Meritage Homes Corporation Quarterly report pursuant to Section 13 or 15(d)

ORGANIZATION AND BASIS OF PRESENTATION (Tables)

9 Months Ended

Sep. 30, 2016

The table below outlines our surety bond and letter of credit obligations (in thousands):



	As of
	September 30, 2016				December 31, 2015
	Outstanding		Estimated work remaining to complete		Outstanding		Estimated work remaining to complete
Sureties:
Sureties related to joint ventures	$	—	$	—	$	87	$	87
Sureties related to owned projects and lots under contract	234,014		73,207		250,639		103,200
Total Sureties	$	234,014	$	73,207	$	250,726	$	103,287
Letters of Credit (“LOCs”):
LOCs in lieu of deposits for contracted lots	$	250	N/A		$	—	N/A
LOCs for land development	28,375		N/A		23,934		N/A
LOCs for general corporate operations	3,750		N/A		3,750		N/A
Total LOCs	$	32,375	N/A		$	27,684	N/A

Accrued liabilities at September 30, 2016 and December 31, 2015 consisted of the following (in thousands):



	As of
	September 30, 2016		December 31, 2015
Accruals related to real estate development and construction activities	$	65,929	$	37,509
Payroll and other benefits	42,112		41,240
Accrued taxes	8,687		9,950
Warranty reserves	21,966		21,615
Legal reserves (1)	1,602		18,812
Other accruals	40,391		32,037
Total	$	180,687	$	161,163

(1) See Note 15 for additional information related to our legal reserves.

A summary of changes in our warranty reserves follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	22,699		$	21,993		$	21,615		$	22,080
Additions to reserve from new home deliveries	4,110			3,376			12,068			9,000
Warranty claims	(4,843		)	(4,229		)	(11,442		)	(10,690		)
Adjustments to pre-existing reserves	—			—			(275		)	750
Balance, end of period	$	21,966		$	21,140		$	21,966		$	21,140