DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 09, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Meritage Homes CORP | ||
Entity Central Index Key | 833,079 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1.6 | ||
Entity Common Stock, Shares Outstanding | 40,330,741 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 170,746 | $ 131,702 |
Other receivables | 79,317 | 70,355 |
Real estate | 2,731,380 | 2,422,063 |
Real estate not owned | 38,864 | 0 |
Deposits on real estate under option or contract | 59,945 | 85,556 |
Investments in unconsolidated entities | 17,068 | 17,097 |
Property and equipment, net | 33,631 | 33,202 |
Deferred tax asset | 35,162 | 53,320 |
Prepaids, other assets and goodwill | 85,145 | 75,396 |
Total assets | 3,251,258 | 2,888,691 |
Liabilities | ||
Accounts payable | 140,516 | 140,682 |
Accrued liabilities | 181,076 | 170,852 |
Home sale deposits | 34,059 | 28,348 |
Liabilities related to real estate not owned | 34,978 | 0 |
Loans payable and other borrowings | 17,354 | 32,195 |
Senior and convertible senior notes, net | 1,266,450 | 1,095,119 |
Total liabilities | 1,674,433 | 1,467,196 |
Stockholders’ Equity | ||
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at December 31, 2017 and 2016 | 0 | 0 |
Common stock, par value $0.01. Authorized 125,000,000 shares; issued 40,330,741 and 40,030,518 shares at December 31, 2017 and 2016, respectively | 403 | 400 |
Additional paid-in capital | 584,578 | 572,506 |
Retained earnings | 991,844 | 848,589 |
Total stockholders’ equity | 1,576,825 | 1,421,495 |
Total liabilities and stockholders’ equity | $ 3,251,258 | $ 2,888,691 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 125,000,000 | 125,000,000 |
Common stock, shares issued (in shares) | 40,330,741 | 40,030,518 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Homebuilding: | ||||
Home closing revenue | $ 3,186,775 | $ 3,003,426 | $ 2,531,556 | |
Land closing revenue | 39,997 | 25,801 | 36,526 | |
Total closing revenue | 3,226,772 | 3,029,227 | 2,568,082 | |
Cost of home closings | (2,624,636) | (2,474,584) | (2,049,637) | |
Cost of land closings | (35,637) | (23,431) | (29,736) | |
Total cost of closings | (2,660,273) | (2,498,015) | (2,079,373) | |
Home closing gross profit | 562,139 | 528,842 | 481,919 | |
Land closing gross profit | 4,360 | 2,370 | 6,790 | |
Total closing gross profit | 566,499 | 531,212 | 488,709 | |
Financial Services: | ||||
Revenue | 14,203 | 12,507 | 11,377 | |
Expense | (6,006) | (5,587) | (5,203) | |
Earnings from financial services unconsolidated entities and other, net | 13,858 | 14,982 | 13,097 | |
Financial services profit | 22,055 | 21,902 | 19,271 | |
Commissions and other sales costs | (221,647) | (215,092) | (188,418) | |
General and administrative expenses | (124,041) | (123,803) | (112,849) | |
Earnings/(loss) from other unconsolidated entities, net | 2,101 | 4,060 | (338) | |
Interest expense | (3,853) | (5,172) | (15,965) | |
Other income/(expense), net | 6,405 | 4,953 | (946) | |
Earnings before income taxes | 247,519 | 218,060 | 189,464 | |
Provision for income taxes | (104,264) | (68,519) | (60,726) | |
Net earnings | $ 143,255 | $ 149,541 | $ 128,738 | |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 3.56 | $ 3.74 | $ 3.25 | |
Diluted (in dollars per share) | [1] | $ 3.41 | $ 3.55 | $ 3.09 |
Weighted average number of shares: | ||||
Basic (in shares) | 40,287 | 39,976 | 39,593 | |
Diluted (in shares) | 42,228 | 42,585 | 42,164 | |
[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 based on the number of days the Convertible Notes were outstanding during the period. All of the Convertible Notes were retired in 2017. |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2014 | 39,147,000 | |||
Beginning balance at Dec. 31, 2014 | $ 1,109,489 | $ 391 | $ 538,788 | $ 570,310 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 128,738 | 128,738 | ||
Exercise/vesting of equity awards (in shares) | 522,000 | |||
Exercise/vesting of equity awards | 2,886 | $ 6 | 2,880 | |
Excess income tax benefit from stock-based awards | 2,043 | 2,043 | ||
Equity award compensation expense | 15,781 | 15,781 | ||
Ending balance (in shares) at Dec. 31, 2015 | 39,669,000 | |||
Ending balance at Dec. 31, 2015 | 1,258,937 | $ 397 | 559,492 | 699,048 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 149,541 | 149,541 | ||
Exercise/vesting of equity awards (in shares) | 362,000 | |||
Exercise/vesting of equity awards | 232 | $ 3 | 229 | |
Excess income tax benefit from stock-based awards | (956) | (956) | ||
Equity award compensation expense | $ 13,741 | 13,741 | ||
Ending balance (in shares) at Dec. 31, 2016 | 40,030,518 | 40,031,000 | ||
Ending balance at Dec. 31, 2016 | $ 1,421,495 | $ 400 | 572,506 | 848,589 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 143,255 | 143,255 | ||
Exercise/vesting of equity awards (in shares) | 300,000 | |||
Exercise/vesting of equity awards | 0 | $ 3 | (3) | |
Equity award compensation expense | $ 12,075 | 12,075 | ||
Ending balance (in shares) at Dec. 31, 2017 | 40,330,741 | 40,331,000 | ||
Ending balance at Dec. 31, 2017 | $ 1,576,825 | $ 403 | $ 584,578 | $ 991,844 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net earnings | $ 143,255 | $ 149,541 | $ 128,738 |
Adjustments to reconcile net earnings to net cash used in operating activities: | |||
Depreciation and amortization | 16,704 | 15,978 | 14,241 |
Stock-based compensation | 12,056 | 13,741 | 15,781 |
Excess income tax provision/(benefit) from stock-based awards | 0 | 956 | (2,043) |
Equity in earnings from unconsolidated entities | (15,959) | (19,042) | (12,759) |
Deferred tax asset revaluation | 19,687 | 0 | 0 |
Distributions of earnings from unconsolidated entities | 15,337 | 16,959 | 12,650 |
Other | 5,849 | 9,539 | 11,530 |
Changes in assets and liabilities: | |||
Increase in real estate | (301,477) | (311,426) | (209,407) |
Decrease in deposits on real estate under option or contract | 21,355 | 2,337 | 6,316 |
Increase in receivables, prepaids and other assets | (17,775) | (17,513) | (7,083) |
Increase in accounts payable and accrued liabilities | 8,125 | 43,377 | 31,883 |
Increase/(decrease) in home sale deposits | 5,711 | (7,849) | 6,818 |
Net cash used in operating activities | (87,132) | (103,402) | (3,335) |
Cash flows from investing activities: | |||
Investments in unconsolidated entities | (670) | (7,244) | (481) |
Distributions of capital from unconsolidated entities | 1,338 | 3,600 | 0 |
Purchases of property and equipment | (18,096) | (16,662) | (16,092) |
Proceeds from sales of property and equipment | 356 | 200 | 86 |
Maturities/sales of investments and securities | 1,402 | 746 | 1,555 |
Payments to purchase investments and securities | (1,402) | (746) | (1,555) |
Net cash used in investing activities | (17,072) | (20,106) | (16,487) |
Cash flows from financing activities: | |||
(Repayment of)/proceeds from Credit Facility, net | (15,000) | 15,000 | 0 |
Repayment of loans payable and other borrowings | (10,970) | (21,274) | (23,226) |
Repurchase/redemption of convertible senior notes | (126,691) | 0 | 0 |
Proceeds from issuance of senior notes | 300,000 | 0 | 200,000 |
Payment of debt issuance costs | (4,091) | 0 | (3,006) |
Excess income tax (provision)/benefit from stock-based awards | 0 | (956) | 2,043 |
Proceeds from stock option exercises | 0 | 232 | 2,886 |
Net cash provided by/(used in) financing activities | 143,248 | (6,998) | 178,697 |
Net increase/(decrease) in cash and cash equivalents | 39,044 | (130,506) | 158,875 |
Cash and cash equivalents, beginning of year | 131,702 | 262,208 | 103,333 |
Cash and cash equivalents, end of year | $ 170,746 | $ 131,702 | $ 262,208 |
BUSINESS AND SUMMARY OF SIGNIFI
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 primarily focused on first-time and first move-up buyers. 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. 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 successors, 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. On a limited basis, we also offer luxury homes in some markets under the name of Monterey Homes. At December 31, 2017 , we were actively selling homes in 244 communities, with base prices ranging from approximately $170,000 to $1,390,000 . Basis of Presentation . The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and 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. Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. Amounts in transit from title companies for home closings of approximately $107.1 million and $75.3 million are included in cash and cash equivalents at December 31, 2017 and 2016 , 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. Actual results can 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 significantly 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. If an asset is deemed to be impaired, the impairment recognized is measured as the amount by which the asset's carrying amount exceeds its fair value. The impairment of a community is allocated to each lot on a straight-line basis. Deposits. Deposits paid related to land option 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 any non-refundable deposits and any ancillary capitalized costs. Our deposits were $59.9 million and $85.6 million as of December 31, 2017 and December 31, 2016 , respectively. Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indicators of impairment exist) through a qualitative assessment to determine whether it is necessary to perform a two-step goodwill impairment test. ASC 350 states that an entity may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, the two-step impairment testing in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information related to goodwill. Property and Equipment, net. Property and equipment, net consists of computer and office equipment and model home furnishings. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Depreciation expense was $15.9 million , $14.3 million , and $12.7 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. Maintenance and repair costs are expensed as incurred. At December 31, 2017 and 2016 , property and equipment, net consisted of the following (in thousands): At December 31, 2017 2016 Computer and office equipment $ 40,731 $ 35,288 Model home furnishings 50,063 45,767 Gross property and equipment 90,794 81,055 Accumulated depreciation (57,163 ) (47,853 ) Total $ 33,631 $ 33,202 Deferred Costs. At December 31, 2017 and 2016 , deferred costs representing debt issuance costs related to our Credit Facility totaled approximately $3.0 million and $2.7 million , net of accumulated amortization of approximately $6.5 million and $5.6 million respectively, and are included on our consolidated balance sheets within Prepaids, other assets and goodwill. The costs are primarily amortized to interest expense using the straight line method which approximates the effective interest method. See Note 6 for additional information related to net debt issuance costs associated with our senior notes. Investments in Unconsolidated Entities . We use the equity method of accounting for investments in unconsolidated entities over which we exercise significant influence but do not have a controlling interest. Under the equity method, our share of the unconsolidated entities’ earnings or loss is included in Earnings/(loss) from other unconsolidated entities, net, or Earnings from financial services, unconsolidated entities and other, net, in our statements of operations. We use the cost method of accounting for investments in unconsolidated entities over which we do not have significant influence, if any. We track cumulative earnings and distributions from each of our ventures. For cash flow classification, to the extent distributions do not exceed cumulative earnings, we designate such distributions as return on capital. Distributions in excess of cumulative earnings are treated as return of capital. We evaluate our investments in unconsolidated entities for impairment when events that trigger an evaluation of recoverability present themselves. See Note 4 for additional information related to investments in unconsolidated entities. Accrued Liabilities . Accrued liabilities at December 31, 2017 and 2016 consisted of the following (in thousands): At December 31, 2017 2016 Accruals related to real estate development and construction activities $ 53,522 $ 53,778 Payroll and other benefits 58,186 52,941 Accrued interest 15,369 15,017 Accrued taxes 14,067 9,637 Warranty reserves 23,328 22,660 Other accruals 16,604 16,819 Total $ 181,076 $ 170,852 Revenue Recognition. Revenue from closings of residential real estate is recognized when closings have occurred, the buyer has made the required minimum down payment, obtained necessary financing, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally the close of escrow. Revenue is reported net of any discounts and incentives. Cost of Home Closings . Cost of home closings includes direct home construction costs, closing costs, land acquisition and development costs, development period interest and common costs, and impairments, if any. Direct construction costs are accumulated during the period of construction and charged to cost of closings under specific identification methods, as are closing costs. Estimates of costs incurred or to be incurred but not paid are accrued and expensed at the time of closing. Land development, acquisition and common costs are allocated to each lot based on the number of lots remaining to close. Income Taxes. We account for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of both temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted. We record deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available objectively verifiable positive and negative evidence, including scheduled reversals of deferred tax liabilities, whether we are in a cumulative loss position, projected future taxable income, tax planning strategies and recent financial operations. If we determine that we will not be able to realize our deferred tax assets in the future, we will record a valuation allowance, which increases the provision for income taxes. We recognize interest and penalties related to unrecognized tax benefits within the Provision for income taxes line in the accompanying consolidated statement of operations. Accrued interest and penalties are included within the Accrued liabilities line in the accompanying consolidated balance sheets. See Note 11 for additional information related to income taxes. Advertising Costs. We expense advertising costs as they are incurred. Advertising expense was approximately $15.8 million , $15.0 million and $14.8 million in fiscal 2017 , 2016 and 2015 , respectively. Earnings Per Share. We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In periods of net losses, no dilution is computed. See Note 8 for additional information related to earnings per share. Stock-Based Compensation . We account for stock-based compensation in accordance with ASC 718-10, Compensation—Stock Compensation ("ASC 718"). This guidance requires us to estimate forfeitures in calculating the expense related to stock-based compensation. Awards with either a graded or cliff vesting are expensed on a straight-line basis over the life of the award. See Note 10 for additional information on stock-based compensation. 401(k) Retirement Plan. We have a 401(k) plan for all full-time Meritage employees. We match portions of employees’ voluntary contributions, and contributed to the plan approximately $2.9 million , $2.7 million and $2.4 million for the years ended 2017 , 2016 and 2015 , respectively. Off-Balance Sheet Arrangements - Joint Ventures . We may participate 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. 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 purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and may have staggered purchase schedules. See Note 3 for additional information on off-balance sheet arrangements. Surety Bonds and Letters of Credit. We provide letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. Surety bonds are generally posted in lieu of letters of credit or cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Bonds are generally not wholly 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 December 31, 2017 2016 Outstanding Estimated work remaining to complete (unaudited) Outstanding Estimated work remaining to complete (unaudited) Sureties: Sureties related to owned projects and lots under contract 296,387 120,320 239,246 85,706 Total Sureties $ 296,387 $ 120,320 $ 239,246 $ 85,706 Letters of Credit (“LOCs”): LOCs in lieu of deposits for contracted lots $ — N/A $ 250 N/A LOCs for land development 70,922 N/A 39,839 N/A LOCs for general corporate operations 3,750 N/A 3,750 N/A Total LOCs $ 74,672 N/A $ 43,839 N/A 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 of warranty costs incurred, we decreased our warranty reserve balance by $1.6 million net in the twelve months ended December 31, 2017 and by $1.0 million net in the twelve months ended December 31, 2016, which decreased our cost of sales. The $1.6 million net adjustment in 2017 was the result of a gross $3.7 million reduction based on actuarial review, offset partially by $2.1 million in additional reserves deemed necessary on three specific warranty matters related to (1) alleged stucco defects in Florida; (2) a potentially faulty solar component provided in various locations by a bankrupt manufacturer; and (3) a possible foundation design matter affecting a single community in Texas. A summary of changes in our warranty reserves follows (in thousands): Years Ended December 31, 2017 2016 Balance, beginning of year $ 22,660 $ 21,615 Additions to reserve from new home deliveries 17,161 16,776 Warranty claims (14,854 ) (14,719 ) Adjustments to pre-existing reserves (1,639 ) (1,012 ) Balance, end of year $ 23,328 $ 22,660 Warranty reserves are included in Accrued liabilities on the accompanying consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying consolidated statements of operations. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the general liability insurance we maintain, are sufficient to cover our general warranty obligations. However, as unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, future costs could differ significantly from our estimates. Recent Accounting Pronouncements. In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04"), which simplifies the accounting for goodwill impairments by eliminating the second step of the goodwill impairment test. Under the new guidance, an impairment loss will reflect the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for us beginning January 1, 2020, with early adoption permitted. We have elected to early adopt ASU 2017-04 effective January 1, 2018 and do not believe it will have a material impact on our financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , ("ASU 2016-15"). ASU 2016-15 adds and clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows, reducing the existing diversity in practice that has resulted from the lack of consistent principles on this topic. ASU 2016-15 is effective for us beginning January 1, 2018. A retrospective transition method is required on adoption. We do not believe that adopting this guidance will have a material impact on our statement of cash flows. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 was effective for us beginning January 1, 2017, and is reflected prospectively in the provision for income taxes in the accompanying consolidated statements of operations. The impact of the adoption was not material to our consolidated financial statements, including our prior year statement of cash flow, which was not revised. We continue to estimate forfeitures in calculating stock-based compensation expense and have not elected to recognize forfeitures as they occur. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. ASU 2016-02 will be effective for us beginning January 1, 2019, and early adoption is permitted. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact adopting this guidance will have on our financial statements. 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 and the guidance allows for full retrospective or modified retrospective methods of adoption. We have completed our evaluation on the impact that the adoption of ASU 2014-09 will have on our financial statements and concluded that the overall impact is immaterial to our consolidated financial statements. As a result of the adoption of ASU 2014-09, the timing of expenses will be impacted resulting from ceasing the capitalization of certain selling costs we incur as part of the selling process. The majority of these previously capitalized costs will be allocated to either Real estate or Property and Equipment, net in our 2018 consolidated balance sheet. We are adopting the modified retrospective approach and accordingly, the balance of any remaining unallocated capitalized marketing costs required to be expensed under ASU 2014-09 will be recorded to our opening balance of retained earnings in our 2018 consolidated balance sheet. We anticipate the adjustment in the first quarter of 2018 to our beginning balance of retained earnings to be approximately $0.6 million . Additionally, forfeited customer deposits that were previously included in Other income/(expense), net will now be reported as home closing revenue in our consolidated statements of operations effective in 2018. The amount of forfeited buyer deposits recognized in Other income/(expense), net was not material to our consolidated financial statements for any of the years ended December 31, 2017, 2016 or 2015. |
REAL ESTATE AND CAPITALIZED INT
REAL ESTATE AND CAPITALIZED INTEREST | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
REAL ESTATE AND CAPITALIZED INTEREST | REAL ESTATE AND CAPITALIZED INTEREST Real estate consists of the following (in thousands): At December 31, 2017 2016 Homes under contract under construction (1) $ 566,474 $ 508,927 Unsold homes, completed and under construction (1) 516,577 431,725 Model homes (1) 142,026 147,406 Finished home sites and home sites under development (2) 1,506,303 1,334,005 $ 2,731,380 $ 2,422,063 (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): Years Ended December 31, 2017 2016 2015 Capitalized interest, beginning of year $ 68,196 $ 61,202 $ 54,060 Interest incurred 79,045 70,348 67,542 Interest expensed (3,853 ) (5,172 ) (15,965 ) Interest amortized to cost of home and land closings (64,824 ) (58,182 ) (44,435 ) Capitalized interest, end of year (1) $ 78,564 $ 68,196 $ 61,202 (1) Approximately $517,000 , $130,000 and $445,000 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 December 31, 2017 , 2016 and 2015 , respectively. |
VARIABLE INTEREST ENTITIES AND
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | 12 Months Ended |
Dec. 31, 2017 | |
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] | |
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED We enter into purchase and option agreements for land or lots as part of the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures reduce our financial risk associated with land acquisitions and holdings and allow us to better leverage our balance sheet. Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into a purchase 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 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 that are not recorded on the balance sheet at December 31, 2017 (dollars in thousands): Projected Number of Lots (unaudited) Purchase Price (unaudited) Option/ Earnest Money Deposits–Cash Purchase and option contracts recorded on balance sheet as Real estate not owned 228 $ 38,864 $ 3,886 Option contracts — non-refundable deposits, committed (1) 3,822 273,925 33,623 Purchase contracts — non-refundable deposits, committed (1) 6,527 281,887 22,885 Purchase and option contracts —refundable deposits, committed 355 18,592 517 Total committed 10,932 613,268 60,911 Purchase and option contracts — refundable deposits, uncommitted (2) 6,326 187,726 2,920 Total lots under contract or option 17,258 $ 800,994 $ 63,831 Total purchase and option contracts 17,030 $ 762,130 $ 59,945 (3) (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) Amount is reflected in our consolidated balance sheet in the line item “Deposits on real estate under option or contract” as of December 31, 2017 . 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, we may purchase lots at an absorption level that exceeds our sales and home starts pace needed to meet the pre-established minimum number of lots or restructure our original contract to terms that more accurately reflect our revised sales pace expectations. |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | INVESTMENTS IN UNCONSOLIDATED ENTITIES We may enter into 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. Based on the structure of these joint ventures, they may or may not be consolidated into our results. Our joint venture partners generally are other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with, or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. In late 2016, we entered into our first new joint venture since 2008. As of December 31, 2017 , we had three active equity-method land ventures. As of December 31, 2017 , we also participated in one mortgage joint venture, which is engaged in mortgage activities and primarily provides services to our homebuyers. Our investment in this mortgage joint venture as of December 31, 2017 and December 31, 2016 was $ 2.2 million and $ 2.3 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 December 31, 2017 2016 Assets: Cash $ 8,942 $ 7,446 Real estate 55,552 54,319 Other assets 4,323 6,461 Total assets $ 68,817 $ 68,226 Liabilities and equity: Accounts payable and other liabilities $ 7,516 $ 7,339 Notes and mortgages payable 25,194 23,000 Equity of: Meritage (1) 14,521 14,245 Other 21,586 23,642 Total liabilities and equity $ 68,817 $ 68,226 Years Ended December 31, 2017 2016 2015 Revenue $ 45,475 $ 72,486 $ 35,510 Costs and expenses (19,203 ) (34,080 ) (16,240 ) Net earnings of unconsolidated entities $ 26,272 $ 38,406 $ 19,270 Meritage’s share of pre-tax earnings (1) (2) $ 16,082 $ 19,357 $ 12,805 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. As discussed in Note 2 to these consolidated financial statements, the balances above do not include $517,000 , $130,000 and $445,000 of capitalized interest that is a component of our investment balances at December 31, 2017, 2016 and 2015, respectively. (2) Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net or Earnings/(loss) from other unconsolidated entities, net, as applicable, on our consolidated statement of operations 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 represent the three active land ventures, one mortgage and various inactive ventures. Our total investment in all of these joint ventures is $17.1 million as of December 31, 2017 . 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 | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE AND OTHER BORROWINGS | LOANS PAYABLE AND OTHER BORROWINGS Loans payable and other borrowings consist of the following (in thousands): At December 31, 2017 2016 Other borrowings, real estate note payable (1) $ 17,354 $ 17,195 $625.0 million unsecured revolving credit facility with interest approximating LIBOR (approximately 1.56% at December 31, 2017) plus 1.75% or Prime (4.50% at December 31, 2017) plus 0.75% — 15,000 Total $ 17,354 $ 32,195 (1) Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 8% . The Company has a $625.0 million unsecured revolving credit facility ("Credit Facility"), with an accordion feature that permits the size of the facility to increase to a maximum of $725.0 million . In May 2017, we amended the Credit Facility to extend the maturity date of a substantial portion of the Credit Facility whereby $60.0 million matures in July 2019 with the remainder maturing in July 2021. As described in Note 17, in January 2018 the maturity of the entire commitment was extended to July 2021. 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 $987.4 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. We were in compliance with all Credit Facility covenants as of December 31, 2017. We had no outstanding borrowings under the Credit Facility as of December 31, 2017 and we had $15.0 million of borrowings outstanding at December 31, 2016 . During the twelve months ended December 31, 2017 we had $415.0 million and $430.0 million of gross borrowings and repayments, respectively. During the twelve months ended December 31, 2016 we had $286.0 million of gross borrowings and $271.0 million of repayments, respectively. Borrowings and repayments during the twelve months ended December 31, 2015 totaled $210.0 million each. As of December 31, 2017 we had outstanding letters of credit issued under the Credit Facility totaling $74.7 million , leaving $550.3 million available under the Credit Facility to be drawn. |
SENIOR AND CONVERTIBLE SENIOR N
SENIOR AND CONVERTIBLE SENIOR NOTES, NET | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
SENIOR AND CONVERTIBLE SENIOR NOTES, NET | SENIOR AND CONVERTIBLE SENIOR NOTES, NET Senior and convertible senior notes, net consist of the following (in thousands): At December 31, 2017 2016 4.50% senior notes due 2018 $ 175,000 $ 175,000 7.15% senior notes due 2020. At December 31, 2017 and December 31, 2016 there was approximately $1,280 and $1,849 in net unamortized premium, respectively 301,280 301,849 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025 200,000 200,000 5.125% senior notes due 2027 300,000 — 1.875% convertible senior notes due 2032 — 126,500 Net debt issuance costs (9,830 ) (8,230 ) Total $ 1,266,450 $ 1,095,119 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 December 31, 2017 . Obligations to pay principal and interest on the senior 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 will be released and relieved of any obligations under its note guarantee. There are no significant restrictions on our ability or the ability of any Guarantor to obtain funds from their respective subsidiaries, as applicable, by dividend or loan. We do not provide separate financial statements of the Guarantor Subsidiaries because Meritage (the parent company) has no independent assets or operations and the guarantees are full and unconditional and joint and several. Subsidiaries of Meritage Homes Corporation that are nonguarantor subsidiaries, if any, are, individually and in the aggregate, minor. During 2010, we completed an offering of $200.0 million aggregate principal amount of 7.15% senior notes due 2020. The notes were issued at 97.567% of par value to yield 7.50% . In the fourth quarter of 2013, we completed a $100.0 million add-on offering to the existing 7.50% senior notes due 2020. The add-on was issued at 106.699% of par value to yield 5.875% . In April 2012, we completed an offering of $300.0 million aggregate principal amount of 7.00% Senior Notes due 2022. Concurrent with this offering, we repurchased all $285.0 million outstanding of our 6.25% Senior Notes due 2015. We also repurchased the remaining aggregate principal amount of approximately $26.1 million of our 7.731% Senior Subordinated Notes due 2017. In March 2013, we issued $175.0 million aggregate principal amount of 4.50% senior notes due 2018. These notes were issued at par and the proceeds were partially used to pay off the remaining $99.8 million balance of our 7.731% senior subordinated notes due 2017. In June 2015, we completed an offering of $200.0 million aggregate principal amount of 6.00% Senior Notes due 2025 (the "2025 Notes"). The 2025 Notes were issued at par, and the proceeds were used for general corporate obligations and future land spend. In June 2017, we completed an offering of $ 300.0 million aggregate principal amount of 5.125% Senior Notes due 2027 (the "2027 Notes"). The 2027 notes were issued at par. Using the proceeds from the 2027 Notes offering, we retired all $126.5 million of our convertible senior notes through a repurchase of $51.9 million in privately negotiated transactions and a redemption of the remaining $74.6 million through a combination of holder redemptions and an exercise of our call option at a redemption price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest. As a result, we incurred a loss on extinguishment of debt of $0.3 million included in Other income/(expense), net, in the accompanying consolidated statement of operations for the twelve months ended December 31, 2017. Scheduled principal maturities of our senior and notes as of December 31, 2017 follow (in thousands): Year Ended December 31, 2018 $ 175,000 2019 — 2020 300,000 2021 — 2022 300,000 Thereafter 500,000 Total $ 1,275,000 |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 12 Months Ended |
Dec. 31, 2017 | |
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. Refer to Notes 1 and 2 for additional information regarding the valuation of our non-financial assets. Financial Instruments : The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (level 2 inputs as per the discussion above) and is as follows (in thousands): At December 31, 2017 2016 Aggregate Principal Estimated Fair Value Aggregate Principal Estimated Fair Value 4.50% senior notes $ 175,000 $ 175,228 $ 175,000 $ 177,625 7.15% senior notes $ 300,000 $ 326,250 $ 300,000 $ 325,500 7.00% senior notes $ 300,000 $ 337,500 $ 300,000 $ 324,750 6.00% senior notes $ 200,000 $ 214,000 $ 200,000 $ 202,500 5.125% senior notes $ 300,000 $ 305,250 N/A N/A 1.875% convertible senior notes N/A N/A $ 126,500 $ 126,105 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 | 12 Months Ended |
Dec. 31, 2017 | |
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): Years Ended December 31, 2017 2016 2015 Basic weighted average number of shares outstanding 40,287 39,976 39,593 Effect of dilutive securities: Convertible debt (1) 1,311 2,176 2,176 Stock options and unvested restricted stock 630 433 395 Diluted average shares outstanding 42,228 42,585 42,164 Net earnings as reported $ 143,255 $ 149,541 $ 128,738 Interest attributable to convertible senior notes, net of income taxes 941 1,615 1,597 Net earnings for diluted earnings per share $ 144,196 $ 151,156 $ 130,335 Basic earnings per share $ 3.56 $ 3.74 $ 3.25 Diluted earnings per share (1) $ 3.41 $ 3.55 $ 3.09 Antidilutive stock options not included in the calculation of diluted earnings per share 2 4 — (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 based on the number of days the Convertible Notes were outstanding during the period. All of the Convertible Notes were retired in 2017. |
ACQUISITIONS AND GOODWILL
ACQUISITIONS AND GOODWILL | 12 Months Ended |
Dec. 31, 2017 | |
Business Acquisitions and Goodwill [Abstract] | |
ACQUISITIONS AND GOODWILL | ACQUISITIONS AND GOODWILL Goodwill. In recent years, we entered new markets through the acquisition of the homebuilding assets and operations of local/regional homebuilders in Georgia, South Carolina and Tennessee. The acquisitions were recorded in accordance with ASC 805, Business Combination s ("ASC 805") and ASC 820, using the acquisition method of accounting. The purchase price for the acquisitions were allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price over the fair value of the net assets of $33.0 million was recorded as goodwill, which 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 triggers are present. Our analysis concluded that our goodwill balance was not impaired. A summary of changes in the carrying amount of goodwill follows (in thousands): West Central East Financial Services Corporate Total Balance at January 1, 2016 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at December 31, 2016 — — 32,962 — — 32,962 Additions — — — — — — Balance at December 31, 2017 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCK BASED AND DEFERRED COMPEN
STOCK BASED AND DEFERRED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
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 has been amended or restated from time to time. 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 5,350,000 shares of common stock, of which 1,169,574 shares remain available for grant at December 31, 2017 . The available shares include shares from expired, terminated or forfeited awards under prior plans that have since expired and are thus available for grant under the Plan. The total shares reserved for existing or future grants at December 31, 2017 was 2,439,231 . 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 senior executive officers and non-employee directors. We have no t granted any stock options since 2009 and had no stock options outstanding as of December 31, 2017 and 2016 . A summary of remaining stock option activity from stock options granted prior to 2010 is provided below. Summary of Stock Option Activity: Years Ended December 31, 2016 2015 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Options outstanding at beginning of year: 14,400 $ 16.11 181,440 $ 18.69 Granted — N/A — N/A Exercised (14,400 ) $ 16.11 (147,040 ) $ 19.62 Cancelled — N/A (20,000 ) $ 13.69 Outstanding at end of year — N/A 14,400 $ 16.11 Exercisable at end of year — N/A 14,400 $ 16.11 Price range of options exercised $ 11.48 - $22.11 $ 11.48 - $22.11 Price range of options outstanding N/A $ 11.48 - $22.11 The total intrinsic value of option exercises for the years ended December 31, 2016 and 2015 was $0.2 million and $3.5 million respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the stock option. Summary of Nonvested (Restricted) Shares and Units Activity: In addition to the stock options discussed above, we grant time-based and performance-based restricted shares. Performance-based restricted shares are only granted to executive officers. All performance shares only vest upon the attainment of certain financial and operational criteria as established and approved by our Board of Directors. Nonvested Restricted Share Activity (time-based) Weighted Average Grant Date Fair Value Nonvested Restricted Share Activity (performance- based) Weighted Average Grant Date Fair Value Outstanding at January 1, 2015 903,441 $ 37.51 170,833 $ 35.43 Granted 434,387 40.48 66,187 41.17 Vested (Earned/Released) (318,651 ) 41.14 (56,250 ) 40.34 Forfeited (1) (135,470 ) 40.53 — N/A Outstanding as of December 31, 2015 883,707 40.75 180,770 42.93 Granted 499,865 31.60 66,698 34.39 Vested (Earned/Released) (305,359 ) 30.87 (41,665 ) 31.02 Forfeited (1) (115,910 ) 36.79 (20,835 ) 42.56 Outstanding at December 31, 2016 962,303 37.00 184,968 34.84 Granted 430,575 34.45 154,120 34.10 Vested (Earned/Released) (279,856 ) 38.39 (20,367 ) 45.60 Forfeited (1) (130,370 ) 35.09 (31,716 ) 45.60 Outstanding at December 31, 2017 982,652 35.59 287,005 35.80 (1) Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are a result of failing to attain certain goals as outlined in our executive officers' compensation agreements. Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, 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, which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense and recorded on a straight-line basis through the end of the award’s vesting period. A portion of the performance-based restricted stock awards granted contain market conditions as defined by ASC 718. The guidance in ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engaged a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is being expensed straight line over the service period of the awards. Below is a summary of compensation expense and stock award activity (in thousands): Years Ended December 31, 2017 2016 2015 Stock-based compensation expense $ 12,056 $ 13,741 $ 15,781 Cash received by Company from exercises $ — $ 232 $ 2,886 The following table includes additional information regarding our Plan (dollars in thousands): At December 31, 2017 2016 Unrecognized stock-based compensation cost $ 18,439 $ 18,528 Weighted average years expense recognition period 2.48 2.56 Total equity awards outstanding 1,269,657 1,147,271 We also offer a non-qualified deferred compensation plan ("deferred compensation plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401(k) 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 years ended December 31, 2017, 2016 and 2015, other than minor administrative costs. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Components of income tax expense are as follows (in thousands): Years Ended December 31, 2017 2016 2015 Current taxes: Federal $ 76,988 $ 55,547 $ 53,510 State 8,006 7,075 2,726 84,994 62,622 56,236 Deferred taxes: Federal 18,916 4,064 (1,652 ) State 354 1,833 6,142 19,270 5,897 4,490 Total $ 104,264 $ 68,519 $ 60,726 Income taxes differ for the years ended December 31, 2017 , 2016 and 2015 , from the amounts computed using the expected federal statutory income tax rate of 35% as a result of the following (in thousands): Years Ended December 31, 2017 2016 2015 Expected taxes at current federal statutory income tax rate $ 86,632 $ 76,321 $ 66,312 State income taxes, net of federal tax benefit 5,434 5,791 5,764 Tax Act revaluation of deferred tax balances 19,687 — — Manufacturing deduction (7,580 ) (6,708 ) (5,917 ) Federal tax credits (484 ) (7,229 ) (6,172 ) Non-deductible costs and other 575 344 739 Income tax expense $ 104,264 $ 68,519 $ 60,726 The effective tax rate was 42.1% , 31.4% , and 32.1% for 2017 , 2016 and 2015, respectively. Our 2016 and 2015 tax rates were favorably impacted by both the homebuilder manufacturing deduction and energy tax credits. The effective tax rate for 2017 was favorably impacted by the homebuilder manufacturing deduction and to a lesser extent additional energy tax credits obtained by qualifying more homes from open prior tax years. These were offset by an unfavorable impact to the 2017 effective tax rate from the revaluation of deferred tax balances due to the Tax Act. Deferred tax assets and liabilities are netted on our balance sheet by tax jurisdiction. Net overall tax assets for all jurisdictions are grouped and included as a separate asset. Net overall deferred tax liabilities for all jurisdictions are grouped and included in other liabilities. At December 31, 2017 , we have a net deferred tax asset of $35.2 million . We also have net deferred tax liabilities of $4.2 million . Deferred tax assets and liabilities are comprised of timing differences (in thousands) as follows: At December 31, 2017 2016 Deferred tax assets: Real estate $ 14,648 $ 21,525 Goodwill 2,076 6,153 Warranty reserve 5,499 8,408 Wages payable 5,796 11,002 Equity-based compensation 4,486 7,030 Accrued expenses 141 250 Net operating loss carry-forwards 1,813 1,366 Other 4,982 3,695 Total deferred tax assets 39,441 59,429 Deferred tax liabilities: Deferred revenue 462 1,455 Prepaids 759 933 Fixed assets 3,058 3,721 Total deferred tax liabilities 4,279 6,109 Deferred tax assets, net 35,162 53,320 Other deferred tax liability - state franchise taxes 4,240 3,128 Net deferred tax assets and liabilities $ 30,922 $ 50,192 At December 31, 2017 and December 31, 2016 , 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. We determine our deferred tax assets and liabilities in accordance with ASC 740-10, Income Taxes ("ASC 740" ) . 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 December 31, 2017 . On December 22, 2017, the President signed into law the Tax Act. Under ASC 740, the effects of new legislation are recognized in the period that includes the date of enactment. The estimated impact on 2017 was to reduce the value of our deferred tax asset by $19.7 million and has been reflected in our effective tax rate reconciliation. The disclosed impact is our most reasonable estimate at this time based on our understanding of the Tax Act as it applies to our business and may change as more information becomes available. Our future NOL and deferred tax asset realization depends on sufficient taxable income in the carryforward periods under existing tax laws. Federal NOL carryforwards may be used to offset future taxable income for 20 years. State NOL carryforwards may be used to offset future taxable income for a period of time ranging from 5 to 20 years, depending on the state jurisdiction. At December 31, 2017 , we had no remaining un-utilized federal NOL carryforward or federal tax credits. At December 31, 2017 , we had tax benefits for state NOL carryforwards of $1.8 million that begin to expire in 2028. At December 31, 2017 , we have income taxes payable of $7.2 million , which primarily consists of current federal and state tax accruals, net of estimated tax payments. This amount is recorded in Accrued liabilities in the accompanying balance sheet at December 31, 2017 . 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 2013 . We have one state income tax examination covering various years pending resolution at this time. The tax benefits from NOLs, built-in losses, and tax credits would be materially reduced or potentially eliminated if we experience an “ownership change” as defined under Internal Revenue Code (“IRC”) §382. Based on our analysis performed as of December 31, 2017 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. On December 18, 2015, Congress passed the Protecting Americans from Tax Hikes ("PATH") Act of 2015 which the President signed into law. The PATH Act extended the availability of the IRC §45L new energy efficient homes credit through the end of 2016. Under ASC 740, the effects of new legislation are recognized in the period that includes the date of enactment, regardless of the retroactive benefit. In accordance with this guidance, we recorded tax effected benefits based on estimates for qualifying new energy efficient homes that we closed in 2015 and 2016. The estimated tax effected benefits as adjusted for actual experience are reflected in our effective tax rate reconciliation as the benefit from federal tax credits. See Note 17 for additional information related to IRC §45L tax credits subsequent to year-end. |
SUPPLEMENTAL DISCLOSURE OF CASH
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
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): Years Ended December 31, 2017 2016 2015 Cash paid during the year for: Interest, net of interest capitalized $ 570 $ 1,760 $ 9,915 Income taxes $ 85,814 $ 65,020 $ 56,186 Non-cash operating activities decrease: Real estate not owned $ 38,864 $ — $ 4,999 Real estate acquired through notes payable $ 11,129 $ 14,199 $ 16,371 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS From time to time, in the normal course of business, we have transacted with related or affiliated companies and with certain of our officers and directors. We believe that the terms and fees negotiated for all transactions listed below are no less favorable than those that could be negotiated in arm’s length transactions. We charter aircraft services from companies that use the private plane of Steven Hilton, our Chairman and CEO, although Mr. Hilton does not have an ownership interest in the companies. Payments made to these companies were approximately $580,000 , $711,000 and $695,000 for the years ended December 31, 2017 , 2016 and 2015 , respectively. |
OPERATING AND REPORTING SEGMENT
OPERATING AND REPORTING SEGMENTS | 12 Months Ended |
Dec. 31, 2017 | |
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 reporting segments based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows: West: Arizona, California and Colorado 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, “Business and Summary of Significant Accounting Policies.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. The following segment information is in thousands: Years Ended December 31, 2017 2016 2015 Homebuilding revenue (1): West $ 1,437,860 $ 1,300,906 $ 1,029,801 Central 904,908 787,849 731,766 East 884,004 940,472 806,515 Consolidated total 3,226,772 3,029,227 2,568,082 Homebuilding segment operating income: West 129,781 103,801 85,760 Central 92,451 74,253 80,444 East 32,089 48,126 56,141 Total homebuilding segment operating income 254,321 226,180 222,345 Financial services segment profit 22,055 21,902 19,271 Corporate and unallocated costs (2) (33,510 ) (33,863 ) (34,903 ) Earnings/(loss) from other unconsolidated entities, net 2,101 4,060 (338 ) Interest expense (3,853 ) (5,172 ) (15,965 ) Other income/(expense), net 6,405 4,953 (946 ) Net earnings before income taxes $ 247,519 $ 218,060 $ 189,464 (1) Homebuilding revenue includes the following land closing revenue, by segment: Years Ended December 31, Land closing revenue: 2017 2016 2015 West $ 18,116 $ 15,608 $ 2,131 Central 622 8,885 26,448 East 21,259 1,308 7,947 Total $ 39,997 $ 25,801 $ 36,526 (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 December 31, 2017 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 15,557 $ 21,309 $ 23,079 $ — $ — $ 59,945 Real estate 1,174,285 700,460 856,635 — — 2,731,380 Investments in unconsolidated entities 7,833 6,999 — — 2,236 17,068 Other assets 58,470 (1) 110,173 (2) 144,681 (3) 1,249 128,292 (4) 442,865 Total assets $ 1,256,145 $ 838,941 $ 1,024,395 $ 1,249 $ 130,528 $ 3,251,258 (1) Balance consists primarily of cash and property and equipment. (2) Balance consists primarily of development reimbursements from local municipalities and cash. (3) Balance consists primarily of real estate not owned, cash and goodwill (see Note 9). (4) Balance consists primarily of cash and our deferred tax asset. At December 31, 2016 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 25,863 $ 27,669 $ 32,024 $ — $ — $ 85,556 Real estate 1,120,038 595,485 706,540 — — 2,422,063 Investments in unconsolidated entities 7,362 7,450 — — 2,285 17,097 Other assets 45,624 (1 ) 94,299 (2 ) 93,245 (3 ) 812 129,995 (4 ) 363,975 Total assets $ 1,198,887 $ 724,903 $ 831,809 $ 812 $ 132,280 $ 2,888,691 (1) Balance consists primarily of cash and property and equipment. (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. (4) Balance consists primarily of cash and our deferred tax asset. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We are involved in various routine legal and regulatory proceedings, including, without limitation, claims and litigation alleging construction defects. In general, the proceedings are incidental to our business, and most exposure is subject to and should be covered by warranty and indemnity obligations of our consultants and subcontractors. Additionally, some such claims are also covered by insurance. With respect to the majority of pending litigation matters, our ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to these matters are not considered probable. Historically, most disputes regarding warranty claims are resolved prior to litigation. We believe there are not any pending legal or warranty matters that could have a material adverse impact upon our consolidated financial condition, results of operations or cash flows that have not been sufficiently reserved. Lease Agreements We lease office facilities, model homes and equipment under various operating lease agreements. Approximate future minimum lease payments for non-cancellable operating leases as of December 31, 2017 , are as follows (in thousands): Years Ended December 31, 2018 $ 7,062 2019 6,405 2020 5,900 2021 5,027 2022 4,100 Thereafter 5,478 $ 33,972 Rent expense was $9.7 million , $7.8 million and $6.6 million in 2017 , 2016 and 2015 , respectively, and is included within general and administrative expense or in commissions and other sales costs on our consolidated statements of operations. Sublease income was $0.7 million , $0.6 million and $0.5 million in 2017 , 2016 and 2015 , respectively. Sublease income is included within other income/(expense), net on our consolidated statements of operations. See Note 1 for information related to our warranty obligations. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Quarterly results for the years ended December 31, 2017 and 2016 follow (in thousands, except per share amounts): First Second Third Fourth 2017 Total closing revenue $ 672,772 $ 801,978 $ 805,597 $ 946,425 Total closing gross profit $ 109,763 $ 140,910 $ 144,601 $ 171,225 Earnings before income taxes $ 36,769 $ 63,205 $ 63,455 $ 84,090 Net earnings $ 23,572 $ 41,580 $ 42,550 $ 35,553 Per Share Data: Basic earnings per share (1) $ 0.59 $ 1.03 $ 1.06 $ 0.88 Diluted earnings per share (1) $ 0.56 $ 0.98 $ 1.02 $ 0.87 2016 Total closing revenue $ 597,766 $ 797,896 $ 752,857 $ 880,708 Total closing gross profit $ 103,796 $ 138,104 $ 131,874 $ 157,438 Earnings before income taxes $ 28,885 $ 59,036 $ 53,802 $ 76,337 Net earnings $ 20,969 $ 39,878 $ 36,887 $ 51,807 Per Share Data: Basic earnings per share (1) $ 0.53 $ 1.00 $ 0.92 $ 1.29 Diluted earnings per share (1) $ 0.50 $ 0.95 $ 0.88 $ 1.22 (1) Due to the computation of earnings per share, the sum of the quarterly amounts may not equal the full-year results. We typically experience seasonal variability in our quarterly operating results and capital requirements. Historically, we sell more homes in the first half of the year, which results in more working capital requirements and home closings in the third and fourth quarters. However, during economic downturns or times of certain government incentives, our results may not follow our historical trends. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Credit Facility On June 13, 2014, Meritage Homes entered into an amended and restated Credit Facility. Since that time, the Credit Facility has been amended from time to time to, among other things, increase the aggregate commitment to $625.0 million , consisting of $565 million of Class A commitments maturing in July 2021 and $60.0 million of Class B commitments maturing in July 2019. On January 25, 2018, the sole Class B commitment lender assigned all of its rights and obligations under the Credit Facility to another lender. Subsequent to such assignment, the new lender converted the entire $60.0 million Class B commitment to a Class A commitment. As a result, the entire $625.0 million aggregate commitment now matures in July 2021. Joint Venture Litigation Since 2010, we have been involved in various legal proceedings regarding a Nevada based land acquisition and development joint venture known as South Edge, LLC relating to a Henderson, Nevada project known as Inspirada. In February 2018, we received $4.8 million to settle and conclude our legal claims against certain members of that venture. Income Taxes On February 9, 2018, the President signed the Bipartisan Budget Act of 2018 which included a retroactive extension of the IRC §45L new energy efficient homes credit, which had previously expired in 2016. This extension provision provides for a single year extension tax credit for homes sold in 2017 that meet the qualification criteria. These energy tax credits have provided us a significant benefit and reduced our effective income tax rate in prior years when they were available. Under ASC 740, the effects of these tax credits will be recorded in 2018, based on the date of enactment, regardless of the retroactive treatment. |
BUSINESS AND SUMMARY OF SIGNI24
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and 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. |
Cash and Cash Equivalents | Liquid investments with an initial maturity of three months or less are classified as cash equivalents. |
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. Actual results can 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 significantly 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. If an asset is deemed to be impaired, the impairment recognized is measured as the amount by which the asset's carrying amount exceeds its fair value. The impairment of a community is allocated to each lot on a straight-line basis. |
Deposits | Deposits paid related to land option 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 any non-refundable deposits and any ancillary capitalized costs. |
Goodwill | In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indicators of impairment exist) through a qualitative assessment to determine whether it is necessary to perform a two-step goodwill impairment test. ASC 350 states that an entity may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, the two-step impairment testing in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information related to goodwill. |
Property and Equipment, net | Property and equipment, net consists of computer and office equipment and model home furnishings. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. |
Deferred Costs | The costs are primarily amortized to interest expense using the straight line method which approximates the effective interest method. |
Investments in Unconsolidated Entities | We use the equity method of accounting for investments in unconsolidated entities over which we exercise significant influence but do not have a controlling interest. Under the equity method, our share of the unconsolidated entities’ earnings or loss is included in Earnings/(loss) from other unconsolidated entities, net, or Earnings from financial services, unconsolidated entities and other, net, in our statements of operations. We use the cost method of accounting for investments in unconsolidated entities over which we do not have significant influence, if any. We track cumulative earnings and distributions from each of our ventures. For cash flow classification, to the extent distributions do not exceed cumulative earnings, we designate such distributions as return on capital. Distributions in excess of cumulative earnings are treated as return of capital. We evaluate our investments in unconsolidated entities for impairment when events that trigger an evaluation of recoverability present themselves. See Note 4 for additional information related to investments in unconsolidated entities. |
Revenue Recognition | Revenue from closings of residential real estate is recognized when closings have occurred, the buyer has made the required minimum down payment, obtained necessary financing, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally the close of escrow. Revenue is reported net of any discounts and incentives. |
Cost of Home Closings | Cost of home closings includes direct home construction costs, closing costs, land acquisition and development costs, development period interest and common costs, and impairments, if any. Direct construction costs are accumulated during the period of construction and charged to cost of closings under specific identification methods, as are closing costs. Estimates of costs incurred or to be incurred but not paid are accrued and expensed at the time of closing. Land development, acquisition and common costs are allocated to each lot based on the number of lots remaining to close. |
Income Taxes | We account for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of both temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted. We record deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available objectively verifiable positive and negative evidence, including scheduled reversals of deferred tax liabilities, whether we are in a cumulative loss position, projected future taxable income, tax planning strategies and recent financial operations. If we determine that we will not be able to realize our deferred tax assets in the future, we will record a valuation allowance, which increases the provision for income taxes. We recognize interest and penalties related to unrecognized tax benefits within the Provision for income taxes line in the accompanying consolidated statement of operations. Accrued interest and penalties are included within the Accrued liabilities line in the accompanying consolidated balance sheets. See Note 11 for additional information related to income taxes. We determine our deferred tax assets and liabilities in accordance with ASC 740-10, Income Taxes ("ASC 740" ) . 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. Deferred tax assets and liabilities are netted on our balance sheet by tax jurisdiction. Net overall tax assets for all jurisdictions are grouped and included as a separate asset. Net overall deferred tax liabilities for all jurisdictions are grouped and included in other liabilities. |
Advertising Costs | We expense advertising costs as they are incurred. |
Earnings Per Share | We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In periods of net losses, no dilution is computed. See Note 8 for additional information related to earnings per share. |
Stock-Based Compensation | We account for stock-based compensation in accordance with ASC 718-10, Compensation—Stock Compensation ("ASC 718"). This guidance requires us to estimate forfeitures in calculating the expense related to stock-based compensation. Awards with either a graded or cliff vesting are expensed on a straight-line basis over the life of the award. See Note 10 for additional information on stock-based compensation. Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, 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, which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense and recorded on a straight-line basis through the end of the award’s vesting period. A portion of the performance-based restricted stock awards granted contain market conditions as defined by ASC 718. The guidance in ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engaged a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is being expensed straight line over the service period of the awards. |
401(k) Retirement Plan | We have a 401(k) plan for all full-time Meritage employees. We match portions of employees’ voluntary contributions |
Off-Balance Sheet Arrangements | In the normal course of business, we may acquire lots from various development entities pursuant purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and may have staggered purchase schedules. See Note 3 for additional information on off-balance sheet arrangements. We provide letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. Surety bonds are generally posted in lieu of letters of credit or cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Bonds are generally not wholly 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. We may participate 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. See Note 4 for additional discussion of our investments in unconsolidated entities. |
Warranty Reserves | Warranty reserves are included in Accrued liabilities on the accompanying consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying consolidated statements of operations. 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. 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. |
Recently Accounting Pronouncements | In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04"), which simplifies the accounting for goodwill impairments by eliminating the second step of the goodwill impairment test. Under the new guidance, an impairment loss will reflect the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for us beginning January 1, 2020, with early adoption permitted. We have elected to early adopt ASU 2017-04 effective January 1, 2018 and do not believe it will have a material impact on our financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , ("ASU 2016-15"). ASU 2016-15 adds and clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows, reducing the existing diversity in practice that has resulted from the lack of consistent principles on this topic. ASU 2016-15 is effective for us beginning January 1, 2018. A retrospective transition method is required on adoption. We do not believe that adopting this guidance will have a material impact on our statement of cash flows. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 was effective for us beginning January 1, 2017, and is reflected prospectively in the provision for income taxes in the accompanying consolidated statements of operations. The impact of the adoption was not material to our consolidated financial statements, including our prior year statement of cash flow, which was not revised. We continue to estimate forfeitures in calculating stock-based compensation expense and have not elected to recognize forfeitures as they occur. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. ASU 2016-02 will be effective for us beginning January 1, 2019, and early adoption is permitted. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact adopting this guidance will have on our financial statements. 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 and the guidance allows for full retrospective or modified retrospective methods of adoption. We have completed our evaluation on the impact that the adoption of ASU 2014-09 will have on our financial statements and concluded that the overall impact is immaterial to our consolidated financial statements. As a result of the adoption of ASU 2014-09, the timing of expenses will be impacted resulting from ceasing the capitalization of certain selling costs we incur as part of the selling process. The majority of these previously capitalized costs will be allocated to either Real estate or Property and Equipment, net in our 2018 consolidated balance sheet. We are adopting the modified retrospective approach and accordingly, the balance of any remaining unallocated capitalized marketing costs required to be expensed under ASU 2014-09 will be recorded to our opening balance of retained earnings in our 2018 consolidated balance sheet. We anticipate the adjustment in the first quarter of 2018 to our beginning balance of retained earnings to be approximately $0.6 million . Additionally, forfeited customer deposits that were previously included in Other income/(expense), net will now be reported as home closing revenue in our consolidated statements of operations effective in 2018. The amount of forfeited buyer deposits recognized in Other income/(expense), net was not material to our consolidated financial statements for any of the years ended December 31, 2017, 2016 or 2015. |
Variable Interest Entities | Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into a purchase 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 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 Measurement | 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. Refer to Notes 1 and 2 for additional information regarding the valuation of our non-financial assets. |
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 reporting segments based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows: West: Arizona, California and Colorado 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, “Business and Summary of Significant Accounting Policies.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. |
BUSINESS AND SUMMARY OF SIGNI25
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Property and Equipment, net | At December 31, 2017 and 2016 , property and equipment, net consisted of the following (in thousands): At December 31, 2017 2016 Computer and office equipment $ 40,731 $ 35,288 Model home furnishings 50,063 45,767 Gross property and equipment 90,794 81,055 Accumulated depreciation (57,163 ) (47,853 ) Total $ 33,631 $ 33,202 |
Schedule of Accrued Liabilities | Accrued liabilities at December 31, 2017 and 2016 consisted of the following (in thousands): At December 31, 2017 2016 Accruals related to real estate development and construction activities $ 53,522 $ 53,778 Payroll and other benefits 58,186 52,941 Accrued interest 15,369 15,017 Accrued taxes 14,067 9,637 Warranty reserves 23,328 22,660 Other accruals 16,604 16,819 Total $ 181,076 $ 170,852 |
Schedule of Surety Bond and Letter of Credit Obligations | The table below outlines our surety bond and letter of credit obligations (in thousands): At December 31, 2017 2016 Outstanding Estimated work remaining to complete (unaudited) Outstanding Estimated work remaining to complete (unaudited) Sureties: Sureties related to owned projects and lots under contract 296,387 120,320 239,246 85,706 Total Sureties $ 296,387 $ 120,320 $ 239,246 $ 85,706 Letters of Credit (“LOCs”): LOCs in lieu of deposits for contracted lots $ — N/A $ 250 N/A LOCs for land development 70,922 N/A 39,839 N/A LOCs for general corporate operations 3,750 N/A 3,750 N/A Total LOCs $ 74,672 N/A $ 43,839 N/A |
Summary of Changes in Warranty Reserves | A summary of changes in our warranty reserves follows (in thousands): Years Ended December 31, 2017 2016 Balance, beginning of year $ 22,660 $ 21,615 Additions to reserve from new home deliveries 17,161 16,776 Warranty claims (14,854 ) (14,719 ) Adjustments to pre-existing reserves (1,639 ) (1,012 ) Balance, end of year $ 23,328 $ 22,660 |
REAL ESTATE AND CAPITALIZED I26
REAL ESTATE AND CAPITALIZED INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Real Estate | Real estate consists of the following (in thousands): At December 31, 2017 2016 Homes under contract under construction (1) $ 566,474 $ 508,927 Unsold homes, completed and under construction (1) 516,577 431,725 Model homes (1) 142,026 147,406 Finished home sites and home sites under development (2) 1,506,303 1,334,005 $ 2,731,380 $ 2,422,063 (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): Years Ended December 31, 2017 2016 2015 Capitalized interest, beginning of year $ 68,196 $ 61,202 $ 54,060 Interest incurred 79,045 70,348 67,542 Interest expensed (3,853 ) (5,172 ) (15,965 ) Interest amortized to cost of home and land closings (64,824 ) (58,182 ) (44,435 ) Capitalized interest, end of year (1) $ 78,564 $ 68,196 $ 61,202 (1) Approximately $517,000 , $130,000 and $445,000 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 December 31, 2017 , 2016 and 2015 , respectively. |
VARIABLE INTEREST ENTITIES AN27
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] | |
Summary of Lots Under Option | The table below presents a summary of our lots under option that are not recorded on the balance sheet at December 31, 2017 (dollars in thousands): Projected Number of Lots (unaudited) Purchase Price (unaudited) Option/ Earnest Money Deposits–Cash Purchase and option contracts recorded on balance sheet as Real estate not owned 228 $ 38,864 $ 3,886 Option contracts — non-refundable deposits, committed (1) 3,822 273,925 33,623 Purchase contracts — non-refundable deposits, committed (1) 6,527 281,887 22,885 Purchase and option contracts —refundable deposits, committed 355 18,592 517 Total committed 10,932 613,268 60,911 Purchase and option contracts — refundable deposits, uncommitted (2) 6,326 187,726 2,920 Total lots under contract or option 17,258 $ 800,994 $ 63,831 Total purchase and option contracts 17,030 $ 762,130 $ 59,945 (3) (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) Amount is reflected in our consolidated balance sheet in the line item “Deposits on real estate under option or contract” as of December 31, 2017 . |
INVESTMENTS IN UNCONSOLIDATED28
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures | Summarized condensed financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): At December 31, 2017 2016 Assets: Cash $ 8,942 $ 7,446 Real estate 55,552 54,319 Other assets 4,323 6,461 Total assets $ 68,817 $ 68,226 Liabilities and equity: Accounts payable and other liabilities $ 7,516 $ 7,339 Notes and mortgages payable 25,194 23,000 Equity of: Meritage (1) 14,521 14,245 Other 21,586 23,642 Total liabilities and equity $ 68,817 $ 68,226 Years Ended December 31, 2017 2016 2015 Revenue $ 45,475 $ 72,486 $ 35,510 Costs and expenses (19,203 ) (34,080 ) (16,240 ) Net earnings of unconsolidated entities $ 26,272 $ 38,406 $ 19,270 Meritage’s share of pre-tax earnings (1) (2) $ 16,082 $ 19,357 $ 12,805 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. As discussed in Note 2 to these consolidated financial statements, the balances above do not include $517,000 , $130,000 and $445,000 of capitalized interest that is a component of our investment balances at December 31, 2017, 2016 and 2015, respectively. (2) Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net or Earnings/(loss) from other unconsolidated entities, net, as applicable, on our consolidated statement of operations 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 BORRO29
LOANS PAYABLE AND OTHER BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable and Other Borrowings | Loans payable and other borrowings consist of the following (in thousands): At December 31, 2017 2016 Other borrowings, real estate note payable (1) $ 17,354 $ 17,195 $625.0 million unsecured revolving credit facility with interest approximating LIBOR (approximately 1.56% at December 31, 2017) plus 1.75% or Prime (4.50% at December 31, 2017) plus 0.75% — 15,000 Total $ 17,354 $ 32,195 (1) Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 8% . |
SENIOR AND CONVERTIBLE SENIOR30
SENIOR AND CONVERTIBLE SENIOR NOTES, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Senior and Convertible Senior Notes | Senior and convertible senior notes, net consist of the following (in thousands): At December 31, 2017 2016 4.50% senior notes due 2018 $ 175,000 $ 175,000 7.15% senior notes due 2020. At December 31, 2017 and December 31, 2016 there was approximately $1,280 and $1,849 in net unamortized premium, respectively 301,280 301,849 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025 200,000 200,000 5.125% senior notes due 2027 300,000 — 1.875% convertible senior notes due 2032 — 126,500 Net debt issuance costs (9,830 ) (8,230 ) Total $ 1,266,450 $ 1,095,119 |
Schedule of Principal Maturities of Senior and Senior Convertible Notes | Scheduled principal maturities of our senior and notes as of December 31, 2017 follow (in thousands): Year Ended December 31, 2018 $ 175,000 2019 — 2020 300,000 2021 — 2022 300,000 Thereafter 500,000 Total $ 1,275,000 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of 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): At December 31, 2017 2016 Aggregate Principal Estimated Fair Value Aggregate Principal Estimated Fair Value 4.50% senior notes $ 175,000 $ 175,228 $ 175,000 $ 177,625 7.15% senior notes $ 300,000 $ 326,250 $ 300,000 $ 325,500 7.00% senior notes $ 300,000 $ 337,500 $ 300,000 $ 324,750 6.00% senior notes $ 200,000 $ 214,000 $ 200,000 $ 202,500 5.125% senior notes $ 300,000 $ 305,250 N/A N/A 1.875% convertible senior notes N/A N/A $ 126,500 $ 126,105 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings per Common Share | Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts): Years Ended December 31, 2017 2016 2015 Basic weighted average number of shares outstanding 40,287 39,976 39,593 Effect of dilutive securities: Convertible debt (1) 1,311 2,176 2,176 Stock options and unvested restricted stock 630 433 395 Diluted average shares outstanding 42,228 42,585 42,164 Net earnings as reported $ 143,255 $ 149,541 $ 128,738 Interest attributable to convertible senior notes, net of income taxes 941 1,615 1,597 Net earnings for diluted earnings per share $ 144,196 $ 151,156 $ 130,335 Basic earnings per share $ 3.56 $ 3.74 $ 3.25 Diluted earnings per share (1) $ 3.41 $ 3.55 $ 3.09 Antidilutive stock options not included in the calculation of diluted earnings per share 2 4 — (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 based on the number of days the Convertible Notes were outstanding during the period. All of the Convertible Notes were retired in 2017. |
ACQUISITIONS AND GOODWILL (Tabl
ACQUISITIONS AND GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Acquisitions and Goodwill [Abstract] | |
Summary of Changes in the Carrying Amount of Goodwill | A summary of changes in the carrying amount of goodwill follows (in thousands): West Central East Financial Services Corporate Total Balance at January 1, 2016 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at December 31, 2016 — — 32,962 — — 32,962 Additions — — — — — — Balance at December 31, 2017 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCK BASED AND DEFERRED COMP34
STOCK BASED AND DEFERRED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Activity | Summary of Stock Option Activity: Years Ended December 31, 2016 2015 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Options outstanding at beginning of year: 14,400 $ 16.11 181,440 $ 18.69 Granted — N/A — N/A Exercised (14,400 ) $ 16.11 (147,040 ) $ 19.62 Cancelled — N/A (20,000 ) $ 13.69 Outstanding at end of year — N/A 14,400 $ 16.11 Exercisable at end of year — N/A 14,400 $ 16.11 Price range of options exercised $ 11.48 - $22.11 $ 11.48 - $22.11 Price range of options outstanding N/A $ 11.48 - $22.11 |
Summary of Nonvested (Restricted) Shares and Units Activity | Summary of Nonvested (Restricted) Shares and Units Activity: In addition to the stock options discussed above, we grant time-based and performance-based restricted shares. Performance-based restricted shares are only granted to executive officers. All performance shares only vest upon the attainment of certain financial and operational criteria as established and approved by our Board of Directors. Nonvested Restricted Share Activity (time-based) Weighted Average Grant Date Fair Value Nonvested Restricted Share Activity (performance- based) Weighted Average Grant Date Fair Value Outstanding at January 1, 2015 903,441 $ 37.51 170,833 $ 35.43 Granted 434,387 40.48 66,187 41.17 Vested (Earned/Released) (318,651 ) 41.14 (56,250 ) 40.34 Forfeited (1) (135,470 ) 40.53 — N/A Outstanding as of December 31, 2015 883,707 40.75 180,770 42.93 Granted 499,865 31.60 66,698 34.39 Vested (Earned/Released) (305,359 ) 30.87 (41,665 ) 31.02 Forfeited (1) (115,910 ) 36.79 (20,835 ) 42.56 Outstanding at December 31, 2016 962,303 37.00 184,968 34.84 Granted 430,575 34.45 154,120 34.10 Vested (Earned/Released) (279,856 ) 38.39 (20,367 ) 45.60 Forfeited (1) (130,370 ) 35.09 (31,716 ) 45.60 Outstanding at December 31, 2017 982,652 35.59 287,005 35.80 (1) Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are a result of failing to attain certain goals as outlined in our executive officers' compensation agreements. |
Summary of Compensation Expense and Stock Award Activity | Below is a summary of compensation expense and stock award activity (in thousands): Years Ended December 31, 2017 2016 2015 Stock-based compensation expense $ 12,056 $ 13,741 $ 15,781 Cash received by Company from exercises $ — $ 232 $ 2,886 |
Summary of Additional Information Regarding Stock Plan | The following table includes additional information regarding our Plan (dollars in thousands): At December 31, 2017 2016 Unrecognized stock-based compensation cost $ 18,439 $ 18,528 Weighted average years expense recognition period 2.48 2.56 Total equity awards outstanding 1,269,657 1,147,271 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | Components of income tax expense are as follows (in thousands): Years Ended December 31, 2017 2016 2015 Current taxes: Federal $ 76,988 $ 55,547 $ 53,510 State 8,006 7,075 2,726 84,994 62,622 56,236 Deferred taxes: Federal 18,916 4,064 (1,652 ) State 354 1,833 6,142 19,270 5,897 4,490 Total $ 104,264 $ 68,519 $ 60,726 |
Schedule of Income Tax Reconciliation | Income taxes differ for the years ended December 31, 2017 , 2016 and 2015 , from the amounts computed using the expected federal statutory income tax rate of 35% as a result of the following (in thousands): Years Ended December 31, 2017 2016 2015 Expected taxes at current federal statutory income tax rate $ 86,632 $ 76,321 $ 66,312 State income taxes, net of federal tax benefit 5,434 5,791 5,764 Tax Act revaluation of deferred tax balances 19,687 — — Manufacturing deduction (7,580 ) (6,708 ) (5,917 ) Federal tax credits (484 ) (7,229 ) (6,172 ) Non-deductible costs and other 575 344 739 Income tax expense $ 104,264 $ 68,519 $ 60,726 |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities are comprised of timing differences (in thousands) as follows: At December 31, 2017 2016 Deferred tax assets: Real estate $ 14,648 $ 21,525 Goodwill 2,076 6,153 Warranty reserve 5,499 8,408 Wages payable 5,796 11,002 Equity-based compensation 4,486 7,030 Accrued expenses 141 250 Net operating loss carry-forwards 1,813 1,366 Other 4,982 3,695 Total deferred tax assets 39,441 59,429 Deferred tax liabilities: Deferred revenue 462 1,455 Prepaids 759 933 Fixed assets 3,058 3,721 Total deferred tax liabilities 4,279 6,109 Deferred tax assets, net 35,162 53,320 Other deferred tax liability - state franchise taxes 4,240 3,128 Net deferred tax assets and liabilities $ 30,922 $ 50,192 |
SUPPLEMENTAL DISCLOSURE OF CA36
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | The following table presents certain supplemental cash flow information (in thousands): Years Ended December 31, 2017 2016 2015 Cash paid during the year for: Interest, net of interest capitalized $ 570 $ 1,760 $ 9,915 Income taxes $ 85,814 $ 65,020 $ 56,186 Non-cash operating activities decrease: Real estate not owned $ 38,864 $ — $ 4,999 Real estate acquired through notes payable $ 11,129 $ 14,199 $ 16,371 |
OPERATING AND REPORTING SEGME37
OPERATING AND REPORTING SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The following segment information is in thousands: Years Ended December 31, 2017 2016 2015 Homebuilding revenue (1): West $ 1,437,860 $ 1,300,906 $ 1,029,801 Central 904,908 787,849 731,766 East 884,004 940,472 806,515 Consolidated total 3,226,772 3,029,227 2,568,082 Homebuilding segment operating income: West 129,781 103,801 85,760 Central 92,451 74,253 80,444 East 32,089 48,126 56,141 Total homebuilding segment operating income 254,321 226,180 222,345 Financial services segment profit 22,055 21,902 19,271 Corporate and unallocated costs (2) (33,510 ) (33,863 ) (34,903 ) Earnings/(loss) from other unconsolidated entities, net 2,101 4,060 (338 ) Interest expense (3,853 ) (5,172 ) (15,965 ) Other income/(expense), net 6,405 4,953 (946 ) Net earnings before income taxes $ 247,519 $ 218,060 $ 189,464 (1) Homebuilding revenue includes the following land closing revenue, by segment: Years Ended December 31, Land closing revenue: 2017 2016 2015 West $ 18,116 $ 15,608 $ 2,131 Central 622 8,885 26,448 East 21,259 1,308 7,947 Total $ 39,997 $ 25,801 $ 36,526 (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. |
Schedule of Segment Assets | At December 31, 2017 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 15,557 $ 21,309 $ 23,079 $ — $ — $ 59,945 Real estate 1,174,285 700,460 856,635 — — 2,731,380 Investments in unconsolidated entities 7,833 6,999 — — 2,236 17,068 Other assets 58,470 (1) 110,173 (2) 144,681 (3) 1,249 128,292 (4) 442,865 Total assets $ 1,256,145 $ 838,941 $ 1,024,395 $ 1,249 $ 130,528 $ 3,251,258 (1) Balance consists primarily of cash and property and equipment. (2) Balance consists primarily of development reimbursements from local municipalities and cash. (3) Balance consists primarily of real estate not owned, cash and goodwill (see Note 9). (4) Balance consists primarily of cash and our deferred tax asset. At December 31, 2016 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 25,863 $ 27,669 $ 32,024 $ — $ — $ 85,556 Real estate 1,120,038 595,485 706,540 — — 2,422,063 Investments in unconsolidated entities 7,362 7,450 — — 2,285 17,097 Other assets 45,624 (1 ) 94,299 (2 ) 93,245 (3 ) 812 129,995 (4 ) 363,975 Total assets $ 1,198,887 $ 724,903 $ 831,809 $ 812 $ 132,280 $ 2,888,691 (1) Balance consists primarily of cash and property and equipment. (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. (4) Balance consists primarily of cash and our deferred tax asset. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease payments for Non-Cancelable Operating Leases | Approximate future minimum lease payments for non-cancellable operating leases as of December 31, 2017 , are as follows (in thousands): Years Ended December 31, 2018 $ 7,062 2019 6,405 2020 5,900 2021 5,027 2022 4,100 Thereafter 5,478 $ 33,972 |
SELECTED QUARTERLY FINANCIAL 39
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Results | Quarterly results for the years ended December 31, 2017 and 2016 follow (in thousands, except per share amounts): First Second Third Fourth 2017 Total closing revenue $ 672,772 $ 801,978 $ 805,597 $ 946,425 Total closing gross profit $ 109,763 $ 140,910 $ 144,601 $ 171,225 Earnings before income taxes $ 36,769 $ 63,205 $ 63,455 $ 84,090 Net earnings $ 23,572 $ 41,580 $ 42,550 $ 35,553 Per Share Data: Basic earnings per share (1) $ 0.59 $ 1.03 $ 1.06 $ 0.88 Diluted earnings per share (1) $ 0.56 $ 0.98 $ 1.02 $ 0.87 2016 Total closing revenue $ 597,766 $ 797,896 $ 752,857 $ 880,708 Total closing gross profit $ 103,796 $ 138,104 $ 131,874 $ 157,438 Earnings before income taxes $ 28,885 $ 59,036 $ 53,802 $ 76,337 Net earnings $ 20,969 $ 39,878 $ 36,887 $ 51,807 Per Share Data: Basic earnings per share (1) $ 0.53 $ 1.00 $ 0.92 $ 1.29 Diluted earnings per share (1) $ 0.50 $ 0.95 $ 0.88 $ 1.22 (1) Due to the computation of earnings per share, the sum of the quarterly amounts may not equal the full-year results. |
BUSINESS AND SUMMARY OF SIGNI40
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017USD ($)stateregioncommunity | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jan. 01, 2018USD ($) | |
Organization and Presentation [Line Items] | ||||
Entity operations in number of regions | region | 3 | |||
Number of states in regions | state | 9 | |||
Number of communities in which homes are sold | community | 244 | |||
Deposits on real estate under option or contract | $ 59,945 | $ 85,556 | ||
Depreciation expense | 15,900 | 14,300 | $ 12,700 | |
Debt issuance costs related to credit facility, net | 3,000 | 2,700 | ||
Accumulated amortization of debt issuance costs | 6,500 | 5,600 | ||
Advertising expense | 15,800 | 15,000 | 14,800 | |
Contribution to the 401(K) Retirement Plan | 2,900 | 2,700 | $ 2,400 | |
Increase (decrease) to warranty reserve balance | (1,639) | (1,012) | ||
Decrease to warranty reserve balance | 3,700 | |||
Increase to warranty reserve balance | 2,100 | |||
Retained earnings | 991,844 | 848,589 | ||
Cash and Cash Equivalents [Member] | ||||
Organization and Presentation [Line Items] | ||||
Amounts in transit from title companies for home closings | 107,100 | $ 75,300 | ||
Minimum [Member] | ||||
Organization and Presentation [Line Items] | ||||
Base price per house for sale range | $ 170 | |||
Community life cycle range | 3 years | |||
Property and equipment useful life | 3 years | |||
Minimum [Member] | Non-Structural Items [Member] | ||||
Organization and Presentation [Line Items] | ||||
Warranty period following home closings | 1 year | |||
Maximum [Member] | ||||
Organization and Presentation [Line Items] | ||||
Base price per house for sale range | $ 1,390 | |||
Community life cycle range | 5 years | |||
Property and equipment useful life | 7 years | |||
Maximum [Member] | Non-Structural Items [Member] | ||||
Organization and Presentation [Line Items] | ||||
Warranty period following home closings | 2 years | |||
Maximum [Member] | Structural [Member] | ||||
Organization and Presentation [Line Items] | ||||
Warranty period following home closings | 10 years | |||
Scenario, Forecast [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | ||||
Organization and Presentation [Line Items] | ||||
Retained earnings | $ 600 |
BUSINESS AND SUMMARY OF SIGNI41
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Property and Equipment, net (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 90,794 | $ 81,055 |
Accumulated depreciation | (57,163) | (47,853) |
Total | 33,631 | 33,202 |
Computer and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 40,731 | 35,288 |
Model home furnishings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 50,063 | $ 45,767 |
BUSINESS AND SUMMARY OF SIGNI42
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Accrued Liabilities | |||
Accruals related to real estate development and construction activities | $ 53,522 | $ 53,778 | |
Payroll and other benefits | 58,186 | 52,941 | |
Accrued interest | 15,369 | 15,017 | |
Accrued taxes | 14,067 | 9,637 | |
Warranty reserves | 23,328 | 22,660 | $ 21,615 |
Other accruals | 16,604 | 16,819 | |
Total | $ 181,076 | $ 170,852 |
BUSINESS AND SUMMARY OF SIGNI43
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Surety Bond and Letter of Credit Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Loss Contingencies [Line Items] | ||
Total LOCs | $ 74,672 | $ 43,839 |
Sureties related to owned projects and lots under contract [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 296,387 | 239,246 |
Estimated work remaining to complete (unaudited) | 120,320 | 85,706 |
Total Sureties [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 296,387 | 239,246 |
Estimated work remaining to complete (unaudited) | 120,320 | 85,706 |
LOCs in lieu of deposit for contracted lots [Member] | ||
Loss Contingencies [Line Items] | ||
Total LOCs | 0 | 250 |
LOCs for land development [Member] | ||
Loss Contingencies [Line Items] | ||
Total LOCs | 70,922 | 39,839 |
LOCs for general corporate operations [Member] | ||
Loss Contingencies [Line Items] | ||
Total LOCs | $ 3,750 | $ 3,750 |
BUSINESS AND SUMMARY OF SIGNI44
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Changes in Warranty Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Warranty Reserves | ||
Balance, beginning of year | $ 22,660 | $ 21,615 |
Additions to reserve from new home deliveries | 17,161 | 16,776 |
Warranty claims | (14,854) | (14,719) |
Adjustments to pre-existing reserves | (1,639) | (1,012) |
Balance, end of year | $ 23,328 | $ 22,660 |
REAL ESTATE AND CAPITALIZED I45
REAL ESTATE AND CAPITALIZED INTEREST - Schedule of Real Estate (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |
Real Estate Properties | |||
Homes under contract under construction | [1] | $ 566,474 | $ 508,927 |
Unsold homes, completed and under construction | [1] | 516,577 | 431,725 |
Model homes | [1] | 142,026 | 147,406 |
Finished home sites and home sites under development | [2] | 1,506,303 | 1,334,005 |
Real estate | $ 2,731,380 | $ 2,422,063 | |
[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 I46
REAL ESTATE AND CAPITALIZED INTEREST - Summary of Capitalized Interest (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||||
Summary of capitalized interest | ||||||
Capitalized interest, beginning of year | $ 68,196 | [1] | $ 61,202 | [1] | $ 54,060 | |
Interest incurred | 79,045 | 70,348 | 67,542 | |||
Interest expensed | (3,853) | (5,172) | (15,965) | |||
Interest amortized to cost of home and land closings | (64,824) | (58,182) | (44,435) | |||
Capitalized interest, end of year | [1] | $ 78,564 | $ 68,196 | $ 61,202 | ||
[1] | Approximately $517,000, $130,000 and $445,000 of the capitalized interest is related to our joint venture investments and is a component of “Investments in unconsolidated entities” in our consolidated balance sheet as of December 31, 2017, 2016 and 2015, respectively. |
REAL ESTATE AND CAPITALIZED I47
REAL ESTATE AND CAPITALIZED INTEREST - Summary of Capitalized Interest (Footnote) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||
Schedule of Equity Method Investments [Line Items] | |||||||
Capitalized interest | $ 78,564 | [1] | $ 68,196 | [1] | $ 61,202 | [1] | $ 54,060 |
Equity-method land ventures [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Capitalized interest | $ 517 | $ 130 | $ 445 | ||||
[1] | Approximately $517,000, $130,000 and $445,000 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 December 31, 2017, 2016 and 2015, respectively. |
VARIABLE INTEREST ENTITIES AN48
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED - Summary of Lots Under Option (Details) $ in Thousands | Dec. 31, 2017USD ($)lot | |
Projected Number of Lots (unaudited) | ||
Purchase and option contracts recorded on balance sheet as Real estate not owned | lot | 228 | |
Option contracts — non-refundable deposits, committed | lot | 3,822 | [1] |
Purchase contracts — non-refundable deposits, committed | lot | 6,527 | [1] |
Purchase and option contracts —refundable deposits, committed | lot | 355 | |
Total committed | lot | 10,932 | |
Purchase and option contracts — refundable deposits, uncommitted | lot | 6,326 | [2] |
Total lots under contract or option | lot | 17,258 | |
Total purchase and option contracts | lot | 17,030 | |
Purchase Price (unaudited) | ||
Purchase and option contracts recorded on balance sheet as Real estate not owned | $ 38,864 | |
Option contracts — non-refundable deposits, committed | 273,925 | [1] |
Purchase contracts — non-refundable deposits, committed | 281,887 | [1] |
Purchase and option contracts —refundable deposits, committed | 18,592 | |
Total committed | 613,268 | |
Purchase and option contracts — refundable deposits, uncommitted | 187,726 | [2] |
Total lots under contract or option | 800,994 | |
Total purchase and option contracts | 762,130 | |
Option/ Earnest Money Deposits–Cash | ||
Purchase and option contracts recorded on balance sheet as Real estate not owned | 3,886 | |
Option contracts — non-refundable deposits, committed | 33,623 | [1] |
Purchase contracts — non-refundable deposits, committed | 22,885 | [1] |
Purchase and option contracts —refundable deposits, committed | 517 | |
Total committed | 60,911 | |
Purchase and option contracts — refundable deposits, uncommitted | 2,920 | [2] |
Total lots under contract or option | 63,831 | |
Total purchase and option contracts | $ 59,945 | [3] |
[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] | Amount is reflected in our consolidated balance sheet in the line item “Deposits on real estate under option or contract” as of December 31, 2017. |
INVESTMENTS IN UNCONSOLIDATED49
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Narrative (Details) $ in Thousands | Dec. 31, 2017USD ($)joint_venture | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |||
Schedule of Equity Method Investments [Line Items] | |||||||
Investments in unconsolidated entities | $ 17,068 | $ 17,097 | |||||
Capitalized interest | $ 78,564 | [1] | 68,196 | [1] | $ 61,202 | [1] | $ 54,060 |
Equity-method land ventures [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Number of joint ventures | joint_venture | 3 | ||||||
Capitalized interest | $ 517 | 130 | $ 445 | ||||
Mortgage joint ventures [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Number of joint ventures | joint_venture | 1 | ||||||
Investments in unconsolidated entities | $ 2,200 | $ 2,300 | |||||
[1] | Approximately $517,000, $130,000 and $445,000 of the capitalized interest is related to our joint venture investments and is a component of “Investments in unconsolidated entities” in our consolidated balance sheet as of December 31, 2017, 2016 and 2015, respectively. |
INVESTMENTS IN UNCONSOLIDATED50
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures, Assets Liabilities and Equity (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |
Assets: | |||
Cash | $ 8,942 | $ 7,446 | |
Real estate | 55,552 | 54,319 | |
Other assets | 4,323 | 6,461 | |
Total assets | 68,817 | 68,226 | |
Liabilities and equity: | |||
Accounts payable and other liabilities | 7,516 | 7,339 | |
Notes and mortgages payable | 25,194 | 23,000 | |
Equity of: | |||
Meritage | [1] | 14,521 | 14,245 |
Other | 21,586 | 23,642 | |
Total liabilities and equity | $ 68,817 | $ 68,226 | |
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. As discussed in Note 2 to these consolidated financial statements, the balances above do not include $517,000, $130,000 and $445,000 of capitalized interest that is a component of our investment balances at December 31, 2017, 2016 and 2015, respectively. |
INVESTMENTS IN UNCONSOLIDATED51
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures, Revenues and Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Financial information related to unconsolidated joint ventures, Operations | ||||
Revenue | $ 45,475 | $ 72,486 | $ 35,510 | |
Costs and expenses | (19,203) | (34,080) | (16,240) | |
Net earnings of unconsolidated entities | 26,272 | 38,406 | 19,270 | |
Meritage’s share of pre-tax earnings | [1],[2] | $ 16,082 | $ 19,357 | $ 12,805 |
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reflected in our consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. As discussed in Note 2 to these consolidated financial statements, the balances above do not include $517,000, $130,000 and $445,000 of capitalized interest that is a component of our investment balances at December 31, 2017, 2016 and 2015, respectively. | |||
[2] | Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net or Earnings/(loss) from other unconsolidated entities, net, as applicable, on our consolidated statement of operations and excludes joint venture profit related to lots we purchased from the joint ventures. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. |
LOANS PAYABLE AND OTHER BORRO52
LOANS PAYABLE AND OTHER BORROWINGS - Schedule of Loans Payable and Other Borrowings (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |
Other borrowings, real estate note payable [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | [1] | $ 17,354 | $ 17,195 |
Line of credit [Member] | Revolving credit facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | 0 | 15,000 | |
Loans payable and other borrowings total [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | $ 17,354 | $ 32,195 | |
[1] | Reflects balance of non-recourse notes payable in connection with land purchases, with interest rates ranging from 0% to 8%. |
LOANS PAYABLE AND OTHER BORRO53
LOANS PAYABLE AND OTHER BORROWINGS - Schedule of Loans Payable and Other Borrowings (Descriptors) (Details) - Line of credit [Member] - Revolving credit facility [Member] | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Line of Credit Facility [Line Items] | |
Unsecured revolving credit facility maturing July 2019 | $ 625,000,000 |
London Interbank Offered Rate (LIBOR) [Member] | |
Line of Credit Facility [Line Items] | |
Base rate | 1.56% |
Basis spread on variable rate | 1.75% |
Prime Rate [Member] | |
Line of Credit Facility [Line Items] | |
Base rate | 4.50% |
Basis spread on variable rate | 0.75% |
LOANS PAYABLE AND OTHER BORRO54
LOANS PAYABLE AND OTHER BORROWINGS - Schedule of Loans Payable and Other Borrowings (Footnote) (Details) - Other borrowings, real estate note payable [Member] | Dec. 31, 2017 |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Debt instrument, stated rate | 0.00% |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Debt instrument, stated rate | 8.00% |
LOANS PAYABLE AND OTHER BORRO55
LOANS PAYABLE AND OTHER BORROWINGS - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Line of Credit Facility [Line Items] | |||
Proceeds from lines of credit | $ 415,000,000 | $ 286,000,000 | $ 210,000,000 |
Repayments | 430,000,000 | 271,000,000 | $ 210,000,000 |
Total LOCs | 74,672,000 | 43,839,000 | |
Revolving credit facility [Member] | Line of credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Current borrowing capacity | 625,000,000 | ||
Maximum borrowing capacity | 725,000,000 | ||
Minimum tangible net worth | $ 987,400,000 | ||
Leverage ratio | 0.6 | ||
Interest coverage ratio | 1.5 | ||
Outstanding borrowings under Credit Facility | $ 0 | $ 15,000,000 | |
Total LOCs | 74,700,000 | ||
Line of credit facility, remaining borrowing capacity | 550,300,000 | ||
Revolving credit facility maturing July 2019 [Member] | Revolving credit facility [Member] | Line of credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Current borrowing capacity | $ 60,000,000 |
SENIOR AND CONVERTIBLE SENIOR56
SENIOR AND CONVERTIBLE SENIOR NOTES, NET - Schedule of Senior and Convertible Senior Notes (Details) - Senior Notes [Member] - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Net debt issuance costs | $ (9,830) | $ (8,230) |
Senior and convertible senior notes, net | 1,266,450 | 1,095,119 |
4.50% senior notes due 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Senior and convertible senior notes, gross | 175,000 | 175,000 |
7.15% senior notes due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Senior and convertible senior notes, gross | 301,280 | 301,849 |
7.00% senior notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior and convertible senior notes, gross | 300,000 | 300,000 |
6.00% senior notes due 2025 [Member] | ||
Debt Instrument [Line Items] | ||
Senior and convertible senior notes, gross | 200,000 | 200,000 |
5.125% senior notes due 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Senior and convertible senior notes, gross | 300,000 | 0 |
1.875% convertible senior notes due 2032 [Member] | ||
Debt Instrument [Line Items] | ||
Senior and convertible senior notes, gross | $ 0 | $ 126,500 |
SENIOR AND CONVERTIBLE SENIOR57
SENIOR AND CONVERTIBLE SENIOR NOTES, NET - Schedule of Senior and Convertible Senior Notes (Descriptors) (Details) - Senior Notes [Member] - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2015 | Mar. 31, 2013 | Apr. 30, 2012 | Dec. 31, 2010 |
4.50% senior notes due 2018 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, stated rate | 4.50% | 4.50% | 4.50% | ||||
7.15% senior notes due 2020 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, stated rate | 7.15% | 7.15% | 7.15% | ||||
Unamortized premium | $ 1,280 | $ 1,849 | |||||
7.00% senior notes due 2022 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, stated rate | 7.00% | 7.00% | 7.00% | ||||
6.00% senior notes due 2025 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, stated rate | 6.00% | 6.00% | 6.00% | ||||
5.125% senior notes due 2027 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, stated rate | 5.125% | 5.125% | |||||
1.875% convertible senior notes due 2032 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, stated rate | 1.875% | 1.875% |
SENIOR AND CONVERTIBLE SENIOR58
SENIOR AND CONVERTIBLE SENIOR NOTES, NET - Narrative (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2015 | Dec. 31, 2013 | Mar. 31, 2013 | Apr. 30, 2012 | Dec. 31, 2010 | |
Debt Instrument [Line Items] | |||||||||
Percentage of wholly owned subsidiary | 100.00% | ||||||||
Senior Notes [Member] | 7.15% senior notes due 2020 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 200,000,000 | ||||||||
Debt instrument, stated rate | 7.15% | 7.15% | 7.15% | ||||||
Percent of debt instrument par value issued | 106.699% | 97.567% | |||||||
Add-on to existing 7.50% senior notes | $ 100,000,000 | ||||||||
Effective percentage of debt instrument | 5.875% | 7.50% | |||||||
Senior Notes [Member] | 7.00% senior notes due 2022 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 300,000,000 | ||||||||
Debt instrument, stated rate | 7.00% | 7.00% | 7.00% | ||||||
Senior Notes [Member] | 6.25% senior notes due 2015 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, stated rate | 6.25% | ||||||||
Aggregate principal amount repurchased | $ 285,000,000 | ||||||||
Senior Notes [Member] | 7.731% senior subordinated notes due 2017 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, stated rate | 7.731% | 7.731% | |||||||
Aggregate principal amount repurchased | $ 99,800,000 | $ 26,100,000 | |||||||
Senior Notes [Member] | 4.50% senior notes due 2018 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 175,000,000 | ||||||||
Debt instrument, stated rate | 4.50% | 4.50% | 4.50% | ||||||
Senior Notes [Member] | 6.00% senior notes due 2025 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 200,000,000 | ||||||||
Debt instrument, stated rate | 6.00% | 6.00% | 6.00% | ||||||
Senior Notes [Member] | 5.125% senior notes due 2027 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 300,000,000 | ||||||||
Debt instrument, stated rate | 5.125% | 5.125% | |||||||
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, stated rate | 1.875% | 1.875% | |||||||
Percentage of principal in the event of a repurchase | 100.00% | ||||||||
Aggregate principal amount repurchased | $ 126,500,000 | ||||||||
Loss on extinguishment of debt | $ 300,000 | ||||||||
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | Privately negotiated transactions | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount repurchased | $ 51,900,000 | ||||||||
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | Remaining redemptions | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount repurchased | $ 74,600,000 |
SENIOR AND CONVERTIBLE SENIOR59
SENIOR AND CONVERTIBLE SENIOR NOTES, NET - Schedule of Principal Maturities of Senior and Senior Convertible Notes (Details) - Senior Notes [Member] - Senior and senior convertible notes [Member] $ in Thousands | Dec. 31, 2017USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2,018 | $ 175,000 |
2,019 | 0 |
2,020 | 300,000 |
2,021 | 0 |
2,022 | 300,000 |
Thereafter | 500,000 |
Total | $ 1,275,000 |
FAIR VALUE DISCLOSURES - Schedu
FAIR VALUE DISCLOSURES - Schedule of Fair Value of Fixed-Rate Debt (Details) - Senior Notes [Member] - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2015 | Mar. 31, 2013 | Apr. 30, 2012 | Dec. 31, 2010 |
4.50% senior notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 175,000,000 | ||||||
Fair value of fixed-rate debt | |||||||
Debt instrument, stated rate | 4.50% | 4.50% | 4.50% | ||||
4.50% senior notes [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 | $ 175,228,000 | $ 177,625,000 | |||||
7.15% senior notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 200,000,000 | ||||||
Fair value of fixed-rate debt | |||||||
Debt instrument, stated rate | 7.15% | 7.15% | 7.15% | ||||
7.15% senior notes [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 | $ 326,250,000 | $ 325,500,000 | |||||
7.00% senior notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 300,000,000 | ||||||
Fair value of fixed-rate debt | |||||||
Debt instrument, stated rate | 7.00% | 7.00% | 7.00% | ||||
7.00% senior notes [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 | $ 337,500,000 | $ 324,750,000 | |||||
6.00% senior notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 200,000,000 | ||||||
Fair value of fixed-rate debt | |||||||
Debt instrument, stated rate | 6.00% | 6.00% | 6.00% | ||||
6.00% senior notes [Member] | Level 2 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 200,000,000 | $ 200,000,000 | |||||
Fair value of fixed-rate debt | |||||||
Estimated Fair Value | $ 214,000,000 | $ 202,500,000 | |||||
5.125% senior notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 300,000,000 | ||||||
Fair value of fixed-rate debt | |||||||
Debt instrument, stated rate | 5.125% | 5.125% | |||||
5.125% senior notes [Member] | Level 2 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 300,000,000 | ||||||
Fair value of fixed-rate debt | |||||||
Estimated Fair Value | $ 305,250,000 | ||||||
1.875% convertible senior notes [Member] | |||||||
Fair value of fixed-rate debt | |||||||
Debt instrument, stated rate | 1.875% | 1.875% | |||||
1.875% convertible senior notes [Member] | Level 2 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate Principal | $ 126,500,000 | ||||||
Fair value of fixed-rate debt | |||||||
Estimated Fair Value | $ 126,105,000 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |||||||||||||
Basic and Diluted (Loss)/Earnings Per Common Share | |||||||||||||||||||||||
Basic weighted average number of shares outstanding (in shares) | 40,287 | 39,976 | 39,593 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||
Convertible debt (in shares) | [1] | 1,311 | 2,176 | 2,176 | |||||||||||||||||||
Stock options and unvested restricted stock (in shares) | 630 | 433 | 395 | ||||||||||||||||||||
Diluted average shares outstanding (in shares) | 42,228 | 42,585 | 42,164 | ||||||||||||||||||||
Net earnings as reported (in dollars) | $ 35,553 | $ 42,550 | $ 41,580 | $ 23,572 | $ 51,807 | $ 36,887 | $ 39,878 | $ 20,969 | $ 143,255 | $ 149,541 | $ 128,738 | ||||||||||||
Interest attributable to convertible senior notes, net of income taxes (in dollars) | 941 | 1,615 | 1,597 | ||||||||||||||||||||
Net earnings for diluted earnings per share (in dollars) | $ 144,196 | $ 151,156 | $ 130,335 | ||||||||||||||||||||
Basic earnings per share (in dollars per share) | $ 0.88 | [2] | $ 1.06 | [2] | $ 1.03 | [2] | $ 0.59 | [2] | $ 1.29 | [2] | $ 0.92 | [2] | $ 1 | [2] | $ 0.53 | [2] | $ 3.56 | $ 3.74 | $ 3.25 | ||||
Diluted earnings per share (in dollars per share) | $ 0.87 | [2] | $ 1.02 | [2] | $ 0.98 | [2] | $ 0.56 | [2] | $ 1.22 | [2] | $ 0.88 | [2] | $ 0.95 | [2] | $ 0.50 | [2] | $ 3.41 | [1] | $ 3.55 | [1] | $ 3.09 | [1] | |
Antidilutive stock options not included in the calculation of diluted earnings per share (in shares) | 2 | 4 | 0 | ||||||||||||||||||||
[1] | In accordance with ASC 260-10, Earnings Per Share, ("ASC 260-10") we calculate the dilutive effect of convertible securities using the "if-converted" method based on the number of days the Convertible Notes were outstanding during the period. All of the Convertible Notes were retired in 2017. | ||||||||||||||||||||||
[2] | Due to the computation of earnings per share, the sum of the quarterly amounts may not equal the full-year results. |
ACQUISITIONS AND GOODWILL - Nar
ACQUISITIONS AND GOODWILL - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Business Acquisitions and Goodwill [Abstract] | |||
Goodwill | $ 32,962 | $ 32,962 | $ 32,962 |
ACQUISITIONS AND GOODWILL - Sum
ACQUISITIONS AND GOODWILL - Summary of Changes in the Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 32,962 | $ 32,962 |
Additions | 0 | 0 |
Ending balance | 32,962 | 32,962 |
Operating Segments [Member] | Financial Services [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | 0 | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | West [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | 0 | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Central [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | 0 | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | East [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 32,962 | 32,962 |
Additions | 0 | 0 |
Ending balance | 32,962 | 32,962 |
Corporate [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | $ 0 | $ 0 |
STOCK BASED AND DEFERRED COMP64
STOCK BASED AND DEFERRED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | 96 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares of common stock authorized under stock compensation plan (in shares) | 5,350,000 | 5,350,000 | |||
Remaining shares available for grant (in shares) | 1,169,574.16 | 1,169,574.16 | |||
Total shares reserved for existing or future equity award grants (in shares) | 2,439,231 | 2,439,231 | |||
Stock options granted (in shares) | 0 | 0 | 0 | ||
Stock options outstanding (in shares) | 0 | 0 | 14,400 | 0 | 181,440 |
Total intrinsic value of options exercises | $ 0.2 | $ 3.5 | |||
Employees [Member] | Non-vested stock awards [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period for non-vested stock awards and stock options | 5 years | ||||
Senior executive officers and non-employee directors [Member] | Non-vested stock and performance-based awards [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period for non-vested stock awards and stock options | 3 years |
STOCK BASED AND DEFERRED COMP65
STOCK BASED AND DEFERRED COMPENSATION - Summary of Stock Option Activity (Details) - $ / shares | 12 Months Ended | 96 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Options | |||
Options outstanding at beginning of year (in shares) | 14,400 | 181,440 | |
Granted (in shares) | 0 | 0 | 0 |
Exercised (in shares) | (14,400) | (147,040) | |
Cancelled (in shares) | 0 | (20,000) | |
Outstanding at end of year (in shares) | 0 | 14,400 | 0 |
Weighted Average Exercise Price | |||
Options outstanding at beginning of year (in dollars per share) | $ 16.11 | $ 18.69 | |
Exercised (in dollars per share) | $ 16.11 | 19.62 | |
Cancelled (in dollars per share) | 13.69 | ||
Outstanding at end of year (in dollars per share) | $ 16.11 | ||
Exercisable at end of year | |||
Options (in shares) | 0 | 14,400 | |
Options (in dollars per share) | $ 16.11 | ||
Price range of options exercised - lower range limit (in dollars per share) | $ 11.48 | 11.48 | |
Price range of options exercised - upper range limit (in dollars per share) | $ 22.11 | 22.11 | |
Price range of options outstanding - lower range limit (in dollars per share) | 11.48 | ||
Price range of options outstanding - upper range limit (in dollars per share) | $ 22.11 |
STOCK BASED AND DEFERRED COMP66
STOCK BASED AND DEFERRED COMPENSATION - Summary of Nonvested (Restricted) Shares and Units Activity (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Nonvested Restricted Share Activity (time-based) [Member] | ||||
Nonvested Restricted Share Activity (time-based and performance-based), Number of Shares [Roll Forward] | ||||
Outstanding at beginning of year (in shares) | 962,303 | 883,707 | 903,441 | |
Granted (in shares) | 430,575 | 499,865 | 434,387 | |
Vested (Earned/Released) (in shares) | (279,856) | (305,359) | (318,651) | |
Forfeited (in shares) | [1] | (130,370) | (115,910) | (135,470) |
Outstanding at end of year (in shares) | 982,652 | 962,303 | 883,707 | |
Nonvested Restricted Share Activity (time-based and performance-based), Weighted Average Grant Date Fair Value [Roll Forward] | ||||
Outstanding at beginning of year (in dollars per share) | $ 37 | $ 40.75 | $ 37.51 | |
Granted (in dollars per share) | 34.45 | 31.60 | 40.48 | |
Vested (Earned/Released) (in dollars per share) | 38.39 | 30.87 | 41.14 | |
Forfeited (in dollars per share) | [1] | 35.09 | 36.79 | 40.53 |
Outstanding at end of year (in dollars per share) | $ 35.59 | $ 37 | $ 40.75 | |
Nonvested Restricted Share Activity (performance- based) [Member] | ||||
Nonvested Restricted Share Activity (time-based and performance-based), Number of Shares [Roll Forward] | ||||
Outstanding at beginning of year (in shares) | 184,968 | 180,770 | 170,833 | |
Granted (in shares) | 154,120 | 66,698 | 66,187 | |
Vested (Earned/Released) (in shares) | (20,367) | (41,665) | (56,250) | |
Forfeited (in shares) | [1] | (31,716) | (20,835) | 0 |
Outstanding at end of year (in shares) | 287,005 | 184,968 | 180,770 | |
Nonvested Restricted Share Activity (time-based and performance-based), Weighted Average Grant Date Fair Value [Roll Forward] | ||||
Outstanding at beginning of year (in dollars per share) | $ 34.84 | $ 42.93 | $ 35.43 | |
Granted (in dollars per share) | 34.10 | 34.39 | 41.17 | |
Vested (Earned/Released) (in dollars per share) | 45.60 | 31.02 | 40.34 | |
Forfeited (in dollars per share) | [1] | 45.60 | 42.56 | |
Outstanding at end of year (in dollars per share) | $ 35.80 | $ 34.84 | $ 42.93 | |
[1] | Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are a result of failing to attain certain goals as outlined in our executive officers' compensation agreements. |
STOCK BASED AND DEFERRED COMP67
STOCK BASED AND DEFERRED COMPENSATION - Summary of Compensation Expense and Stock Award Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of compensation expense and stock award activity | |||
Stock-based compensation expense | $ 12,056 | $ 13,741 | $ 15,781 |
Cash received by Company from exercises | $ 0 | $ 232 | $ 2,886 |
STOCK BASED AND DEFERRED COMP68
STOCK BASED AND DEFERRED COMPENSATION - Summary of Additional Information Regarding Stock Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of stock based compensation agreements | ||
Unrecognized stock-based compensation cost | $ 18,439 | $ 18,528 |
Weighted average years expense recognition period | 2 years 5 months 23 days | 2 years 6 months 22 days |
Total equity awards outstanding (in shares) | 1,269,657 | 1,147,271 |
INCOME TAXES - Schedule of Comp
INCOME TAXES - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current taxes: | |||
Federal | $ 76,988 | $ 55,547 | $ 53,510 |
State | 8,006 | 7,075 | 2,726 |
Current income taxes | 84,994 | 62,622 | 56,236 |
Deferred taxes: | |||
Federal | 18,916 | 4,064 | (1,652) |
State | 354 | 1,833 | 6,142 |
Deferred income taxes | 19,270 | 5,897 | 4,490 |
Income tax expense | $ 104,264 | $ 68,519 | $ 60,726 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)examination | Dec. 31, 2016USD ($) | Dec. 31, 2015 | |
Income Taxes (Textual) [Abstract] | |||
Statutory federal income tax rate | 35.00% | 35.00% | 35.00% |
Effective tax rate | 42.10% | 31.40% | 32.10% |
Deferred tax asset | $ 35,162,000 | $ 53,320,000 | |
Deferred tax liabilities | 4,240,000 | 3,128,000 | |
Unrecognized tax benefits | 0 | $ 0 | |
Deferred tax assets, valuation allowance | 0 | ||
Provisional income tax expense from reduction of deferred tax asset related to the Tax Act | 19,700,000 | ||
NOL carryover, valuation allowance | 0 | ||
Accrued liabilities [Member] | |||
Income Taxes (Textual) [Abstract] | |||
Income taxes payable | 7,200,000 | ||
State [Member] | |||
Income Taxes (Textual) [Abstract] | |||
NOL carryforwards | $ 1,800,000 | ||
Number of income tax examinations pending | examination | 1 | ||
Federal [Member] | |||
Income Taxes (Textual) [Abstract] | |||
Tax credits | $ 0 | ||
NOL carryforwards | $ 0 |
INCOME TAXES - Schedule of Inco
INCOME TAXES - Schedule of Income Tax Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | |||
Expected taxes at current federal statutory income tax rate | $ 86,632 | $ 76,321 | $ 66,312 |
State income taxes, net of federal tax benefit | 5,434 | 5,791 | 5,764 |
Tax Act revaluation of deferred tax balances | 19,687 | 0 | 0 |
Manufacturing deduction | (7,580) | (6,708) | (5,917) |
Federal tax credits | (484) | (7,229) | (6,172) |
Non-deductible costs and other | 575 | 344 | 739 |
Income tax expense | $ 104,264 | $ 68,519 | $ 60,726 |
INCOME TAXES - Schedule of Defe
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Real estate | $ 14,648 | $ 21,525 |
Goodwill | 2,076 | 6,153 |
Warranty reserve | 5,499 | 8,408 |
Wages payable | 5,796 | 11,002 |
Equity-based compensation | 4,486 | 7,030 |
Accrued expenses | 141 | 250 |
Net operating loss carry-forwards | 1,813 | 1,366 |
Other | 4,982 | 3,695 |
Total deferred tax assets | 39,441 | 59,429 |
Deferred tax liabilities: | ||
Deferred revenue | 462 | 1,455 |
Prepaids | 759 | 933 |
Fixed assets | 3,058 | 3,721 |
Total deferred tax liabilities | 4,279 | 6,109 |
Deferred tax assets, net | 35,162 | 53,320 |
Other deferred tax liability - state franchise taxes | 4,240 | 3,128 |
Net deferred tax assets and liabilities | $ 30,922 | $ 50,192 |
SUPPLEMENTAL DISCLOSURE OF CA73
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash paid during the year for: | |||
Interest, net of interest capitalized | $ 570 | $ 1,760 | $ 9,915 |
Income taxes | 85,814 | 65,020 | 56,186 |
Non-cash operating activities decrease: | |||
Real estate not owned | 38,864 | 0 | 4,999 |
Real estate acquired through notes payable | $ 11,129 | $ 14,199 | $ 16,371 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Payments to aviation charter [Member] | Steve Hilton, Chairman and CEO [Member] | |||
Related Party Transaction [Line Items] | |||
Payments to related parties | $ 580 | $ 711 | $ 695 |
OPERATING AND REPORTING SEGME75
OPERATING AND REPORTING SEGMENTS - Narrative (Details) | 12 Months Ended |
Dec. 31, 2017operating_segmentsegment | |
Segment Reporting [Abstract] | |
Number of business segments | segment | 2 |
Number of operating segments | operating_segment | 9 |
OPERATING AND REPORTING SEGME76
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Homebuilding revenue: | ||||||||||||
Revenue | $ 946,425 | $ 805,597 | $ 801,978 | $ 672,772 | $ 880,708 | $ 752,857 | $ 797,896 | $ 597,766 | $ 3,226,772 | $ 3,029,227 | $ 2,568,082 | |
Homebuilding segment operating income: | ||||||||||||
Corporate and unallocated costs | (124,041) | (123,803) | (112,849) | |||||||||
Earnings/(loss) from other unconsolidated entities, net | 2,101 | 4,060 | (338) | |||||||||
Interest expense | (3,853) | (5,172) | (15,965) | |||||||||
Other income/(expense), net | 6,405 | 4,953 | (946) | |||||||||
Earnings before income taxes | $ 84,090 | $ 63,455 | $ 63,205 | $ 36,769 | $ 76,337 | $ 53,802 | $ 59,036 | $ 28,885 | 247,519 | 218,060 | 189,464 | |
Operating Segments [Member] | Homebuilding [Member] | ||||||||||||
Homebuilding revenue: | ||||||||||||
Revenue | [1] | 3,226,772 | 3,029,227 | 2,568,082 | ||||||||
Homebuilding segment operating income: | ||||||||||||
Operating Income | 254,321 | 226,180 | 222,345 | |||||||||
Operating Segments [Member] | Financial Services [Member] | ||||||||||||
Homebuilding segment operating income: | ||||||||||||
Operating Income | 22,055 | 21,902 | 19,271 | |||||||||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | West [Member] | ||||||||||||
Homebuilding revenue: | ||||||||||||
Revenue | [1] | 1,437,860 | 1,300,906 | 1,029,801 | ||||||||
Homebuilding segment operating income: | ||||||||||||
Operating Income | 129,781 | 103,801 | 85,760 | |||||||||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Central [Member] | ||||||||||||
Homebuilding revenue: | ||||||||||||
Revenue | [1] | 904,908 | 787,849 | 731,766 | ||||||||
Homebuilding segment operating income: | ||||||||||||
Operating Income | 92,451 | 74,253 | 80,444 | |||||||||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | East [Member] | ||||||||||||
Homebuilding revenue: | ||||||||||||
Revenue | [1] | 884,004 | 940,472 | 806,515 | ||||||||
Homebuilding segment operating income: | ||||||||||||
Operating Income | 32,089 | 48,126 | 56,141 | |||||||||
Corporate and Unallocated [Member] | ||||||||||||
Homebuilding segment operating income: | ||||||||||||
Corporate and unallocated costs | [2] | (33,510) | (33,863) | (34,903) | ||||||||
Segment Reconciling Items [Member] | ||||||||||||
Homebuilding segment operating income: | ||||||||||||
Earnings/(loss) from other unconsolidated entities, net | 2,101 | 4,060 | (338) | |||||||||
Interest expense | (3,853) | (5,172) | (15,965) | |||||||||
Other income/(expense), net | $ 6,405 | $ 4,953 | $ (946) | |||||||||
[1] | Homebuilding revenue includes the following land closing revenue, by segment: Years Ended December 31,Land closing revenue: 2017 2016 2015West $18,116 $15,608 $2,131Central 622 8,885 26,448East 21,259 1,308 7,947Total $39,997 $25,801 $36,526 | |||||||||||
[2] | Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial reporting segments. |
OPERATING AND REPORTING SEGME77
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information, Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Land closing revenue | $ 39,997 | $ 25,801 | $ 36,526 |
Operating Segments [Member] | Homebuilding [Member] | |||
Segment Reporting Information [Line Items] | |||
Land closing revenue | 39,997 | 25,801 | 36,526 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | West [Member] | |||
Segment Reporting Information [Line Items] | |||
Land closing revenue | 18,116 | 15,608 | 2,131 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Central [Member] | |||
Segment Reporting Information [Line Items] | |||
Land closing revenue | 622 | 8,885 | 26,448 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | East [Member] | |||
Segment Reporting Information [Line Items] | |||
Land closing revenue | $ 21,259 | $ 1,308 | $ 7,947 |
OPERATING AND REPORTING SEGME78
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |||
Segment Reporting Information [Line Items] | |||||
Deposits on real estate under option or contract | $ 59,945 | $ 85,556 | |||
Real estate | 2,731,380 | 2,422,063 | |||
Investments in unconsolidated entities | 17,068 | 17,097 | |||
Other assets | 442,865 | 363,975 | |||
Total assets | 3,251,258 | 2,888,691 | |||
Operating Segments [Member] | Financial Services [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 | 1,249 | 812 | |||
Total assets | 1,249 | 812 | |||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | West [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Deposits on real estate under option or contract | 15,557 | 25,863 | |||
Real estate | 1,174,285 | 1,120,038 | |||
Investments in unconsolidated entities | 7,833 | 7,362 | |||
Other assets | [1] | 58,470 | 45,624 | ||
Total assets | 1,256,145 | 1,198,887 | |||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | Central [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Deposits on real estate under option or contract | 21,309 | 27,669 | |||
Real estate | 700,460 | 595,485 | |||
Investments in unconsolidated entities | 6,999 | 7,450 | |||
Other assets | [2] | 110,173 | 94,299 | ||
Total assets | 838,941 | 724,903 | |||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding [Member] | East [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Deposits on real estate under option or contract | 23,079 | 32,024 | |||
Real estate | 856,635 | 706,540 | |||
Investments in unconsolidated entities | 0 | 0 | |||
Other assets | 144,681 | [3] | 93,245 | [4] | |
Total assets | 1,024,395 | 831,809 | |||
Corporate and Unallocated [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Deposits on real estate under option or contract | 0 | 0 | |||
Real estate | 0 | 0 | |||
Investments in unconsolidated entities | 2,236 | 2,285 | |||
Other assets | [5] | 128,292 | 129,995 | ||
Total assets | $ 130,528 | $ 132,280 | |||
[1] | Balance consists primarily of cash and property and equipment. | ||||
[2] | Balance consists primarily of development reimbursements from local municipalities and cash. | ||||
[3] | Balance consists primarily of real estate not owned, cash and goodwill (see Note 9). | ||||
[4] | Balance consists primarily of goodwill (see Note 9), prepaid permits and fees to local municipalities and cash. | ||||
[5] | Balance consists primarily of cash and our deferred tax asset. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 9.7 | $ 7.8 | $ 6.6 |
Sublease income | $ 0.7 | $ 0.6 | $ 0.5 |
COMMITMENTS AND CONTINGENCIES80
COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments for Non-Cancelable Operating Leases (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,018 | $ 7,062 |
2,019 | 6,405 |
2,010 | 5,900 |
2,021 | 5,027 |
2,022 | 4,100 |
Thereafter | 5,478 |
Total future minimum lease payments due | $ 33,972 |
SELECTED QUARTERLY FINANCIAL 81
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) - Schedule of Quarterly Results (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||||||||||||
Selected Quarterly Financial Information [Abstract] | ||||||||||||||||||||||
Total closing revenue | $ 946,425 | $ 805,597 | $ 801,978 | $ 672,772 | $ 880,708 | $ 752,857 | $ 797,896 | $ 597,766 | $ 3,226,772 | $ 3,029,227 | $ 2,568,082 | |||||||||||
Total closing gross profit | 171,225 | 144,601 | 140,910 | 109,763 | 157,438 | 131,874 | 138,104 | 103,796 | 566,499 | 531,212 | 488,709 | |||||||||||
Earnings before income taxes | 84,090 | 63,455 | 63,205 | 36,769 | 76,337 | 53,802 | 59,036 | 28,885 | 247,519 | 218,060 | 189,464 | |||||||||||
Net earnings | $ 35,553 | $ 42,550 | $ 41,580 | $ 23,572 | $ 51,807 | $ 36,887 | $ 39,878 | $ 20,969 | $ 143,255 | $ 149,541 | $ 128,738 | |||||||||||
Per Share Data: | ||||||||||||||||||||||
Basic earnings per share (in dollars per share) | $ 0.88 | [1] | $ 1.06 | [1] | $ 1.03 | [1] | $ 0.59 | [1] | $ 1.29 | [1] | $ 0.92 | [1] | $ 1 | [1] | $ 0.53 | [1] | $ 3.56 | $ 3.74 | $ 3.25 | |||
Diluted earnings per share (in dollars per share) | $ 0.87 | [1] | $ 1.02 | [1] | $ 0.98 | [1] | $ 0.56 | [1] | $ 1.22 | [1] | $ 0.88 | [1] | $ 0.95 | [1] | $ 0.50 | [1] | $ 3.41 | [2] | $ 3.55 | [2] | $ 3.09 | [2] |
[1] | Due to the computation of earnings per share, the sum of the quarterly amounts may not equal the full-year results. | |||||||||||||||||||||
[2] | 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 based on the number of days the Convertible Notes were outstanding during the period. All of the Convertible Notes were retired in 2017. |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Feb. 12, 2018 | Jan. 25, 2018 | Dec. 31, 2017 |
Subsequent event [Member] | Positive outcome of litigation [Member] | |||
Subsequent Event [Line Items] | |||
Litigation settlement received | $ 4,800,000 | ||
Revolving credit facility [Member] | Line of credit [Member] | |||
Subsequent Event [Line Items] | |||
Current borrowing capacity | $ 625,000,000 | ||
Revolving credit facility [Member] | Line of credit [Member] | Revolving credit facility due July 2021 [Member] | |||
Subsequent Event [Line Items] | |||
Current borrowing capacity | 565,000,000 | ||
Revolving credit facility [Member] | Line of credit [Member] | Revolving credit facility due July 2021 [Member] | Subsequent event [Member] | |||
Subsequent Event [Line Items] | |||
Current borrowing capacity | $ 625,000,000 | ||
Revolving credit facility [Member] | Line of credit [Member] | Revolving credit facility maturing July 2019 [Member] | |||
Subsequent Event [Line Items] | |||
Current borrowing capacity | $ 60,000,000 |