Annual report pursuant to Section 13 and 15(d)

Investments in Unconsolidated Entities (Tables)

v2.4.0.6
Investments in Unconsolidated Entities (Tables)
 12 Months Ended
Dec. 31, 2012
Equity Method Investments and Joint Ventures [Abstract]  
Repayment and completion guarantees
In connection with our land development joint ventures, we may also provide certain types of guarantees to associated lenders. These guarantees can be classified into two categories: (i) Repayment Guarantees and (ii) Completion Guarantees, described in more detail below. Additionally, we have classified a guarantee related to our minority ownership in the South Edge joint venture separately, as there is pending litigation with the venture's lender group regarding that guarantee.
 
 
 
 
 
(In thousands)
 
At December 31, 2012
 
At December 31, 2011
Repayment guarantees
 
$
219

 
$
346

Completion guarantees (1)
 
—

 
—

South Edge guarantee (2)
 
13,243

 
13,243

Total guarantees
 
$
13,462

 
$
13,589

 
(1)
As our completion guarantees are typically backed by funding from a third party, we believe these guarantees do not represent a potential cash obligation for us, as they require only non-financial performance.
(2)
As discussed in Note 13, although we have a reserve for the amounts we believe are appropriate, we dispute the enforceability of this guarantee, and ultimate resolution of this matter will be addressed through litigation and/or arbitration.

Financial information related to unconsolidated joint ventures, Balance sheets
 
At December 31, 2012
 
At December 31, 2011
Assets:
 
 
 
Cash
$
7,650

 
$
4,530

Real estate
36,626

 
44,764

Other assets
3,478

 
3,946

Total assets
$
47,754

 
$
53,240

Liabilities and equity:
 
 
 
Accounts payable and other liabilities
$
4,748

 
$
4,534

Notes and mortgages payable
14,001

 
20,923

Equity of:
 
 
 
Meritage (1)
9,631

 
9,351

Other
19,374

 
18,432

Total liabilities and equity
$
47,754

 
$
53,240

Financial information related to unconsolidated joint ventures, operations
 
Years Ended December 31,
 
2012
 
2011
 
2010
Revenue
$
38,230

 
$
19,881

 
$
24,754

Costs and expenses
(21,093
)
 
(11,783
)
 
(152,873
)
Net earnings of unconsolidated entities
$
17,137

 
$
8,098

 
$
(128,119
)
Meritage’s share of pre-tax earnings (1)(2)(3)
$
10,441

 
$
5,849

 
$
5,653


(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 balance sheets due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) income deferrals as discussed in Note (3) below and (iv) the cessation of allocation of losses from joint ventures in which we have previously impaired our investment balance to zero and where we have no commitment to fund additional losses.
(2)
The joint venture financial statements above represent the most recent information available to us.
(3)
Our share of pre-tax earnings is recorded in “Earnings from unconsolidated entities, net” on our consolidated statements 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.