Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 29, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Meritage Homes CORP | |
Entity Central Index Key | 833079 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 39,652,547 |
Unaudited_Consolidated_Balance
Unaudited Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | |
In Thousands, unless otherwise specified | |||
Assets | |||
Cash and cash equivalents | $89,245 | $103,333 | |
Other receivables | 61,515 | 56,763 | |
Real estate | 1,943,055 | 1,877,682 | |
Real estate not owned | 0 | 4,999 | |
Deposits on real estate under option or contract | 91,922 | [1] | 94,989 |
Investments in unconsolidated entities | 10,271 | 10,780 | |
Property and equipment, net | 33,826 | 32,403 | |
Deferred tax asset | 64,711 | 64,137 | |
Prepaids, other assets and goodwill | 71,913 | 71,052 | |
Total assets | 2,366,458 | 2,316,138 | |
Liabilities | |||
Accounts payable | 91,474 | 83,619 | |
Accrued liabilities | 141,175 | 154,144 | |
Home sale deposits | 32,771 | 29,379 | |
Liabilities related to real estate not owned | 0 | 4,299 | |
Loans payable and other borrowings | 61,406 | 30,722 | |
Senior and convertible senior notes | 904,344 | 904,486 | |
Total liabilities | 1,231,170 | 1,206,649 | |
Stockholders’ Equity | |||
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at March 31, 2015 and December 31, 2014 | 0 | 0 | |
Common stock, par value $0.01. Authorized 125,000,000 shares; issued 39,616,663 and 39,147,153 shares at March 31, 2015 and December 31, 2014, respectively | 396 | 391 | |
Additional paid-in capital | 548,182 | 538,788 | |
Retained earnings | 586,710 | 570,310 | |
Total stockholders’ equity | 1,135,288 | 1,109,489 | |
Total liabilities and stockholders’ equity | $2,366,458 | $2,316,138 | |
[1] | Amount is reflected in our consolidated balance sheet in the line item “Deposits on real estate under option or contract†as of March 31, 2015. |
Unaudited_Consolidated_Balance1
Unaudited Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $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 (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 39,616,663 | 39,147,153 |
Unaudited_Consolidated_Income_
Unaudited Consolidated Income Statement (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Income Statement [Abstract] | ||||
Home closing revenue | $517,273 | $405,779 | ||
Land closing revenue | 1,439 | 2,566 | ||
Total closing revenue | 518,712 | 408,345 | ||
Cost of home closings | -421,786 | -313,180 | ||
Cost of land closings | -1,285 | -3,593 | ||
Total cost of closings | -423,071 | -316,773 | ||
Home closing gross profit | 95,487 | 92,599 | ||
Land closing gross profit/(loss) | 154 | -1,027 | ||
Total closing gross profit | 95,641 | 91,572 | ||
Revenue | 2,535 | 1,899 | ||
Expense | -1,299 | -1,075 | ||
Earnings from financial services unconsolidated entities and other, net | 2,544 | 2,201 | ||
Financial services profit | 3,780 | 3,025 | ||
Commissions and other sales costs | -41,612 | -30,934 | ||
General and administrative expenses | -29,650 | -21,671 | ||
Loss from other unconsolidated entities, net | -123 | -169 | ||
Interest expense | -3,154 | -2,713 | ||
Other income/(loss), net | 415 | 648 | ||
Earnings before income taxes | 25,297 | 39,758 | ||
Provision for income taxes | -8,897 | -14,381 | ||
Net earnings | $16,400 | $25,377 | ||
Earnings per common share: | ||||
Basic (in dollars per share) | $0.42 | $0.66 | ||
Diluted (in dollars per share) | $0.40 | [1] | $0.62 | [1] |
Weighted average number of shares: | ||||
Basic (in shares) | 39,390 | 38,687 | ||
Diluted (in shares) | 41,948 | 41,308 | ||
[1] | In accordance with ASC 260-10, Earnings Per Share, ("ASC 260-10") we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Unaudited_Consolidated_Stateme
Unaudited Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Cash flows from operating activities: | ||||
Net earnings | $16,400 | $25,377 | ||
Adjustments to reconcile net earnings to net cash used in operating activities: | ||||
Depreciation and amortization | 3,211 | 2,513 | ||
Stock-based compensation | 4,630 | 2,411 | ||
Excess income tax benefit from stock-based awards | -1,935 | -2,275 | ||
Equity in earnings from unconsolidated entities | -2,421 | [1],[2] | -2,032 | [1],[2] |
Distributions of earnings from unconsolidated entities | 3,035 | 3,955 | ||
Other | -490 | 4,118 | ||
Changes in assets and liabilities: | ||||
Increase in real estate | -58,906 | -132,536 | ||
Decrease/(increase) in deposits on real estate under option or contract | 3,767 | -3,071 | ||
Increase in receivables, prepaids and other assets | -5,695 | -13,998 | ||
Decrease in accounts payable and accrued liabilities | -3,179 | -15,813 | ||
Increase in home sale deposits | 3,392 | 1,839 | ||
Net cash used in operating activities | -38,191 | -129,512 | ||
Cash flows from investing activities: | ||||
Investments in unconsolidated entities | -104 | -44 | ||
Purchases of property and equipment | -4,589 | -6,995 | ||
Proceeds from sales of property and equipment | 44 | 93 | ||
Maturities of investments and securities | 0 | 47,533 | ||
Payments to purchase investments and securities | 0 | -35,514 | ||
Net cash (used in)/provided by investing activities | -4,649 | 5,073 | ||
Cash flows from financing activities: | ||||
Proceeds from Credit Facility, net | 27,000 | 0 | ||
Repayment of loans payable and other borrowings | -3,017 | -2,155 | ||
Excess income tax benefit from stock-based awards | 1,935 | 2,275 | ||
Proceeds from issuance of common stock, net | 0 | 110,432 | ||
Proceeds from stock option exercises | 2,834 | 707 | ||
Net cash provided by financing activities | 28,752 | 111,259 | ||
Net decrease in cash and cash equivalents | -14,088 | -13,180 | ||
Cash and cash equivalents, beginning of period | 103,333 | 274,136 | ||
Cash and cash equivalents, end of period | $89,245 | $260,956 | ||
[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) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) 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. |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
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. We primarily build in historically high-growth regions of the 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, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina 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 Communities"). 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 currently operate under the name of Phillips Builders, 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 March 31, 2015, we were actively selling homes in 229 communities, with base prices ranging from approximately $130,000 to $1,270,000. | |||||||||||||||||
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, 2014. 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 prior year results to conform to current year presentation. | |||||||||||||||||
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 or closing agents for home closings of approximately $49.6 million and $59.2 million are included in cash and cash equivalents at March 31, 2015 and December 31, 2014, respectively. | |||||||||||||||||
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”) 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 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. An accrued liability to capture such obligations is recorded 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 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 smaller finished lot purchases 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 indication of a decline in value of our land and real estate assets exist. For those assets 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 land options and purchase contracts 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 our 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 $91.9 million and $95.0 million as of March 31, 2015 and December 31, 2014, respectively. | |||||||||||||||||
Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on at least an annual basis 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. ASC 350 states that an entity may assess qualitative factors first to determine whether it is necessary to perform a two-step goodwill impairment test. 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 and labor costs, 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. See Note 9 for additional information related to goodwill. | |||||||||||||||||
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 and lot positions, 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. In the normal course of business, we may acquire lots from various development entities pursuant to option and purchase agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators). See Note 3 for additional information on off-balance sheet arrangements. | |||||||||||||||||
Surety Bonds and Letters of Credit. We provide letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. 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 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 March 31, 2015 | At December 31, 2014 | ||||||||||||||||
Outstanding | Estimated work | Outstanding | Estimated work | ||||||||||||||
remaining to | remaining to | ||||||||||||||||
complete | complete | ||||||||||||||||
Sureties: | |||||||||||||||||
Sureties related to joint ventures | $ | 87 | $ | 87 | $ | 87 | $ | 87 | |||||||||
Sureties related to owned projects and lots under contract | 249,367 | 101,669 | 230,079 | 93,667 | |||||||||||||
Total Sureties | $ | 249,454 | $ | 101,756 | $ | 230,166 | $ | 93,754 | |||||||||
Letters of Credit (“LOCs”): | |||||||||||||||||
LOCs in lieu of deposits for contracted lots | $ | 1,200 | N/A | $ | 1,200 | N/A | |||||||||||
LOCs for land development | 14,012 | N/A | 13,789 | N/A | |||||||||||||
LOCs for general corporate operations | 4,500 | N/A | 4,500 | N/A | |||||||||||||
Total LOCs | $ | 19,712 | N/A | $ | 19,489 | N/A | |||||||||||
Accrued Liabilities. Accrued liabilities at March 31, 2015 and December 31, 2014 consisted of the following (in thousands): | |||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||
Accruals related to real estate development and construction activities | $ | 29,693 | $ | 29,365 | |||||||||||||
Payroll and other benefits | 25,810 | 44,107 | |||||||||||||||
Accrued taxes | 10,352 | 11,096 | |||||||||||||||
Warranty reserves | 21,839 | 22,080 | |||||||||||||||
Legal reserves | 15,109 | 16,499 | |||||||||||||||
Other accruals | 38,372 | 30,997 | |||||||||||||||
Total | $ | 141,175 | $ | 154,144 | |||||||||||||
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 one to two years 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 have estimated these reserves for the structural warranty based on the number of homes still under warranty and historical 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 is incomplete 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 March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Balance, beginning of period | $ | 22,080 | $ | 21,971 | |||||||||||||
Additions to reserve from new home deliveries | 2,628 | 2,276 | |||||||||||||||
Warranty claims | (2,869 | ) | (2,765 | ) | |||||||||||||
Adjustments to pre-existing reserves | — | — | |||||||||||||||
Balance, end of period | $ | 21,839 | $ | 21,482 | |||||||||||||
Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying unaudited 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, as unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, future costs could differ significantly from our estimates. | |||||||||||||||||
Recent Accounting Pronouncements. In January 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-01, Income Statement - Extraordinary and Unusual Items ("ASU 2015-01"). ASU 2015-01 eliminates the concept of extraordinary items from GAAP but retains the presentation and disclosure guidance for items that are unusual in nature or occur infrequently and expands the guidance to include items that are both unusual and infrequently occurring. ASU 2015-01 is effective for us on January 1, 2016. A reporting entity may apply ASU 2015-01 prospectively or retrospectively to all periods presented in the financial statements. We do not anticipate the adoption of ASU 2015-01 will have a material effect on our consolidated financial statements. | |||||||||||||||||
In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis ("ASU 2015-02"). ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. ASU 2015-02 is effective for us beginning January 1, 2016. Early adoption is permitted. We do not anticipate the adoption of ASU 2015-02 will have a material effect on our consolidated financial statements. | |||||||||||||||||
In August 2014, the FASB issued 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. We do not anticipate the adoption of ASU 2014-15 will have a material effect on our consolidated financial statements or disclosures. | |||||||||||||||||
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 applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date which for us was January 1, 2015. The adoption of ASU 2014-08 did not have a material effect on our consolidation financial statements or disclosures. |
Real_Estate_and_Capitalized_In
Real Estate and Capitalized Interest | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
REAL ESTATE AND CAPITALIZED INTEREST | REAL ESTATE AND CAPITALIZED INTEREST | ||||||||
Real estate consists of the following (in thousands): | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Homes under contract under construction (1) | $ | 419,324 | $ | 328,931 | |||||
Unsold homes, completed and under construction (1) | 251,840 | 302,288 | |||||||
Model homes (1) | 111,304 | 109,614 | |||||||
Finished home sites and home sites under development (2) | 1,160,587 | 1,136,849 | |||||||
$ | 1,943,055 | $ | 1,877,682 | ||||||
(1) Includes the allocated land and land development costs associated with each lot for these homes. | |||||||||
-2 | Includes raw land, 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 our development period interest costs incurred in connection with the development and construction of real estate. Capitalized interest is allocated to active real estate when incurred and charged to cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands): | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Capitalized interest, beginning of period | $ | 54,060 | $ | 32,992 | |||||
Interest incurred | 15,282 | 14,256 | |||||||
Interest expensed | (3,154 | ) | (2,713 | ) | |||||
Interest amortized to cost of home and land closings | (9,345 | ) | (5,834 | ) | |||||
Capitalized interest, end of period (1) | $ | 56,843 | $ | 38,701 | |||||
-1 | Approximately $490,000 of the capitalized interest is related to our joint venture investments and is a component of “Investments in unconsolidated entities” in our consolidated balance sheet as of March 31, 2015 and December 31, 2014. |
Variable_Interest_Entities_and
Variable Interest Entities and Consolidated Real Estate Not Owned | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
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 the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures reduce our financial risk associated with land acquisitions and holdings and allow us to better leverage our balance sheet. | ||||||||||||||
Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into a purchase or option agreement to acquire land or lots from an entity, a variable interest entity, or “VIE”, may be created. We evaluate all option and purchase agreements for land to determine whether they are a VIE. ASC 810, Consolidation, 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.” The liabilities related to consolidated VIEs are excluded from our debt covenant calculations. | ||||||||||||||
In order to determine if we are the primary beneficiary, we must first assess whether we have the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with Meritage; and the ability to change or amend the existing option contract with the VIE. If we are not determined to control such activities, we are not considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our analysis by determining if we are also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if we will benefit from a potentially significant amount of the VIE’s expected gains. | ||||||||||||||
In substantially all cases, creditors of the entities with which we have option agreements 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 any budget savings or shortfalls are borne by us. 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 at March 31, 2015 (dollars in thousands): | ||||||||||||||
Projected Number | Purchase | Option/ | ||||||||||||
of Lots | Price | Earnest Money | ||||||||||||
Deposits–Cash | ||||||||||||||
Purchase and option contracts recorded on balance sheet as Real estate not owned | — | $ | — | $ | — | |||||||||
Option contracts not recorded on balance sheet — non-refundable deposits, committed (1) | 7,101 | 581,670 | 77,991 | |||||||||||
Purchase contracts not recorded on balance sheet — non-refundable deposits, committed (1) | 2,646 | 118,193 | 10,560 | |||||||||||
Purchase contracts not recorded on balance sheet —refundable deposits, committed | 109 | 4,611 | 329 | |||||||||||
Total committed (on and off balance sheet) | 9,856 | 704,474 | 88,880 | |||||||||||
Total purchase and option contracts not recorded on balance sheet — refundable deposits, uncommitted (2) | 4,119 | 201,031 | 3,042 | |||||||||||
Total lots under contract or option | 13,975 | $ | 905,505 | $ | 91,922 | |||||||||
Total option contracts not recorded on balance sheet (3) | 13,975 | $ | 905,505 | $ | 91,922 | -4 | ||||||||
-1 | Deposits are non-refundable except if certain contractual conditions 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 contracts recorded on our balance sheet as Real estate not owned, if any, 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 March 31, 2015. | |||||||||||||
Generally, our options 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. Although the pre-established number is typically structured to approximate our expected rate of home construction starts, during a weakened homebuilding market, or in situations where we may encounter development or construction delays, we may purchase lots at an absorption level that exceeds our sales and home starts pace. |
Investments_in_Unconsolidated_
Investments in Unconsolidated Entities | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
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 joint 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 are generally 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 March 31, 2015, we had two active equity-method land ventures. | ||||||||
In connection with our land development joint ventures, we may also provide certain types of guarantees to associated lenders of the joint venture. These guarantees can be classified into two categories: (i) repayment guarantees and (ii) completion guarantees. We have no such guarantees as of March 31, 2015 or December 31, 2014. We have outstanding litigation related to our minority ownership in the South Edge joint venture as there is pending litigation with the venture's lender group regarding our $13.2 million guarantee related to that venture. See Note 15 regarding the outstanding litigation related to this joint venture and the corresponding reserves and charges we have recorded relating thereto. | ||||||||
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 would 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 detail of our surety bonds. | ||||||||
As of March 31, 2015, we also participated 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 mortgage joint venture as of March 31, 2015 and December 31, 2014 was $1.5 million and $2.0 million, respectively. | ||||||||
Summarized condensed financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): | ||||||||
At March 31, 2015 | At December 31, 2014 | |||||||
Assets: | ||||||||
Cash | $ | 5,284 | $ | 6,471 | ||||
Real estate | 34,437 | 34,435 | ||||||
Other assets | 3,239 | 2,990 | ||||||
Total assets | $ | 42,960 | $ | 43,896 | ||||
Liabilities and equity: | ||||||||
Accounts payable and other liabilities | $ | 5,186 | $ | 5,994 | ||||
Notes and mortgages payable | 13,345 | 13,346 | ||||||
Equity of: | ||||||||
Meritage (1) | 7,970 | 7,735 | ||||||
Other | 16,459 | 16,821 | ||||||
Total liabilities and equity | $ | 42,960 | $ | 43,896 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 6,741 | $ | 5,309 | ||||
Costs and expenses | (3,195 | ) | (2,753 | ) | ||||
Net earnings of unconsolidated entities | $ | 3,546 | $ | 2,556 | ||||
Meritage’s share of pre-tax earnings (1) (2) | $ | 2,421 | $ | 2,032 | ||||
-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) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) 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 the active land ventures, one mortgage venture and various inactive ventures. Our total investment in all of these joint ventures is $10.3 million and $10.8 million as of March 31, 2015 and December 31, 2014, respectively. As of March 31, 2015, we believe these ventures are in compliance with their respective debt agreements, if applicable, and such debt is non recourse to us. |
Loans_Payable_and_Other_Borrow
Loans Payable and Other Borrowings | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Loans Payable and Other Borrowings [Abstract] | |||||||||
LOANS PAYABLE AND OTHER BORROWINGS | LOANS PAYABLE AND OTHER BORROWINGS | ||||||||
Loans payable and other borrowings consist of the following (in thousands): | |||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
Other borrowings, real estate note payable (1) | $ | 34,406 | $ | 30,722 | |||||
$500 million unsecured revolving credit facility, maturing June 2018, with interest approximating LIBOR (approximately 0.18% at March 31, 2015) plus 2.25% or Prime (3.25% at March 31, 2015) plus 1.25% | 27,000 | — | |||||||
Total | $ | 61,406 | $ | 30,722 | |||||
(1) Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 6%. | |||||||||
In July 2012, we entered into an unsecured revolving $125.0 million credit facility ("Credit Facility"). In 2014, we amended and restated the Credit Facility, increasing the capacity as of December 31, 2014 to $400.0 million, increasing the amount available for letters of credit to $200.0 million and extending the maturity date to June 2018. In the first quarter of 2015, we further increased the capacity to $500.0 million. Borrowings under the Credit Facility are unsecured but availability is 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. During the first quarter of 2015, our maximum borrowings under the Credit Facility were $100.0 million. As of March 31, 2015 we had outstanding borrowings and letters of credit issued under the Credit Facility totaling $27.0 million and $19.7 million, respectively, leaving $453.3 million available under the Credit Facility to be drawn. | |||||||||
SENIOR AND CONVERTIBLE SENIOR NOTES | |||||||||
Senior and convertible senior notes consist of the following (in thousands): | |||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 175,000 | |||||
7.15% senior notes due 2020. At March 31, 2015 and December 31, 2014 there was approximately $2,844 and $2,986 in net unamortized premium, respectively | 302,844 | 302,986 | |||||||
7.00% senior notes due 2022 | 300,000 | 300,000 | |||||||
1.875% convertible senior notes due 2032 | 126,500 | 126,500 | |||||||
Total | $ | 904,344 | $ | 904,486 | |||||
The indentures for our 4.50%, 7.15% and 7.00% 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. | |||||||||
The convertible senior notes are convertible into shares of our common stock at an initial conversion rate of 17.1985 shares of our common stock per $1,000 principal amount of convertible senior notes. This corresponds to an initial conversion price of $58.14 per share and represents a 47.5% conversion premium based on the closing price of our common stock on September 12, 2012. | |||||||||
Obligations to pay principal and interest on the senior and convertible notes 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 may 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, minor. |
Senior_and_Convertible_Senior_
Senior and Convertible Senior Notes | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
SENIOR AND CONVERTIBLE SENIOR NOTES | LOANS PAYABLE AND OTHER BORROWINGS | ||||||||
Loans payable and other borrowings consist of the following (in thousands): | |||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
Other borrowings, real estate note payable (1) | $ | 34,406 | $ | 30,722 | |||||
$500 million unsecured revolving credit facility, maturing June 2018, with interest approximating LIBOR (approximately 0.18% at March 31, 2015) plus 2.25% or Prime (3.25% at March 31, 2015) plus 1.25% | 27,000 | — | |||||||
Total | $ | 61,406 | $ | 30,722 | |||||
(1) Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 6%. | |||||||||
In July 2012, we entered into an unsecured revolving $125.0 million credit facility ("Credit Facility"). In 2014, we amended and restated the Credit Facility, increasing the capacity as of December 31, 2014 to $400.0 million, increasing the amount available for letters of credit to $200.0 million and extending the maturity date to June 2018. In the first quarter of 2015, we further increased the capacity to $500.0 million. Borrowings under the Credit Facility are unsecured but availability is 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. During the first quarter of 2015, our maximum borrowings under the Credit Facility were $100.0 million. As of March 31, 2015 we had outstanding borrowings and letters of credit issued under the Credit Facility totaling $27.0 million and $19.7 million, respectively, leaving $453.3 million available under the Credit Facility to be drawn. | |||||||||
SENIOR AND CONVERTIBLE SENIOR NOTES | |||||||||
Senior and convertible senior notes consist of the following (in thousands): | |||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 175,000 | |||||
7.15% senior notes due 2020. At March 31, 2015 and December 31, 2014 there was approximately $2,844 and $2,986 in net unamortized premium, respectively | 302,844 | 302,986 | |||||||
7.00% senior notes due 2022 | 300,000 | 300,000 | |||||||
1.875% convertible senior notes due 2032 | 126,500 | 126,500 | |||||||
Total | $ | 904,344 | $ | 904,486 | |||||
The indentures for our 4.50%, 7.15% and 7.00% 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. | |||||||||
The convertible senior notes are convertible into shares of our common stock at an initial conversion rate of 17.1985 shares of our common stock per $1,000 principal amount of convertible senior notes. This corresponds to an initial conversion price of $58.14 per share and represents a 47.5% conversion premium based on the closing price of our common stock on September 12, 2012. | |||||||||
Obligations to pay principal and interest on the senior and convertible notes 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 may 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, minor. |
Fair_Value_Disclosures
Fair Value Disclosures | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES | |||||||||||||||||
We account for non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10 Fair Value Measurement. 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. Except as discussed in Note 1, we do not value any other non-financial assets at fair value. | ||||||||||||||||||
Financial Instruments: The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (level 2 inputs as per the discussion above) and is as follows (in thousands): | ||||||||||||||||||
31-Mar-15 | 31-Dec-14 | |||||||||||||||||
Aggregate | Estimated Fair | Aggregate | Estimated Fair | |||||||||||||||
Principal | Value | Principal | Value | |||||||||||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 177,625 | $ | 175,000 | $ | 175,000 | ||||||||||
7.15% senior notes | $ | 300,000 | $ | 322,500 | $ | 300,000 | $ | 322,500 | ||||||||||
7.00% senior notes | $ | 300,000 | $ | 320,250 | $ | 300,000 | $ | 318,000 | ||||||||||
1.875% convertible senior notes | $ | 126,500 | $ | 134,564 | $ | 126,500 | $ | 124,444 | ||||||||||
Due to the short-term nature of other financial assets and liabilities including our Other Borrowings, we consider the carrying amounts of our other short-term financial instruments to approximate fair value. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
EARNINGS 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 March 31, | |||||||||
2015 | 2014 | ||||||||
Basic weighted average number of shares outstanding | 39,390 | 38,687 | |||||||
Effect of dilutive securities: | |||||||||
Convertible debt (1) | 2,176 | 2,176 | |||||||
Stock options and unvested restricted stock | 382 | 445 | |||||||
Diluted average shares outstanding | 41,948 | 41,308 | |||||||
Net earnings as reported | $ | 16,400 | $ | 25,377 | |||||
Interest attributable to convertible senior notes, net of income taxes | 385 | 379 | |||||||
Net earnings for diluted earnings per share | $ | 16,785 | $ | 25,756 | |||||
Basic earnings per share | $ | 0.42 | $ | 0.66 | |||||
Diluted earnings per share (1) | $ | 0.4 | $ | 0.62 | |||||
Antidilutive stock options not included in the calculation of diluted earnings per share | 7 | — | |||||||
-1 | In accordance with ASC 260-10, Earnings Per Share, ("ASC 260-10") we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Acquisitions_and_Goodwill
Acquisitions and Goodwill | 3 Months Ended | |||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||
ACQUISTIONS AND GOODWILL | 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 $18.6 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. The remaining basis of the $8.4 million is almost entirely comprised of the fair value of the acquired inventory with limited other assets and liabilities. | ||||||||||||||||||||||||
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. The purchase price was approximately $130.7 million in cash. The results of Legendary Communities' 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 Communities 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 acquisitions were 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 was recorded as goodwill, which is included in our consolidated balance sheet in Prepaids, other assets and goodwill. | ||||||||||||||||||||||||
A summary of the carrying amount of goodwill follows (in thousands): | ||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate | Total | |||||||||||||||||||
Balance at December 31, 2014 | — | — | 32,962 | — | — | 32,962 | ||||||||||||||||||
Additions | — | — | — | — | — | — | ||||||||||||||||||
Impairments | — | — | — | — | — | — | ||||||||||||||||||
Balance at March 31, 2015 | $ | — | $ | — | $ | 32,962 | $ | — | $ | — | $ | 32,962 | ||||||||||||
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY | |||||||||||||||||||
A summary of changes in shareholders’ equity is presented below (dollars in thousands): | ||||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Number of | Common | Additional | Retained | Total | ||||||||||||||||
Shares | Stock | Paid-In | Earnings | |||||||||||||||||
Capital | ||||||||||||||||||||
Balance at December 31, 2014 | 39,147 | $ | 391 | $ | 538,788 | $ | 570,310 | $ | 1,109,489 | |||||||||||
Net earnings | — | — | — | 16,400 | 16,400 | |||||||||||||||
Exercise/vesting of equity awards | 470 | 5 | 2,829 | — | 2,834 | |||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 1,935 | — | 1,935 | |||||||||||||||
Equity award compensation expense | — | — | 4,630 | — | 4,630 | |||||||||||||||
Balance at March 31, 2015 | 39,617 | $ | 396 | $ | 548,182 | $ | 586,710 | $ | 1,135,288 | |||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
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 | — | — | — | 25,377 | 25,377 | |||||||||||||||
Exercise/vesting of equity awards | 340 | 4 | 703 | — | 707 | |||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 2,275 | — | 2,275 | |||||||||||||||
Equity award compensation expense | — | — | 2,411 | — | 2,411 | |||||||||||||||
Issuance of stock (1) | 2,530 | 25 | 110,407 | — | 110,432 | |||||||||||||||
Balance at March 31, 2014 | 39,114 | $ | 391 | $ | 528,757 | $ | 453,446 | $ | 982,594 | |||||||||||
(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. |
Stock_Based_and_Deferred_Compe
Stock Based and Deferred Compensation | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||
STOCK BASED AND DEFERRED COMPENSATION | STOCK BASED AND DEFERRED 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 1,046,688 shares remain available for grant at March 31, 2015. 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 are usually granted with a five-year ratable vesting period, with a three-year cliff vesting for non-vested stock and performance-based awards granted to certain senior executive officers and non-employee directors. | |||||||||
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 ("ASC 718"), 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 and recorded on a straight-line basis through the end of the award’s vesting period. Beginning with grants in 2014, a portion of the performance-based restricted stock awards granted contain market conditions as defined by ASC 718. The guidance in ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engaged a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is being expensed straight line over the service period of the awards. Below is a summary of compensation expense and stock award activity (in thousands): | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Stock-based compensation expense | $ | 4,630 | $ | 2,411 | |||||
Non-vested shares granted | 388,787 | 355,283 | |||||||
Performance-based non-vested shares granted | 66,187 | 52,083 | |||||||
Stock options exercised | 143,440 | 40,245 | |||||||
Restricted stock awards vested (includes performance-based awards) | 326,070 | 300,170 | |||||||
The following table includes additional information regarding our Plan (dollars in thousands): | |||||||||
As of | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Unrecognized stock-based compensation cost | $ | 31,410 | $ | 20,577 | |||||
Weighted average years expense recognition period | 2.91 | 2.11 | |||||||
Total equity awards outstanding (1) | 1,203,218 | 1,255,714 | |||||||
(1) Includes options outstanding and unvested restricted stock and performance-based awards and restricted stock units. | |||||||||
In 2013, we began to offer a non-qualified deferred compensation plan ("deferred compensation plan") to highly compensated employees in order to allow them additional pre-tax income deferral opportunities above and beyond the limits that qualified plans, such as 401k plans, impose on highly compensated employees. We do not currently offer a contribution match on the deferred compensation plan. All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the three months ended March 31, 2015 or 2014. |
Income_Taxes
Income Taxes | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
INCOME TAXES | INCOME TAXES | ||||||||
Components of the income tax provision are as follows (in thousands): | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Federal | $ | 8,093 | $ | 12,882 | |||||
State, net of federal benefit | 804 | 1,499 | |||||||
Total | $ | 8,897 | $ | 14,381 | |||||
The effective tax rate for the three months ended March 31, 2015 was 35.2% versus 36.2% in 2014. | |||||||||
At March 31, 2015 and December 31, 2014, we have no unrecognized tax benefits due to the lapse of the statute of limitations and completion of audits for prior years. We believe that our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change. 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, Income Taxes ("ASC 740"), we determine our deferred tax assets and liabilities by taxing jurisdiction. We evaluate our deferred tax assets, including the benefit from 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, experiences with operating losses and experiences of utilizing tax credit carryforwards and tax planning alternatives. We have no valuation allowance on our deferred tax assets and NOL carryovers at March 31, 2015. | |||||||||
At March 31, 2015, we had no remaining federal NOL carryforward or federal tax credits. At March 31, 2015, we had tax benefits for state NOL carryforwards of $4.6 million, unchanged from December 31, 2014, that begin to expire in 2015 depending on the state jurisdiction. | |||||||||
At March 31, 2015, we have income taxes payable of $4.9 million, which primarily consists of current federal and state tax accruals, net of estimated tax payments. This amount is recorded in Accrued liabilities in the accompanying balance sheet at March 31, 2015. | |||||||||
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 have one state income tax examination pending resolution at this time. | |||||||||
The tax benefits from 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 March 31, 2015 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 any tax benefit for future utilization. |
Supplemental_Disclosure_of_Cas
Supplemental Disclosure of Cash Flow Information | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||||
The following table presents certain supplemental cash flow information (in thousands): | ||||||||||
Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Cash paid during the period for: | ||||||||||
Interest, net of interest capitalized | $ | (5,995 | ) | $ | 4,081 | |||||
Income taxes | $ | 8,710 | $ | 17,190 | ||||||
Non-cash operating activities: | ||||||||||
Real estate not owned decrease | $ | (4,999 | ) | $ | (241 | ) | ||||
Real estate acquired through notes payable | $ | 6,701 | $ | 116 | ||||||
Operating_and_Reporting_Segmen
Operating and Reporting Segments | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||
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. The homebuilding 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 a reporting segment based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows: | |||||||||||||||||||||||||
West: Arizona, California and Colorado | |||||||||||||||||||||||||
Central: Texas | |||||||||||||||||||||||||
East: Florida, Georgia, North Carolina, South Carolina and Tennessee | |||||||||||||||||||||||||
Management’s evaluation of 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, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” 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 March 31, | |||||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||||
Homebuilding revenue (1): | |||||||||||||||||||||||||
West | $ | 206,878 | $ | 192,681 | |||||||||||||||||||||
Central | 154,026 | 119,715 | |||||||||||||||||||||||
East | 157,808 | 95,949 | |||||||||||||||||||||||
Consolidated total | 518,712 | 408,345 | |||||||||||||||||||||||
Homebuilding segment operating income: | |||||||||||||||||||||||||
West | 14,197 | 24,810 | |||||||||||||||||||||||
Central | 14,105 | 9,469 | |||||||||||||||||||||||
East | 5,619 | 10,664 | |||||||||||||||||||||||
Total homebuilding segment operating income | 33,921 | 44,943 | |||||||||||||||||||||||
Financial services segment profit | 3,780 | 3,025 | |||||||||||||||||||||||
Corporate and unallocated costs (2) | (9,542 | ) | (5,976 | ) | |||||||||||||||||||||
Loss from unconsolidated entities, net | (123 | ) | (169 | ) | |||||||||||||||||||||
Interest expense | (3,154 | ) | (2,713 | ) | |||||||||||||||||||||
Other income/(loss), net | 415 | 648 | |||||||||||||||||||||||
Net earnings before income taxes | $ | 25,297 | $ | 39,758 | |||||||||||||||||||||
-1 | Homebuilding revenue includes the following land closing revenue, by segment as outlined in the table below. | ||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||||
Land closing revenue: | |||||||||||||||||||||||||
West | $ | — | $ | 1,050 | |||||||||||||||||||||
Central | 1,439 | 1,516 | |||||||||||||||||||||||
East | — | — | |||||||||||||||||||||||
Total | $ | 1,439 | $ | 2,566 | |||||||||||||||||||||
-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 reporting segments. | ||||||||||||||||||||||||
At March 31, 2015 | |||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | ||||||||||||||||||||
Unallocated | |||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 30,680 | $ | 31,706 | $ | 29,536 | $ | — | $ | — | $ | 91,922 | |||||||||||||
Real estate | 972,589 | 467,929 | 502,537 | — | — | 1,943,055 | |||||||||||||||||||
Investments in unconsolidated entities | 205 | 8,541 | — | — | 1,525 | 10,271 | |||||||||||||||||||
Other assets | 49,177 | 69,472 | -1 | 70,089 | -2 | 2,164 | 130,308 | -3 | 321,210 | ||||||||||||||||
Total assets | $ | 1,052,651 | $ | 577,648 | $ | 602,162 | $ | 2,164 | $ | 131,833 | $ | 2,366,458 | |||||||||||||
At December 31, 2014 | |||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | ||||||||||||||||||||
Unallocated | |||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 34,622 | $ | 31,317 | $ | 29,050 | $ | — | $ | — | $ | 94,989 | |||||||||||||
Real estate | 943,600 | 446,208 | 487,874 | — | — | 1,877,682 | |||||||||||||||||||
Investments in unconsolidated entities | 204 | 8,561 | — | — | 2,015 | 10,780 | |||||||||||||||||||
Other assets | 48,120 | 80,689 | -1 | 70,036 | -2 | 958 | 132,884 | -3 | 332,687 | ||||||||||||||||
Total assets | $ | 1,026,546 | $ | 566,775 | $ | 586,960 | $ | 958 | $ | 134,899 | $ | 2,316,138 | |||||||||||||
-1 | Balance consists primarily of development reimbursements from local municipalities and cash. | ||||||||||||||||||||||||
-2 | Balance consists primarily of goodwill (see Note 9) and cash. | ||||||||||||||||||||||||
-3 | Balance consists primarily of cash and securities and our deferred tax asset. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
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 March 31, 2015, we have reserved approximately $15.1 million related to non-warranty related litigation and asserted claims. In addition, our $21.8 million warranty reserve includes accruals for all warranty and construction defect claims that are similarly recorded in an amount we believe will be necessary to resolve those warranty and construction defect claims. Except as may be specifically disclosed herein, we currently 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 | |
Since 2008, we have been involved in litigation initiated by the lender group for a large Nevada-based land acquisition and unconsolidated development joint venture in which the lenders were seeking damages in two separate actions on the basis of enforcement of completion guarantees and other related claims (JP Morgan Chase Bank, N.A. v. KB HOME Nevada, et al., U.S. District Court, District of Nevada (Case No. 08-CV-01711 PMP Consolidated)). Our interest in this joint venture is comparatively small, totaling 3.53%, but we have vigorously defended and otherwise sought resolution of these actions. We are the only builder joint venture partner to have fully performed its obligations with respect to takedowns of lots from the joint venture, having completed our first takedown in April 2007 and having tendered full performance of our second and final takedown in April 2008. The joint venture and the lender group rejected our tender of performance for our second and final takedown, and we contend, among other things, that the rejection by the joint venture and the lender group of our tender of full performance was wrongful and constituted a breach of contract and should release us of liability with respect to the takedown and extinguish or greatly reduce our exposure under all guarantees. Pursuant to the lenders’ request and stipulation of the parties, on January 23, 2012, the Court dismissed without prejudice all of the lenders’ claims against Meritage in this consolidated lawsuit. | |
On December 9, 2010, three of the lenders filed a petition seeking to place the venture into an involuntary bankruptcy (JP Morgan Chase Bank, N.A. v. South Edge, LLC (Case No. 10-32968-bam)). On June 6, 2011, we received a demand letter from the lenders, requesting full payment of $13.2 million, the lenders claimed to be owed under the springing repayment guarantee, including past due interest and penalties. The lenders claim that the involuntary bankruptcy filed by three of the co-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 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 most of the same issues addressed in the Ohio litigation (Case No. 2: 11-CV-01364-PMP). The Ohio and the Nevada actions have been consolidated into a single action. 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, and 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 prejudgment interest that accrued between December 6, 2012 and the date of the judgment. We immediately appealed the Court's rulings, which is still currently pending and on July 17, 2013 we posted a supersedeas bond in the amount of $16,050,604 staying enforcement of the judgment. 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 ruling on appeal which is currently pending. In addition, we believe that the four co-venturers in the South Edge entity (KB Home, Toll Brothers, Pardee Homes and Beazer Homes) 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 may be required to pay under the repayment guarantee. | |
In March 2012, Inspirada Builders, LLC, (an entity owned by the above named four co-venturers) as Estate Representative of bankrupt 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. There were two main demands against us contained in this filing. The first is a demand for $13.5 million, relating to alleged breaches of the Operating Agreement of South Edge, LLC, for not paying the amounts Meritage fully tendered but South Edge (at the direction of, or as a result of acts or of the failure to perform by, the above named co-venture members) rejected in 2008. The second demand was for $9.8 million relating to our supposed pro rata share of alleged future infrastructure improvement costs to be incurred by Inspirada Builders, LLC (which is the new owner of the project and which is owned by the four builders identified above) having purchased it through bankruptcy proceedings. The second demand was dismissed on June 27, 2013. The $13.5 million claim identified above represents the same alleged obligation that is the subject of the repayment guarantee litigation between us and JP Morgan that is described above. Meritage has filed a response to Inspirada Builders' arbitration claims denying liability, and we have asserted cross-claims against the four above-named co-venture builders for breach of contract, breach of the implied covenant of good faith and fair dealing, and indemnity. The balance of the parties' arbitration claims are currently pending but pursuant to a stipulation of the parties have been stayed pending resolution of our pending appeal of the Court's rulings in favor of JP Morgan in the federal court action. We do not believe there is any additional exposure to us related to this arbitration claim beyond that already disclosed and discussed above. |
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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, 2014. 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 prior year results to conform to current year presentation. | ||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. | ||||||||
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”) 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 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. An accrued liability to capture such obligations is recorded 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 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 smaller finished lot purchases 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 indication of a decline in value of our land and real estate assets exist. For those assets 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 land options and purchase contracts 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 our 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 $91.9 million and $95.0 million as of March 31, 2015 and December 31, 2014, respectively. | ||||||||
Goodwill | Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on at least an annual basis 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. ASC 350 states that an entity may assess qualitative factors first to determine whether it is necessary to perform a two-step goodwill impairment test. 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 and labor costs, 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. See Note 9 for additional information related to goodwill. | ||||||||
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 and lot positions, 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. In the normal course of business, we may acquire lots from various development entities pursuant to option and purchase agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators). See Note 3 for additional information on off-balance sheet arrangements. | |||||||||
Surety Bonds and Letters of Credit. We provide letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. 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 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. 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 one to two years 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 have estimated these reserves for the structural warranty based on the number of homes still under warranty and historical 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 is incomplete 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 March 31, | |||||||||
2015 | 2014 | ||||||||
Balance, beginning of period | $ | 22,080 | $ | 21,971 | |||||
Additions to reserve from new home deliveries | 2,628 | 2,276 | |||||||
Warranty claims | (2,869 | ) | (2,765 | ) | |||||
Adjustments to pre-existing reserves | — | — | |||||||
Balance, end of period | $ | 21,839 | $ | 21,482 | |||||
Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying unaudited 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, as unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, future costs could differ significantly from our estimates. | |||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In January 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-01, Income Statement - Extraordinary and Unusual Items ("ASU 2015-01"). ASU 2015-01 eliminates the concept of extraordinary items from GAAP but retains the presentation and disclosure guidance for items that are unusual in nature or occur infrequently and expands the guidance to include items that are both unusual and infrequently occurring. ASU 2015-01 is effective for us on January 1, 2016. A reporting entity may apply ASU 2015-01 prospectively or retrospectively to all periods presented in the financial statements. We do not anticipate the adoption of ASU 2015-01 will have a material effect on our consolidated financial statements. | ||||||||
In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis ("ASU 2015-02"). ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. ASU 2015-02 is effective for us beginning January 1, 2016. Early adoption is permitted. We do not anticipate the adoption of ASU 2015-02 will have a material effect on our consolidated financial statements. | |||||||||
In August 2014, the FASB issued 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. We do not anticipate the adoption of ASU 2014-15 will have a material effect on our consolidated financial statements or disclosures. | |||||||||
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 applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date which for us was January 1, 2015. The adoption of ASU 2014-08 did not have a material effect on our consolidation financial statements or disclosures. | |||||||||
Variable Interest Entities | Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into a purchase or option agreement to acquire land or lots from an entity, a variable interest entity, or “VIE”, may be created. We evaluate all option and purchase agreements for land to determine whether they are a VIE. ASC 810, Consolidation, 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.” The liabilities related to consolidated VIEs are excluded from our debt covenant calculations. | ||||||||
In order to determine if we are the primary beneficiary, we must first assess whether we have the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with Meritage; and the ability to change or amend the existing option contract with the VIE. If we are not determined to control such activities, we are not considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our analysis by determining if we are also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if we will benefit from a potentially significant amount of the VIE’s expected gains. | |||||||||
In substantially all cases, creditors of the entities with which we have option agreements 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 any budget savings or shortfalls are borne by us. Some of our option deposits may be refundable to us if certain contractual conditions are not performed by the party selling the lots. | |||||||||
Fair Value Disclosures | We account for non-recurring fair value measurements of our non-financial assets and liabilities in accordance with ASC 820-10 Fair Value Measurement. 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. Except as discussed in Note 1, we do not value any other non-financial assets at fair value. | |||||||||
Income Tax Policy | In accordance with ASC 740-10, Income Taxes ("ASC 740"), we determine our deferred tax assets and liabilities by taxing jurisdiction. We evaluate our deferred tax assets, including the benefit from 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, experiences with operating losses and experiences of utilizing tax credit carryforwards and tax planning alternatives. | ||||||||
Segment Reporting | 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. The homebuilding 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 a reporting segment based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows: | ||||||||
West: Arizona, California and Colorado | |||||||||
Central: Texas | |||||||||
East: Florida, Georgia, North Carolina, South Carolina and Tennessee | |||||||||
Management’s evaluation of 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, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” 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. |
Organization_and_Basis_of_Pres2
Organization and Basis of Presentation (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
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 March 31, 2015 | At December 31, 2014 | ||||||||||||||||
Outstanding | Estimated work | Outstanding | Estimated work | ||||||||||||||
remaining to | remaining to | ||||||||||||||||
complete | complete | ||||||||||||||||
Sureties: | |||||||||||||||||
Sureties related to joint ventures | $ | 87 | $ | 87 | $ | 87 | $ | 87 | |||||||||
Sureties related to owned projects and lots under contract | 249,367 | 101,669 | 230,079 | 93,667 | |||||||||||||
Total Sureties | $ | 249,454 | $ | 101,756 | $ | 230,166 | $ | 93,754 | |||||||||
Letters of Credit (“LOCs”): | |||||||||||||||||
LOCs in lieu of deposits for contracted lots | $ | 1,200 | N/A | $ | 1,200 | N/A | |||||||||||
LOCs for land development | 14,012 | N/A | 13,789 | N/A | |||||||||||||
LOCs for general corporate operations | 4,500 | N/A | 4,500 | N/A | |||||||||||||
Total LOCs | $ | 19,712 | N/A | $ | 19,489 | N/A | |||||||||||
Accrued liabilities | Accrued liabilities at March 31, 2015 and December 31, 2014 consisted of the following (in thousands): | ||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||
Accruals related to real estate development and construction activities | $ | 29,693 | $ | 29,365 | |||||||||||||
Payroll and other benefits | 25,810 | 44,107 | |||||||||||||||
Accrued taxes | 10,352 | 11,096 | |||||||||||||||
Warranty reserves | 21,839 | 22,080 | |||||||||||||||
Legal reserves | 15,109 | 16,499 | |||||||||||||||
Other accruals | 38,372 | 30,997 | |||||||||||||||
Total | $ | 141,175 | $ | 154,144 | |||||||||||||
Warranty reserves | A summary of changes in our warranty reserves follows (in thousands): | ||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Balance, beginning of period | $ | 22,080 | $ | 21,971 | |||||||||||||
Additions to reserve from new home deliveries | 2,628 | 2,276 | |||||||||||||||
Warranty claims | (2,869 | ) | (2,765 | ) | |||||||||||||
Adjustments to pre-existing reserves | — | — | |||||||||||||||
Balance, end of period | $ | 21,839 | $ | 21,482 | |||||||||||||
Real_Estate_and_Capitalized_In1
Real Estate and Capitalized Interest (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Real estate properties | Real estate consists of the following (in thousands): | ||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Homes under contract under construction (1) | $ | 419,324 | $ | 328,931 | |||||
Unsold homes, completed and under construction (1) | 251,840 | 302,288 | |||||||
Model homes (1) | 111,304 | 109,614 | |||||||
Finished home sites and home sites under development (2) | 1,160,587 | 1,136,849 | |||||||
$ | 1,943,055 | $ | 1,877,682 | ||||||
(1) Includes the allocated land and land development costs associated with each lot for these homes. | |||||||||
-2 | Includes raw land, 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 March 31, | |||||||||
2015 | 2014 | ||||||||
Capitalized interest, beginning of period | $ | 54,060 | $ | 32,992 | |||||
Interest incurred | 15,282 | 14,256 | |||||||
Interest expensed | (3,154 | ) | (2,713 | ) | |||||
Interest amortized to cost of home and land closings | (9,345 | ) | (5,834 | ) | |||||
Capitalized interest, end of period (1) | $ | 56,843 | $ | 38,701 | |||||
-1 | Approximately $490,000 of the capitalized interest is related to our joint venture investments and is a component of “Investments in unconsolidated entities” in our consolidated balance sheet as of March 31, 2015 and December 31, 2014. |
Variable_Interest_Entities_and1
Variable Interest Entities and Consolidated Real Estate Not Owned (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
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 at March 31, 2015 (dollars in thousands): | |||||||||||||
Projected Number | Purchase | Option/ | ||||||||||||
of Lots | Price | Earnest Money | ||||||||||||
Deposits–Cash | ||||||||||||||
Purchase and option contracts recorded on balance sheet as Real estate not owned | — | $ | — | $ | — | |||||||||
Option contracts not recorded on balance sheet — non-refundable deposits, committed (1) | 7,101 | 581,670 | 77,991 | |||||||||||
Purchase contracts not recorded on balance sheet — non-refundable deposits, committed (1) | 2,646 | 118,193 | 10,560 | |||||||||||
Purchase contracts not recorded on balance sheet —refundable deposits, committed | 109 | 4,611 | 329 | |||||||||||
Total committed (on and off balance sheet) | 9,856 | 704,474 | 88,880 | |||||||||||
Total purchase and option contracts not recorded on balance sheet — refundable deposits, uncommitted (2) | 4,119 | 201,031 | 3,042 | |||||||||||
Total lots under contract or option | 13,975 | $ | 905,505 | $ | 91,922 | |||||||||
Total option contracts not recorded on balance sheet (3) | 13,975 | $ | 905,505 | $ | 91,922 | -4 | ||||||||
-1 | Deposits are non-refundable except if certain contractual conditions 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 contracts recorded on our balance sheet as Real estate not owned, if any, 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 March 31, 2015. |
Investments_in_Unconsolidated_1
Investments in Unconsolidated Entities (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||
Equity Method Investments | Summarized condensed financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): | |||||||
At March 31, 2015 | At December 31, 2014 | |||||||
Assets: | ||||||||
Cash | $ | 5,284 | $ | 6,471 | ||||
Real estate | 34,437 | 34,435 | ||||||
Other assets | 3,239 | 2,990 | ||||||
Total assets | $ | 42,960 | $ | 43,896 | ||||
Liabilities and equity: | ||||||||
Accounts payable and other liabilities | $ | 5,186 | $ | 5,994 | ||||
Notes and mortgages payable | 13,345 | 13,346 | ||||||
Equity of: | ||||||||
Meritage (1) | 7,970 | 7,735 | ||||||
Other | 16,459 | 16,821 | ||||||
Total liabilities and equity | $ | 42,960 | $ | 43,896 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 6,741 | $ | 5,309 | ||||
Costs and expenses | (3,195 | ) | (2,753 | ) | ||||
Net earnings of unconsolidated entities | $ | 3,546 | $ | 2,556 | ||||
Meritage’s share of pre-tax earnings (1) (2) | $ | 2,421 | $ | 2,032 | ||||
-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) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) 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. |
Loans_Payable_and_Other_Borrow1
Loans Payable and Other Borrowings (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Loans Payable and Other Borrowings [Abstract] | |||||||||
Loans payable and other borrowings | Loans payable and other borrowings consist of the following (in thousands): | ||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
Other borrowings, real estate note payable (1) | $ | 34,406 | $ | 30,722 | |||||
$500 million unsecured revolving credit facility, maturing June 2018, with interest approximating LIBOR (approximately 0.18% at March 31, 2015) plus 2.25% or Prime (3.25% at March 31, 2015) plus 1.25% | 27,000 | — | |||||||
Total | $ | 61,406 | $ | 30,722 | |||||
(1) Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 6%. | |||||||||
Senior and convertible senior notes consist of the following (in thousands): | |||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 175,000 | |||||
7.15% senior notes due 2020. At March 31, 2015 and December 31, 2014 there was approximately $2,844 and $2,986 in net unamortized premium, respectively | 302,844 | 302,986 | |||||||
7.00% senior notes due 2022 | 300,000 | 300,000 | |||||||
1.875% convertible senior notes due 2032 | 126,500 | 126,500 | |||||||
Total | $ | 904,344 | $ | 904,486 | |||||
Senior_and_Convertible_Senior_1
Senior and Convertible Senior Notes (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Components of senior and senior subordinated notes | Loans payable and other borrowings consist of the following (in thousands): | ||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
Other borrowings, real estate note payable (1) | $ | 34,406 | $ | 30,722 | |||||
$500 million unsecured revolving credit facility, maturing June 2018, with interest approximating LIBOR (approximately 0.18% at March 31, 2015) plus 2.25% or Prime (3.25% at March 31, 2015) plus 1.25% | 27,000 | — | |||||||
Total | $ | 61,406 | $ | 30,722 | |||||
(1) Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 6%. | |||||||||
Senior and convertible senior notes consist of the following (in thousands): | |||||||||
At March 31, 2015 | At December 31, 2014 | ||||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 175,000 | |||||
7.15% senior notes due 2020. At March 31, 2015 and December 31, 2014 there was approximately $2,844 and $2,986 in net unamortized premium, respectively | 302,844 | 302,986 | |||||||
7.00% senior notes due 2022 | 300,000 | 300,000 | |||||||
1.875% convertible senior notes due 2032 | 126,500 | 126,500 | |||||||
Total | $ | 904,344 | $ | 904,486 | |||||
Fair_Value_Disclosures_Tables
Fair Value Disclosures (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||
Fair value of our fixed-rate debt | Financial Instruments: The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (level 2 inputs as per the discussion above) and is as follows (in thousands): | |||||||||||||||||
31-Mar-15 | 31-Dec-14 | |||||||||||||||||
Aggregate | Estimated Fair | Aggregate | Estimated Fair | |||||||||||||||
Principal | Value | Principal | Value | |||||||||||||||
4.50% senior notes due 2018 | $ | 175,000 | $ | 177,625 | $ | 175,000 | $ | 175,000 | ||||||||||
7.15% senior notes | $ | 300,000 | $ | 322,500 | $ | 300,000 | $ | 322,500 | ||||||||||
7.00% senior notes | $ | 300,000 | $ | 320,250 | $ | 300,000 | $ | 318,000 | ||||||||||
1.875% convertible senior notes | $ | 126,500 | $ | 134,564 | $ | 126,500 | $ | 124,444 | ||||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Basic and diluted earnings per common share | Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts): | ||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Basic weighted average number of shares outstanding | 39,390 | 38,687 | |||||||
Effect of dilutive securities: | |||||||||
Convertible debt (1) | 2,176 | 2,176 | |||||||
Stock options and unvested restricted stock | 382 | 445 | |||||||
Diluted average shares outstanding | 41,948 | 41,308 | |||||||
Net earnings as reported | $ | 16,400 | $ | 25,377 | |||||
Interest attributable to convertible senior notes, net of income taxes | 385 | 379 | |||||||
Net earnings for diluted earnings per share | $ | 16,785 | $ | 25,756 | |||||
Basic earnings per share | $ | 0.42 | $ | 0.66 | |||||
Diluted earnings per share (1) | $ | 0.4 | $ | 0.62 | |||||
Antidilutive stock options not included in the calculation of diluted earnings per share | 7 | — | |||||||
-1 | In accordance with ASC 260-10, Earnings Per Share, ("ASC 260-10") we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Acquisitions_and_Goodwill_Tabl
Acquisitions and Goodwill (Tables) | 3 Months Ended | |||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||
Schedule of Goodwill | A summary of the carrying amount of goodwill follows (in thousands): | |||||||||||||||||||||||
West | Central | East | Financial Services | Corporate | Total | |||||||||||||||||||
Balance at December 31, 2014 | — | — | 32,962 | — | — | 32,962 | ||||||||||||||||||
Additions | — | — | — | — | — | — | ||||||||||||||||||
Impairments | — | — | — | — | — | — | ||||||||||||||||||
Balance at March 31, 2015 | $ | — | $ | — | $ | 32,962 | $ | — | $ | — | $ | 32,962 | ||||||||||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||
Schedule of Stockholders Equity | A summary of changes in shareholders’ equity is presented below (dollars in thousands): | |||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Number of | Common | Additional | Retained | Total | ||||||||||||||||
Shares | Stock | Paid-In | Earnings | |||||||||||||||||
Capital | ||||||||||||||||||||
Balance at December 31, 2014 | 39,147 | $ | 391 | $ | 538,788 | $ | 570,310 | $ | 1,109,489 | |||||||||||
Net earnings | — | — | — | 16,400 | 16,400 | |||||||||||||||
Exercise/vesting of equity awards | 470 | 5 | 2,829 | — | 2,834 | |||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 1,935 | — | 1,935 | |||||||||||||||
Equity award compensation expense | — | — | 4,630 | — | 4,630 | |||||||||||||||
Balance at March 31, 2015 | 39,617 | $ | 396 | $ | 548,182 | $ | 586,710 | $ | 1,135,288 | |||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
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 | — | — | — | 25,377 | 25,377 | |||||||||||||||
Exercise/vesting of equity awards | 340 | 4 | 703 | — | 707 | |||||||||||||||
Excess income tax benefit from stock-based awards | — | — | 2,275 | — | 2,275 | |||||||||||||||
Equity award compensation expense | — | — | 2,411 | — | 2,411 | |||||||||||||||
Issuance of stock (1) | 2,530 | 25 | 110,407 | — | 110,432 | |||||||||||||||
Balance at March 31, 2014 | 39,114 | $ | 391 | $ | 528,757 | $ | 453,446 | $ | 982,594 | |||||||||||
(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. |
Stock_Based_and_Deferred_Compe1
Stock Based and Deferred Compensation (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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 (in thousands): | ||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Stock-based compensation expense | $ | 4,630 | $ | 2,411 | |||||
Non-vested shares granted | 388,787 | 355,283 | |||||||
Performance-based non-vested shares granted | 66,187 | 52,083 | |||||||
Stock options exercised | 143,440 | 40,245 | |||||||
Restricted stock awards vested (includes performance-based awards) | 326,070 | 300,170 | |||||||
Summary of stock based compensation agreements | The following table includes additional information regarding our Plan (dollars in thousands): | ||||||||
As of | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Unrecognized stock-based compensation cost | $ | 31,410 | $ | 20,577 | |||||
Weighted average years expense recognition period | 2.91 | 2.11 | |||||||
Total equity awards outstanding (1) | 1,203,218 | 1,255,714 | |||||||
(1) Includes options outstanding and unvested restricted stock and performance-based awards and restricted stock units. |
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Components of income tax provision | Components of the income tax provision are as follows (in thousands): | ||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Federal | $ | 8,093 | $ | 12,882 | |||||
State, net of federal benefit | 804 | 1,499 | |||||||
Total | $ | 8,897 | $ | 14,381 | |||||
Supplemental_Disclosure_of_Cas1
Supplemental Disclosure of Cash Flow Information (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||
Supplemental cash flow information | The following table presents certain supplemental cash flow information (in thousands): | |||||||||
Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Cash paid during the period for: | ||||||||||
Interest, net of interest capitalized | $ | (5,995 | ) | $ | 4,081 | |||||
Income taxes | $ | 8,710 | $ | 17,190 | ||||||
Non-cash operating activities: | ||||||||||
Real estate not owned decrease | $ | (4,999 | ) | $ | (241 | ) | ||||
Real estate acquired through notes payable | $ | 6,701 | $ | 116 | ||||||
Operating_and_Reporting_Segmen1
Operating and Reporting Segments (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||
Segment information on operating results | The following segment information is in thousands: | ||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||||
Homebuilding revenue (1): | |||||||||||||||||||||||||
West | $ | 206,878 | $ | 192,681 | |||||||||||||||||||||
Central | 154,026 | 119,715 | |||||||||||||||||||||||
East | 157,808 | 95,949 | |||||||||||||||||||||||
Consolidated total | 518,712 | 408,345 | |||||||||||||||||||||||
Homebuilding segment operating income: | |||||||||||||||||||||||||
West | 14,197 | 24,810 | |||||||||||||||||||||||
Central | 14,105 | 9,469 | |||||||||||||||||||||||
East | 5,619 | 10,664 | |||||||||||||||||||||||
Total homebuilding segment operating income | 33,921 | 44,943 | |||||||||||||||||||||||
Financial services segment profit | 3,780 | 3,025 | |||||||||||||||||||||||
Corporate and unallocated costs (2) | (9,542 | ) | (5,976 | ) | |||||||||||||||||||||
Loss from unconsolidated entities, net | (123 | ) | (169 | ) | |||||||||||||||||||||
Interest expense | (3,154 | ) | (2,713 | ) | |||||||||||||||||||||
Other income/(loss), net | 415 | 648 | |||||||||||||||||||||||
Net earnings before income taxes | $ | 25,297 | $ | 39,758 | |||||||||||||||||||||
-1 | Homebuilding revenue includes the following land closing revenue, by segment as outlined in the table below. | ||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||||
Land closing revenue: | |||||||||||||||||||||||||
West | $ | — | $ | 1,050 | |||||||||||||||||||||
Central | 1,439 | 1,516 | |||||||||||||||||||||||
East | — | — | |||||||||||||||||||||||
Total | $ | 1,439 | $ | 2,566 | |||||||||||||||||||||
-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 reporting segments. | ||||||||||||||||||||||||
Total assets from segment | |||||||||||||||||||||||||
At March 31, 2015 | |||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | ||||||||||||||||||||
Unallocated | |||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 30,680 | $ | 31,706 | $ | 29,536 | $ | — | $ | — | $ | 91,922 | |||||||||||||
Real estate | 972,589 | 467,929 | 502,537 | — | — | 1,943,055 | |||||||||||||||||||
Investments in unconsolidated entities | 205 | 8,541 | — | — | 1,525 | 10,271 | |||||||||||||||||||
Other assets | 49,177 | 69,472 | -1 | 70,089 | -2 | 2,164 | 130,308 | -3 | 321,210 | ||||||||||||||||
Total assets | $ | 1,052,651 | $ | 577,648 | $ | 602,162 | $ | 2,164 | $ | 131,833 | $ | 2,366,458 | |||||||||||||
At December 31, 2014 | |||||||||||||||||||||||||
West | Central | East | Financial Services | Corporate and | Total | ||||||||||||||||||||
Unallocated | |||||||||||||||||||||||||
Deposits on real estate under option or contract | $ | 34,622 | $ | 31,317 | $ | 29,050 | $ | — | $ | — | $ | 94,989 | |||||||||||||
Real estate | 943,600 | 446,208 | 487,874 | — | — | 1,877,682 | |||||||||||||||||||
Investments in unconsolidated entities | 204 | 8,561 | — | — | 2,015 | 10,780 | |||||||||||||||||||
Other assets | 48,120 | 80,689 | -1 | 70,036 | -2 | 958 | 132,884 | -3 | 332,687 | ||||||||||||||||
Total assets | $ | 1,026,546 | $ | 566,775 | $ | 586,960 | $ | 958 | $ | 134,899 | $ | 2,316,138 | |||||||||||||
-1 | Balance consists primarily of development reimbursements from local municipalities and cash. | ||||||||||||||||||||||||
-2 | Balance consists primarily of goodwill (see Note 9) and cash. | ||||||||||||||||||||||||
-3 | 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 $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Letter of credit and surety bond obligations | ||
Surety Bonds, Outstanding | $249,454 | $230,166 |
Surety bonds, Estimated work remaining to complete | 101,756 | 93,754 |
Letters of Credit (“LOCsâ€): | ||
Letters of Credit (LOC's) | 19,712 | 19,489 |
Sureties related to joint ventures [Member] | ||
Letter of credit and surety bond obligations | ||
Surety Bonds, Outstanding | 87 | 87 |
Surety bonds, Estimated work remaining to complete | 87 | 87 |
Sureties related to owned projects and lots under contract [Member] | ||
Letter of credit and surety bond obligations | ||
Surety Bonds, Outstanding | 249,367 | 230,079 |
Surety bonds, Estimated work remaining to complete | 101,669 | 93,667 |
Letter of Credit in lieu of deposit for contracted lots [Member] | ||
Letters of Credit (“LOCsâ€): | ||
Letters of Credit (LOC's) | 1,200 | 1,200 |
LOCs for land development [Member] | ||
Letters of Credit (“LOCsâ€): | ||
Letters of Credit (LOC's) | 14,012 | 13,789 |
LOCs for general corporate operations [Member] | ||
Letters of Credit (“LOCsâ€): | ||
Letters of Credit (LOC's) | $4,500 | $4,500 |
Organization_and_Basis_of_Pres4
Organization and Basis of Presentation (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||||
Accrued Liabilities | ||||
Accruals related to real estate development and construction activities | $29,693 | $29,365 | ||
Payroll and other benefits | 25,810 | 44,107 | ||
Accrued taxes | 10,352 | 11,096 | ||
Warranty reserves | 21,839 | 22,080 | 21,482 | 21,971 |
Legal reserves | 15,109 | 16,499 | ||
Other accruals | 38,372 | 30,997 | ||
Total | $141,175 | $154,144 |
Organization_and_Basis_of_Pres5
Organization and Basis of Presentation (Details 3) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Warranty Reserves | ||
Balance, beginning of period | $22,080 | $21,971 |
Additions to reserve from new home deliveries | 2,628 | 2,276 |
Warranty claims | -2,869 | -2,765 |
Adjustments to pre-existing reserves | 0 | 0 |
Balance, end of period | $21,839 | $21,482 |
Organization_and_Basis_of_Pres6
Organization and Basis of Presentation (Details Textual) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | ||
Organization and Presentation [Line Items] | |||
Entity operations in number of regions | 3 | ||
Number of states in regions | 9 | ||
Number of communities in which homes are sold | 229 | ||
Amounts in transit from title companies for home closings | $49,600,000 | $59,200,000 | |
Money Market Funds, at Carrying Value | 200,000 | ||
Deposits on real estate under option or contract | 91,922,000 | [1] | 94,989,000 |
Minimum [Member] | |||
Organization and Presentation [Line Items] | |||
Base price per house for sale range | 130,000 | ||
Community life cycle range (in years) | 3 years | ||
Maximum [Member] | |||
Organization and Presentation [Line Items] | |||
Base price per house for sale range | $1,270,000 | ||
Community life cycle range (in years) | 5 years | ||
Non-Structural Items [Member] | Minimum [Member] | |||
Organization and Presentation [Line Items] | |||
Warranty period following home closings | 1 year | ||
Non-Structural Items [Member] | Maximum [Member] | |||
Organization and Presentation [Line Items] | |||
Warranty period following home closings | 2 years | ||
Structural [Member] | Maximum [Member] | |||
Organization and Presentation [Line Items] | |||
Warranty period following home closings | 10 years | ||
[1] | Amount is reflected in our consolidated balance sheet in the line item “Deposits on real estate under option or contract†as of March 31, 2015. |
Real_Estate_and_Capitalized_In2
Real Estate and Capitalized Interest (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Real Estate Properties | ||||
Finished home sites and home sites under development | $1,160,587 | [1] | $1,136,849 | [1] |
Real estate | 1,943,055 | 1,877,682 | ||
Homes under contract [Member] | ||||
Real Estate Properties | ||||
Homes under contract under construction | 419,324 | [2] | 328,931 | [2] |
Speculative homes not under contract [Member] | ||||
Real Estate Properties | ||||
Homes under contract under construction | 251,840 | [2] | 302,288 | [2] |
Model homes [Member] | ||||
Real Estate Properties | ||||
Homes under contract under construction | $111,304 | [2] | $109,614 | [2] |
[1] | Includes raw land, 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 2) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | ||
Summary of capitalized interest | |||||
Capitalized interest, beginning of period | $54,060 | $32,992 | |||
Interest incurred | 15,282 | 14,256 | |||
Interest expensed | -3,154 | -2,713 | |||
Interest amortized to cost of home and land closings | -9,345 | -5,834 | |||
Capitalized interest, end of period | 56,843 | [1] | 38,701 | [1] | |
Equity Method Land Ventures [Member] | |||||
Summary of capitalized interest | |||||
Capitalized interest, beginning of period | 490 | ||||
Capitalized interest, end of period | $490 | $490 | |||
[1] | Approximately $490,000 of the capitalized interest is related to our joint venture investments and is a component of “Investments in unconsolidated entities†in our consolidated balance sheet as of March 31, 2015 and December 31, 2014. |
Variable_Interest_Entities_and2
Variable Interest Entities and Consolidated Real Estate Not Owned (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | |
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 | 0 | ||
Purchase Price of Option contracts recorded on balance sheet as Real estate not owned | $0 | $4,999 | |
Option/Earnest money Deposits Cash Option contracts recorded on balance sheet as Real estate not owned | 0 | ||
Number of lots not recorded | 13,975 | [1] | |
Purchase price not recorded | 905,505 | [1] | |
Option/Earnest Money Deposits Cash | 91,922 | [2] | 94,989 |
Number of lots recorded and unrecorded | 13,975 | ||
Purchase Price recorded and unrecorded | 905,505 | ||
Option/Earnest Money Deposits Cash recorded and unrecorded | 91,922 | ||
Option Contracts Not Recorded On Balance Sheet Non Refundable Deposits Committed [Member] | |||
Summary of lots under option or contract | |||
Number of lots not recorded | 7,101 | [3] | |
Purchase price not recorded | 581,670 | [3] | |
Option/Earnest Money Deposits Cash | 77,991 | [3] | |
Purchase Contracts Not Recorded On Balance Sheet Non Refundable Deposits Committed [Member] | |||
Summary of lots under option or contract | |||
Number of lots not recorded | 2,646 | [3] | |
Purchase price not recorded | 118,193 | [3] | |
Option/Earnest Money Deposits Cash | 10,560 | [3] | |
Purchase Contracts not recorded on balance sheet Refundable Deposits Committed [Member] | |||
Summary of lots under option or contract | |||
Number of lots not recorded | 109 | ||
Purchase price not recorded | 4,611 | ||
Option/Earnest Money Deposits Cash | 329 | ||
Total committed (on and off balance sheet) [Member] | |||
Summary of lots under option or contract | |||
Number of lots recorded and unrecorded | 9,856 | ||
Purchase Price recorded and unrecorded | 704,474 | ||
Option/Earnest Money Deposits Cash recorded and unrecorded | 88,880 | ||
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 | 4,119 | [4] | |
Purchase price not recorded | 201,031 | [4] | |
Option/Earnest Money Deposits Cash | $3,042 | [4] | |
[1] | Except for our specific performance contracts recorded on our balance sheet as Real estate not owned, if any, 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 March 31, 2015. | ||
[3] | Deposits are non-refundable except if certain contractual conditions 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 $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Assets: | ||||
Cash | $5,284 | $6,471 | ||
Real estate | 34,437 | 34,435 | ||
Other assets | 3,239 | 2,990 | ||
Total assets | 42,960 | 43,896 | ||
Liabilities and equity: | ||||
Accounts payable and other liabilities | 5,186 | 5,994 | ||
Notes and mortgages payable | 13,345 | 13,346 | ||
Total liabilities and equity | 42,960 | 43,896 | ||
Meritage Homes [Member] | ||||
Liabilities and equity: | ||||
Equity | 7,970 | [1] | 7,735 | [1] |
JV Partners [Member] | ||||
Liabilities and equity: | ||||
Equity | $16,459 | $16,821 | ||
[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) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) 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_3
Investments in Unconsolidated Entities (Details 2) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Financial information related to unconsolidated joint ventures, Operations | ||||
Revenue | $6,741 | $5,309 | ||
Costs and expenses | -3,195 | -2,753 | ||
Net earnings of unconsolidated entities | 3,546 | 2,556 | ||
Meritage's share of pre-tax earnings | $2,421 | [1],[2] | $2,032 | [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) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) 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. |
Investments_in_Unconsolidated_4
Investments in Unconsolidated Entities (Details Textual) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated entities | $10,271,000 | $10,780,000 |
South Edge Guarantee [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Guarantor Obligations, Maximum Exposure, Undiscounted | 13,200,000 | |
Equity method land ventures [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | 2 | |
Mortgage joint ventures | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | 1 | |
Investments in unconsolidated entities | $1,500,000 | $2,000,000 |
Loans_Payable_and_Other_Borrow2
Loans Payable and Other Borrowings (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | ||
Line of Credit Facility [Line Items] | ||||
Loans payable and other borrowings | $61,406 | $30,722 | ||
Line of Credit Facility, Interest Rate Description | $500 million unsecured revolving credit facility, maturing June 2018, with interest approximating LIBOR (approximately 0.18% at March 31, 2015) plus 2.25% or Prime (3.25% at March 31, 2015) plus 1.25% | |||
Notes Payable, Other Payables [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Long-term Debt | 34,406 | [1] | 30,722 | [1] |
Line of Credit [Member] | Revolving Credit Facility [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Long-term Debt | $27,000 | $0 | ||
[1] | Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 6%. |
Loans_Payable_and_Other_Borrow3
Loans Payable and Other Borrowings Details Textual (Details) (USD $) | 3 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2014 | Jul. 31, 2012 | |||
Line of Credit Facility [Line Items] | |||||
Proceeds from Long-term Lines of Credit | $100,000,000 | ||||
Letters of Credit Outstanding, Amount | 19,712,000 | 19,489,000 | |||
Line of Credit Facility, Remaining Borrowing Capacity | 453,300,000 | ||||
Notes Payable, Other Payables [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum | 0.00% | ||||
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum | 6.00% | ||||
Long-term Debt | 34,406,000 | [1] | 30,722,000 | [1] | |
Letter of Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | 200,000,000 | ||||
Revolving Credit Facility [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | 500,000,000 | 400,000,000 | 125,000,000 | ||
Minimum Tangible Net Worth | 670,300,000 | ||||
Leverage ratio (as a percentage) | 60.00% | ||||
Interest Coverage Ratio | 1.5 | ||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Description of Variable Rate Basis | LIBOR | ||||
Debt Instrument, Base Rate | 0.18% | ||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | ||||
Revolving Credit Facility [Member] | Prime Rate [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Description of Variable Rate Basis | Prime | ||||
Debt Instrument, Base Rate | 3.25% | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | ||||
Revolving Credit Facility [Member] | Line of Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Long-term Debt | $27,000,000 | $0 | |||
[1] | Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 6%. |
Senior_and_Convertible_Senior_2
Senior and Convertible Senior Notes (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Senior Notes | $904,344 | $904,486 |
Senior Notes [Member] | 4.50% senior notes due 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 175,000 | 175,000 |
Debt instrument, stated rate | 4.50% | 4.50% |
Senior Notes [Member] | 7.15% senior notes due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 302,844 | 302,986 |
Debt instrument, stated rate | 7.15% | 7.15% |
Debt Instrument, Unamortized Premium | 2,844 | 2,986 |
Senior Notes [Member] | 7.00% senior notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 300,000 | 300,000 |
Debt instrument, stated rate | 7.00% | 7.00% |
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $126,500 | $126,500 |
Debt instrument, stated rate | 1.88% | 1.88% |
Debt instrument, convertible, conversion ratio | 0.0171985 |
Senior_and_Convertible_Senior_3
Senior and Convertible Senior Notes (Details Textual) (Senior Notes [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
4.50% senior notes due 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated rate | 4.50% | 4.50% |
7.15% senior notes due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated rate | 7.15% | 7.15% |
7.00% senior notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated rate | 7.00% | 7.00% |
1.875% convertible senior notes due 2032 [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated rate | 1.88% | 1.88% |
Debt instrument, convertible, conversion price | 58.14 | |
Conversion premium | 47.50% |
Fair_Value_Disclosures_Details
Fair Value Disclosures (Details) (Senior Notes [Member], Level 2 [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
4.50% senior notes due 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal | $175,000,000 | $175,000,000 |
Fair value of fixed-rate debt | ||
Estimated Fair Value | 177,625,000 | 175,000,000 |
7.15% senior notes due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal | 300,000,000 | 300,000,000 |
Fair value of fixed-rate debt | ||
Estimated Fair Value | 322,500,000 | 322,500,000 |
7.00% senior notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal | 300,000,000 | 300,000,000 |
Fair value of fixed-rate debt | ||
Estimated Fair Value | 320,250,000 | 318,000,000 |
1.875% convertible senior notes due 2032 [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal | 126,500,000 | 126,500,000 |
Fair value of fixed-rate debt | ||
Estimated Fair Value | $134,564,000 | $124,444,000 |
Fair_Value_Disclosures_Details1
Fair Value Disclosures (Details Textual) (Senior Notes [Member]) | Mar. 31, 2015 | Dec. 31, 2014 |
4.50% senior notes due 2018 [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 | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Basic and Diluted (Loss)/Earnings Per Common Share | ||||
Basic weighted average number of shares outstanding | 39,390 | 38,687 | ||
Effect of dilutive securities: | ||||
Convertible debt | 2,176 | [1] | 2,176 | [1] |
Stock options and unvested restricted stock | 382 | 445 | ||
Diluted average shares outstanding | 41,948 | 41,308 | ||
Net earnings as reported | $16,400 | $25,377 | ||
Interest attributable to convertible senior notes, net of income taxes | 385 | 379 | ||
Net earnings for diluted earnings per share | $16,785 | $25,756 | ||
Basic earnings per share (in dollars per share) | $0.42 | $0.66 | ||
Diluted earnings per share (in dollars per share) | $0.40 | [1] | $0.62 | [1] |
Antidilutive stock options not included in the calculation of diluted earnings per share | 7 | 0 | ||
[1] | In accordance with ASC 260-10, Earnings Per Share, ("ASC 260-10") we calculate the dilutive effect of convertible securities using the "if-converted" method. |
Acquisitions_and_Goodwill_Deta
Acquisitions and Goodwill (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $32,962 |
Additions | 0 |
Impairments | 0 |
Goodwill, ending balance | 32,962 |
Operating Segments [Member] | Financial Services [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Additions | 0 |
Impairments | 0 |
Goodwill, ending balance | 0 |
Operating Segments [Member] | Homebuilding [Member] | Reportable Subsegments [Member] | Homebuilding, West Region [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Additions | 0 |
Impairments | 0 |
Goodwill, ending balance | 0 |
Operating Segments [Member] | Homebuilding [Member] | Reportable Subsegments [Member] | Homebuilding, Central Region [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Additions | 0 |
Impairments | 0 |
Goodwill, ending balance | 0 |
Operating Segments [Member] | Homebuilding [Member] | Reportable Subsegments [Member] | Homebuilding, East Region [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 32,962 |
Additions | 0 |
Impairments | 0 |
Goodwill, ending balance | 32,962 |
Corporate, Non-Segment [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Additions | 0 |
Impairments | 0 |
Goodwill, ending balance | $0 |
Acquisitions_and_Goodwill_Deta1
Acquisitions and Goodwill - Details Textual (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2013 | Dec. 31, 2014 | Mar. 31, 2015 | Aug. 01, 2014 | |
Goodwill [Line Items] | ||||
Additions | $32,962,000 | $32,962,000 | ||
Nashville Acquisition [Member] | ||||
Goodwill [Line Items] | ||||
Cash Paid for Acquisitions | 18,600,000 | |||
Additions | 10,200,000 | |||
Remaining basis of other assets and liabilities after goodwill, almost entirely comprised of acquired inventory | 8,400,000 | |||
Legendary Communities Acquisition [Member] | ||||
Goodwill [Line Items] | ||||
Cash Paid for Acquisitions | 130,700,000 | |||
Additions | 22,700,000 | |||
Remaining basis of other assets and liabilities after goodwill, almost entirely comprised of acquired inventory | $108,000,000 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 3 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Jan. 31, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Balance, shares | 39,147,153 | 2,530,000 | |||
Balance | $1,109,489 | $841,392 | |||
Net earnings | 16,400 | 25,377 | |||
Exercise/vesting of equity awards, value | 2,834 | 707 | |||
Excess income tax benefit from stock-based awards | 1,935 | 2,275 | |||
Equity award compensation expense | 4,630 | 2,411 | |||
Issuance of stock, value | 110,432 | [1] | |||
Balance, shares | 39,616,663 | 2,530,000 | |||
Balance | 1,135,288 | 982,594 | |||
Common stock, shares issued | 39,616,663 | 2,530,000 | |||
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 | ||
Sale of stock, price per share (in dollars per share) | $45.75 | ||||
Common Stock [Member] | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Balance, shares | 39,147,000 | 36,244,000 | |||
Balance | 391 | 362 | |||
Exercise/vesting of equity awards, shares | 470,000 | 340,000 | |||
Exercise/vesting of equity awards, value | 5 | 4 | |||
Issuance of stock, shares | 2,530,000 | [1] | |||
Issuance of stock, value | 25 | [1] | |||
Balance, shares | 39,617,000 | 39,114,000 | |||
Balance | 396 | 391 | |||
Common stock, shares issued | 39,617,000 | 39,114,000 | |||
Additional Paid-in Capital [Member] | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Balance | 538,788 | 412,961 | |||
Exercise/vesting of equity awards, value | 2,829 | 703 | |||
Excess income tax benefit from stock-based awards | 1,935 | 2,275 | |||
Equity award compensation expense | 4,630 | 2,411 | |||
Issuance of stock, value | 110,407 | [1] | |||
Balance | 548,182 | 528,757 | |||
Retained Earnings [Member] | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Balance | 570,310 | 428,069 | |||
Net earnings | 16,400 | 25,377 | |||
Balance | $586,710 | $453,446 | |||
[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. |
Stock_Based_and_Deferred_Compe2
Stock Based and Deferred Compensation (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Summary of compensation expense and stock award activity | ||
Stock-based compensation expense | $4,630 | $2,411 |
Stock options exercised | 143,440 | 40,245 |
Restricted Stock [Member] | ||
Summary of compensation expense and stock award activity | ||
Restricted stock awards vested (includes performance-based awards) | 326,070 | 300,170 |
Time Based Restricted Stock [Member] | ||
Summary of compensation expense and stock award activity | ||
Non-vested shares granted | 388,787 | 355,283 |
Performance Shares [Member] | ||
Summary of compensation expense and stock award activity | ||
Non-vested shares granted | 66,187 | 52,083 |
Stock_Based_and_Deferred_Compe3
Stock Based and Deferred Compensation (Details 1) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | ||
Summary of stock based compensation agreements | ||||
Unrecognized stock-based compensation cost | $31,410 | $20,577 | ||
Weighted average years expense recognition period | 2 years 10 months 28 days | 2 years 1 month 10 days | ||
Total equity awards outstanding | 1,203,218 | [1] | 1,255,714 | [1] |
[1] | Includes options outstanding and unvested restricted stock and performance-based awards and restricted stock units. |
Stock_Based_and_Deferred_Compe4
Stock Based and Deferred Compensation (Details Textual) | 3 Months Ended |
Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares of common stock authorized under stock compensation plan (up to) | 10,050,000 |
Remaining shares available for grant | 1,046,688 |
Non-Management [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period for non-vested stock awards and stock options (in years) | 5 years |
Management [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period for non-vested stock awards and stock options (in years) | 3 years |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Current Taxes: | ||
Federal | $8,093 | $12,882 |
State, net of federal benefit | 804 | 1,499 |
Total | $8,897 | $14,381 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Income Taxes (Textual) [Abstract] | |||
Effective Tax Rate (percent) | 35.20% | 36.20% | |
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | $0 | $0 | |
Income taxes payable | 4,900,000 | ||
Domestic Tax Authority [Member] | |||
Income Taxes (Textual) [Abstract] | |||
Tax Credit Carryforward, Amount | 0 | ||
NOL carryforwards | 0 | ||
State [Member] | |||
Income Taxes (Textual) [Abstract] | |||
NOL carryforwards | $4,600,000 | ||
Earliest Tax Year [Member] | |||
Income Taxes (Textual) [Abstract] | |||
Open Tax Year | 2010 |
Supplemental_Disclosure_of_Cas2
Supplemental Disclosure of Cash Flow Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash paid during the period for: | ||
Interest, net of interest capitalized | ($5,995) | $4,081 |
Income taxes | 8,710 | 17,190 |
Non-cash operating activities: | ||
Real estate not owned decrease | -4,999 | -241 |
Real estate acquired through notes payable | $6,701 | $116 |
Operating_and_Reporting_Segmen2
Operating and Reporting Segments (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Revenue | ||||
Revenue | $518,712 | $408,345 | ||
Segment operating income | ||||
Corporate and unallocated costs | -29,650 | -21,671 | ||
Loss from other unconsolidated entities, net | -123 | -169 | ||
Interest expense | -3,154 | -2,713 | ||
Other income/(loss), net | 415 | 648 | ||
Earnings before income taxes | 25,297 | 39,758 | ||
Corporate, Non-Segment [Member] | ||||
Segment operating income | ||||
Corporate and unallocated costs | -9,542 | [1] | -5,976 | [1] |
Loss from other unconsolidated entities, net | -123 | -169 | ||
Interest expense | -3,154 | -2,713 | ||
Other income/(loss), net | 415 | 648 | ||
Homebuilding [Member] | Operating Segments [Member] | ||||
Revenue | ||||
Revenue | 518,712 | [2] | 408,345 | [2] |
Segment operating income | ||||
Operating income | 33,921 | 44,943 | ||
Financial Services [Member] | Operating Segments [Member] | ||||
Segment operating income | ||||
Operating income | 3,780 | 3,025 | ||
Homebuilding, West Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Revenue | ||||
Revenue | 206,878 | [2] | 192,681 | [2] |
Segment operating income | ||||
Operating income | 14,197 | 24,810 | ||
Homebuilding, Central Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Revenue | ||||
Revenue | 154,026 | [2] | 119,715 | [2] |
Segment operating income | ||||
Operating income | 14,105 | 9,469 | ||
Homebuilding, East Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Revenue | ||||
Revenue | 157,808 | [2] | 95,949 | [2] |
Segment operating income | ||||
Operating income | $5,619 | $10,664 | ||
[1] | 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 reporting segments. | |||
[2] | Homebuilding revenue includes the following land closing revenue, by segment as outlined in the table below. Three Months Ended March 31, 2015 2014Land closing revenue: West $— $1,050Central 1,439 1,516East — —Total $1,439 $2,566 |
Operating_and_Reporting_Segmen3
Operating and Reporting Segments Operating and Reporting Segments (Details 1) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Land closing revenue | $1,439 | $2,566 |
Homebuilding [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Land closing revenue | 1,439 | 2,566 |
Homebuilding, West Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Land closing revenue | 0 | 1,050 |
Homebuilding, Central Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Land closing revenue | 1,439 | 1,516 |
Homebuilding, East Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Land closing revenue | $0 | $0 |
Operating_and_Reporting_Segmen4
Operating and Reporting Segments (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | $91,922 | [1] | $94,989 | |
Real estate | 1,943,055 | 1,877,682 | ||
Investments in unconsolidated entities | 10,271 | 10,780 | ||
Other assets | 321,210 | 332,687 | ||
Total assets | 2,366,458 | 2,316,138 | ||
Corporate, Non-Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 0 | 0 | ||
Real estate | 0 | 0 | ||
Investments in unconsolidated entities | 1,525 | 2,015 | ||
Other assets | 130,308 | [2] | 132,884 | [2] |
Total assets | 131,833 | 134,899 | ||
Financial Services [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 0 | 0 | ||
Real estate | 0 | 0 | ||
Investments in unconsolidated entities | 0 | 0 | ||
Other assets | 2,164 | 958 | ||
Total assets | 2,164 | 958 | ||
Homebuilding, West Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 30,680 | 34,622 | ||
Real estate | 972,589 | 943,600 | ||
Investments in unconsolidated entities | 205 | 204 | ||
Other assets | 49,177 | 48,120 | ||
Total assets | 1,052,651 | 1,026,546 | ||
Homebuilding, Central Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 31,706 | 31,317 | ||
Real estate | 467,929 | 446,208 | ||
Investments in unconsolidated entities | 8,541 | 8,561 | ||
Other assets | 69,472 | [3] | 80,689 | [3] |
Total assets | 577,648 | 566,775 | ||
Homebuilding, East Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 29,536 | 29,050 | ||
Real estate | 502,537 | 487,874 | ||
Investments in unconsolidated entities | 0 | 0 | ||
Other assets | 70,089 | [4] | 70,036 | [4] |
Total assets | $602,162 | $586,960 | ||
[1] | Amount is reflected in our consolidated balance sheet in the line item “Deposits on real estate under option or contract†as of March 31, 2015. | |||
[2] | Balance consists primarily of cash and securities and our deferred tax asset. | |||
[3] | Balance consists primarily of development reimbursements from local municipalities and cash. | |||
[4] | Balance consists primarily of goodwill (see Note 9) and cash. |
Operating_and_Reporting_Segmen5
Operating and Reporting Segments (Details Textual) | 3 Months Ended |
Mar. 31, 2015 | |
operating_segment | |
segment | |
Segment Reporting [Abstract] | |
Number of Business Segments | 2 |
Number of operating segments | 9 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 0 Months Ended | 1 Months Ended | |||||||||||
Dec. 09, 2010 | Mar. 31, 2012 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Feb. 14, 2014 | Dec. 31, 2013 | Jul. 17, 2013 | Jul. 08, 2013 | Jun. 17, 2013 | Jun. 06, 2011 | Dec. 31, 2008 | Oct. 26, 2011 | |
lender | claim | action | JointVenture | ||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Reserved for litigation and asserted claims | $15,109,000 | $16,499,000 | |||||||||||
Warranty reserve | 21,839,000 | 22,080,000 | 21,482,000 | 21,971,000 | |||||||||
Loss Contingency, Pending Claims, Number | 2 | ||||||||||||
Number of lenders filing petition for involuntary bankruptcy | 3 | ||||||||||||
Initial Litigation Judgment Amount | 15,053,857 | ||||||||||||
Litigation Judgment Amount With Interest | 15,753,344 | ||||||||||||
Litigation Judgment Interest | 699,487 | ||||||||||||
Supersedeas Bond | 16,930,477 | 16,050,604 | |||||||||||
Incremental Attorney Fees to Supersedeas Bond | 877,241 | ||||||||||||
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 | 9,800,000 | ||||||||||||
South Edge Guarantee [Member] | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Loss Contingency, Pending Claims, Number | 2 | ||||||||||||
Equity Method Investment, Ownership Percentage | 3.53% | ||||||||||||
Springing Repayment Guarantee Original Demand Letter | $13,200,000 | ||||||||||||
South Edge [Member] | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of co-ventures in joint venture | 4 |