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Bluegreen Corporation Reports 2012 Third Quarter Financial Results

System-wide sales also include Bluegreen’s sales of VOI inventory in connection with a new category of sales, which we commenced during January 2012, requiring low levels of capital deployment whereby we acquire VOI inventory from our resorts’ property owner associations (“POAs”) on a non-committed basis, in close proximity to the timing of our selling of such VOIs (“POA Sales”). These VOIs are typically obtained by the POAs through foreclosure in connection with maintenance fee defaults and are generally acquired by us at a discount. In the three and nine months ended September 30, 2012, POA Sales, which are included within the results of Bluegreen’s Traditional Timeshare Business in the tables above, were $5.1 million and $13.0 million, respectively.

Cost of VOIs sold represented 22% and 25% of sales of VOIs in Q3 2012 and Q3 2011, respectively. Cost of VOIs sold as a percentage of sales of VOIs varies between periods based on the relative costs of the specific VOIs sold in each period. Additionally, changes in assumptions, including estimated project sales, future defaults, upgrades and estimated incremental revenue from the resale of repossessed VOI inventory and the size of the point packages of the VOIs sold (due to offered volume discounts, including consideration of cumulative sales to existing owners) are reflected on a prospective basis in the period the change occurs.

As a percentage of system-wide sales of VOIs, net, selling and marketing expenses increased to 46% in Q3 2012 from 45% in Q3 2011. Sales to existing Bluegreen owners as a percentage of system-wide sales of VOIs was 56% in Q3 2012 as compared to 55% Q3 2011. If Bluegreen shifts its marketing efforts more to selling to new customers as opposed to existing owners, its marketing expenses will increase as a percentage of sales.

Operating profit at Resorts rose to $25.8 million, or 24% of system-wide sales of VOI’s, net, for Q3 2012 from operating profit of $17.9 million, or 20% of system-wide sales of VOI’s, net, for Q3 2011.

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