Bluegreen Corporation Reports 2010 Fourth Quarter and Year End Financial Results

Bluegreen Corporation (NYSE: BXG), a leading provider of Colorful Places to Live and Play(R), today announced financial results for the three months and year ended December 31, 2010.

John M. Maloney Jr., President and Chief Executive Officer of Bluegreen, commented, “We were pleased with Bluegreen’s progress in 2010. During 2010, we continued to focus on the development of our fee-based services business. This is reflected by, among other things, a 19% increase in VOI system-wide sales driven by incremental sales on behalf of our fee-based clients and a 56% increase in total fee-based services revenues. We began earning commissions in our sales and marketing fee-based services in July 2009 and as of December 31, 2010, we had entered into six contracts to provide fee-based services, up from four as of December 31, 2009. We believe our fee-based service business will require significantly less capital for growth as compared to our historical traditional timeshare business.”

Mr. Maloney continued by noting additional 2010 and Q4 2010 operating highlights: [member]

Cash flow from Operating/Investing activities was $158.0 million for year ended December 31, 2010;

  • Unrestricted cash rose to $72.1 million at December 31, 2010, from $70.5 million at December 31, 2009;
  • In connection with our fee-based services business, Bluegreen Resorts (“Resorts”) sold $22.8 million of third-party inventory in Q4 2010, generating sales and marketing commissions of approximately $15.5 million, which contributed an estimated $2.9 million to Resorts operating profit. This compares to sales of $20.5 million of third-party inventory, which generated sales and marketing commissions of $13.0 million and contributed an estimated $1.3 million to Resorts operating profit in Q4 2009;
  • During 2010, Resorts sold $78.8 million of third-party inventory, generating sales and marketing commissions of approximately $53.0 million, which contributed an estimated $10.8 million to Resorts operating profit. This compares to sales of $31.7 million of third-party inventory, which generated sales and marketing commissions of $20.1 million and an estimated $3.6 million of Resorts operating profit in 2009.
  • Total revenues from fee-based services (including sales and marketing commissions, management services, title and other services) rose 17% to $32.4 million in Q4 2010 from $27.6 million in Q4 2009. During 2010, total revenues from fee-based services rose 56% to $120.0 million from $77.1 million in 2009;
  • Cash received from Resorts sales – either at closing or within 30 days of closing – represented 54% of Resorts sales in 2010, up from 45% in 2009;
  • Sales to existing Bluegreen Vacation Club owners represented 58% of total Resorts sales in Q4 2010 as compared to 56% in Q4 2009. Sales to existing Bluegreen Vacation Club owners represented 58% of total Resorts sales in 2010 as compared to 55% in 2009; and
  • We completed a variety of credit transactions that provided us with additional liquidity for our VOI-backed notes receivable, as well as the securitization of an aggregate $162.3 million of VOI notes receivable in two separate transactions.

While the Company incurred a net loss of $44.0 million or $1.41 per diluted share during 2010, this net loss included non-cash, after-tax charges totaling $67.3 million, or $2.15 per diluted share, more fully described below. Excluding these charges, non-GAAP net income for 2010 would have been $23.3 million or $0.74 per diluted share, as compared to non-GAAP net income for 2009 of $11.8 million or $0.38 per diluted share. These non-cash charges in 2010 were associated with the following pre-tax items: i) a $69.7 million increase in the Company’s loan loss reserves for VOI notes receivable generated prior to December 15, 2008 (the date that Bluegreen implemented a FICO(R) score-based credit underwriting program), partially offset by a $15.9 million reduction in cost of sales in connection with the increase in loan loss reserves and changes in estimated gross profit, and ii) impairment charges related to the write-down of Bluegreen Communities’ inventory in the amount of $54.6 million. These charges did not impact the Company’s cash position or operating cash flows.

While the Company incurred a net loss of $23.7 million, or $0.76 per diluted share during Q4 2010, this net loss included non-cash, after-tax charges totaling $28.6 million, or $0.91 per diluted share, more fully described below. Excluding these charges, non-GAAP net income for Q4 2010 would have been $4.9 million or $0.15 per diluted share, as compared to a non-GAAP net loss for Q4 2009 of $4.0 million or $0.13 per diluted share. These non-cash charges in Q4 2010 were associated with the following pre-tax items: i) a $31.9 million increase in the Company’s loan loss reserves for VOI notes receivable generated prior to December 15, 2008 (the date that Bluegreen implemented a FICO(R) score-based credit underwriting program), partially offset by a $14.1 million reduction in cost of sales in connection with the increase in loan loss reserves and changes in estimated gross profit, and ii) impairment charges related to the write-down of Bluegreen Communities’ inventory in the amount of $28.1 million. These charges did not impact the Company’s cash position or operating cash flows.

As previously reported, effective January 1, 2010, Bluegreen adopted accounting guidance that resulted in the consolidation into its financial statements of seven special-purpose finance entities that were previously classified as off-balance sheet. These entities issued Bluegreen’s securitization bonds and hold the receivables that collateralized the bonds. The consolidation of these entities resulted in increased interest expense (by the amount of interest expense incurred on the securitization bonds) and interest income (by the amount of income generated from the related receivables, partially offset by the absence of accretion income on residual interests that were eliminated).

On March 24, 2011, the Company announced that its Board of Directors had engaged advisors to explore alternative strategies for Bluegreen Communities, including the possible sale of the division. There is no assurance that the announcement regarding strategic alternatives will not have a material adverse effect on Bluegreen Communities’ operations or that it will result in the consummation of a transaction. As of December 31, 2010, the carrying value of the Bluegreen Communities inventory was $82.2 million. This carrying value was based upon the Company’s estimates of probability-weighted cash flows for various outcomes, appraisals and other data. Additional, material impairment charges may occur in the future, depending on the decision, if any, to pursue a specific strategic alternative or on additional market information obtained during the exploration process. In the event that the real estate market does not improve in the period expected or continues to deteriorate further, additional material impairment charges may be required.

For more information and to review the entire report, please visit http://phx.corporate-ir.net/phoenix.zhtml?c=112002&p=irol-newsArticle&ID=1544665&highlight=    [/member]

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