Bluegreen Corporation Reports 2007 Third Quarter Results

Bluegreen Corporation (NYSE: BXG), a leading provider of Colorful Places to Live and Play®, today announced financial results for the three and nine months ended September 30, 2007 (see attached tables). Total sales in the third quarter of 2007 rose to $180.9 million from $172.5 million in the same period last year, due primarily to record vacation ownership ("Resorts”) sales, partially offset by lower homesite ("Bluegreen Communities”) sales. Bluegreen Resorts and Bluegreen Communities yielded Field Operating Profit (1) of $29.7 million and $4.5 million, respectively, during the third quarter of 2007 (see tables entitled "Supplemental Segment Financial Data”). Net income in the third quarter of 2007 was $14.0 million, or $0.45 per diluted share, as compared to net income of $21.9 million, or $0.71 per diluted share, in the same period last year. BLUEGREEN RESORTS Bluegreen Resorts sales increased 14.4% to a third quarter record $149.1 million from $130.3 million in the third quarter of 2006. Higher Resorts sales were primarily attributable to a significant increase in sales to existing Bluegreen Vacation Club® owners from the third quarter of 2006; these sales comprised 42% of Resorts sales for the third quarter of 2007 as compared to 34% of Resorts sales during the comparable prior year period. Same-resort sales increased, led by sales offices at the Smoky Mountain Preview Center in Sevierville, Tenn., The Falls Village™ resort in Branson, Mo., MountainLoft™ in Gatlinburg, Tenn., and an offsite sales office in Las Vegas. Higher sales were also attributable, to a lesser extent, to the opening of new sales offices at SeaGlass Tower, located in Myrtle Beach, S.C., and at a new resort under development in Williamsburg, Va., as well as a system-wide price increase that went into effect during March 2007. Results for the third quarter of 2007 also included a gain on sale of notes receivable totaling $19.9 million, which is required by generally accepted accounting principles to be reflected as a $24.2 million increase in Resorts sales with an offsetting $4.4 million contra-revenue amount in sales of notes receivable. This compares to a $21.6 million gain on sales of notes receivable in the third quarter of 2006, reflected as an $18.1 million increase in Resorts sales and $3.5 million of revenue in sales of notes receivable. In accordance with Statement of Financial Accounting Standards No. 152, "Accounting for Real Estate Time-sharing Transactions" ("SFAS 152"), as of September 30, 2007 approximately $32.9 million and $18.5 million of Resorts sales and profits, respectively, were deferred under SFAS 152 as these contracted sales had not yet met the requirements for revenue recognition. These amounts compare to $37.8 million and $21.0 million of Resorts sales and profits, respectively, which were deferred as of June 30, 2007. Deferred amounts are expected to be recognized in future periods. In addition, SFAS 152 requires that Resorts sales be reduced by estimated uncollectible timeshare notes receivable, which were estimated to be $19.5 million for the third quarter of 2007 and $18.1 million for the third quarter of 2006. Resorts cost of sales in the third quarter of 2007 was 25.8% as compared to 19.8% in the third quarter of 2006, the result of a higher percentage of Resort sales in relatively higher cost properties. Resorts cost of sales as a percentage of sales for the fourth quarter of 2007 are expected to range between 23% and 26%. John M. Maloney Jr., President and Chief Executive Officer of Bluegreen, commented, "Bluegreen Resorts offers owners access to a multitude of vacation destinations at a price that fits their budget and with a flexibility that conforms to their individual lifestyle. We believe that Bluegreen’s growing brand recognition, the geographic diversity of our properties, and unwavering commitment to customer service have combined to produce another quarter of record Resorts results. We are continuing to make investments to expand our destination portfolio and are pleased to report that construction is progressing at our newest Resorts in Las Vegas and Williamsburg, both of which are expected to begin accepting guests during 2008.” Mr. Maloney also noted that Bluegreen consummated two significant financial transactions during the third quarter of 2007. In August 2007, the Company renewed and expanded an existing unsecured revolving line of credit with Wachovia Bank, N.A. In September 2007, Bluegreen completed a private offering and sale of $177.0 million of timeshare loan-backed securities. BLUEGREEN COMMUNITIES Sales at Bluegreen Communities declined to $31.7 million from $42.2 million during the same period last year. Bluegreen Communities cost of sales in the third quarter of 2007 was 54.0% compared to 49.7% in the same period one year ago. Mr. Maloney commented, "Lower sales at Bluegreen Communities reflect the substantial sell-out of several communities that were in active sales during the third quarter of 2006 and the deferral of revenue recognition of $3.4 million of sales contracts in communities that have not yet received final platting approval, partially offset by the commencement of sales at three new Bluegreen Communities subsequent to the third quarter of 2006. This segment of our business continued to operate profitably during the third quarter. In addition to the previously disclosed impact of reduced inventory levels, we believe that Bluegreen Communities sales in certain regions are also being negatively impacted by a generally sluggish residential real estate market. Because of the changing dynamics of this market, we are reviewing the sales and marketing of existing properties and the acquisition of new inventory at Bluegreen Communities. While we are optimistic about new sales and marketing initiatives in this segment, we anticipate that land purchases will only be consummated on a selective basis with a view towards aligning our Bluegreen Communities inventory with current and anticipated market demand. Bluegreen Communities, which comprised 18% of our consolidated sales and 13% of our consolidated Field Operating Profit in the third quarter of 2007, remains an important part of our business, but we expect it to continue to be a smaller component of our consolidated results as we continue to focus on future growth at Bluegreen Resorts.” As of September 30, 2007, approximately $14.3 million and $6.3 million of Bluegreen Communities sales and profits, respectively, were deferred under the percentage-of-completion method of accounting. It is expected that these amounts will be recognized in future periods ratably with the development of the communities. These amounts compare to $20.7 million and $8.9 million of sales and profits, respectively, deferred as of June 30, 2007. Therefore, net recognition in the third quarter of 2007 of revenues and profits previously deferred under the percentage of completion method of accounting totaled $6.4 million and $2.6 million, respectively. In the third quarter of 2006, net recognition of revenue and profits previously deferred under the percentage-of-completion method of accounting totaled $4.0 million and $2.2 million, respectively. OTHER FINANCIAL INFORMATION Bluegreen’s balance sheet at September 30, 2007 reflected unrestricted cash of $113.1 million, a book value of $12.04 per share, and a debt-to-equity ratio of 1:1. Total positive net interest spread (interest income less interest expense) was $5.0 million in the third quarter of 2007 as compared to $6.5 million in the third quarter of 2006. Interest income declined due to the write down of approximately $0.6 million of the carrying value of Bluegreen’s retained interests in notes receivable sold as a result of increased market discount rates, while interest expense rose due to an increase in outstanding debt. Bluegreen increased borrowings on operating lines of credit during the third quarter of 2007 in order to increase its cash on hand. NINE-MONTH FINANCIAL RESULTS Total sales for the nine months ended September 30, 2007 increased to $446.2 million from total sales of $436.3 million in the first nine months of 2006. Resorts sales increased 15.4% to $341.5 million from $295.8 million in the comparable period one year ago. Bluegreen Communities sales for the first nine months of 2007 were $104.6 million, a decrease from sales of $140.4 million in the nine-month period ended September 30, 2006. Bluegreen Communities sales in the nine months of 2006 included $7.0 million of revenue related to the bulk sale of land in California on a non-retail basis; there was no such sale in 2007. Net income for the nine months of 2007 was $23.4 million, or $0.75 per diluted share, as compared to net income of $28.0 million, or $0.90 per diluted share, in the same period last year. Net income for the nine months of 2006 included a cumulative effect of change in accounting principle charge, net of income taxes and minority interest, totaling $4.5 million, or $0.14 per diluted share; there was no such charge in 2007. CONFERENCE CALL Bluegreen Corporation will host a conference call on Tuesday, November 6, 2007 at 10:00 am ET to discuss this news release. Interested parties may participate in the call by dialing (866) 770-7125 (Domestic) or (617) 213-8066 (International) and use the code 91727651 approximately 10 minutes before the call is scheduled to begin, and ask to be connected to the Bluegreen conference call. A recorded replay of the call will be available until November 13, 2007. Listeners may dial (888) 286-8010 (Domestic) or (617) 801-6888 (International) and use the code 62438379 for the replay. In addition, the conference call will be broadcast live over the Internet at Bluegreen’s corporate web site, www.bluegreencorp.com. To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed on Bluegreen Corporation’s web site for approximately 90 days. ABOUT BLUEGREEN CORPORATION Bluegreen Corporation (NYSE:BXG) is a leading provider of Colorful Places to Live and Play® through two principal operating divisions. With approximately 183,000 owners, Bluegreen Resorts markets a flexible, real estate-based vacation ownership plan that provides access to over 40 resorts and an exchange network of over 4,000 resorts and other vacation experiences such as cruises and hotel stays. Bluegreen Communities has sold over 55,000 planned residential and golf community homesites in 32 states since 1985. Founded in 1966, Bluegreen is headquartered in Boca Raton, Fla., and currently employs over 6,000 associates. In 2005, Bluegreen ranked No. 57 on Forbes' list of The 200 Best Small Companies and No. 48 on FORTUNE'S list of America's 100 Fastest Growing Companies. More information about Bluegreen is available at 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, competitive and other factors affecting the Company and its operations, markets, products and services, as well as the risk that Company-wide growth and profitability and growth and profitability at Resorts and Communities will not occur as anticipated; risks relating to pending or future litigation, claims and assessments; that the Company will not be able to acquire land or identify new projects, as anticipated; sales and marketing strategies related to new Resorts and Communities properties will not be as successful as anticipated; new Resort and Communities properties will not open when expected, will cost more to develop or may not be as successful as anticipated; retail prices and homesite yields for Communities properties will be below the Company’s estimates; cost of sales will not be as expected; the Company may be unable to sell notes receivable on satisfactory terms, if at all; the Company may not be in a position to draw down on its existing credit lines or may be unable to renew or replace such lines of credit; real estate inventories, notes receivable, retained interests in notes receivable sold or other assets will be determined to be impaired in the future; sales to existing owners will not continue at current levels; deferred sales will not be recognized to the extent or at the time anticipated; and the risks and other factors detailed in the Company’s SEC filings, including its most recent Annual Report on Form 10-K filed on March 16, 2007, its Form 10-K/A filed on July 3, 2007 and its Form 10-Q to be filed on or before November 9, 2007. (1) Field operating profit is defined as operating profit prior to the allocation of corporate overhead, interest income, other income, interest expense, and income taxes. BLUEGREEN CORPORATION Condensed Consolidated Statements of Income (In 000's, Except Per Share Data)   Three Months Ended Nine Months Ended September 30,   September 30, September 30,   September 30,   2007     2006     2007     2006     REVENUES:   Gross vacation ownership sales $ 144,401 $ 130,291 $ 355,199 $ 312,579 Estimated uncollectible VOI notes receivable (19,504 ) (18,078 ) (46,098 ) (44,000 ) Gain on sales of notes receivable (Resort sales portion)   24,228     18,097     32,419     27,252   Vacation ownership sales 149,125 130,310 341,520 295,831 Homesite sales   31,745     42,239     104,646     140,425   Total sales 180,870 172,549 446,166 436,256   Other resort and communities operations revenue 17,255 18,503 47,863 48,790 Interest income 12,341 13,020 34,291 30,692 Sales of notes receivable (4,377 ) 3,497 (4,377 ) 4,049 Other income, net   72     -     -     -   Total operating revenues   206,161     207,569     523,943     519,787     EXPENSES: Cost of sales: Vacation ownership cost of sales 38,416 25,741 83,927 64,716 Homesite cost of sales   17,144     20,986     54,670     76,255   Total cost of sales 55,560 46,727 138,597 140,971 Cost of other resort and communities operations 13,789 13,052 38,063 42,769 Selling, general and administrative expenses 104,915 101,893 284,760 264,055 Interest expense 7,348 6,530 18,380 13,362 Other expense   -     1,932     1,125     1,242   Total operating expenses   181,612     170,134     480,925     462,399   Income before minority interest and provision for income taxes 24,549 37,435 43,018 57,388 Minority interest in income of consolidated subsidiary   2,044     2,241     5,311     4,940   Income before provision for income taxes 22,505 35,194 37,707 52,448 Provision for income taxes   8,552     13,287     14,329     19,930   Income before cumulative effect of change in accounting principle 13,953 21,907 23,378 23,3 32,518 Cumulative effect of change in accounting principle, net of tax - - - (5,678 ) Minority interest in cumulative effect of change in accounting principle, net of tax   -     -     -     1,184   Net income $ 13,953   $ 21,907   $ 23,378   $ 28,024     Income before cumulative effect of change in accounting principle per share: Basic: $ 0.45 $ 0.72 $ 0.75 $ 1.07 Diluted: $ 0.45 $ 0.71 $ 0.75 $ 1.04   Cumulative effect of change in accounting principle, per share Basic: $ - $ - $ - $ (0.15 ) Diluted: $ - $ - $ - $ (0.14 )   Net income per share: Basic: $ 0.45   $ 0.72   $ 0.75   $ 0.92   Diluted: $ 0.45   $ 0.71   $ 0.75   $ 0.90     Weighted average number of common and common equivalent shares:   Basic   31,011     30,547     30,968     30,530   Diluted   31,301     31,053     31,315     31,092   BLUEGREEN CORPORATION Supplemental Segment Financial Data Three- and Nine-Month Periods Ended September 30, 2007 and September 30, 2006       (In 000s, except percentages)     BLUEGREEN RESORTS   Q3 2007   % of Sales     Q3 2006   % of Sales     YTD2007   % of Sales     YTD 2006   % of Sales   Gross sales of real estate $ 144,401 $ 130,291 $ 355,199 $ 312,579 Estimated uncollectibleVOI notes receivable (19,504 ) (18,078 ) (46,098 ) (44,000 ) Gain on sales of notes receivable (Resort sales portion)   24,228     18,097     32,419     27,252   Sales of real estate 149,125 100.0 130,310 100.0 341,520 100.0 295,831 100.0 Cost of sales of real estate   38,416   25.8   25,741   19.8   83,927   24.6   64,716   21.9 Gross profit of real estate 110,709 74.2 104,569 80.2 257,593 75.4 231,115 78.1   Sales of other services 14,400 100.0 15,408 100.0 39,473 100.0 39,363 100.0 Cost of sales of other services   10,689   74.2   9,915   64.3   29,618   75.0   34,451   87.5 Gross profit of other services 3,711 25.8 5,493 35.7 9,855 25.0 4,912 12.5   Selling and marketing expense 77,521 51.9 72,203 55.4 198,933 58.3 180,016 60.9 Field G & A expense   7,233   4.9   6,367   4.9   21,189   6.2   19,364   6.5 Total field operating expense   84,754   56.8   78,570   60.3   220,122   64.5   199,380   67.4   Field operating profit $ 29,666   19.9 $ 31,492   24.2 $ 47,326   13.9 $ 36,647   12.4 BLUEGREEN COMMUNITIES   Q3 2007   % of Sales     Q3 2006   % of Sales     YTD 2007   % of Sales     YTD 2006   % of Sales   Sales of real estate $ 31,745 100.0 $ 42,239 100.0 $ 104,646 100.0 $ 140,425 100.0 Cost of sales of real estate   17,144   54.0     20,986   49.7     54,670   52.2     76,255 54.3 Gross profit of real estate 14,601 46.0 21,253 50.3 49,976 47.8 64,170 45.7   Sales of other services 2,855 100.0 3,095 100.0 8,390 100.0 9,427 100.0 Cost of sales of other services   3,100   108.6     3,137   101.4     8,445   100.7     8,318 88.2 Gross profit of other services (245 ) (8.6 ) (42 ) (1.4 ) (55 ) (0.7 ) 1,109 11.8   Selling and marketing expense 7,463 23.5 6,942 16.4 21,935 20.9 21,754 15.4 Field G & A expense   2,344   7.4     3,141   7.5     8,102   7.8     8,041 5.8 Total field operating expense   9,807   30.9     10,083   23.9     30,037   28.7     29,795 21.2   Field operating profit $ 4,549   14.3   $ 11,128   26.3   $ 19,884   19.0   $ 35,484 25.3 BLUEGREEN CORPORATION Reconciliation of Field Operating Profit to Income Before Minority Interest and Provision for Income Taxes   Three Months Ended Nine Months Ended September 30,   September 30, September 30,   September 30,   2007     2006     2007     2006     Field operating profit for Bluegreen Resorts $ 29,666 $ 31,492 $ 47,326 $ 36,647 Field operating profit for Bluegreen Communities 4,549 11,128 19,884 35,484 Interest Income 12,341 13,020 34,291 30,692 Sale of notes receivable (4,377 ) 3,497 (4,377 ) 4,049 Other income (expense), net 72 (1,932 ) (1,125 ) (1,242 ) Corporate general and administrative expenses (10,354 ) (13,240 ) (34,601 ) (34,880 ) Interest expense   (7,348 )   (6,530 )   (18,380 )   (13,362 ) Income before minority interest and provision for income taxes $ 24,549   $ 37,435   $ 43,018   $ 57,388   BLUEGREEN CORPORATION Condensed Consolidated Balance Sheets (In 000s)   September 30, December 31, 2007 2006 ASSETS (Unaudited)   Cash and cash equivalents (unrestricted) $ 113,071 $ 49,672 Cash and cash equivalents (restricted)   25,930   21,476 Total cash and cash equivalents 139,001 71,148 Contracts receivable, net 26,512 23,856 Notes receivable, net 159,782 144,251 Prepaid expenses 10,593 10,800 Other assets 23,688 27,465 Inventory, net 398,333 349,333 Retained interests in notes receivable sold 141,713 130,623 Property and equipment, net 97,438 92,445 Goodwill   4,291   4,291 Total assets $ 1,001,351 $ 854,212   LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Accounts payable $ 20,738 $ 18,465 Accrued liabilities and other 66,300 49,458 Deferred income 41,641 40,270 Deferred income taxes 99,911 87,624 Receivable-backed notes payable 36,472 21,050 Lines-of-credit and notes payable 174,817 124,412 10.50% senior secured notes 55,000 55,000 Junior subordinated debentures   110,827   90,208 Total liabilities 605,706 486,487   Minority interest 20,013 14,702   Total shareholders’ equity   375,632   353,023 Total liabilities and shareholders’ equity $ 1,001,351 $ 854,212