Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 28, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Meritage Homes CORP | |
Entity Central Index Key | 833,079 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 39,665,797 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $ 235,409 | $ 103,333 |
Other receivables | 59,617 | 56,763 |
Real estate | 2,088,690 | 1,877,682 |
Real estate not owned | 0 | 4,999 |
Deposits on real estate under option or contract | 91,526 | 94,989 |
Investments in unconsolidated entities | 10,374 | 10,780 |
Property and equipment, net | 34,403 | 32,403 |
Deferred tax asset | 66,850 | 64,137 |
Prepaids, other assets and goodwill | 77,017 | 71,052 |
Total assets | 2,663,886 | 2,316,138 |
Liabilities | ||
Accounts payable | 113,869 | 83,619 |
Accrued liabilities | 161,803 | 154,144 |
Home sale deposits | 39,587 | 29,379 |
Liabilities related to real estate not owned | 0 | 4,299 |
Loans payable and other borrowings | 41,898 | 30,722 |
Senior and convertible senior notes | 1,104,060 | 904,486 |
Total liabilities | 1,461,217 | 1,206,649 |
Stockholders’ Equity | ||
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at September 30, 2015 and December 31, 2014 | 0 | 0 |
Common stock, par value $0.01. Authorized 125,000,000 shares; issued 39,665,797 and 39,147,153 shares at September 30, 2015 and December 31, 2014, respectively | 397 | 391 |
Additional paid-in capital | 556,121 | 538,788 |
Retained earnings | 646,151 | 570,310 |
Total stockholders’ equity | 1,202,669 | 1,109,489 |
Total liabilities and stockholders’ equity | $ 2,663,886 | $ 2,316,138 |
Unaudited Consolidated Balance3
Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 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 | 39,665,797 | 39,147,153 |
Unaudited Consolidated Income S
Unaudited Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Income Statement [Abstract] | |||||
Home closing revenue | $ 661,884 | $ 545,524 | $ 1,770,184 | $ 1,454,103 | |
Land closing revenue | 8,072 | 11,252 | 16,285 | 16,622 | |
Total closing revenue | 669,956 | 556,776 | 1,786,469 | 1,470,725 | |
Cost of home closings | (536,267) | (434,286) | (1,434,843) | (1,140,305) | |
Cost of land closings | (7,445) | (11,729) | (14,992) | (18,084) | |
Total cost of closings | (543,712) | (446,015) | (1,449,835) | (1,158,389) | |
Home closing gross profit | 125,617 | 111,238 | 335,341 | 313,798 | |
Land closing gross profit/(loss) | 627 | (477) | 1,293 | (1,462) | |
Total closing gross profit | 126,244 | 110,761 | 336,634 | 312,336 | |
Financial services revenue | 3,000 | 2,749 | 8,276 | 7,099 | |
Financial services expense | (1,253) | (1,238) | (3,914) | (3,444) | |
Earnings from financial services unconsolidated entities and other, net | 3,854 | 2,783 | 9,155 | 7,281 | |
Financial services profit | 5,601 | 4,294 | 13,517 | 10,936 | |
Commissions and other sales costs | (48,097) | (40,211) | (134,876) | (107,250) | |
General and administrative expenses | (28,774) | (29,218) | (86,074) | (75,460) | |
Loss from other unconsolidated entities, net | (123) | (134) | (415) | (364) | |
Interest expense | (4,187) | (460) | (11,962) | (4,569) | |
Other (expense)/income, net | (3,996) | 1,998 | (3,445) | 6,395 | |
Earnings before income taxes | 46,668 | 47,030 | 113,379 | 142,024 | |
Provision for income taxes | (16,360) | (14,453) | (37,538) | (48,991) | |
Net earnings | $ 30,308 | $ 32,577 | $ 75,841 | $ 93,033 | |
Earnings per common share: | |||||
Basic (in dollars per share) | $ 0.76 | $ 0.83 | $ 1.92 | $ 2.39 | |
Diluted (in dollars per share) | [1] | $ 0.73 | $ 0.79 | $ 1.83 | $ 2.27 |
Weighted average number of shares: | |||||
Basic (in shares) | 39,663 | 39,123 | 39,568 | 38,977 | |
Diluted (in shares) | 42,192 | 41,656 | 42,134 | 41,564 | |
[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 Statemen
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net earnings | $ 75,841 | $ 93,033 |
Adjustments to reconcile net earnings to net cash used in operating activities: | ||
Depreciation and amortization | 10,294 | 8,154 |
Stock-based compensation | 12,418 | 9,035 |
Excess income tax benefit from stock-based awards | (2,040) | (2,197) |
Equity in earnings from unconsolidated entities | (8,740) | (6,917) |
Distributions of earnings from unconsolidated entities | 9,446 | 8,784 |
Other | 1,246 | 8,361 |
Changes in assets and liabilities: | ||
Increase in real estate | (198,520) | (343,763) |
Decrease/(increase) in deposits on real estate under option or contract | 2,719 | (27,552) |
Increase in receivables, prepaids and other assets | (6,067) | (19,502) |
Increase in accounts payable and accrued liabilities | 39,949 | 33,920 |
Increase in home sale deposits | 10,208 | 9,015 |
Net cash used in operating activities | (53,246) | (229,629) |
Cash flows from investing activities: | ||
Investments in unconsolidated entities | (300) | (245) |
Purchases of property and equipment | (12,334) | (16,367) |
Proceeds from sales of property and equipment | 92 | 173 |
Maturities of investments and securities | 0 | 115,584 |
Payments to purchase investments and securities | 0 | (35,697) |
Cash paid for acquisitions | 0 | (130,677) |
Net cash used in investing activities | (12,542) | (67,229) |
Cash flows from financing activities: | ||
Proceeds from Credit Facility, net | 0 | 0 |
Repayment of loans payable and other borrowings | (4,044) | (6,524) |
Proceeds from issuance of senior notes | 200,000 | 0 |
Debt issuance costs | (3,013) | 0 |
Excess income tax benefit from stock-based awards | 2,040 | 2,197 |
Proceeds from issuance of common stock, net | 0 | 110,420 |
Proceeds from stock option exercises | 2,881 | 734 |
Net cash provided by financing activities | 197,864 | 106,827 |
Net increase/(decrease) in cash and cash equivalents | 132,076 | (190,031) |
Cash and cash equivalents, beginning of period | 103,333 | 274,136 |
Cash and cash equivalents, end of period | $ 235,409 | $ 84,105 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 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 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 Greenville market where we currently operate under the Legendary Communities brand for all communities open for sales as of the date of our acquisition and as Meritage Homes for all subsequently opened Greenville communities. We also offer luxury homes in some markets under the brand name of Monterey Homes. At September 30, 2015 , we were actively selling homes in 250 communities, with base prices ranging from approximately $130,000 to $1,350,000 . 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 unaudited 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 $58.7 million and $59.2 million are included in cash and cash equivalents at September 30, 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 $91.5 million and $95.0 million as of September 30, 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. For some projects, surety bonds may be 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 September 30, 2015 At December 31, 2014 Outstanding Estimated work remaining to complete Outstanding Estimated work remaining to complete Sureties: Sureties related to joint ventures $ 87 $ 87 $ 87 $ 87 Sureties related to owned projects and lots under contract 247,719 92,914 230,079 93,667 Total Sureties $ 247,806 $ 93,001 $ 230,166 $ 93,754 Letters of Credit (“LOCs”): LOCs in lieu of deposits for contracted lots $ — N/A $ 1,200 N/A LOCs for land development 13,445 N/A 13,789 N/A LOCs for general corporate operations 3,750 N/A 4,500 N/A Total LOCs $ 17,195 N/A $ 19,489 N/A Accrued Liabilities . Accrued liabilities at September 30, 2015 and December 31, 2014 consisted of the following (in thousands): September 30, 2015 December 31, 2014 Accruals related to real estate development and construction activities $ 34,747 $ 34,975 Payroll and other benefits 36,565 44,107 Accrued taxes 12,022 11,096 Warranty reserves 21,140 22,080 Legal reserves 19,829 16,499 Other accruals 37,500 25,387 Total $ 161,803 $ 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. Based on such reviews, we increased our warranty reserve balance by $750,000 and $500,000 in the nine months ended September 30, 2015 and 2014, respectively, which increased our cost of sales for those periods. A summary of changes in our warranty reserves follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Balance, beginning of period $ 21,993 $ 20,882 $ 22,080 $ 21,971 Additions to reserve from new home deliveries 3,376 3,023 9,000 8,058 Warranty claims (4,229 ) (2,451 ) (10,690 ) (9,075 ) Adjustments to pre-existing reserves — — 750 500 Balance, end of period $ 21,140 $ 21,454 $ 21,140 $ 21,454 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 April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability, other than those related to a revolving debt arrangement, be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting ASU 2015-15, which clarifies the treatment of debt issuance costs from line-of-credit arrangements after the adoption of ASU 2015-03. In particular, ASU 2015-15 clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 is effective for us for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is to be applied on a retrospective basis and represents a change in accounting principle. The adoption of ASU 2015-03 will result in a retrospective reclassification of our debt costs as described above, but we do not expect the resulting changes to be material. 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 January 2015, the FASB issued 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 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 ASC, and some cost guidance related to construction-type and production-type contracts. ASU 2014-09 is effective for us on January 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. |
Real Estate and Capitalized Int
Real Estate and Capitalized Interest | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
REAL ESTATE AND CAPITALIZED INTEREST | REAL ESTATE AND CAPITALIZED INTEREST Real estate consists of the following (in thousands): September 30, 2015 December 31, 2014 Homes under contract under construction (1) $ 505,527 $ 328,931 Unsold homes, completed and under construction (1) 301,528 302,288 Model homes (1) 135,323 109,614 Finished home sites and home sites under development (1) (2) 1,146,312 1,136,849 $ 2,088,690 $ 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Capitalized interest, beginning of period $ 58,870 $ 44,355 $ 54,060 $ 32,992 Interest incurred 17,857 14,695 49,665 43,333 Interest expensed (4,187 ) (460 ) (11,962 ) (4,569 ) Interest amortized to cost of home and land closings (11,144 ) (8,135 ) (30,367 ) (21,301 ) Capitalized interest, end of period (1) $ 61,396 $ 50,455 $ 61,396 $ 50,455 (1) Approximately $468,000 and $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 September 30, 2015 and December 31, 2014 , respectively. |
Variable Interest Entities and
Variable Interest Entities and Consolidated Real Estate Not Owned | 9 Months Ended |
Sep. 30, 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 In the normal course of business, we enter into purchase and option agreements for land or lots. 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 generally 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 deemed to be in line with current marking pricing 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 September 30, 2015 (dollars in thousands): Projected Number of Lots Purchase Price Option/ 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) 6,330 563,413 74,315 Purchase contracts not recorded on balance sheet — non-refundable deposits, committed (1) 2,717 137,876 12,338 Purchase contracts not recorded on balance sheet —refundable deposits, committed 1,010 34,607 1,227 Total committed (on and off balance sheet) 10,057 735,896 87,880 Total purchase and option contracts not recorded on balance sheet — refundable deposits, uncommitted (2) 4,213 223,364 3,646 Total lots under contract or option 14,270 $ 959,260 $ 91,526 Total purchase and option contracts not recorded on balance sheet (3) 14,270 $ 959,260 $ 91,526 (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 September 30, 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 E
Investments in Unconsolidated Entities | 9 Months Ended |
Sep. 30, 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 September 30, 2015 , we had two active equity-method land ventures. We have outstanding litigation reserves related to a minority ownership in one of our inactive joint ventures, the South Edge joint venture. There is pending litigation with the venture's lender group regarding our guarantee related to that venture and, separate pending arbitration proceedings regarding a dispute we have with certain members of the joint venture. See Note 15 regarding the outstanding litigation related to this joint venture. As of September 30, 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 September 30, 2015 and December 31, 2014 was $1.7 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 September 30, 2015 At December 31, 2014 Assets: Cash $ 7,320 $ 6,471 Real estate 33,338 34,435 Other assets 3,456 2,990 Total assets $ 44,114 $ 43,896 Liabilities and equity: Accounts payable and other liabilities $ 5,755 $ 5,994 Notes and mortgages payable 13,345 13,346 Equity of: Meritage (1) 7,890 7,735 Other 17,124 16,821 Total liabilities and equity $ 44,114 $ 43,896 Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ 10,252 $ 7,982 $ 25,406 $ 19,905 Costs and expenses (4,649 ) (3,744 ) (12,057 ) (9,609 ) Net earnings of unconsolidated entities $ 5,603 $ 4,238 $ 13,349 $ 10,296 Meritage’s share of pre-tax earnings (1) (2) $ 3,754 $ 2,649 $ 8,763 $ 6,917 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported 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 two active land ventures, one mortgage venture and various inactive ventures. Our total investment in all of these joint ventures is $10.4 million and $10.8 million as of September 30, 2015 and December 31, 2014 , respectively. As of September 30, 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 Borrowi
Loans Payable and Other Borrowings | 9 Months Ended |
Sep. 30, 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 September 30, 2015 At December 31, 2014 Other borrowings, real estate note payable (1) $ 41,898 $ 30,722 $500 million unsecured revolving credit facility, maturing July 2019, with interest approximating LIBOR (approximately 0.19% at September 30, 2015) plus 1.75% or Prime (3.25% at September 30, 2015) plus 0.75% — — Total $ 41,898 $ 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"). From time to time, we have increased the Credit Facility and extended its maturity date. Most recently, in the first quarter of 2015 we increased the capacity to $500.0 million . In July 2015, the maturity date of the credit facility was extended to July 9, 2019 and the accordion feature was amended to permit the size of the facility to be increased by $100.0 million up to a maximum of $600.0 million . In addition to the extended maturity date, various terms including interest rates and commitment fees were reduced. 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 nine months ended September 30, 2015, our maximum borrowings under the Credit Facility were $110.0 million , all of which was repaid as of June 30, 2015, with no subsequent borrowing since that date. As of September 30, 2015 we had outstanding letters of credit issued under the Credit Facility totaling $17.2 million , leaving $482.8 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 September 30, 2015 At December 31, 2014 4.50% senior notes due 2018 $ 175,000 $ 175,000 7.15% senior notes due 2020. At September 30, 2015 and December 31, 2014 there was approximately $2,560 and $2,986 in net unamortized premium, respectively 302,560 302,986 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025 200,000 — 1.875% convertible senior notes due 2032 (1) 126,500 126,500 Total $ 1,104,060 $ 904,486 (1) The Convertible Notes may be redeemed by the note-holders on the fifth, tenth and fifteenth anniversary dates of the issuance date of the Convertible Notes. On June 2, 2015, we completed an offering of $200.0 million aggregate principal amount of Senior Notes due 2025 ("2025 Notes"). The 2025 Notes bear interest at 6.00% per annum, payable on June 1 and December 1 of each year, commencing on December 1, 2015. The indentures for all of our 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. We believe we are in compliance with all such covenants as of September 30, 2015 . 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 represented a 47.5% conversion premium based on the closing price of our common stock on the issue date of the convertible senior notes. Obligations to pay principal and interest on the senior and convertible notes are guaranteed by substantially 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 are, individually and in the aggregate, minor. |
Senior and Convertible Senior N
Senior and Convertible Senior Notes | 9 Months Ended |
Sep. 30, 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 September 30, 2015 At December 31, 2014 Other borrowings, real estate note payable (1) $ 41,898 $ 30,722 $500 million unsecured revolving credit facility, maturing July 2019, with interest approximating LIBOR (approximately 0.19% at September 30, 2015) plus 1.75% or Prime (3.25% at September 30, 2015) plus 0.75% — — Total $ 41,898 $ 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"). From time to time, we have increased the Credit Facility and extended its maturity date. Most recently, in the first quarter of 2015 we increased the capacity to $500.0 million . In July 2015, the maturity date of the credit facility was extended to July 9, 2019 and the accordion feature was amended to permit the size of the facility to be increased by $100.0 million up to a maximum of $600.0 million . In addition to the extended maturity date, various terms including interest rates and commitment fees were reduced. 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 nine months ended September 30, 2015, our maximum borrowings under the Credit Facility were $110.0 million , all of which was repaid as of June 30, 2015, with no subsequent borrowing since that date. As of September 30, 2015 we had outstanding letters of credit issued under the Credit Facility totaling $17.2 million , leaving $482.8 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 September 30, 2015 At December 31, 2014 4.50% senior notes due 2018 $ 175,000 $ 175,000 7.15% senior notes due 2020. At September 30, 2015 and December 31, 2014 there was approximately $2,560 and $2,986 in net unamortized premium, respectively 302,560 302,986 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025 200,000 — 1.875% convertible senior notes due 2032 (1) 126,500 126,500 Total $ 1,104,060 $ 904,486 (1) The Convertible Notes may be redeemed by the note-holders on the fifth, tenth and fifteenth anniversary dates of the issuance date of the Convertible Notes. On June 2, 2015, we completed an offering of $200.0 million aggregate principal amount of Senior Notes due 2025 ("2025 Notes"). The 2025 Notes bear interest at 6.00% per annum, payable on June 1 and December 1 of each year, commencing on December 1, 2015. The indentures for all of our 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. We believe we are in compliance with all such covenants as of September 30, 2015 . 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 represented a 47.5% conversion premium based on the closing price of our common stock on the issue date of the convertible senior notes. Obligations to pay principal and interest on the senior and convertible notes are guaranteed by substantially 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 are, individually and in the aggregate, minor. |
Fair Value Disclosures
Fair Value Disclosures | 9 Months Ended |
Sep. 30, 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): September 30, 2015 December 31, 2014 Aggregate Principal Estimated Fair Value Aggregate Principal Estimated Fair Value 4.50% senior notes $ 175,000 $ 177,188 $ 175,000 $ 175,000 7.15% senior notes $ 300,000 $ 321,000 $ 300,000 $ 322,500 7.00% senior notes $ 300,000 $ 321,750 $ 300,000 $ 318,000 6.00% senior notes $ 200,000 $ 201,000 N/A N/A 1.875% convertible senior notes $ 126,500 $ 126,026 $ 126,500 $ 124,444 Due to the short-term nature of other financial assets and liabilities including our Loans payable and other borrowings, we consider the carrying amounts of our other short-term financial instruments to approximate fair value. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Basic weighted average number of shares outstanding 39,663 39,123 39,568 38,977 Effect of dilutive securities: Convertible debt (1) 2,176 2,176 2,176 2,176 Stock options and unvested restricted stock 353 357 390 411 Diluted average shares outstanding 42,192 41,656 42,134 41,564 Net earnings as reported $ 30,308 $ 32,577 $ 75,841 $ 93,033 Interest attributable to convertible senior notes, net of income taxes 385 378 1,189 1,135 Net earnings for diluted earnings per share $ 30,693 $ 32,955 $ 77,030 $ 94,168 Basic earnings per share $ 0.76 $ 0.83 $ 1.92 $ 2.39 Diluted earnings per share (1) $ 0.73 $ 0.79 $ 1.83 $ 2.27 Antidilutive stock options not included in the calculation of diluted earnings per share 3 22 — 24 (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 | 9 Months Ended |
Sep. 30, 2015 | |
Business Acquisitions and Goodwill [Abstract] | |
ACQUISTIONS AND GOODWILL | ACQUISITIONS AND GOODWILL 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 operations of Legendary Communities 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 for our entire East Region from establishing a market presence in Georgia and South Carolina, the experience and knowledge of the acquired business and its capital efficient operating structure. 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. Our acquisitions are recorded in accordance with ASC 805, Business Combination s ("ASC 805") and ASC 820, using the acquisition method of accounting. The purchase price for acquisitions is allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price of our acquisitions over the fair value of the net assets is included in our consolidated balance sheet in Prepaids, other assets and goodwill. In accordance with ASC 350, we assess the recoverability of goodwill annually, or more frequently, if impairment indicators are present. As of September 30, 2015, we were in the process of re-assessing goodwill, but do not expect to incur any impairment charges as a result of our analysis. 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 September 30, 2015 $ — $ — $ 32,962 $ — $ — $ 32,962 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY A summary of changes in shareholders’ equity is presented below (in thousands): Nine Months Ended September 30, 2015 (In thousands) Number of Shares Common Stock Additional Paid-In Capital Retained Earnings Total Balance at December 31, 2014 39,147 $ 391 $ 538,788 $ 570,310 $ 1,109,489 Net earnings — — — 75,841 75,841 Exercise/vesting of equity awards 519 6 2,875 — 2,881 Excess income tax benefit from stock-based awards — — 2,040 — 2,040 Equity award compensation expense — — 12,418 — 12,418 Balance at September 30, 2015 39,666 $ 397 $ 556,121 $ 646,151 $ 1,202,669 Nine Months Ended September 30, 2014 (In thousands) Number of Shares Common Stock Additional Paid-In Capital Retained Earnings Total Balance at December 31, 2013 36,244 $ 362 $ 412,961 $ 428,069 $ 841,392 Net earnings — — — 93,033 93,033 Exercise/vesting of equity awards 351 4 730 — 734 Excess income tax benefit from stock-based awards — — 2,197 — 2,197 Equity award compensation expense — — 9,035 — 9,035 Issuance of stock (1) 2,530 25 110,395 — 110,420 Other — — (114 ) — (114 ) Balance at September 30, 2014 39,125 $ 391 $ 535,204 $ 521,102 $ 1,056,697 (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 Compen
Stock Based and Deferred Compensation | 9 Months Ended |
Sep. 30, 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 is amended or restated from time to time, most recently in 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 1,140,721 shares remain available for grant at September 30, 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 for employees and with a three -year cliff vesting for both 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 life-to-date 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 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 straight-line over the service period. Each year we engage a third party to perform a valuation analysis on the awards determined to contain market conditions. Our associated expense with those awards is based on the derived fair value from that analysis and is expensed on a straight-line basis over the service period of the awards. Below is a summary of compensation expense and stock award activity (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Stock-based compensation expense $ 3,953 $ 3,771 $ 12,418 $ 9,035 Non-vested shares granted 20,600 — 424,387 374,683 Performance-based non-vested shares granted — — 66,187 52,083 Stock options exercised 3,000 1,200 146,640 41,445 Restricted stock awards vested (includes performance-based awards) 1,800 2,100 372,004 309,490 The following table includes additional information regarding our Plan (dollars in thousands): As of September 30, 2015 December 31, 2014 Unrecognized stock-based compensation cost $ 21,756 $ 20,577 Weighted average years expense recognition period 2.40 2.11 Total equity awards outstanding (1) 1,085,944 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 or nine months ended September 30, 2015 or 2014. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Components of the income tax provision are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Federal $ 14,251 $ 12,622 $ 33,678 $ 43,480 State 2,109 1,831 3,860 5,511 Total $ 16,360 $ 14,453 $ 37,538 $ 48,991 The effective tax rate for the three and nine months ended September 30, 2015 was 35.1% and 33.1% , respectively, and for the three and nine months ended September 30, 2014 was 30.7% and 34.5% , respectively. Our tax rate has been favorably impacted in both periods by the homebuilding manufacturing deduction and in the nine-months ended September 30, 2015 there was a favorable impact from additional estimated federal energy tax credits related to prior tax years. The 2014 impact from such credits was fully recognized in the fourth quarter of 2014 . In the second quarter of 2015, there was also a favorable impact from a state tax rate reduction in Texas due to a change in law. At September 30, 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 September 30, 2015 . At September 30, 2015 , we had no remaining federal NOL carryforward or un-utilized federal tax credits. At September 30, 2015 , we had tax benefits for state NOL carryforwards of $4.6 million net of federal benefit, unchanged from December 31, 2014 , that began to expire in 2015 depending on the state jurisdiction. At September 30, 2015 , we have income taxes payable of $6.9 million , which primarily consists of current federal and state tax accruals, net of estimated tax payments and tax credits. This amount is recorded in Accrued liabilities in the accompanying unaudited balance sheet at September 30, 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 2011 . 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 §382. Based on our analysis performed as of September 30, 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 Cash
Supplemental Disclosure of Cash Flow Information | 9 Months Ended |
Sep. 30, 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): Nine Months Ended September 30, 2015 2014 Interest (capitalized)/paid $ (3,732 ) $ 3,801 Income taxes paid $ 37,984 $ 51,668 Non-cash operating activities: Real estate not owned (decrease)/increase $ (4,999 ) $ 4,710 Real estate acquired through notes payable $ 15,220 $ 581 In July 2012, we entered into our Credit Facility agreement, which has been amended from time to time, as discussed in Note 5. We utilize the Credit Facility as a means for expedited access to liquidity, as needed. We had no outstanding borrowings under the Credit Facility as of September 30, 2015 or December 31, 2014. During the nine months ended September 30, 2015 we had gross borrowings and repayments of $ 210.0 million , each. The nine month period ended September 30, 2014 had $1.0 million of gross borrowings and repayments. |
Operating and Reporting Segment
Operating and Reporting Segments | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Homebuilding revenue (1): West $ 270,202 $ 234,950 $ 696,854 $ 659,596 Central 191,132 179,761 524,633 459,619 East 208,622 142,065 564,982 351,510 Consolidated total $ 669,956 $ 556,776 $ 1,786,469 $ 1,470,725 Homebuilding segment operating income: West $ 24,347 $ 22,204 $ 53,800 $ 74,398 Central 19,524 19,323 54,682 47,512 East 13,849 9,295 35,427 30,539 Total homebuilding segment operating income 57,720 50,822 143,909 152,449 Financial services segment profit 5,601 4,294 13,517 10,936 Corporate and unallocated costs (2) (8,347 ) (9,490 ) (28,225 ) (22,823 ) Loss from unconsolidated entities, net (123 ) (134 ) (415 ) (364 ) Interest expense (4,187 ) (460 ) (11,962 ) (4,569 ) Other (expense)/income, net (3,996 ) 1,998 (3,445 ) 6,395 Net earnings before income taxes $ 46,668 $ 47,030 $ 113,379 $ 142,024 (1) Homebuilding revenue includes the following land closing revenue, by segment, as outlined in the table below. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Land closing revenue: West $ — $ 10,105 $ — $ 11,155 Central 7,677 1,147 14,194 3,244 East 395 — 2,091 2,223 Total $ 8,072 $ 11,252 $ 16,285 $ 16,622 (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 September 30, 2015 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 32,380 $ 32,272 $ 26,874 $ — $ — $ 91,526 Real estate 1,022,906 498,041 567,743 — — 2,088,690 Investments in unconsolidated entities 204 8,446 — — 1,724 10,374 Other assets 61,618 70,411 (1) 72,097 (2) 873 268,297 (3) 473,296 Total assets $ 1,117,108 $ 609,170 $ 666,714 $ 873 $ 270,021 $ 2,663,886 At December 31, 2014 West Central East Financial Services Corporate and Unallocated Total 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), prepaid permits and fees to local municipalities and cash. (3) Balance consists primarily of cash and our deferred tax asset. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 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 September 30, 2015, we have reserved approximately $19.8 million related to non-warranty related litigation and asserted claims. In addition, our $21.1 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 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. Later, the Court entered judgments in favor of JP Morgan in a combined amount of $16,630,585 , which included prejudgment interest and attorneys' fees. We immediately appealed the Court's rulings and posted a supersedeas bond in the amount of $16,930,477 (which includes additional sums for a potential award of post-judgment interest and attorneys' fees on appeal) staying enforcement of the judgments. On October 26, 2015, the Ninth Circuit Court of Appeals issued an unpublished Memorandum Opinion affirming the trial court's ruling that JP Morgan has standing to pursue its claims against Meritage, and also rejecting Meritage's various other arguments on appeal. We incurred an incremental $4.1 million in charges in the third quarter of 2015 for litigation reserves related to this matter and we believe we have fully reserved for the maximum potential exposure related to this matter; however, we disagree with the opinion of the Ninth Circuit Court of Appeals and plan to challenge/appeal this ruling. 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 such amounts. 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. 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 Pre21
Organization and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 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 unaudited 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 $91.5 million and $95.0 million as of September 30, 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. For some projects, surety bonds may be 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. Based on such reviews, we increased our warranty reserve balance by $750,000 and $500,000 in the nine months ended September 30, 2015 and 2014, respectively, which increased our cost of sales for those periods. A summary of changes in our warranty reserves follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Balance, beginning of period $ 21,993 $ 20,882 $ 22,080 $ 21,971 Additions to reserve from new home deliveries 3,376 3,023 9,000 8,058 Warranty claims (4,229 ) (2,451 ) (10,690 ) (9,075 ) Adjustments to pre-existing reserves — — 750 500 Balance, end of period $ 21,140 $ 21,454 $ 21,140 $ 21,454 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 April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability, other than those related to a revolving debt arrangement, be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting ASU 2015-15, which clarifies the treatment of debt issuance costs from line-of-credit arrangements after the adoption of ASU 2015-03. In particular, ASU 2015-15 clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 is effective for us for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is to be applied on a retrospective basis and represents a change in accounting principle. The adoption of ASU 2015-03 will result in a retrospective reclassification of our debt costs as described above, but we do not expect the resulting changes to be material. 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 January 2015, the FASB issued 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 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 ASC, and some cost guidance related to construction-type and production-type contracts. ASU 2014-09 is effective for us on January 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. |
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 generally 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 deemed to be in line with current marking pricing 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 Pre22
Organization and Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2015 At December 31, 2014 Outstanding Estimated work remaining to complete Outstanding Estimated work remaining to complete Sureties: Sureties related to joint ventures $ 87 $ 87 $ 87 $ 87 Sureties related to owned projects and lots under contract 247,719 92,914 230,079 93,667 Total Sureties $ 247,806 $ 93,001 $ 230,166 $ 93,754 Letters of Credit (“LOCs”): LOCs in lieu of deposits for contracted lots $ — N/A $ 1,200 N/A LOCs for land development 13,445 N/A 13,789 N/A LOCs for general corporate operations 3,750 N/A 4,500 N/A Total LOCs $ 17,195 N/A $ 19,489 N/A |
Accrued liabilities | Accrued liabilities at September 30, 2015 and December 31, 2014 consisted of the following (in thousands): September 30, 2015 December 31, 2014 Accruals related to real estate development and construction activities $ 34,747 $ 34,975 Payroll and other benefits 36,565 44,107 Accrued taxes 12,022 11,096 Warranty reserves 21,140 22,080 Legal reserves 19,829 16,499 Other accruals 37,500 25,387 Total $ 161,803 $ 154,144 |
Warranty reserves | A summary of changes in our warranty reserves follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Balance, beginning of period $ 21,993 $ 20,882 $ 22,080 $ 21,971 Additions to reserve from new home deliveries 3,376 3,023 9,000 8,058 Warranty claims (4,229 ) (2,451 ) (10,690 ) (9,075 ) Adjustments to pre-existing reserves — — 750 500 Balance, end of period $ 21,140 $ 21,454 $ 21,140 $ 21,454 |
Real Estate and Capitalized I23
Real Estate and Capitalized Interest (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Real estate properties | Real estate consists of the following (in thousands): September 30, 2015 December 31, 2014 Homes under contract under construction (1) $ 505,527 $ 328,931 Unsold homes, completed and under construction (1) 301,528 302,288 Model homes (1) 135,323 109,614 Finished home sites and home sites under development (1) (2) 1,146,312 1,136,849 $ 2,088,690 $ 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Capitalized interest, beginning of period $ 58,870 $ 44,355 $ 54,060 $ 32,992 Interest incurred 17,857 14,695 49,665 43,333 Interest expensed (4,187 ) (460 ) (11,962 ) (4,569 ) Interest amortized to cost of home and land closings (11,144 ) (8,135 ) (30,367 ) (21,301 ) Capitalized interest, end of period (1) $ 61,396 $ 50,455 $ 61,396 $ 50,455 (1) Approximately $468,000 and $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 September 30, 2015 and December 31, 2014 , respectively. |
Variable Interest Entities an24
Variable Interest Entities and Consolidated Real Estate Not Owned (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] | |
Land under contracts and real estate not owned | The table below presents a summary of our lots under option at September 30, 2015 (dollars in thousands): Projected Number of Lots Purchase Price Option/ 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) 6,330 563,413 74,315 Purchase contracts not recorded on balance sheet — non-refundable deposits, committed (1) 2,717 137,876 12,338 Purchase contracts not recorded on balance sheet —refundable deposits, committed 1,010 34,607 1,227 Total committed (on and off balance sheet) 10,057 735,896 87,880 Total purchase and option contracts not recorded on balance sheet — refundable deposits, uncommitted (2) 4,213 223,364 3,646 Total lots under contract or option 14,270 $ 959,260 $ 91,526 Total purchase and option contracts not recorded on balance sheet (3) 14,270 $ 959,260 $ 91,526 (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 September 30, 2015 . |
Investments in Unconsolidated25
Investments in Unconsolidated Entities (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2015 At December 31, 2014 Assets: Cash $ 7,320 $ 6,471 Real estate 33,338 34,435 Other assets 3,456 2,990 Total assets $ 44,114 $ 43,896 Liabilities and equity: Accounts payable and other liabilities $ 5,755 $ 5,994 Notes and mortgages payable 13,345 13,346 Equity of: Meritage (1) 7,890 7,735 Other 17,124 16,821 Total liabilities and equity $ 44,114 $ 43,896 Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ 10,252 $ 7,982 $ 25,406 $ 19,905 Costs and expenses (4,649 ) (3,744 ) (12,057 ) (9,609 ) Net earnings of unconsolidated entities $ 5,603 $ 4,238 $ 13,349 $ 10,296 Meritage’s share of pre-tax earnings (1) (2) $ 3,754 $ 2,649 $ 8,763 $ 6,917 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported 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 Borro26
Loans Payable and Other Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Loans Payable and Other Borrowings [Abstract] | |
Loans payable and other borrowings | Loans payable and other borrowings consist of the following (in thousands): At September 30, 2015 At December 31, 2014 Other borrowings, real estate note payable (1) $ 41,898 $ 30,722 $500 million unsecured revolving credit facility, maturing July 2019, with interest approximating LIBOR (approximately 0.19% at September 30, 2015) plus 1.75% or Prime (3.25% at September 30, 2015) plus 0.75% — — Total $ 41,898 $ 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 September 30, 2015 At December 31, 2014 4.50% senior notes due 2018 $ 175,000 $ 175,000 7.15% senior notes due 2020. At September 30, 2015 and December 31, 2014 there was approximately $2,560 and $2,986 in net unamortized premium, respectively 302,560 302,986 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025 200,000 — 1.875% convertible senior notes due 2032 (1) 126,500 126,500 Total $ 1,104,060 $ 904,486 (1) The Convertible Notes may be redeemed by the note-holders on the fifth, tenth and fifteenth anniversary dates of the issuance date of the Convertible Notes. |
Senior and Convertible Senior27
Senior and Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Components of senior and senior subordinated notes | Loans payable and other borrowings consist of the following (in thousands): At September 30, 2015 At December 31, 2014 Other borrowings, real estate note payable (1) $ 41,898 $ 30,722 $500 million unsecured revolving credit facility, maturing July 2019, with interest approximating LIBOR (approximately 0.19% at September 30, 2015) plus 1.75% or Prime (3.25% at September 30, 2015) plus 0.75% — — Total $ 41,898 $ 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 September 30, 2015 At December 31, 2014 4.50% senior notes due 2018 $ 175,000 $ 175,000 7.15% senior notes due 2020. At September 30, 2015 and December 31, 2014 there was approximately $2,560 and $2,986 in net unamortized premium, respectively 302,560 302,986 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025 200,000 — 1.875% convertible senior notes due 2032 (1) 126,500 126,500 Total $ 1,104,060 $ 904,486 (1) The Convertible Notes may be redeemed by the note-holders on the fifth, tenth and fifteenth anniversary dates of the issuance date of the Convertible Notes. |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value of our fixed-rate debt | The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (level 2 inputs as per the discussion above) and is as follows (in thousands): September 30, 2015 December 31, 2014 Aggregate Principal Estimated Fair Value Aggregate Principal Estimated Fair Value 4.50% senior notes $ 175,000 $ 177,188 $ 175,000 $ 175,000 7.15% senior notes $ 300,000 $ 321,000 $ 300,000 $ 322,500 7.00% senior notes $ 300,000 $ 321,750 $ 300,000 $ 318,000 6.00% senior notes $ 200,000 $ 201,000 N/A N/A 1.875% convertible senior notes $ 126,500 $ 126,026 $ 126,500 $ 124,444 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Basic weighted average number of shares outstanding 39,663 39,123 39,568 38,977 Effect of dilutive securities: Convertible debt (1) 2,176 2,176 2,176 2,176 Stock options and unvested restricted stock 353 357 390 411 Diluted average shares outstanding 42,192 41,656 42,134 41,564 Net earnings as reported $ 30,308 $ 32,577 $ 75,841 $ 93,033 Interest attributable to convertible senior notes, net of income taxes 385 378 1,189 1,135 Net earnings for diluted earnings per share $ 30,693 $ 32,955 $ 77,030 $ 94,168 Basic earnings per share $ 0.76 $ 0.83 $ 1.92 $ 2.39 Diluted earnings per share (1) $ 0.73 $ 0.79 $ 1.83 $ 2.27 Antidilutive stock options not included in the calculation of diluted earnings per share 3 22 — 24 (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) | 9 Months Ended |
Sep. 30, 2015 | |
Business Acquisitions and Goodwill [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 September 30, 2015 $ — $ — $ 32,962 $ — $ — $ 32,962 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of stockholders equity | A summary of changes in shareholders’ equity is presented below (in thousands): Nine Months Ended September 30, 2015 (In thousands) Number of Shares Common Stock Additional Paid-In Capital Retained Earnings Total Balance at December 31, 2014 39,147 $ 391 $ 538,788 $ 570,310 $ 1,109,489 Net earnings — — — 75,841 75,841 Exercise/vesting of equity awards 519 6 2,875 — 2,881 Excess income tax benefit from stock-based awards — — 2,040 — 2,040 Equity award compensation expense — — 12,418 — 12,418 Balance at September 30, 2015 39,666 $ 397 $ 556,121 $ 646,151 $ 1,202,669 Nine Months Ended September 30, 2014 (In thousands) Number of Shares Common Stock Additional Paid-In Capital Retained Earnings Total Balance at December 31, 2013 36,244 $ 362 $ 412,961 $ 428,069 $ 841,392 Net earnings — — — 93,033 93,033 Exercise/vesting of equity awards 351 4 730 — 734 Excess income tax benefit from stock-based awards — — 2,197 — 2,197 Equity award compensation expense — — 9,035 — 9,035 Issuance of stock (1) 2,530 25 110,395 — 110,420 Other — — (114 ) — (114 ) Balance at September 30, 2014 39,125 $ 391 $ 535,204 $ 521,102 $ 1,056,697 (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 Comp32
Stock Based and Deferred Compensation (Tables) | 9 Months Ended |
Sep. 30, 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 (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Stock-based compensation expense $ 3,953 $ 3,771 $ 12,418 $ 9,035 Non-vested shares granted 20,600 — 424,387 374,683 Performance-based non-vested shares granted — — 66,187 52,083 Stock options exercised 3,000 1,200 146,640 41,445 Restricted stock awards vested (includes performance-based awards) 1,800 2,100 372,004 309,490 |
Summary of stock based compensation agreements | The following table includes additional information regarding our Plan (dollars in thousands): As of September 30, 2015 December 31, 2014 Unrecognized stock-based compensation cost $ 21,756 $ 20,577 Weighted average years expense recognition period 2.40 2.11 Total equity awards outstanding (1) 1,085,944 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) | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Components of income tax provision | Components of the income tax provision are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Federal $ 14,251 $ 12,622 $ 33,678 $ 43,480 State 2,109 1,831 3,860 5,511 Total $ 16,360 $ 14,453 $ 37,538 $ 48,991 |
Supplemental Disclosure of Ca34
Supplemental Disclosure of Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow information | The following table presents certain supplemental cash flow information (in thousands): Nine Months Ended September 30, 2015 2014 Interest (capitalized)/paid $ (3,732 ) $ 3,801 Income taxes paid $ 37,984 $ 51,668 Non-cash operating activities: Real estate not owned (decrease)/increase $ (4,999 ) $ 4,710 Real estate acquired through notes payable $ 15,220 $ 581 |
Operating and Reporting Segme35
Operating and Reporting Segments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment information on operating results | The following segment information is in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Homebuilding revenue (1): West $ 270,202 $ 234,950 $ 696,854 $ 659,596 Central 191,132 179,761 524,633 459,619 East 208,622 142,065 564,982 351,510 Consolidated total $ 669,956 $ 556,776 $ 1,786,469 $ 1,470,725 Homebuilding segment operating income: West $ 24,347 $ 22,204 $ 53,800 $ 74,398 Central 19,524 19,323 54,682 47,512 East 13,849 9,295 35,427 30,539 Total homebuilding segment operating income 57,720 50,822 143,909 152,449 Financial services segment profit 5,601 4,294 13,517 10,936 Corporate and unallocated costs (2) (8,347 ) (9,490 ) (28,225 ) (22,823 ) Loss from unconsolidated entities, net (123 ) (134 ) (415 ) (364 ) Interest expense (4,187 ) (460 ) (11,962 ) (4,569 ) Other (expense)/income, net (3,996 ) 1,998 (3,445 ) 6,395 Net earnings before income taxes $ 46,668 $ 47,030 $ 113,379 $ 142,024 (1) Homebuilding revenue includes the following land closing revenue, by segment, as outlined in the table below. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Land closing revenue: West $ — $ 10,105 $ — $ 11,155 Central 7,677 1,147 14,194 3,244 East 395 — 2,091 2,223 Total $ 8,072 $ 11,252 $ 16,285 $ 16,622 (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 September 30, 2015 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 32,380 $ 32,272 $ 26,874 $ — $ — $ 91,526 Real estate 1,022,906 498,041 567,743 — — 2,088,690 Investments in unconsolidated entities 204 8,446 — — 1,724 10,374 Other assets 61,618 70,411 (1) 72,097 (2) 873 268,297 (3) 473,296 Total assets $ 1,117,108 $ 609,170 $ 666,714 $ 873 $ 270,021 $ 2,663,886 At December 31, 2014 West Central East Financial Services Corporate and Unallocated Total 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), prepaid permits and fees to local municipalities and cash. (3) Balance consists primarily of cash and our deferred tax asset. |
Organization and Basis of Pre36
Organization and Basis of Presentation (Details 1) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | $ 17,195 | $ 19,489 |
Sureties related to joint ventures [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 87 | 87 |
Estimated work remaining to complete | 87 | 87 |
Sureties related to owned projects and lots under contract [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 247,719 | 230,079 |
Estimated work remaining to complete | 92,914 | 93,667 |
Sureties [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 247,806 | 230,166 |
Estimated work remaining to complete | 93,001 | 93,754 |
LOCs in lieu of deposit for contracted lots [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | 0 | 1,200 |
LOCs for land development [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | 13,445 | 13,789 |
LOCs for general corporate operations [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | $ 3,750 | $ 4,500 |
Organization and Basis of Pre37
Organization and Basis of Presentation (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Accrued Liabilities | ||||||
Accruals related to real estate development and construction activities | $ 34,747 | $ 34,975 | ||||
Payroll and other benefits | 36,565 | 44,107 | ||||
Accrued taxes | 12,022 | 11,096 | ||||
Warranty reserves | 21,140 | $ 21,993 | 22,080 | $ 21,454 | $ 20,882 | $ 21,971 |
Legal reserves | 19,829 | 16,499 | ||||
Other accruals | 37,500 | 25,387 | ||||
Total | $ 161,803 | $ 154,144 |
Organization and Basis of Pre38
Organization and Basis of Presentation (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Warranty Reserves | ||||
Balance, beginning of period | $ 21,993 | $ 20,882 | $ 22,080 | $ 21,971 |
Additions to reserve from new home deliveries | 3,376 | 3,023 | 9,000 | 8,058 |
Warranty claims | (4,229) | (2,451) | (10,690) | (9,075) |
Adjustments to pre-existing reserves | 0 | 0 | 750 | 500 |
Balance, end of period | $ 21,140 | $ 21,454 | $ 21,140 | $ 21,454 |
Organization and Basis of Pre39
Organization and Basis of Presentation (Details Textual) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($)stateregioncommunity | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)stateregioncommunity | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Organization and Presentation [Line Items] | |||||
Entity operations in number of regions | region | 3 | 3 | |||
Number of states in regions | state | 9 | 9 | |||
Number of communities in which homes are sold | community | 250 | 250 | |||
Amounts in transit from title companies for home closings | $ 58,700,000 | $ 58,700,000 | $ 59,200,000 | ||
Deposits on real estate under option or contract | 91,526,000 | 91,526,000 | $ 94,989,000 | ||
Adjustments to pre-existing reserves | $ 0 | $ 0 | 750,000 | $ 500,000 | |
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 | $ 1,350,000 | ||||
Community life cycle range (in years) | 5 years | ||||
Non-Structural Items [Member] | Minimum [Member] | |||||
Organization and Presentation [Line Items] | |||||
Warranty period following home closings (in years) | 1 year | ||||
Non-Structural Items [Member] | Maximum [Member] | |||||
Organization and Presentation [Line Items] | |||||
Warranty period following home closings (in years) | 2 years | ||||
Structural [Member] | Maximum [Member] | |||||
Organization and Presentation [Line Items] | |||||
Warranty period following home closings (in years) | 10 years |
Real Estate and Capitalized I40
Real Estate and Capitalized Interest (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Real Estate Properties | |||
Homes under contract under construction | [1] | $ 505,527 | $ 328,931 |
Unsold homes completed and under construction | [1] | 301,528 | 302,288 |
Model homes | [1] | 135,323 | 109,614 |
Finished home sites and home sites under development | [1],[2] | 1,146,312 | 1,136,849 |
Real estate | $ 2,088,690 | $ 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. |
Real Estate and Capitalized I41
Real Estate and Capitalized Interest (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Summary of capitalized interest | |||||
Capitalized interest, beginning of period | $ 58,870 | $ 44,355 | $ 54,060 | $ 32,992 | |
Interest incurred | 17,857 | 14,695 | 49,665 | 43,333 | |
Interest expensed | (4,187) | (460) | (11,962) | (4,569) | |
Interest amortized to cost of home and land closings | (11,144) | (8,135) | (30,367) | (21,301) | |
Capitalized interest, end of period | [1] | 61,396 | $ 50,455 | 61,396 | $ 50,455 |
Equity Method Land Ventures [Member] | |||||
Summary of capitalized interest | |||||
Capitalized interest, beginning of period | 490 | ||||
Capitalized interest, end of period | $ 468 | $ 468 | |||
[1] | Approximately $468,000 and $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 September 30, 2015 and December 31, 2014, respectively. |
Variable Interest Entities an42
Variable Interest Entities and Consolidated Real Estate Not Owned (Details) $ in Thousands | Sep. 30, 2015USD ($)lot | |
Projected Number of Lots | ||
Land under purchase contracts and options, recorded, number of lots | lot | 0 | |
Land under options, not recorded, non-refundable, committed, number of lots | lot | 6,330 | [1] |
Land under purchase contracts, not recorded, non-refundable, committed, number of lots | lot | 2,717 | [1] |
Land under purchase contracts, not recorded, refundable, committed, number of lots | lot | 1,010 | |
Land under purchase contracts and options, committed, number of lots | lot | 10,057 | |
Land under purchase contracts and options, not recorded, refundable, uncommitted, number of lots | lot | 4,213 | [2] |
Land under purchase contracts and options, number of lots | lot | 14,270 | |
Land under options, not recorded, number of lots | lot | 14,270 | [3] |
Purchase Price | ||
Land under purchase contracts and options, recorded | $ 0 | |
Land under options, not recorded, non-refundable, committed | 563,413 | [1] |
Land under purchase contracts, not recorded, non-refundable, committed | 137,876 | [1] |
Land under purchase contracts, not recorded, refundable, committed | 34,607 | |
Land under purchase contracts and options, committed | 735,896 | |
Land under purchase contracts and options, not recorded, refundable, uncommitted | 223,364 | [2] |
Land under purchase contracts and options | 959,260 | |
Land under options, not recorded | 959,260 | [3] |
Option/ Earnest Money Deposits–Cash | ||
Land under purchase contracts and options, recorded, cash deposits | 0 | |
Land under options, not recorded, non-refundable, committed, cash deposits | 74,315 | [1] |
Land under purchase contracts, not recorded, non-refundable, committed, cash deposits | 12,338 | [1] |
Land under purchase contracts, not recorded, refundable, committed, cash deposits | 1,227 | |
Land under purchase contracts and options, committed, cash deposits | 87,880 | |
Land under purchase contracts and options, not recorded, refundable, uncommitted, cash deposits | 3,646 | [2] |
Land under purchase contracts and options, cash deposits | 91,526 | |
Land under options, not recorded, cash deposits | $ 91,526 | [3],[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 September 30, 2015. |
Investments in Unconsolidated43
Investments in Unconsolidated Entities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Assets: | |||
Cash | $ 7,320 | $ 6,471 | |
Real estate | 33,338 | 34,435 | |
Other assets | 3,456 | 2,990 | |
Total assets | 44,114 | 43,896 | |
Liabilities and equity: | |||
Accounts payable and other liabilities | 5,755 | 5,994 | |
Notes and mortgages payable | 13,345 | 13,346 | |
Meritage | [1] | 7,890 | 7,735 |
Other | 17,124 | 16,821 | |
Total liabilities and equity | $ 44,114 | $ 43,896 | |
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported 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 Unconsolidated44
Investments in Unconsolidated Entities (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Financial information related to unconsolidated joint ventures, Operations | |||||
Revenue | $ 10,252 | $ 7,982 | $ 25,406 | $ 19,905 | |
Costs and expenses | (4,649) | (3,744) | (12,057) | (9,609) | |
Net earnings of unconsolidated entities | 5,603 | 4,238 | 13,349 | 10,296 | |
Meritage's share of pre-tax earnings | [1],[2] | $ 3,754 | $ 2,649 | $ 8,763 | $ 6,917 |
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported 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 Unconsolidated45
Investments in Unconsolidated Entities (Details Textual) $ in Thousands | Sep. 30, 2015USD ($)joint_venture | Dec. 31, 2014USD ($) |
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated entities | $ 10,374 | $ 10,780 |
Equity method land ventures [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | joint_venture | 2 | |
Mortgage joint ventures [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | joint_venture | 1 | |
Investments in unconsolidated entities | $ 1,700 | $ 2,000 |
Loans Payable and Other Borro46
Loans Payable and Other Borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | $ 41,898 | $ 30,722 | |
Notes Payable, Other Payables [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term debt | [1] | 41,898 | 30,722 |
Line of Credit [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term debt | $ 0 | $ 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 Borro47
Loans Payable and Other Borrowings (Details Textual) | 9 Months Ended | ||||
Sep. 30, 2015USD ($) | Jul. 31, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Jul. 31, 2012USD ($) | |
Line of Credit Facility [Line Items] | |||||
Maximum borrowings outstanding | $ 110,000,000 | ||||
Letters of credit outstanding | 17,195,000 | $ 19,489,000 | |||
Line of credit facility, remaining borrowing capacity | $ 482,800,000 | ||||
Notes Payable, Other Payables [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Interest rate, minimum (percentage) | 0.00% | ||||
Interest rate, maximum (percentage) | 6.00% | ||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Description of variable rate basis | LIBOR | ||||
Base rate (percentage) | 0.19% | ||||
Basis spread on variable rate (percentage) | 1.75% | ||||
Revolving Credit Facility [Member] | Prime Rate [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Description of variable rate basis | Prime | ||||
Base rate (percentage) | 3.25% | ||||
Basis spread on variable rate (percentage) | 0.75% | ||||
Revolving Credit Facility [Member] | Line of Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 500,000,000 | $ 600,000,000 | $ 500,000,000 | $ 125,000,000 | |
Line of credit facility, accordion feature, increase limit | $ 100,000,000 | ||||
Minimum tangible net worth | $ 670,300,000 | ||||
Leverage ratio (as a percentage) | 0.6 | ||||
Interest coverage ratio | 1.5 |
Senior and Convertible Senior48
Senior and Convertible Senior Notes (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Jun. 02, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||||
Senior Notes | $ 1,104,060 | $ 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 (percentage) | 4.50% | 4.50% | ||
Senior Notes [Member] | 7.15% senior notes due 2020 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 302,560 | $ 302,986 | ||
Debt instrument, stated rate (percentage) | 7.15% | 7.15% | ||
Unamortized premium | $ 2,560 | $ 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 (percentage) | 7.00% | 7.00% | ||
Senior Notes [Member] | 6.00% senior notes due 2025 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 200,000 | $ 0 | ||
Debt instrument, stated rate (percentage) | 6.00% | 6.00% | ||
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | [1] | $ 126,500 | $ 126,500 | |
Debt instrument, stated rate (percentage) | 1.875% | 1.875% | ||
[1] | The Convertible Notes may be redeemed by the note-holders on the fifth, tenth and fifteenth anniversary dates of the issuance date of the Convertible Notes. |
Senior and Convertible Senior49
Senior and Convertible Senior Notes (Details Textual) - Senior Notes [Member] - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Jun. 02, 2015 | Dec. 31, 2014 | |
4.50% senior notes due 2018 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, stated rate (percentage) | 4.50% | 4.50% | |
7.15% senior notes due 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, stated rate (percentage) | 7.15% | 7.15% | |
7.00% senior notes due 2022 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, stated rate (percentage) | 7.00% | 7.00% | |
6.00% senior notes due 2025 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 200,000,000 | ||
Debt instrument, stated rate (percentage) | 6.00% | 6.00% | |
1.875% convertible senior notes due 2032 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, stated rate (percentage) | 1.875% | 1.875% | |
Debt instrument, convertible, conversion ratio | 0.0171985 | ||
Debt instrument, convertible, conversion price (in dollars per share) | $ 58.14 | ||
Conversion premium (percentage) | 47.50% |
Fair Value Disclosures (Details
Fair Value Disclosures (Details) - Senior Notes [Member] - USD ($) | Sep. 30, 2015 | Jun. 02, 2015 | Dec. 31, 2014 |
4.50% senior notes due 2018 [Member] | Level 2 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | $ 175,000,000 | $ 175,000,000 | |
Fair value of fixed-rate debt | |||
Estimated Fair Value | 177,188,000 | 175,000,000 | |
7.15% senior notes due 2020 [Member] | Level 2 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | 300,000,000 | 300,000,000 | |
Fair value of fixed-rate debt | |||
Estimated Fair Value | 321,000,000 | 322,500,000 | |
7.00% senior notes due 2022 [Member] | Level 2 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | 300,000,000 | 300,000,000 | |
Fair value of fixed-rate debt | |||
Estimated Fair Value | 321,750,000 | 318,000,000 | |
6.00% senior notes due 2025 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | $ 200,000,000 | ||
6.00% senior notes due 2025 [Member] | Level 2 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | 200,000,000 | ||
Fair value of fixed-rate debt | |||
Estimated Fair Value | 201,000,000 | ||
1.875% convertible senior notes due 2032 [Member] | Level 2 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | 126,500,000 | 126,500,000 | |
Fair value of fixed-rate debt | |||
Estimated Fair Value | $ 126,026,000 | $ 124,444,000 |
Fair Value Disclosures (Detai51
Fair Value Disclosures (Details Textual) - Senior Notes [Member] | Sep. 30, 2015 | Jun. 02, 2015 | Dec. 31, 2014 |
4.50% senior notes due 2018 [Member] | |||
Fair Value Disclosures (Textual) [Abstract] | |||
Debt instrument, stated rate (percentage) | 4.50% | 4.50% | |
7.15% senior notes due 2020 [Member] | |||
Fair Value Disclosures (Textual) [Abstract] | |||
Debt instrument, stated rate (percentage) | 7.15% | 7.15% | |
7.00% senior notes due 2022 [Member] | |||
Fair Value Disclosures (Textual) [Abstract] | |||
Debt instrument, stated rate (percentage) | 7.00% | 7.00% | |
6.00% senior notes due 2025 [Member] | |||
Fair Value Disclosures (Textual) [Abstract] | |||
Debt instrument, stated rate (percentage) | 6.00% | 6.00% | |
1.875% convertible senior notes due 2032 [Member] | |||
Fair Value Disclosures (Textual) [Abstract] | |||
Debt instrument, stated rate (percentage) | 1.875% | 1.875% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Basic and Diluted Earnings Per Common Share | |||||
Basic weighted average number of shares outstanding | 39,663 | 39,123 | 39,568 | 38,977 | |
Effect of dilutive securities: | |||||
Convertible debt (in shares) | [1] | 2,176 | 2,176 | 2,176 | 2,176 |
Stock options and unvested restricted stock | 353 | 357 | 390 | 411 | |
Diluted average shares outstanding | 42,192 | 41,656 | 42,134 | 41,564 | |
Net earnings as reported | $ 30,308 | $ 32,577 | $ 75,841 | $ 93,033 | |
Interest attributable to convertible senior notes, net of income taxes | 385 | 378 | 1,189 | 1,135 | |
Net earnings for diluted earnings per share | $ 30,693 | $ 32,955 | $ 77,030 | $ 94,168 | |
Basic earnings per share (in dollars per share) | $ 0.76 | $ 0.83 | $ 1.92 | $ 2.39 | |
Diluted earnings per share (in dollars per share) | [1] | $ 0.73 | $ 0.79 | $ 1.83 | $ 2.27 |
Antidilutive stock options not included in the calculation of diluted earnings per share | 3 | 22 | 0 | 24 | |
[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) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
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 (De54
Acquisitions and Goodwill (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | |||
Aug. 31, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | Aug. 01, 2014 | |
Goodwill [Line Items] | ||||
Goodwill | $ 32,962 | $ 32,962 | ||
Legendary Communities Acquisition [Member] | ||||
Goodwill [Line Items] | ||||
Cash paid for acquisitions | $ 130,700 | |||
Goodwill | $ 22,700 | |||
Remaining basis of other assets and liabilities after goodwill, almost entirely comprised of acquired inventory | $ 108,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | Jan. 31, 2014 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance (in shares) | 39,147,153 | |||||||
Balance | $ 1,109,489 | $ 841,392 | ||||||
Net earnings | $ 30,308 | $ 32,577 | 75,841 | 93,033 | ||||
Exercise/vesting of equity awards, value | 2,881 | 734 | ||||||
Excess income tax benefit from stock-based awards | 2,040 | 2,197 | ||||||
Equity award compensation expense | $ 12,418 | 9,035 | ||||||
Issuance of stock, value | [1] | 110,420 | ||||||
Other | (114) | |||||||
Balance (in shares) | 39,665,797 | 39,665,797 | ||||||
Balance | $ 1,202,669 | $ 1,056,697 | $ 1,202,669 | $ 1,056,697 | ||||
Common stock, shares issued | 39,665,797 | 39,147,153 | 39,665,797 | 39,147,153 | 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 (in shares) | 39,147,000 | 36,244,000 | ||||||
Balance | $ 391 | $ 362 | ||||||
Exercise/vesting of equity awards (in shares) | 519,000 | 351,000 | ||||||
Exercise/vesting of equity awards, value | $ 6 | $ 4 | ||||||
Issuance of stock (in shares) | [1] | 2,530,000 | ||||||
Issuance of stock, value | [1] | $ 25 | ||||||
Balance (in shares) | 39,666,000 | 39,125,000 | 39,666,000 | 39,125,000 | ||||
Balance | $ 397 | $ 391 | $ 397 | $ 391 | ||||
Common stock, shares issued | 39,666,000 | 39,125,000 | 39,147,000 | 36,244,000 | 39,666,000 | 39,147,000 | ||
Additional Paid-in Capital [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | $ 538,788 | $ 412,961 | ||||||
Exercise/vesting of equity awards, value | 2,875 | 730 | ||||||
Excess income tax benefit from stock-based awards | 2,040 | 2,197 | ||||||
Equity award compensation expense | 12,418 | 9,035 | ||||||
Issuance of stock, value | [1] | 110,395 | ||||||
Other | (114) | |||||||
Balance | $ 556,121 | $ 535,204 | 556,121 | 535,204 | ||||
Retained Earnings [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance | 570,310 | 428,069 | ||||||
Net earnings | 75,841 | 93,033 | ||||||
Balance | $ 646,151 | $ 521,102 | $ 646,151 | $ 521,102 | ||||
[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 $45.75 per share. |
Stock Based and Deferred Comp56
Stock Based and Deferred Compensation (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Summary of compensation expense and stock award activity | ||||
Stock-based compensation expense | $ 3,953 | $ 3,771 | $ 12,418 | $ 9,035 |
Stock options exercised | 3,000 | 1,200 | 146,640 | 41,445 |
Restricted Stock [Member] | ||||
Summary of compensation expense and stock award activity | ||||
Restricted stock awards vested (includes performance-based awards) | 1,800 | 2,100 | 372,004 | 309,490 |
Time Based Restricted Stock [Member] | ||||
Summary of compensation expense and stock award activity | ||||
Non-vested shares granted | 20,600 | 0 | 424,387 | 374,683 |
Performance Shares [Member] | ||||
Summary of compensation expense and stock award activity | ||||
Non-vested shares granted | 0 | 0 | 66,187 | 52,083 |
Stock Based and Deferred Comp57
Stock Based and Deferred Compensation (Details 1) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | ||
Summary of stock based compensation agreements | |||
Unrecognized stock-based compensation cost | $ 21,756 | $ 20,577 | |
Weighted average years expense recognition period | 2 years 4 months 24 days | 2 years 1 month 10 days | |
Total equity awards outstanding | [1] | 1,085,944 | 1,255,714 |
[1] | Includes options outstanding and unvested restricted stock and performance-based awards and restricted stock units. |
Stock Based and Deferred Comp58
Stock Based and Deferred Compensation (Details Textual) | 9 Months Ended |
Sep. 30, 2015shares | |
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 | 1,140,721 |
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 ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Current Taxes: | ||||
Federal | $ 14,251 | $ 12,622 | $ 33,678 | $ 43,480 |
State | 2,109 | 1,831 | 3,860 | 5,511 |
Total | $ 16,360 | $ 14,453 | $ 37,538 | $ 48,991 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($)examination | Sep. 30, 2014 | Sep. 30, 2015USD ($)examination | Sep. 30, 2014 | Dec. 31, 2014USD ($) | |
Income Taxes (Textual) [Abstract] | |||||
Effective tax rate (percent) | 35.10% | 30.70% | 33.10% | 34.50% | |
Unrecognized tax benefits due to the lapse of the statute of limitations | $ 0 | $ 0 | $ 0 | ||
Income taxes payable | 6,900,000 | 6,900,000 | |||
Domestic Tax Authority [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
NOL carryforwards | 0 | 0 | |||
Tax credit carryfoward | 0 | 0 | |||
State [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
NOL carryforwards | $ 4,600,000 | $ 4,600,000 | |||
Number of income tax examinations pending | examination | 1 | 1 |
Supplemental Disclosure of Ca61
Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash paid during the period for: | ||
Interest (capitalized)/paid | $ (3,732) | $ 3,801 |
Income taxes paid | 37,984 | 51,668 |
Non-cash operating activities: | ||
Real estate not owned (decrease)/increase | (4,999) | 4,710 |
Real estate acquired through notes payable | 15,220 | 581 |
Gross borrowings | 210,000 | 1,000 |
Gross repayments | $ 210,000 | $ 1,000 |
Operating and Reporting Segme62
Operating and Reporting Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Revenue | |||||
Revenue | $ 669,956 | $ 556,776 | $ 1,786,469 | $ 1,470,725 | |
Segment operating income | |||||
Corporate and unallocated costs | (28,774) | (29,218) | (86,074) | (75,460) | |
Loss from other unconsolidated entities, net | (123) | (134) | (415) | (364) | |
Interest expense | (4,187) | (460) | (11,962) | (4,569) | |
Other (expense)/income, net | (3,996) | 1,998 | (3,445) | 6,395 | |
Earnings before income taxes | 46,668 | 47,030 | 113,379 | 142,024 | |
Corporate, Non-Segment [Member] | |||||
Segment operating income | |||||
Corporate and unallocated costs | [1] | (8,347) | (9,490) | (28,225) | (22,823) |
Segment Reconciling Items [Member] | |||||
Segment operating income | |||||
Loss from other unconsolidated entities, net | (123) | (134) | (415) | (364) | |
Interest expense | (4,187) | (460) | (11,962) | (4,569) | |
Other (expense)/income, net | (3,996) | 1,998 | (3,445) | 6,395 | |
Homebuilding [Member] | Operating Segments [Member] | |||||
Revenue | |||||
Revenue | [2] | 669,956 | 556,776 | 1,786,469 | 1,470,725 |
Segment operating income | |||||
Operating income | 57,720 | 50,822 | 143,909 | 152,449 | |
Financial Services [Member] | Operating Segments [Member] | |||||
Segment operating income | |||||
Operating income | 5,601 | 4,294 | 13,517 | 10,936 | |
Homebuilding, West Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | |||||
Revenue | |||||
Revenue | [2] | 270,202 | 234,950 | 696,854 | 659,596 |
Segment operating income | |||||
Operating income | 24,347 | 22,204 | 53,800 | 74,398 | |
Homebuilding, Central Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | |||||
Revenue | |||||
Revenue | [2] | 191,132 | 179,761 | 524,633 | 459,619 |
Segment operating income | |||||
Operating income | 19,524 | 19,323 | 54,682 | 47,512 | |
Homebuilding, East Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | |||||
Revenue | |||||
Revenue | [2] | 208,622 | 142,065 | 564,982 | 351,510 |
Segment operating income | |||||
Operating income | $ 13,849 | $ 9,295 | $ 35,427 | $ 30,539 | |
[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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014Land closing revenue: West$— $10,105 $— $11,155Central7,677 1,147 14,194 3,244East395 — 2,091 2,223Total$8,072 $11,252 $16,285 $16,622 |
Operating and Reporting Segme63
Operating and Reporting Segments (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Land closing revenue | $ 8,072 | $ 11,252 | $ 16,285 | $ 16,622 |
Homebuilding [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Land closing revenue | 8,072 | 11,252 | 16,285 | 16,622 |
Homebuilding, West Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Land closing revenue | 0 | 10,105 | 0 | 11,155 |
Homebuilding, Central Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Land closing revenue | 7,677 | 1,147 | 14,194 | 3,244 |
Homebuilding, East Region [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Land closing revenue | $ 395 | $ 0 | $ 2,091 | $ 2,223 |
Operating and Reporting Segme64
Operating and Reporting Segments (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||
Deposits on real estate under option or contract | $ 91,526 | $ 94,989 | |
Real estate | 2,088,690 | 1,877,682 | |
Investments in unconsolidated entities | 10,374 | 10,780 | |
Other assets | 473,296 | 332,687 | |
Total assets | 2,663,886 | 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 | 1,724 | 2,015 | |
Other assets | [1] | 268,297 | 132,884 |
Total assets | 270,021 | 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 | 873 | 958 | |
Total assets | 873 | 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 | 32,380 | 34,622 | |
Real estate | 1,022,906 | 943,600 | |
Investments in unconsolidated entities | 204 | 204 | |
Other assets | 61,618 | 48,120 | |
Total assets | 1,117,108 | 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 | 32,272 | 31,317 | |
Real estate | 498,041 | 446,208 | |
Investments in unconsolidated entities | 8,446 | 8,561 | |
Other assets | [2] | 70,411 | 80,689 |
Total assets | 609,170 | 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 | 26,874 | 29,050 | |
Real estate | 567,743 | 487,874 | |
Investments in unconsolidated entities | 0 | 0 | |
Other assets | [3] | 72,097 | 70,036 |
Total assets | $ 666,714 | $ 586,960 | |
[1] | Balance consists primarily of cash and our deferred tax asset. | ||
[2] | Balance consists primarily of development reimbursements from local municipalities and cash. | ||
[3] | Balance consists primarily of goodwill (see Note 9), prepaid permits and fees to local municipalities and cash. |
Operating and Reporting Segme65
Operating and Reporting Segments (Details Textual) | 9 Months Ended |
Sep. 30, 2015segmentoperating_segment | |
Segment Reporting [Abstract] | |
Number of business segments | 2 |
Number of operating segments | operating_segment | 9 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Dec. 09, 2010lender | Mar. 31, 2012USD ($)claim | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2013USD ($) | Jun. 17, 2013USD ($) | Oct. 26, 2011joint_venture | Jun. 06, 2011USD ($) | Dec. 31, 2008action |
Loss Contingencies [Line Items] | ||||||||||||
Legal reserves | $ 19,829,000 | $ 16,499,000 | ||||||||||
Warranty reserves | $ 21,140,000 | $ 21,993,000 | $ 22,080,000 | $ 21,454,000 | $ 20,882,000 | $ 21,971,000 | ||||||
Number of pending claims | claim | 2 | |||||||||||
Number of lenders filing petition for involuntary bankruptcy | lender | 3 | |||||||||||
Litigation judgment amount with interest | $ 16,630,585 | |||||||||||
Supersedeas bond | $ 16,930,477 | |||||||||||
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] | ||||||||||||
Number of pending claims | action | 2 | |||||||||||
Equity method investment, ownership percentage | 3.53% | |||||||||||
Springing repayment guarantee | $ 13,200,000 | |||||||||||
South Edge [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Number of co-ventures in joint venture | joint_venture | 4 | |||||||||||
JP Morgan v.s. Meritage [Member] | Pending Litigation [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Provision for litigation reserves | $ 4,100,000 |