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

Organization and Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2014

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



	At June 30, 2014				At December 31, 2013
	Outstanding		Estimated work remaining to complete		Outstanding		Estimated work remaining to complete
Surety Bonds:
Surety bonds related to joint ventures	$	87	$	87	$	87	$	87
Surety bonds related to owned projects and lots under contract	237,310		95,882		191,742		86,115
Total surety bonds	$	237,397	$	95,969	$	191,829	$	86,202
Letters of Credit (“LOCs”):
LOCs in lieu of deposits for contracted lots	$	200	N/A		$	1,685	N/A
LOCs for land development	22,043		N/A		35,883		N/A
LOCs for general corporate operations	4,500		N/A		4,500		N/A
Total LOCs	$	26,743	N/A		$	42,068	N/A

Accrued Liabilities. Accrued liabilities consist of the following (in thousands):



	At June 30, 2014		At December 31, 2013
Accruals related to real-estate development and construction activities	$	36,736	$	29,992
Payroll and other benefits	26,663		36,232
Accrued taxes	11,205		22,902
Warranty reserves	20,882		21,971
Legal reserves	16,298		16,463
Real-estate notes payable (1)	17,036		15,993
Other accruals	22,976		23,058
Total	$	151,796	$	166,611

(1) Reflects balance of non-recourse notes payable obtained in connection with land purchases.

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



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Balance, beginning of period	$	21,482		$	21,384		$	21,971		$	22,064
Additions to reserve from new home deliveries	2,759			2,666			5,035			4,737
Warranty claims	(3,859		)	(2,706		)	(6,624		)	(5,457		)
Adjustments to pre-existing reserves	500			500			500			500
Balance, end of period	$	20,882		$	21,844		$	20,882		$	21,844