Meritage Warns of Write-Offs

Scottcdale, AZ, July 9, 2007--Meritage Homes Corp. warned that it expects to post major declines in home sales and orders in its second quarter and take some $100 million in charges because of the downturn in the housing market.

Meritage said it expects to report full earnings for the second quarter on July 26, but said preliminary results show home closing revenue fell 37 percent to $569 million and its home backlog declined 39 percent to $1.2 billion. Home orders declined 28 percent to $502 million.

Buyers' cancellations rose to approximately 37 percent of orders for the quarter, compared to 32 percent in the second quarter 2006.

"As reported by other homebuilders, the housing market in general continues to be very challenging," Meritage Chairman and Chief Executive Steven J. Hilton said in a statement. "Weak demand and high inventory levels have increased competition among homebuilders, pressuring margins despite reductions in new home starts, lot supplies and operating costs."

He added: "We continue to adjust our operations to compete effectively, maintain a strong balance sheet and better position ourselves for the future."

Meritage said it expects to incur pretax charges of $75 million to $80 million because of inventory impairments and to write off land options. The company also expects to book a charge of $28 million related to a 2005 acquisition in Ft. Myers and Naples, Fla.