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TheStreet Open House

Bluegreen Corporation Reports 2012 Third Quarter Financial Results

Stocks in this article: BXG

INTEREST INCOME AND INTEREST EXPENSE

Net interest spread is the excess of interest income over interest expense. Pre-tax income from net interest spread in Q3 2012 rose to $10.8 million from $10.3 million in Q3 2011, due to a decrease in interest expense as Bluegreen continues to reduce the level of debt on its balance sheet, partially offset by lower interest income resulting from the continued decline in Bluegreen’s VOI notes receivable portfolio due to both the maturing of the portfolio as well as our efforts to increase cash sales and collect higher down payments on those VOI sales that we do finance.

DISCONTINUED OPERATIONS

Bluegreen Communities, which is reported as discontinued operations in all periods presented, marketed residential homesites, the majority of which were sold directly to retail customers seeking to build a home generally in the future, and operated daily-fee golf courses. As previously announced, on May 4, 2012, substantially all of the assets which comprised Bluegreen Communities were sold to Southstar for a purchase price of $29.0 million in cash, the majority of which was used to pay outstanding debt which was collateralized by the Bluegreen Communities assets sold in the transaction. Bluegreen may also receive certain contingent consideration based on Southstar’s sale, if any, of two properties sold to Southstar as part of the transaction. Certain assets relating to Bluegreen Communities, including primarily Bluegreen Communities’ notes receivable portfolio, were excluded from the sale.

ABOUT BLUEGREEN CORPORATION

Founded in 1966 and headquartered in Boca Raton, FL, Bluegreen Corporation (NYSE:BXG) is a leading timeshare sales, marketing and resort management company. Bluegreen manages, markets and sells the Bluegreen Vacation Club, a flexible, points-based, deeded vacation ownership plan with more than 160,000 owners, over 59 owned or managed resorts, and access to more than 4,000 resorts worldwide. Bluegreen also offers a portfolio of comprehensive, turnkey, fee-based service resort management, financial services, and sales and marketing on behalf of third parties. For more information, visit www.bluegreencorp.com.

Statements in this release may constitute forward-looking statements and are made pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Forward looking statements are based largely on expectations and are subject to a number of risks and uncertainties including, but not limited to, the risks and uncertainties associated with economic, credit market, competitive and other factors affecting the Company and its operations, markets, products and services; the Company’s efforts to improve its liquidity through cash sales and larger down payments on financed sales may not be successful; the performance of the Company’s VOI notes receivable may deteriorate, and the FICO ® score-based credit underwriting standards may not have the expected effects on the performance of the receivables; the Company may not be in a position to draw down on its existing credit lines or may be unable to renew, extend, or replace such lines of credit; the Company may require new credit lines to provide liquidity for its operations, including facilities to sell or finance its notes receivable; the Company may not be able to successfully securitize additional timeshare loans and/or obtain adequate receivable credit facilities in the future; risks relating to pending or future litigation, regulatory proceedings, claims and assessments; sales and marketing strategies may not be successful; marketing costs may increase and not result in increased sales; system-wide sales, including sales on behalf of third parties and sales to existing owners, may not continue at current levels or they may decrease; fee-based service initiatives may not be successful and may not grow or generate profits as anticipated; POA Sales may not continue at current levels or may decrease, and we may not be successful in our efforts to enter into similar arrangements with third-party developers in connection with our fee-based services business; risks related to other financial trends discussed in this press release, including that the volume of tours and the sale-to-tour conversion ratio may not continue at current levels or decrease, the Company may be required to further increase its allowance for loan losses in the future and record additional impairment charges as a result of any such increase; selling and marketing expenses as a percentage of system-wide sales of VOIs, net may not remain at current levels or they may increase; and the Company’s indebtedness may increase in the future; and the risks and other factors detailed in the Company’s SEC filings, including those contained in the “Risk Factors” sections of such filings.

                       

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(In 000's, except per share data)

(Unaudited)

 

For the Three Months Ended

For the Nine Months Ended
September 30, September 30,
 
  2012     2011     2012     2011  
 
Revenues:
Gross sales of VOI $ 65,326 $ 56,658 $ 172,987 $ 149,116
Estimated uncollectible VOI notes receivable   (8,354 )   (10,770 )   (21,448 )   (21,521 )
Sales of VOIs 56,972 45,888 151,539 127,595
 
Fee-based sales commission revenue 27,798 23,460 66,279 52,532
Other fee-based services revenue 19,401 18,838 57,091 53,325
Interest income 21,485 23,533 65,051 71,986
Other income, net   377     -     759     -  
  126,033     111,719     340,719     305,438  
 
Costs and expenses:
Cost of VOIs sold 12,590 11,349 31,355 32,003
Cost of other resort fee-based services 10,416 12,912 35,353 38,149
Selling, general and administrative expenses 69,482 56,098 178,845 149,448
Interest expense 10,651 13,225 33,074 41,746
Other expense, net   -     -     -     910  
  103,139     93,584     278,627     262,256  
 
Income before non-controlling interest, provision for income taxes, and
discontinued operations 22,894 18,135 62,092 43,182
Provision for income taxes   8,149     5,939     21,960     14,650  
Income from continuing operations 14,745 12,196 40,132 28,532
Loss from discontinued operations, net of income taxes   (347 )   (2,626 )   (2,043 )   (40,389 )
Net income (loss) 14,398 9,570 38,089 (11,857 )
Less: Net income attributable to non-controlling interest   2,738     2,520     7,519     5,261  
Net income (loss) attributable to Bluegreen Corporation $ 11,660   $ 7,050   $ 30,570   $ (17,118 )
 
Income (loss) attributable to Bluegreen Corporation per common share - Basic
Earnings per share from continuing operations attributable to
Bluegreen shareholders $ 0.38 $ 0.31 $ 1.04 $ 0.75
Loss per share from discontinued operations   (0.01 )   (0.08 )   (0.07 )   (1.29 )
Earnings (loss) per share attributable to Bluegreen shareholders $ 0.37   $ 0.23   $ 0.98   $ (0.55 )
 
Income (Loss) attributable to Bluegreen Corporation per common share - Diluted
Earnings per share from continuing operations attributable to
Bluegreen shareholders $ 0.38 $ 0.30 $ 1.03 $ 0.71
Loss per share from discontinued operations   (0.01 )   (0.08 )   (0.06 )   (1.26 )
Earnings (loss) per share attributable to Bluegreen shareholders $ 0.37   $ 0.22   $ 0.97   $ (0.53 )
 
Weighted average number of common shares:
Basic   31,347     31,245     31,288     31,211  
Diluted   31,605     32,429     31,554     32,156  
 
Comprehensive income (loss) attributable to Bluegreen Corporation $ 11,660   $ 7,050   $ 30,570   $ (17,118 )
 
           
Condensed Consolidated Balance Sheets
(In 000's, except per share data)
 
September 30, December 31,
2012       2011
ASSETS (Unaudited)
 
Unrestricted cash and cash equivalents $ 100,236 $ 80,931
Restricted cash ($35,876 and $38,913 in VIEs at September 30, 2012
and December 31, 2011, respectively) 60,148 51,125
Notes receivable, net ($370,121 and $375,904 in VIEs
at September 30, 2012 and December 31, 2011, respectively) 489,440 512,517
Inventory 280,569 302,843
Prepaid expenses 8,563 4,120
Other assets 52,901 47,100
Property and equipment, net 69,157 70,112
Assets held for sale           28,625
Total assets

$

1,061,014

      $

1,097,373

 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable $ 10,908 $ 8,834
Accrued liabilities and other 73,811 62,878
Deferred income 30,304 24,549
Deferred income taxes 35,546 15,776
Receivable-backed notes payable - recourse ($11,511 and $15,826 in
VIEs at September 30, 2012 and December 31, 2011, respectively) 65,063 110,016
Receivable-backed notes payable - non-recourse (in VIEs) 373,385 369,314
Lines-of-credit and notes payable 20,396 86,817
Junior subordinated debentures   110,827         110,827
Total liabilities 720,240 $ 789,011
 
 
 
Shareholders' Equity
Preferred stock, $.01 par value, 1,000 shares authorized; none issued
Common stock, $.01 par value, 140,000 shares authorized;
31,349 and 31,288 shares issued at September 30, 2012 and December 31, 2011, respectively 313 313
Additional paid-in capital 193,672 191,999
Retained earnings   107,588         77,018
Total Bluegreen Corporation shareholders' equity 301,573 269,330
Non-controlling interest   39,201         39,032
Total shareholders’ equity   340,774         308,362
Total liabilities and shareholders' equity

$

1,061,014

      $ 1,097,373
 




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