unrecorded | 78,361 | ' | |
Option and Purchase contracts not recorded on balance sheet - refundable deposits, uncommitted [Member] | ' | ' | |
Summary of lots under option or contract | ' | ' | |
Number of lots not recorded | 5,048 | [4] | ' |
Purchase Price not recorded | 163,581 | [4] | ' |
Deposits on real estate under option or contract | $2,602 | [4] | ' |
[1] | (3)Except for our specific performance option contracts recorded on our balance sheet as Real estate not owned, none of our option agreements require us to purchase lots. | ||
[2] | Amount is reflected in our consolidated balance sheet in the line item Deposits on real estate under option or contract as of September 30, 2014. | ||
[3] | Deposits are generally non-refundable except if certain contractual conditions fail or certain contractual obligations are not performed by the selling party. | ||
[4] | Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. |
Investments_in_Unconsolidated_2
Investments in Unconsolidated Entities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Guarantor Obligations [Line Items] | ' | ' | ||
Guarantor Obligations, Maximum Exposure, Undiscounted | $13,243 | $13,243 | ||
Repayment Guarantees [Member] | ' | ' | ||
Guarantor Obligations [Line Items] | ' | ' | ||
Guarantor Obligations, Maximum Exposure, Undiscounted | 0 | 0 | ||
Completion Guarantees [Member] | ' | ' | ||
Guarantor Obligations [Line Items] | ' | ' | ||
Guarantor Obligations, Maximum Exposure, Undiscounted | 0 | [1] | 0 | [1] |
South Edge Guarantee [Member] | ' | ' | ||
Guarantor Obligations [Line Items] | ' | ' | ||
Guarantor Obligations, Maximum Exposure, Undiscounted | $13,243 | [2] | $13,243 | [2] |
[1] | (1)As our completion guarantees are typically backed by funding from a third party, we do not believe these guarantees represent a potential cash obligation for us, as they require only non-financial performance. | |||
[2] | (2)See Note 14 regarding outstanding litigation related to a joint venture project known as “South Edge†or "Inspirada" and the corresponding reserves and charges we have recorded relating thereto. |
Investments_in_Unconsolidated_3
Investments in Unconsolidated Entities (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Schedule of Equity Method Investments [Line Items] | ' | ' | ||
Cash | $4,759 | $7,299 | ||
Real estate | 34,445 | 34,949 | ||
Other assets | 2,807 | 3,067 | ||
Total assets | 42,011 | 45,315 | ||
Accounts payable and other liabilities | 4,349 | 2,889 | ||
Notes and mortgages payable | 13,347 | 13,453 | ||
Total liabilities and equity | 42,011 | 45,315 | ||
Meritage Homes [Member] | ' | ' | ||
Schedule of Equity Method Investments [Line Items] | ' | ' | ||
JV Equity | 7,838 | [1] | 10,332 | [1] |
JV Partners [Member] | ' | ' | ||
Schedule of Equity Method Investments [Line Items] | ' | ' | ||
JV Equity | $16,477 | $18,641 | ||
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) income deferrals as discussed in Note (2) below and (iv) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. |
Investments_in_Unconsolidated_4
Investments in Unconsolidated Entities (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Financial information related to unconsolidated joint ventures, Operations | ' | ' | ' | ' | ||||
Revenue | $7,982 | $8,975 | $19,905 | $25,373 | ||||
Costs and expenses | -3,744 | -3,256 | -9,609 | -9,466 | ||||
Net earnings of unconsolidated entities | 4,238 | 5,719 | 10,296 | 15,907 | ||||
Income (Loss) from Equity Method Investments | $2,649 | [1],[2] | $3,578 | [1],[2] | $6,917 | [1],[2] | $9,583 | [1],[2] |
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) income deferrals as discussed in Note (2) below and (iv) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. | |||||||
[2] | (2)Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net and Loss from other unconsolidated entities, net on our consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. |
Investments_in_Unconsolidated_5
Investments in Unconsolidated Entities (Details Textual) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Investments in Unconsolidated Entities (Textual) [Abstract] | ' | ' |
Investments in unconsolidated entities | $9,900,000 | $11,638,000 |
Equity Method Land Ventures [Member] | ' | ' |
Schedule of Equity Method Investments [Line Items] | ' | ' |
Number of joint ventures | 2 | ' |
Mortgage Joint Ventures [Member] | ' | ' |
Schedule of Equity Method Investments [Line Items] | ' | ' |
Number of joint ventures | 1 | ' |
Investment in mortgage joint venture | $1,300,000 | $2,900,000 |
Senior_Convertible_Senior_Note2
Senior, Convertible Senior Notes (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Components of senior and senior subordinated notes | ' | ' |
Senior, convertible senior notes and other borrowings | $904,629,000 | $905,055,000 |
Line of credit facility, amount outstanding | 0 | 0 |
4.50% senior notes due 2018 | ' | ' |
Components of senior and senior subordinated notes | ' | ' |
Senior, convertible senior notes and other borrowings | 175,000,000 | 175,000,000 |
7.15% senior notes due 2020. At September 30, 2014 and December 31, 2013 there was approximately $3,129 and $3,555 in net unamortized premium, respectively | ' | ' |
Components of senior and senior subordinated notes | ' | ' |
Senior, convertible senior notes and other borrowings | 303,129,000 | 303,555,000 |
7.00% senior notes due 2022 | ' | ' |
Components of senior and senior subordinated notes | ' | ' |
Senior, convertible senior notes and other borrowings | 300,000,000 | 300,000,000 |
1.875% convertible senior notes due 2032 | ' | ' |
Components of senior and senior subordinated notes | ' | ' |
Senior, convertible senior notes and other borrowings | 126,500,000 | 126,500,000 |
Revolving Credit Facility [Member] | ' | ' |
Components of senior and senior subordinated notes | ' | ' |
Line of credit facility, amount outstanding | $0 | $0 |
Senior_Convertible_Senior_Note3
Senior, Convertible Senior Notes (Details Textual) (USD $) | Sep. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
4.50% senior notes due two thousand eighteen [Member] | 4.50% senior notes due two thousand eighteen [Member] | 7.00% senior notes due 2022 [Member] | 7.00% senior notes due 2022 [Member] | 7.15% senior notes due 2020 [Member] | 7.15% senior notes due 2020 [Member] | 1.875% convertible senior notes due 2032 [Member] | 1.875% convertible senior notes due 2032 [Member] | 1.875% convertible senior notes due 2032 [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Credit Facility Accordion Feature [Member] | Consolidated EBITDA [Member] | Consolidated Interest Incurred [Member] | ||||
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | ||||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit facility, maximum borrowing capacity | $400,000,000 | $200,000,000 | $200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $100,000,000 | ' | ' |
Debt Instrument Maturity Year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2018 | ' | ' | ' | ' |
Available For Issuance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' |
Minimum net worth required for compliance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 670,300,000 | ' | ' | ' | ' |
Leverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 60.00% | ' | ' | ' | ' |
Interest coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.5 | 1 |
Line of credit facility, amount outstanding | 0 | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' |
Letters of Credit Outstanding, Amount | 24,286,000 | ' | 42,068,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Remaining Borrowing Capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 375,700,000 | ' | ' | ' | ' |
Debt instrument, stated rate | ' | ' | ' | 4.50% | 4.50% | 7.00% | 7.00% | 7.15% | 7.15% | 1.88% | 1.88% | ' | ' | ' | ' | ' | ' |
Percentage of wholly owned subsidiary | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Year in which senior notes due | ' | ' | ' | '2018 | '2018 | '2022 | '2022 | '2020 | '2020 | '2032 | '2032 | ' | ' | ' | ' | ' | ' |
Aggregate principal amount of offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000 | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Unamortized Premium | ' | ' | ' | ' | ' | ' | ' | $3,128,660 | $3,555,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Conversion Ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | 17.1985 | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Conversion Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $58.14 | ' | ' | ' | ' | ' |
Fair_Value_Disclosures_Details
Fair Value Disclosures (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
4.50% senior notes due two thousand eighteen [Member] | Level 2 [Member] | ' | ' |
Fair value of fixed-rate debt | ' | ' |
Aggregate Principal | $175,000,000 | $175,000,000 |
Estimated Fair Value | 174,563,000 | 174,125,000 |
7.15% senior notes due 2020 [Member] | Level 2 [Member] | ' | ' |
Fair value of fixed-rate debt | ' | ' |
Aggregate Principal | 300,000,000 | 300,000,000 |
Estimated Fair Value | 322,500,000 | 325,500,000 |
7.00% senior notes due 2022 [Member] | Level 2 [Member] | ' | ' |
Fair value of fixed-rate debt | ' | ' |
Aggregate Principal | 300,000,000 | 300,000,000 |
Estimated Fair Value | 321,750,000 | 318,750,000 |
1.875% convertible senior notes due 2032 [Member] | ' | ' |
Fair value of fixed-rate debt | ' | ' |
Aggregate Principal | 1,000 | ' |
1.875% convertible senior notes due 2032 [Member] | Level 2 [Member] | ' | ' |
Fair value of fixed-rate debt | ' | ' |
Aggregate Principal | 126,500,000 | 126,500,000 |
Estimated Fair Value | $125,551,000 | $142,154,000 |
Fair_Value_Disclosures_Details1
Fair Value Disclosures (Details Textual) | Sep. 30, 2014 | Dec. 31, 2013 |
4.50% senior notes due two thousand eighteen [Member] | ' | ' |
Fair Value Disclosures (Textual) [Abstract] | ' | ' |
Debt instrument, stated rate | 4.50% | 4.50% |
7.15% senior notes due 2020 [Member] | ' | ' |
Fair Value Disclosures (Textual) [Abstract] | ' | ' |
Debt instrument, stated rate | 7.15% | 7.15% |
7.00% senior notes due 2022 [Member] | ' | ' |
Fair Value Disclosures (Textual) [Abstract] | ' | ' |
Debt instrument, stated rate | 7.00% | 7.00% |
1.875% convertible senior notes due 2032 [Member] | ' | ' |
Fair Value Disclosures (Textual) [Abstract] | ' | ' |
Debt instrument, stated rate | 1.88% | 1.88% |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Basic and Diluted Earnings Per Common Share | ' | ' | ' | ' | ||||
Basic weighted average number of shares outstanding | 39,123 | 36,226 | 38,977 | 36,060 | ||||
Convertible debt | 2,176 | [1] | 2,176 | [1] | 2,176 | [1] | 2,176 | [1] |
Effect of dilutive securities: | ' | ' | ' | ' | ||||
Stock options and unvested restricted stock | 357 | 463 | 411 | 535 | ||||
Diluted weighted average shares outstanding | 41,656 | 38,865 | 41,564 | 38,771 | ||||
Net earnings as reported | $32,577 | $38,191 | $93,033 | $78,375 | ||||
Interest attributable to convertible senior notes, net of income taxes | 378 | 393 | 1,135 | 1,180 | ||||
Net earnings for diluted earnings per share | $32,955 | $38,584 | $94,168 | $79,555 | ||||
Basic earnings per share | $0.83 | $1.05 | $2.39 | $2.17 | ||||
Diluted earnings per share (1) | $0.79 | [1] | $0.99 | [1] | $2.27 | [1] | $2.05 | [1] |
Antidilutive stock options not included in the calculation of diluted income per share | 22 | 10 | 24 | 5 | ||||
[1] | (1)In accordance with ASC Subtopic 260-10, Earnings Per Share, we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Acquisitions_and_Goodwill_Deta
Acquisitions and Goodwill (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | Jan. 01, 2013 |
Goodwill | $32,962 | $10,247 | $0 |
Goodwill, Acquired During Period | 22,715 | 10,247 | ' |
West [Member] | ' | ' | ' |
Goodwill | 0 | 0 | 0 |
Goodwill, Acquired During Period | 0 | 0 | ' |
Central [Member] | ' | ' | ' |
Goodwill | 0 | 0 | 0 |
Goodwill, Acquired During Period | 0 | 0 | ' |
East [Member] | ' | ' | ' |
Goodwill | ' | 10,247 | 0 |
Financial Services [Member] | ' | ' | ' |
Goodwill | 0 | 0 | 0 |
Goodwill, Acquired During Period | 0 | 0 | ' |
Corporate and Other [Member] | ' | ' | ' |
Goodwill | 0 | 0 | 0 |
Goodwill, Acquired During Period | 0 | 0 | ' |
Nashville Acquisition [Member] | East [Member] | ' | ' | ' |
Goodwill, Acquired During Period | ' | 10,247 | ' |
Legendary Communities Acquisition [Member] | East [Member] | ' | ' | ' |
Goodwill, Acquired During Period | $22,715 | ' | ' |
Acquisitions_and_Goodwill_Deta1
Acquisitions and Goodwill Details Textual (Details) (USD $) | 9 Months Ended | 12 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jan. 01, 2013 | Sep. 30, 2014 | Aug. 01, 2014 | |
Legendary Communities Acquisition [Member] | Legendary Communities Acquisition [Member] | |||||
Cash paid for acquisitions | $130,677,000 | $18,379,000 | ' | ' | ($130,700,000) | ' |
Business Acquisition Estimated Earn Out | ' | ' | ' | ' | ' | 10,000,000 |
Goodwill, Acquired During Period | 22,715,000 | ' | 10,247,000 | ' | ' | ' |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | ' | ' | ' | ' | ' | 108,000,000 |
Goodwill | $32,962,000 | ' | $10,247,000 | $0 | ' | ' |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jan. 09, 2014 |
Stockholders' Equity [Line Items] | ' | ' | ' | ' | ' |
Sale of Stock, Price Per Share | ' | ' | ' | ' | $45.75 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Balance, shares | ' | ' | 36,244,071 | ' | 2,530,000 |
Balance | ' | ' | $841,392 | $694,210 | ' |
Net earnings as reported | 32,577 | 38,191 | 93,033 | 78,375 | ' |
Exercise/vesting of equity awards, value | ' | ' | 734 | 11,225 | ' |
Excess income tax benefit from stock-based awards | ' | ' | 2,197 | 1,733 | ' |
Equity award compensation expense | ' | ' | 9,035 | 7,040 | ' |
Issuance of stock, value | ' | ' | 110,420 | ' | ' |
Other | ' | ' | -114 | ' | ' |
Non-controlling interest acquisition | ' | ' | ' | -257 | ' |
Balance, shares | 39,125,006 | ' | 39,125,006 | ' | 2,530,000 |
Balance | 1,056,697 | 792,326 | 1,056,697 | 792,326 | ' |
Common Stock [Member] | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Balance, shares | ' | ' | 36,244,000 | 35,613,000 | ' |
Balance | ' | ' | 362 | 356 | ' |
Net earnings as reported | ' | ' | 0 | 0 | ' |
Exercise/vesting of equity awards, shares | ' | ' | 351,000 | 618,000 | ' |
Exercise/vesting of equity awards, value | ' | ' | 4 | 6 | ' |
Equity award compensation expense | ' | ' | 0 | 0 | ' |
Issuance of stock, shares | ' | ' | 2,530,000 | ' | ' |
Issuance of stock, value | ' | ' | 25 | ' | ' |
Other | ' | ' | 0 | ' | ' |
Non-controlling interest acquisition | ' | ' | ' | 0 | ' |
Balance, shares | 39,125,000 | 36,231,000 | 39,125,000 | 36,231,000 | ' |
Balance | 391 | 362 | 391 | 362 | ' |
Additional Paid In Capital [Member] | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Balance | ' | ' | 412,961 | 390,249 | ' |
Net earnings as reported | ' | ' | 0 | 0 | ' |
Exercise/vesting of equity awards, value | ' | ' | 730 | 11,219 | ' |
Excess income tax benefit from stock-based awards | ' | ' | 2,197 | 1,733 | ' |
Equity award compensation expense | ' | ' | 9,035 | 7,040 | ' |
Issuance of stock, value | ' | ' | 110,395 | ' | ' |
Other | ' | ' | -114 | ' | ' |
Non-controlling interest acquisition | ' | ' | ' | -257 | ' |
Balance | 535,204 | 409,984 | 535,204 | 409,984 | ' |
Retained Earnings [Member] | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Balance | ' | ' | 428,069 | 303,605 | ' |
Net earnings as reported | ' | ' | 93,033 | 78,375 | ' |
Exercise/vesting of equity awards, value | ' | ' | 0 | 0 | ' |
Equity award compensation expense | ' | ' | 0 | 0 | ' |
Issuance of stock, value | ' | ' | 0 | ' | ' |
Other | ' | ' | 0 | ' | ' |
Non-controlling interest acquisition | ' | ' | ' | 0 | ' |
Balance | $521,102 | $381,980 | $521,102 | $381,980 | ' |
Stockholders_Equity_Details_Te
Stockholders' Equity (Details Textual) (USD $) | Sep. 30, 2014 | Jan. 09, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
In Thousands, except Per Share data, unless otherwise specified | Common Stock [Member] | |||
Stockholders' Equity [Line Items] | ' | ' | ' | ' |
Issuance of stock, shares | ' | ' | ' | 2,530 |
Common stock, par or stated value per share | $0.01 | ' | $0.01 | ' |
Sale of Stock, Price Per Share | ' | $45.75 | ' | ' |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Summary of compensation expense and stock award activity | ' | ' | ' | ' |
Stock-based compensation expense | $3,771 | $3,099 | $9,035 | $7,040 |
Stock options exercised | 1,200 | 12,400 | 41,445 | 334,500 |
Performance based awards [Member] | ' | ' | ' | ' |
Summary of compensation expense and stock award activity | ' | ' | ' | ' |
Non-vested shares granted | 0 | 0 | 52,083 | 62,500 |
Restricted Stock Awards [Member] | ' | ' | ' | ' |
Summary of compensation expense and stock award activity | ' | ' | ' | ' |
Non-vested shares granted | 0 | 3,600 | 374,683 | 345,700 |
Restricted stock awards vested (includes performance based awards) | 2,100 | 2,550 | 309,490 | 283,350 |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 1) (USD $) | 9 Months Ended | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | ||
Summary of stock based compensation agreements | ' | ' | ||
Unrecognized stock-based compensation cost | $23,826 | $17,385 | ||
Weighted average years remaining vesting period | '2 years 4 months 16 days | '2 years 2 months 5 days | ||
Total equity awards outstanding | 1,285,301 | [1] | 1,317,710 | [1] |
[1] | (1) Includes vested and unvested options outstanding and unvested restricted stock awards. |
StockBased_Compensation_Detail2
Stock-Based Compensation (Details Textual) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
Maximum [Member] | Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Vesting period for non-vested stock awards and stock options | ' | ' | '5 years | '3 years |
Stock Based Compensation (Textual) [Abstract] | ' | ' | ' | ' |
Remaining shares available for grant | ' | 1,620,260 | ' | ' |
Shares of common stock authorized under stock compensation plan | ' | 10,050,000 | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 1,100,000 | ' | ' | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Components of the income tax benefit/(provision) | ' | ' | ' | ' |
Federal | ($12,622) | ($18,153) | ($43,480) | ($33,846) |
State, net of federal benefit | -1,831 | -442 | -5,511 | 428 |
Total taxes | ($14,453) | ($18,595) | ($48,991) | ($33,418) |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Effective Income Tax Rate, Continuing Operations | 30.70% | 32.70% | 34.50% | 29.90% | ' |
Unrecognized tax benefits | ' | ' | $0 | ' | $0 |
Income taxes payable | 7,900,000 | ' | 7,900,000 | ' | ' |
State and Local Jurisdiction [Member] | ' | ' | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Deferred Tax Assets, Operating Loss Carryforwards | 7,200,000 | ' | 7,200,000 | ' | ' |
Internal Revenue Service (IRS) [Member] | ' | ' | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Deferred Tax Assets, Operating Loss Carryforwards | 0 | ' | 0 | ' | ' |
Tax Credit Carryforward, Amount | 0 | ' | 0 | ' | ' |
Homes sold during 2012 [Member] | ' | ' | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Income Tax Benefit Recognized due to IRC 45L | ' | ' | ' | ' | 1,700,000 |
Homes sold during 2013 [Member] [Member] | ' | ' | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Income Tax Benefit Recognized due to IRC 45L | ' | ' | ' | ' | 2,000,000 |
Homes Sold in 2012 and 2013 [Member] | ' | ' | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Income Tax Benefit Recognized due to IRC 45L | $2,100,000 | ' | ' | ' | ' |
Supplemental_Disclosure_of_Cas2
Supplemental Disclosure of Cash Flow Information (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash paid during the period for: | ' | ' |
Interest, net of interest capitalized | $3,801 | $2,876 |
Income taxes | 51,668 | 5,192 |
Non-cash operating activities: | ' | ' |
Real estate not owned | 4,710 | 481 |
Real estate acquired through notes payable | $581 | $9,588 |
Operating_and_Reporting_Segmen2
Operating and Reporting Segments (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Revenue | ' | ' | ' | ' | ||||
Revenue | $556,776 | [1] | $492,080 | [1] | $1,470,725 | [1] | $1,278,465 | [1] |
Segment operating income | ' | ' | ' | ' | ||||
Segment operating income | 50,822 | 63,965 | 152,449 | 137,667 | ||||
Financial Services Profit | 4,294 | 4,294 | 10,936 | 11,515 | ||||
Corporate and unallocated | -9,490 | [2] | -8,662 | [2] | -22,823 | [2] | -22,011 | [2] |
(Loss)/earnings from other unconsolidated entities, net | -134 | 46 | -364 | -229 | ||||
Interest expense | -460 | -3,462 | -4,569 | -13,113 | ||||
Other income, net | 1,998 | 605 | 6,395 | 1,760 | ||||
Loss on early extinguishment of debt | 0 | 0 | 0 | -3,796 | ||||
Earnings before income taxes | 47,030 | 56,786 | 142,024 | 111,793 | ||||
West [Member] | ' | ' | ' | ' | ||||
Revenue | ' | ' | ' | ' | ||||
Revenue | 234,950 | 259,669 | 659,596 | 695,615 | ||||
Segment operating income | ' | ' | ' | ' | ||||
Segment operating income | 22,204 | 41,298 | 74,398 | 95,356 | ||||
Central [Member] | ' | ' | ' | ' | ||||
Revenue | ' | ' | ' | ' | ||||
Revenue | 179,761 | 139,307 | 459,619 | 357,406 | ||||
Segment operating income | ' | ' | ' | ' | ||||
Segment operating income | 19,323 | 12,677 | 47,512 | 22,320 | ||||
East [Member] | ' | ' | ' | ' | ||||
Revenue | ' | ' | ' | ' | ||||
Revenue | 142,065 | 93,104 | 351,510 | 225,444 | ||||
Segment operating income | ' | ' | ' | ' | ||||
Segment operating income | $9,295 | $9,990 | $30,539 | $19,991 | ||||
[1] | (1)Homebuilding revenue includes the following land closing revenue, by segment: Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 2014 2013Land closing revenue: West$10,105 $5,875 $11,155 $11,616Central1,147 3,058 3,244 13,482East— — 2,223 3,470Consolidated total$11,252 $8,933 $16,622 $28,568 | |||||||
[2] | Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments. |
Operating_and_Reporting_Segmen3
Operating and Reporting Segments (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Land Sales | $11,252 | $8,933 | $16,622 | $28,568 |
West [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Land Sales | 10,105 | 5,875 | 11,155 | 11,616 |
Central [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Land Sales | 1,147 | 3,058 | 3,244 | 13,482 |
East [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Land Sales | $0 | $0 | $2,223 | $3,470 |
Operating_and_Reporting_Segmen4
Operating and Reporting Segments Details 2 (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ||
Deposits on real estate under option or contract | $80,263 | [1],[2] | $51,595 | |
Real estate | 1,865,051 | 1,405,299 | ||
Investments in unconsolidated entities | 9,900 | 11,638 | ||
Other Assets | 317,598 | [3] | 534,829 | [3] |
Total assets | 2,272,812 | 2,003,361 | ||
East [Member] | ' | ' | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ||
Deposits on real estate under option or contract | 30,738 | 12,982 | ||
Real estate | 454,972 | 235,547 | ||
Investments in unconsolidated entities | 0 | 50 | ||
Other Assets | 63,916 | [3] | 31,372 | [3] |
Total assets | 549,626 | 279,951 | ||
West [Member] | ' | ' | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ||
Deposits on real estate under option or contract | 22,569 | 26,415 | ||
Real estate | 945,921 | 800,288 | ||
Investments in unconsolidated entities | 203 | 204 | ||
Other Assets | 45,005 | [3] | 26,900 | [3] |
Total assets | 1,013,698 | 853,807 | ||
Central [Member] | ' | ' | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ||
Deposits on real estate under option or contract | 26,956 | 12,198 | ||
Real estate | 464,158 | 369,464 | ||
Investments in unconsolidated entities | 8,451 | 8,941 | ||
Other Assets | 83,378 | [3] | 165,403 | [3] |
Total assets | 582,943 | 556,006 | ||
Financial Services [Member] | ' | ' | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ||
Deposits on real estate under option or contract | 0 | 0 | ||
Real estate | 0 | 0 | ||
Investments in unconsolidated entities | 0 | 0 | ||
Other Assets | 607 | [3] | 497 | [3] |
Total assets | 607 | 497 | ||
Corporate and Other [Member] | ' | ' | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ||
Deposits on real estate under option or contract | 0 | 0 | ||
Real estate | 0 | 0 | ||
Investments in unconsolidated entities | 1,246 | [3] | 2,443 | [3] |
Other Assets | 124,692 | [3] | 310,657 | [3] |
Total assets | $125,938 | [3] | $313,100 | [3] |
[1] | (3)Except for our specific performance option contracts recorded on our balance sheet as Real estate not owned, none of our option agreements require us to purchase lots. | |||
[2] | Amount is reflected in our consolidated balance sheet in the line item Deposits on real estate under option or contract as of September 30, 2014. | |||
[3] | (1) Balance consists primarily of cash and securities and our deferred tax asset. |
Operating_and_Reporting_Segmen5
Operating and Reporting Segments Details Textual (Details) | 9 Months Ended |
Sep. 30, 2014 | |
operating_segment | |
State | |
Segment Reporting [Abstract] | ' |
Number of Operating Segments | 2 |
Number of States in which Entity Operates | 9 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Textual) (USD $) | 1 Months Ended | 9 Months Ended | ||||||||||||||
Mar. 31, 2012 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jul. 17, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Sep. 30, 2014 | Jun. 06, 2011 | Oct. 26, 2011 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
lender | South Edge guarantee [Member] | South Edge guarantee [Member] | South Edge [Member] | Summary Judgment Excluding Interest [Member] [Member] | Summary Judgment Including Interest [Member] [Member] | Summary Judgment Interest [Member] | Summary Judgment Attorney Fees [Member] | |||||||||
JointVenture | ||||||||||||||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reserved for litigation and asserted claims | ' | $15,747,000 | ' | $16,463,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Joint venture ownership percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.53% | ' | ' | ' | ' | ' | ' |
Springing Repayment Guarantee_Original demand Letter | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,200,000 | ' | ' | ' | ' | ' |
Number of co-ventures in joint venture | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' |
Litigation Judgment Amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15,053,857 | 15,753,344 | 699,487 | 877,241 |
Supersedeas Bond | ' | 16,930,477 | ' | ' | ' | 16,050,604 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments and Contingencies (Textual) [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warranty reserve | ' | 21,454,000 | 20,882,000 | 21,971,000 | 22,257,000 | ' | 21,844,000 | 22,064,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of lenders filing petition for involuntary bankruptcy | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount requested in demand for arbitration related to alleged breaches | 13,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional amount requested in demand for arbitration related to pro rata future infrastructure improvement costs subsequently dismissed | ' | ' | ' | ' | ' | ' | ' | ' | $9,800,000 | ' | ' | ' | ' | ' | ' | ' |