##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2008ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934For the transition period from  to
 Commission file number: 001-31931
 WOODBRIDGE HOLDINGS CORPORATION
  Florida
(State or other jurisdiction of 
incorporation or organization)
    
    11-3675068
(I.R.S. Employer
Identification No.)2100 W. Cypress Creek Road, 
Fort Lauderdale, FL
(Address of principal executive offices)
    
    33309
(Zip Code)
 (954) 940-4950
  x o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
  o x
  Class
    
    Outstanding at November 6, 2008Class A common stock, $0.01 par value
    
    
    19,042,149Class B common stock, $0.01 par value
    
    
    243,807




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##### 



PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Statements of Financial Condition as of September 30, 2008 and December 31, 2007  Unaudited
    
    
    1Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007  Unaudited
    
    
    2Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2008 and 2007  Unaudited
    
    
    3Consolidated Statement of Shareholders Equity for the nine months ended September 30, 2008  Unaudited
    
    
    4Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007  Unaudited
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    57Item 4.
    
    Controls and Procedures
    
    
    57PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    58Item 1A.
    
    Risk Factors
    
    
    58Item 6.
    
    Exhibits
    
    
    60SIGNATURES
    
    
    61EX-10.1 Amended & Restated 2003 Stock Incentive PlanEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 Woodbridge Holdings Corporation  Consolidated Statements of Financial Condition  Unaudited
(In thousands, except share data)
 September 30,
    
    
    December 31,2008
    
    
    2007AssetsCash and cash equivalents
    
    $
    143,889
    
    
    
    195,181Restricted cash
    
    
    814
    
    
    
    2,207Current income tax receivable
    
    
    
    
    
    
    27,407Inventory of real estate
    
    
    240,701
    
    
    
    227,290Assets held for sale
    
    
    92,674
    
    
    
    96,214Investments:Bluegreen Corporation
    
    
    65,765
    
    
    
    116,014Other equity securities
    
    
    11,352
    
    
    
    Other
    
    
    2,564
    
    
    
    2,565Property and equipment, net
    
    
    32,589
    
    
    
    33,566Other assets
    
    
    13,102
    
    
    
    12,407Total assets
    
    $
    603,450
    
    
    
    712,851Liabilities and Shareholders EquityAccounts payable, accrued liabilities and other
    
    $
    34,796
    
    
    
    41,618Current income tax payable
    
    
    2,380
    
    
    
    Liabilities related to assets held for sale
    
    
    76,957
    
    
    
    80,093Notes and mortgage notes payable
    
    
    171,365
    
    
    
    189,768Junior subordinated debentures
    
    
    85,052
    
    
    
    85,052Loss in excess of investment in subsidiary
    
    
    55,214
    
    
    
    55,214Total liabilities
    
    
    425,764
    
    
    
    451,745Shareholders equity:Preferred stock, $0.01 par valueAuthorized: 5,000,000 sharesIssued and outstanding: no shares
    
    
    
    
    
    
    Class A Common Stock, $0.01 par valueAuthorized: 30,000,000 sharesIssued and outstanding: 19,042,149 and 19,010,804 shares, respectively
    
    
    190
    
    
    
    190Class B Common Stock, $0.01 par valueAuthorized: 2,000,000 sharesIssued and outstanding: 243,807 shares
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    338,922
    
    
    
    337,565Accumulated deficit
    
    
    (153,913
    )
    
    
    (78,537
    )Accumulated other comprehensive (loss) income
    
    
    (7,515
    )
    
    
    1,886Total shareholders equity
    
    
    177,686
    
    
    
    261,106Total liabilities and shareholders equity
    
    $
    603,450
    
    
    
    712,851
  1




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##### Table of Contents



Woodbridge Holdings Corporation  Consolidated Statements of Operations  Unaudited
(In thousands, except per share data)
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Sales of real estate
    
    $
    10,522
    
    
    
    122,824
    
    
    
    13,071
    
    
    
    389,486Other revenues
    
    
    762
    
    
    
    1,449
    
    
    
    2,318
    
    
    
    5,063Total revenues
    
    
    11,284
    
    
    
    124,273
    
    
    
    15,389
    
    
    
    394,549Costs and expenses:Cost of sales of real estate
    
    
    7,015
    
    
    
    275,340
    
    
    
    8,801
    
    
    
    559,842Selling, general and administrative expenses
    
    
    11,423
    
    
    
    31,556
    
    
    
    35,937
    
    
    
    96,887Interest expense
    
    
    1,785
    
    
    
    
    
    
    
    6,650
    
    
    
    Other expenses
    
    
    
    
    
    
    1,112
    
    
    
    
    
    
    
    2,007Total costs and expenses
    
    
    20,223
    
    
    
    308,008
    
    
    
    51,388
    
    
    
    658,736Earnings from Bluegreen Corporation
    
    
    2,241
    
    
    
    4,418
    
    
    
    3,978
    
    
    
    7,519Interest and other income
    
    
    1,247
    
    
    
    3,109
    
    
    
    4,792
    
    
    
    8,743Impairment of investment in Bluegreen
    
    
    (53,576
    )
    
    
    
    
    
    
    (53,576
    )
    
    
    Loss from continuing operations before
income taxes
    
    
    (59,027
    )
    
    
    (176,208
    )
    
    
    (80,805
    )
    
    
    (247,925
    )Benefit for income taxes
    
    
    
    
    
    
    6,228
    
    
    
    
    
    
    
    20,729Loss from continuing operations
    
    
    (59,027
    )
    
    
    (169,980
    )
    
    
    (80,805
    )
    
    
    (227,196
    )Discontinued operations:Income from discontinued operations, net of
tax
    
    
    3,024
    
    
    
    812
    
    
    
    5,429
    
    
    
    917Net loss
    
    $
    (56,003
    )
    
    
    (169,168
    )
    
    
    (75,376
    )
    
    
    (226,279
    )Basic loss per common share:Continuing operations
    
    $
    (3.06
    )
    
    
    (42.03
    )
    
    
    (4.19
    )
    
    
    (56.18
    )Discontinued operations
    
    
    0.15
    
    
    
    0.20
    
    
    
    0.28
    
    
    
    0.22Total basic loss per common share
    
    $
    (2.91
    )
    
    
    (41.83
    )
    
    
    (3.91
    )
    
    
    (55.96
    )Diluted loss per common share:Continuing operations
    
    $
    (3.06
    )
    
    
    (42.03
    )
    
    
    (4.19
    )
    
    
    (56.18
    )Discontinued operations
    
    
    0.15
    
    
    
    0.20
    
    
    
    0.28
    
    
    
    0.22Total diluted loss per common share
    
    $
    (2.91
    )
    
    
    (41.83
    )
    
    
    (3.91
    )
    
    
    (55.96
    )Weighted average common shares outstanding:Basic
    
    
    19,263
    
    
    
    4,044
    
    
    
    19,258
    
    
    
    4,044Diluted
    
    
    19,263
    
    
    
    4,044
    
    
    
    19,258
    
    
    
    4,044Dividends declared per common share:Class A common stock
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    0.02Class B common stock
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    0.02
  2




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Woodbridge Holdings Corporation
Consolidated Statements of Comprehensive Loss  Unaudited
(In thousands)
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (56,003
    )
    
    
    (169,168
    )
    
    
    (75,376
    )
    
    
    (226,279
    )Other comprehensive loss:Pro-rata share of unrealized loss
recognized by Bluegreen Corporation on
retained interests in notes receivable sold
    
    
    (616
    )
    
    
    (499
    )
    
    
    (1,501
    )
    
    
    (1,038
    )Unrealized loss on other equity securities,
net of reclassification adjustment (See Note 6)
    
    
    (7,347
    )
    
    
    
    
    
    
    (7,900
    )
    
    
    Benefit for income taxes
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    400Total unrealized loss, net of taxes
    
    
    (7,963
    )
    
    
    (307
    )
    
    
    (9,401
    )
    
    
    (638
    )Total comprehensive loss
    
    $
    (63,966
    )
    
    
    (169,475
    )
    
    
    (84,777
    )
    
    
    (226,917
    )
  3




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Woodbridge Holdings Corporation  Consolidated Statement of Shareholders Equity  Unaudited
Nine Months Ended September 30, 2008
(In thousands)
 AccumulatedClass A
    
    
    Class B
    
    
    Additional
    
    
    
    
    
    
    Compre-Class A
    
    
    Class B
    
    
    Common
    
    
    Common
    
    
    Paid-In
    
    
    Accumulated
    
    
    hensiveShares
    
    
    Shares
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    TotalBalance at December 31, 2007
    
    
    19,011
    
    
    
    244
    
    
    $
    190
    
    
    
    2
    
    
    
    337,565
    
    
    
    (78,537
    )
    
    
    1,886
    
    
    
    261,106Issuance of restricted common
stock
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,376
    )
    
    
    
    
    
    
    (75,376
    )Pro-rata share of unrealized
loss recognized by Bluegreen on
sale of retained interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,501
    )
    
    
    (1,501
    )Issuance of Bluegreen common
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    850
    
    
    
    
    
    
    
    
    
    
    
    850Unrealized loss on other equity
securities, net of
reclassification adjustment
(See Note 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,900
    )
    
    
    (7,900
    )Share based compensation
related to stock options and
restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    507
    
    
    
    
    
    
    
    
    
    
    
    507Balance at September 30, 2008
    
    
    19,042
    
    
    
    244
    
    
    $
    190
    
    
    
    2
    
    
    
    338,922
    
    
    
    (153,913
    )
    
    
    (7,515
    )
    
    
    177,686
  4




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Woodbridge Holdings Corporation
Consolidated Statements of Cash Flows  Unaudited
(In thousands)
 Nine Months EndedSeptember 30,2008
    
    
    2007Net cash used in operating activities
    
    $
    (16,327
    )
    
    
    (35,679
    )Investing activities:Investment in and advances to real estate joint ventures
    
    
    
    
    
    
    (229
    )Purchases of other equity securities
    
    
    (36,978
    )
    
    
    Proceeds from sale of other equity securities
    
    
    18,904
    
    
    
    Decrease in restricted cash
    
    
    1,393
    
    
    
    1,231Distributions of capital from real estate joint ventures
    
    
    
    
    
    
    47Distributions from unconsolidated trusts
    
    
    166
    
    
    
    128Proceeds from sales of property and equipment
    
    
    5,588
    
    
    
    12Capital expenditures
    
    
    (1,165
    )
    
    
    (34,142
    )Net cash used in investing activities
    
    
    (12,092
    )
    
    
    (32,953
    )Financing activities:Proceeds from notes and mortgage notes payable
    
    
    8,382
    
    
    
    214,057Repayment of notes and mortgage notes payable
    
    
    (30,678
    )
    
    
    (156,031
    )Payments for debt issuance costs
    
    
    (577
    )
    
    
    (1,656
    )Cash dividends paid
    
    
    
    
    
    
    (396
    )Net cash (used in) provided by financing activities
    
    
    (22,873
    )
    
    
    55,974Decrease in cash and cash equivalents
    
    
    (51,292
    )
    
    
    (12,658
    )Cash and cash equivalents at the beginning of period
    
    
    195,181
    
    
    
    48,391Cash and cash equivalents at the end of period
    
    $
    143,889
    
    
    
    35,733Supplemental cash flow information:Interest paid on borrowings, net of amounts capitalized
    
    $
    8,347
    
    
    
    (1,900
    )Income taxes (refunded) paid
    
    $
    (29,711
    )
    
    
    4,556Supplemental disclosure of non-cash operating,investing and financing activities:Change in shareholders equity resulting from
unrealized lossrecognized from equity
securities, net of tax
    
    $
    (9,401
    )
    
    
    (638
    )Change in shareholders equity resulting from the
issuanceof Bluegreen common stock, net of tax
    
    $
    850
    
    
    
    1,145Decrease in inventory from reclassification to property
and equipment
    
    $
    
    
    
    
    1,148Increase in deferred tax liability due to cumulative impact
of changein accounting for uncertainties in income taxes
    
    $
    
    
    
    
    260
  5




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##### Table of Contents



Woodbridge Holdings Corporation
Notes to Unaudited Consolidated Financial Statements
 1. Presentation of Interim Financial Statements
     6




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##### Table of Contents



Investments
   2.
    
    Sale of Two Core Communities Commercial Leasing Projects  Discontinued Operations
  7




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##### Table of Contents



Accounting for the Impairment or Disposal of Long-Lived
Assets
   September 30,
    
    
    December 31,2008
    
    
    2007Property and equipment, net
    
    $
    80,709
    
    
    
    84,677Other assets
    
    
    11,965
    
    
    
    11,537Assets held for sale
    
    $
    92,674
    
    
    
    96,214Accounts payable, accrued liabilities and
other
    
    $
    1,847
    
    
    
    1,123Notes and mortgage payable
    
    
    75,110
    
    
    
    78,970Liabilities related to assets held for sale
    
    $
    76,957
    
    
    
    80,093
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    2,393
    
    
    
    1,551
    
    
    
    6,545
    
    
    
    2,910Costs and expenses
    
    
    1,893
    
    
    
    307
    
    
    
    3,649
    
    
    
    1,491500
    
    
    
    1,244
    
    
    
    2,896
    
    
    
    1,419Other income (a)
    
    
    2,524
    
    
    
    7
    
    
    
    2,533
    
    
    
    14Income before income taxes
    
    
    3,024
    
    
    
    1,251
    
    
    
    5,429
    
    
    
    1,433Provision for income taxes
    
    
    
    
    
    
    (439
    )
    
    
    
    
    
    
    (516
    )Net income
    
    $
    3,024
    
    
    
    812
    
    
    
    5,429
    
    
    
    917
 
 (a)
    
    Includes a gain on sale of real estate assets of $2.5 million for the three and nine month
periods ended September 30, 2008, and other income of approximately $4,000 and $13,000 for the same
periods, respectively. 8




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##### Table of Contents



3.
    
    Stock Based Compensation
 Share-Based Payment
   Number of
    
    
    WeightedStock
    
    
    Average ExerciseOptions
    
    
    PriceOptions outstanding at December 31, 2007
    
    
    372,532
    
    
    $
    86.66Granted
    
    
    36,398
    
    
    $
    6.70Exercised
    
    
    
    
    
    
    Forfeited
    
    
    90,459
    
    
    $
    81.85Options outstanding at September 30, 2008
    
    
    318,471
    
    
    $
    78.89Options exercisable at September 30, 2008
    
    
    69,822
    
    
    $
    40.20
    9




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##### Table of Contents



4. Inventory of Real Estate
  September 30,
    
    
    December 31,2008
    
    
    2007Land and land development costs
    
    $
    200,698
    
    
    
    196,577Construction costs
    
    
    1,502
    
    
    
    1,062Capitalized interest
    
    
    37,866
    
    
    
    29,012Other costs
    
    
    635
    
    
    
    639$
    240,701
    
    
    
    227,290
   10




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##### Table of Contents



5. Interest
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest incurred
    
    $
    4,445
    
    
    
    12,968
    
    
    
    14,090
    
    
    
    38,187Interest capitalized
    
    
    (2,660
    )
    
    
    (12,968
    )
    
    
    (7,440
    )
    
    
    (38,187
    )Interest expense
    
    $
    1,785
    
    
    
    
    
    
    
    6,650
    
    
    
    Interest expensed
in cost of sales
    
    $
    281
    
    
    
    7,563
    
    
    
    325
    
    
    
    17,550
  6. Investments
 Bluegreen Corporation
  Fair Value Measurements
 11




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##### Table of Contents



Unaudited Condensed Consolidated Balance Sheets
 September 30,
    
    December 31,2008
    
    2007Total assets
    
    $
    1,198,680
    
    
    
    1,039,578Total liabilities
    
    $
    775,854
    
    
    
    632,047Minority interest
    
    
    27,703
    
    
    
    22,423Total shareholders equity
    
    
    395,123
    
    
    
    385,108Total liabilities and shareholders equity
    
    $
    1,198,680
    
    
    
    1,039,578
 Unaudited Condensed Consolidated Statements of Income
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues and other income
    
    $
    179,786
    
    
    
    206,313
    
    
    
    470,268
    
    
    
    523,943Cost and other expenses
    
    
    165,663
    
    
    
    181,764
    
    
    
    446,179
    
    
    
    480,925Income before minority interest and
provision for income taxes
    
    
    14,123
    
    
    
    24,549
    
    
    
    24,089
    
    
    
    43,018Minority interest
    
    
    3,122
    
    
    
    2,044
    
    
    
    5,280
    
    
    
    5,311Income before provision for income
taxes
    
    
    11,001
    
    
    
    22,505
    
    
    
    18,809
    
    
    
    37,707Provision for income taxes
    
    
    (4,180
    )
    
    
    (8,552
    )
    
    
    (7,147
    )
    
    
    (14,329
    )Net income
    
    $
    6,821
    
    
    
    13,953
    
    
    
    11,662
    
    
    
    23,378
 Office Depot Investment
   12




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##### Table of Contents



September 30,2008Total cost
    
    $
    33,978Sale of portion of Office Depot common stock
    
    
    (17,726
    )Gross unrealized losses
    
    
    (7,900
    )Total fair value
    
    $
    8,352
  Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2008
    
    
    2008Unrealized holding loss arising during the period
    
    $
    (7,347
    )
    
    
    (6,722
    )Less: Reclassification adjustment for gains
included in net loss
    
    
    
    
    
    
    (1,178
    )Net unrealized loss on securities
    
    $
    (7,347
    )
    
    
    (7,900
    )
  The Meaning of Other-than-Temporary Impairment and Its Application To Certain
Investments,
 Pizza Fusion Investment
   13




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##### Table of Contents



7. Debt
     8. Commitments and Contingencies
    Severance
    
    
    
    
    
    
    Independent
    
    
    SuretyRelated and
    
    
    
    
    
    
    Contractor
    
    
    BondBenefits
    
    
    Facilities
    
    
    Agreements
    
    
    Accrual
    
    
    TotalBalance at December 31, 2007
    
    $
    1,954
    
    
    
    1,010
    
    
    
    1,421
    
    
    
    1,826
    
    
    
    6,211Restructuring charges (credits)
    
    
    2,250
    
    
    
    140
    
    
    
    (11
    )
    
    
    (150
    )
    
    
    2,229Cash payments
    
    
    (3,586
    )
    
    
    (352
    )
    
    
    (618
    )
    
    
    (532
    )
    
    
    (5,088
    )Balance at September 30, 2008
    
    $
    618
    
    
    
    798
    
    
    
    792
    
    
    
    1,144
    
    
    
    3,352
 14




---



##### Table of Contents



Accounting for Costs Associated with Exit or Disposal Activities
    Accounting for
Uncertainty in Income Taxes  an interpretation of FASB No. 109
 15




---



##### Table of Contents



9. Development Bonds Payable
  Accounting for Contingencies
 Accounting for Special Assessments and Tax Increment
Financing
 10. Loss per Share
  16




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Basic loss per common share:Loss from continuing operations
    
    $
    (59,027
    )
    
    
    (169,980
    )
    
    
    (80,805
    )
    
    
    (227,196
    )Income from discontinued operations
    
    
    3,024
    
    
    
    812
    
    
    
    5,429
    
    
    
    917Net loss  basic
    
    $
    (56,003
    )
    
    
    (169,168
    )
    
    
    (75,376
    )
    
    
    (226,279
    )Diluted loss per common share:Net loss from continuing operations  basic
    
    $
    (59,027
    )
    
    
    (169,980
    )
    
    
    (80,805
    )
    
    
    (227,196
    )Pro rata share of the net effect of Bluegreen
dilutive securities
    
    
    (24
    )
    
    
    (8
    )
    
    
    (18
    )
    
    
    (40
    )Loss from continuing operations
    
    $
    (59,051
    )
    
    
    (169,988
    )
    
    
    (80,823
    )
    
    
    (227,236
    )Income from discontinued operations
    
    
    3,024
    
    
    
    812
    
    
    
    5,429
    
    
    
    917Net loss  diluted
    
    $
    (56,027
    )
    
    
    (169,176
    )
    
    
    (75,394
    )
    
    
    (226,319
    )Denominator:Basic average shares outstanding
    
    
    19,263
    
    
    
    3,966
    
    
    
    19,258
    
    
    
    3,966Bonus adjustment factor from registration rights
offering
    
    
    
    
    
    
    1.0197
    
    
    
    
    
    
    
    1.0197Basic average shares outstanding
    
    
    19,263
    
    
    
    4,044
    
    
    
    19,258
    
    
    
    4,044Net effect of stock options assumed to be exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted average shares outstanding
    
    
    19,263
    
    
    
    4,044
    
    
    
    19,258
    
    
    
    4,044Basic loss per common share:Continuing operations
    
    $
    (3.06
    )
    
    
    (42.03
    )
    
    
    (4.19
    )
    
    
    (56.18
    )Discontinued operations
    
    $
    0.15
    
    
    
    0.20
    
    
    
    0.28
    
    
    
    0.22Total basic loss per share
    
    $
    (2.91
    )
    
    
    (41.83
    )
    
    
    (3.91
    )
    
    
    (55.96
    )Diluted
loss per common share:Continuing operations
    
    $
    (3.06
    )
    
    
    (42.03
    )
    
    
    (4.19
    )
    
    
    (56.18
    )Discontinued operations
    
    $
    0.15
    
    
    
    0.20
    
    
    
    0.28
    
    
    
    0.22Total diluted loss per share
    
    $
    (2.91
    )
    
    
    (41.83
    )
    
    
    (3.91
    )
    
    
    (55.96
    )
 17




---



##### Table of Contents



11. Income Taxes
    18




---



##### Table of Contents



12. Segment Reporting
   19




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    OtherSeptember 30, 2008
    
    Land
    
    
    Operations
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    8,450
    
    
    
    1,847
    
    
    
    225
    
    
    
    10,522Other revenues
    
    
    486
    
    
    
    276
    
    
    
    
    
    
    
    762Total revenues
    
    
    8,936
    
    
    
    2,123
    
    
    
    225
    
    
    
    11,284Costs and expenses:Cost of sales of real estate
    
    
    5,029
    
    
    
    1,906
    
    
    
    80
    
    
    
    7,015Selling, general and administrative expenses
    
    
    5,078
    
    
    
    6,496
    
    
    
    (151
    )
    
    
    11,423Interest expense
    
    
    40
    
    
    
    1,745
    
    
    
    
    
    
    
    1,785Total costs and expenses
    
    
    10,147
    
    
    
    10,147
    
    
    
    (71
    )
    
    
    20,223Earnings from Bluegreen Corporation
    
    
    
    
    
    
    2,241
    
    
    
    
    
    
    
    2,241Interest and other income
    
    
    961
    
    
    
    470
    
    
    
    (184
    )
    
    
    1,247Impairment of investment in Bluegreen
    
    
    
    
    
    
    (53,576
    )
    
    
    
    
    
    
    (53,576
    )(Loss) income from continuing operations before income
taxes
    
    
    (250
    )
    
    
    (58,889
    )
    
    
    112
    
    
    
    (59,027
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) income from continuing operations
    
    
    (250
    )
    
    
    (58,889
    )
    
    
    112
    
    
    
    (59,027
    )Discontinued operations:Income from discontinued operations
    
    
    3,024
    
    
    
    
    
    
    
    
    
    
    
    3,024Net income (loss)
    
    $
    2,774
    
    
    
    (58,889
    )
    
    
    112
    
    
    
    (56,003
    )Inventory of real estate
    
    $
    202,286
    
    
    
    48,397
    
    
    
    (9,982
    )
    
    
    240,701Total assets
    
    $
    361,583
    
    
    
    252,262
    
    
    
    (10,395
    )
    
    
    603,450Total debt
    
    $
    121,748
    
    
    
    134,669
    
    
    
    
    
    
    
    256,417Total liabilities
    
    $
    235,766
    
    
    
    183,892
    
    
    
    6,106
    
    
    
    425,764Total shareholders equity
    
    $
    125,817
    
    
    
    68,370
    
    
    
    (16,501
    )
    
    
    177,686
 20




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##### Table of Contents



Three Months Ended
    
    Primary
    
    
    Tennessee
    
    
    
    
    
    
    OtherSeptember 30, 2007
    
    Homebuilding
    
    
    Homebuilding
    
    
    Land
    
    
    Operations
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    112,885
    
    
    
    9,339
    
    
    
    757
    
    
    
    
    
    
    
    (157
    )
    
    
    122,824Other revenues
    
    
    614
    
    
    
    
    
    
    
    711
    
    
    
    258
    
    
    
    (134
    )
    
    
    1,449Total revenues
    
    
    113,499
    
    
    
    9,339
    
    
    
    1,468
    
    
    
    258
    
    
    
    (291
    )
    
    
    124,273Costs and expenses:Cost of sales of real estate
    
    
    247,388
    
    
    
    19,822
    
    
    
    256
    
    
    
    10,259
    
    
    
    (2,385
    )
    
    
    275,340Selling, general and
administrative expenses
    
    
    19,252
    
    
    
    1,552
    
    
    
    4,152
    
    
    
    6,776
    
    
    
    (176
    )
    
    
    31,556Interest expense
    
    
    
    
    
    
    
    
    
    
    829
    
    
    
    
    
    
    
    (829
    )
    
    
    Other expenses
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    536
    
    
    
    1
    
    
    
    1,112Total costs and expenses
    
    
    267,215
    
    
    
    21,374
    
    
    
    5,237
    
    
    
    17,571
    
    
    
    (3,389
    )
    
    
    308,008Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,418
    
    
    
    
    
    
    
    4,418Interest and other income
    
    
    2,274
    
    
    
    25
    
    
    
    1,354
    
    
    
    285
    
    
    
    (829
    )
    
    
    3,109(Loss) income from
continuing operations
before income taxes
    
    
    (151,442
    )
    
    
    (12,010
    )
    
    
    (2,415
    )
    
    
    (12,610
    )
    
    
    2,269
    
    
    
    (176,208
    )Benefit (provision) for income taxes
    
    
    1,866
    
    
    
    (100
    )
    
    
    728
    
    
    
    4,594
    
    
    
    (860
    )
    
    
    6,228(Loss) income from
continuing operations
    
    
    (149,576
    )
    
    
    (12,110
    )
    
    
    (1,687
    )
    
    
    (8,016
    )
    
    
    1,409
    
    
    
    (169,980
    )Discontinued operations:Income from discontinued
operations, net of tax
    
    
    
    
    
    
    
    
    
    
    812
    
    
    
    
    
    
    
    
    
    
    
    812Net (loss) income
    
    $
    (149,576
    )
    
    
    (12,110
    )
    
    
    (875
    )
    
    
    (8,016
    )
    
    
    1,409
    
    
    
    (169,168
    )Inventory of real estate
    
    $
    355,349
    
    
    
    32,317
    
    
    
    212,704
    
    
    
    4,507
    
    
    
    (24,773
    )
    
    
    580,104Total assets
    
    $
    405,553
    
    
    
    37,172
    
    
    
    329,538
    
    
    
    146,083
    
    
    
    (17,954
    )
    
    
    900,392Total debt
    
    $
    353,391
    
    
    
    25,086
    
    
    
    131,679
    
    
    
    98,993
    
    
    
    
    
    
    
    609,149Total liabilities
    
    $
    486,493
    
    
    
    44,457
    
    
    
    196,918
    
    
    
    59,458
    
    
    
    (6,367
    )
    
    
    780,959Total shareholders equity
    
    $
    (80,940
    )
    
    
    (7,285
    )
    
    
    132,620
    
    
    
    86,625
    
    
    
    (11,587
    )
    
    
    119,433
 21




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##### Table of Contents



Nine Months Ended
    
    
    
    
    
    OtherSeptember 30, 2008
    
    Land
    
    
    Operations
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    10,315
    
    
    
    2,482
    
    
    
    274
    
    
    
    13,071Other revenues
    
    
    1,532
    
    
    
    786
    
    
    
    
    
    
    
    2,318Total revenues
    
    
    11,847
    
    
    
    3,268
    
    
    
    274
    
    
    
    15,389Costs and expenses:Cost of sales of real estate
    
    
    6,202
    
    
    
    2,493
    
    
    
    106
    
    
    
    8,801Selling, general and administrative expenses
    
    
    14,864
    
    
    
    21,243
    
    
    
    (170
    )
    
    
    35,937Interest expense
    
    
    1,213
    
    
    
    6,522
    
    
    
    (1,085
    )
    
    
    6,650Total costs and expenses
    
    
    22,279
    
    
    
    30,258
    
    
    
    (1,149
    )
    
    
    51,388Earnings from Bluegreen Corporation
    
    
    
    
    
    
    3,978
    
    
    
    
    
    
    
    3,978Interest and other income
    
    
    2,517
    
    
    
    3,544
    
    
    
    (1,269
    )
    
    
    4,792Impairment of investment in Bluegreen
    
    
    
    
    
    
    (53,576
    )
    
    
    
    
    
    
    (53,576
    )(Loss) income from continuing operations before income
taxes
    
    
    (7,915
    )
    
    
    (73,044
    )
    
    
    154
    
    
    
    (80,805
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) income from continuing operations
    
    
    (7,915
    )
    
    
    (73,044
    )
    
    
    154
    
    
    
    (80,805
    )Discontinued operations:Income from discontinued operations
    
    
    5,429
    
    
    
    
    
    
    
    
    
    
    
    5,429Net (loss) income
    
    $
    (2,486
    )
    
    
    (73,044
    )
    
    
    154
    
    
    
    (75,376
    )Inventory of real estate
    
    $
    202,286
    
    
    
    48,397
    
    
    
    (9,982
    )
    
    
    240,701Total assets
    
    $
    361,583
    
    
    
    252,262
    
    
    
    (10,395
    )
    
    
    603,450Total debt
    
    $
    121,748
    
    
    
    134,669
    
    
    
    
    
    
    
    256,417Total liabilities
    
    $
    235,766
    
    
    
    183,892
    
    
    
    6,106
    
    
    
    425,764Total shareholders equity
    
    $
    125,817
    
    
    
    68,370
    
    
    
    (16,501
    )
    
    
    177,686
 22




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##### Table of Contents



Nine Months Ended
    
    Primary
    
    
    Tennessee
    
    
    
    
    
    
    OtherSeptember 30, 2007
    
    Homebuilding
    
    
    Homebuilding
    
    
    Land
    
    
    Operations
    
    
    Eliminations
    
    
    TotalRevenues:Sales of real estate
    
    $
    340,202
    
    
    
    39,844
    
    
    
    3,451
    
    
    
    6,574
    
    
    
    (585
    )
    
    
    389,486Other revenues
    
    
    2,213
    
    
    
    
    
    
    
    2,494
    
    
    
    693
    
    
    
    (337
    )
    
    
    5,063Total revenues
    
    
    342,415
    
    
    
    39,844
    
    
    
    5,945
    
    
    
    7,267
    
    
    
    (922
    )
    
    
    394,549Costs and expenses:Cost of sales of real estate
    
    
    496,663
    
    
    
    49,156
    
    
    
    811
    
    
    
    16,778
    
    
    
    (3,566
    )
    
    
    559,842Selling, general and
administrative expenses
    
    
    58,348
    
    
    
    5,416
    
    
    
    11,421
    
    
    
    21,940
    
    
    
    (238
    )
    
    
    96,887Interest expense
    
    
    
    
    
    
    
    
    
    
    1,851
    
    
    
    
    
    
    
    (1,851
    )
    
    
    Other expenses
    
    
    1,470
    
    
    
    
    
    
    
    
    
    
    
    536
    
    
    
    1
    
    
    
    2,007Total costs and expenses
    
    
    556,481
    
    
    
    54,572
    
    
    
    14,083
    
    
    
    39,254
    
    
    
    (5,654
    )
    
    
    658,736Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,519
    
    
    
    
    
    
    
    7,519Interest and other income
    
    
    6,475
    
    
    
    77
    
    
    
    3,414
    
    
    
    933
    
    
    
    (2,156
    )
    
    
    8,743(Loss) income from
continuing operations
before income taxes
    
    
    (207,591
    )
    
    
    (14,651
    )
    
    
    (4,724
    )
    
    
    (23,535
    )
    
    
    2,576
    
    
    
    (247,925
    )Benefit (provision) for income taxes
    
    
    11,680
    
    
    
    824
    
    
    
    1,701
    
    
    
    7,500
    
    
    
    (976
    )
    
    
    20,729(Loss) income from
continuing operations
    
    
    (195,911
    )
    
    
    (13,827
    )
    
    
    (3,023
    )
    
    
    (16,035
    )
    
    
    1,600
    
    
    
    (227,196
    )Discontinued operations:Income from discontinued
operations, net of tax
    
    
    
    
    
    
    
    
    
    
    917
    
    
    
    
    
    
    
    
    
    
    
    917Net (loss) income
    
    $
    (195,911
    )
    
    
    (13,827
    )
    
    
    (2,106
    )
    
    
    (16,035
    )
    
    
    1,600
    
    
    
    (226,279
    )Inventory of real estate
    
    $
    355,349
    
    
    
    32,317
    
    
    
    212,704
    
    
    
    4,507
    
    
    
    (24,773
    )
    
    
    580,104Total assets
    
    $
    405,553
    
    
    
    37,172
    
    
    
    329,538
    
    
    
    146,083
    
    
    
    (17,954
    )
    
    
    900,392Total debt
    
    $
    353,391
    
    
    
    25,086
    
    
    
    131,679
    
    
    
    98,993
    
    
    
    
    
    
    
    609,149Total liabilities
    
    $
    486,493
    
    
    
    44,457
    
    
    
    196,918
    
    
    
    59,458
    
    
    
    (6,367
    )
    
    
    780,959Total shareholders equity
    
    $
    (80,940
    )
    
    
    (7,285
    )
    
    
    132,620
    
    
    
    86,625
    
    
    
    (11,587
    )
    
    
    119,433
  23




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##### Table of Contents



13. Parent Company Financial Statements
      Unaudited Condensed Statements of Financial Condition
 September 30,
    
    
    December 31,2008
    
    
    2007Total assets
    
    $
    312,071
    
    
    
    429,532Total liabilities
    
    $
    134,385
    
    
    
    168,426Total shareholders equity
    
    
    177,686
    
    
    
    261,106Total liabilities and shareholders equity
    
    $
    312,071
    
    
    
    429,532
 Unaudited Condensed Statements of Operations
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Earnings from Bluegreen Corporation
    
    $
    2,241
    
    
    
    4,418
    
    
    
    3,978
    
    
    
    7,519Other revenues
    
    
    463
    
    
    
    284
    
    
    
    2,346
    
    
    
    928Costs and expenses (a)
    
    
    60,199
    
    
    
    16,274
    
    
    
    74,923
    
    
    
    32,022Loss before income taxes
    
    
    (57,495
    )
    
    
    (11,572
    )
    
    
    (68,599
    )
    
    
    (23,575
    )Benefit for income taxes
    
    
    
    
    
    
    (4,594
    )
    
    
    
    
    
    
    (7,868
    )Net loss before undistributed
loss from consolidated
subsidiaries
    
    
    (57,495
    )
    
    
    (6,978
    )
    
    
    (68,599
    )
    
    
    (15,707
    )Earnings (deficit) from consolidated
subsidiaries, net of income taxes
    
    
    1,492
    
    
    
    (162,190
    )
    
    
    (6,777
    )
    
    
    (210,572
    )Net loss
    
    $
    (56,003
    )
    
    
    (169,168
    )
    
    
    (75,376
    )
    
    
    (226,279
    )
 
 (a)
    
    Includes an other-than-temporary impairment charge of
$53.6 million incurred during the third quarter of 2008 relating to the Companys
investment in Bluegreen Corporation.  24




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##### Table of Contents



14. Certain Relationships and Related Party Transactions
       15. New Accounting Pronouncements
  25




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##### Table of Contents



The Fair Value Option for Financial Assets and
Financial Liabilities
 Noncontrolling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51
 Business Combinations
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 Determination of the Useful Life of
Intangible Assets
 26




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##### Table of Contents



The Hierarchy of Generally Accepted Accounting
Principles
 16. Litigation
 Class Action litigation
  General litigation
  17. Financial Information of Levitt and Sons
  27




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##### Table of Contents



28




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Levitt and Sons  Condensed Consolidated Statements of Financial Condition  Unaudited
(In thousands)
 September 30,
    
    
    December 31,2008
    
    
    2007AssetsCash
    
    $
    5,336
    
    
    
    5,365Inventory
    
    
    167,120
    
    
    
    208,686Property and equipment
    
    
    
    
    
    
    55Other assets
    
    
    21,757
    
    
    
    23,810Total assets
    
    $
    194,213
    
    
    
    237,916Liabilities and Shareholders EquityAccounts payable and other accrued liabilities
    
    $
    1,057
    
    
    
    469Due to Woodbridge
    
    
    2,906
    
    
    
    748Liabilities subject to compromise (A)
    
    
    327,557
    
    
    
    354,748Shareholders deficit
    
    
    (137,307
    )
    
    
    (118,049
    )Total liabilities and shareholders equity
    
    $
    194,213
    
    
    
    237,916
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##### Table of Contents



(A) Liabilities Subject to Compromise
   Accounts payable and other accrued liabilities
    
    $
    57,879Customer deposits
    
    
    15,755Due to Woodbridge
    
    
    87,182Deficiency claim associated with secured debt
    
    
    36,800Notes and mortgage payable
    
    
    129,941Total liabilities subject to compromise
    
    $
    327,557
  Levitt and Sons  Condensed Consolidated Statements of Operations  Unaudited
(In thousands)
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007RevenuesSales of real estate
    
    $
    508
    
    
    
    122,224
    
    
    
    31,783
    
    
    
    380,046Other revenues
    
    
    
    
    
    
    614
    
    
    
    2
    
    
    
    2,213Total revenues
    
    
    508
    
    
    
    122,838
    
    
    
    31,785
    
    
    
    382,259Costs and expensesCost of sales of real estate
    
    
    976
    
    
    
    267,210
    
    
    
    41,949
    
    
    
    545,819Selling, general and
administrative expenses
    
    
    71
    
    
    
    20,804
    
    
    
    4,093
    
    
    
    63,764Total costs and expenses
    
    
    1,047
    
    
    
    288,014
    
    
    
    46,042
    
    
    
    609,583Reorganization items, net
    
    
    (1,276
    )
    
    
    
    
    
    
    (6,136
    )
    
    
    Other income, net of other expense
    
    
    8
    
    
    
    1,724
    
    
    
    1,134
    
    
    
    5,082Loss before income taxes
    
    
    (1,807
    )
    
    
    (163,452
    )
    
    
    (19,259
    )
    
    
    (222,242
    )Benefit for income taxes
    
    
    
    
    
    
    1,766
    
    
    
    
    
    
    
    12,504Net loss
    
    $
    (1,807
    )
    
    
    (161,686
    )
    
    
    (19,259
    )
    
    
    (209,738
    )
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18. Subsequent Event
  th
  31




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     
    
    the impact of economic, competitive and other factors affecting the Company and its
operations;
    
    the market for real estate in the areas where the Company has developments, including
the impact of market conditions on the Companys margins;
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
    
    the risk that the value of the property held by Core Communities and Carolina Oak may
decline, including as a result of a sustained downturn in the residential real estate and
homebuilding industries;
    
    the impact of market conditions for commercial property and the extent to which the
factors negatively impacting the homebuilding and residential real estate industries will
impact the market for commercial property;
    
    the risk that the recent downturn in the credit markets may adversely affect Cores
commercial leasing projects, including due to the impact it may have on the ability of
current and potential tenants to secure financing which may, in turn, negatively impact
long-term rental and occupancy rates as well as the value of Cores commercial properties;
    
    the risk that the development of parcels and master-planned communities will not be
completed as anticipated;
    
    continued declines in the estimated fair value of our real estate inventory and the
potential for write-downs or impairment charges;
    
    the effects of increases in interest rates on us and the availability and cost of credit
to buyers of our inventory;
    
    the impact of the problems in financial and credit markets on our ability and the
ability of buyers of our inventory to obtain financing on acceptable terms, if at all;
    
    accelerated principal payments on our debt obligations due to re-margining or
curtailment payment requirements;
    
    the ability to obtain financing and to renew existing credit facilities on acceptable
terms, if at all;
    
    the risk that Woodbridge may be required to adjust the carrying value of its investment
in Office Depot and incur impairment charges relating to this investment in future periods
if the trading price of Office Depots common stock does not increase from current levels
and the risk that Woodbridge may be required to record a further other-than-temporary
impairment charge relating to its investment in Bluegreen in the future;
    
    the Companys ability to access additional capital on acceptable terms, if at all;
    
    the risks and uncertainties inherent in bankruptcy proceedings and the inability to
predict the effect of Levitt and Sons liquidation process on Woodbridge, as well as the
potential impact of the assertion of claims against Woodbridge in connection with these
proceedings, its results of operations and financial condition;
    
    equity risks associated with a decline in the trading prices of the equity securities
owned by Woodbridge;
    
    the risk that creditors of Levitt and Sons may be successful in asserting claims against
Woodbridge;
 
    
    the risks relating to the Settlement Agreement and the amendment to the Settlement
Agreement, including, without limitation, that the conditions to consummation of the
Settlement Agreement, as amended, will not be met, that the Settlement Agreement, as
amended, will not be approved by the Bankruptcy Court when expected, or at all, and that,
in the event the Settlement Agreement, as amended, is approved by the Bankruptcy Court,
such approval will be appealed;
    
    the risk that the announced acquisition by a third party of Bluegreen will not be
consummated on the terms proposed, or at all;
    
    the risks related to the Companys ability to comply with the continued listing
requirements of the New York Stock Exchange;
    
    the risks associated with the businesses in which the Company holds investments;
 
    
    the Companys success in pursuing strategic alternatives that could enhance liquidity;
and
    
    the Companys success at managing the risks involved in the foregoing.
  33




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Executive Overview
    Financial and Non-Financial Metrics
  34




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Land Division Overview
    Other Operations Overview
   35




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36




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Critical Accounting Policies and Estimates
  Investments in Unconsolidated Subsidiaries  Cost Method
  37




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CONSOLIDATED RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(In thousands)
    
    ( U n a u d i t e d )
    
    
    ( U n a u d i t e d )RevenuesSales of real estate
    
    $
    10,522
    
    
    
    122,824
    
    
    
    (112,302
    )
    
    
    13,071
    
    
    
    389,486
    
    
    
    (376,415
    )Other revenues
    
    
    762
    
    
    
    1,449
    
    
    
    (687
    )
    
    
    2,318
    
    
    
    5,063
    
    
    
    (2,745
    )Total revenues
    
    
    11,284
    
    
    
    124,273
    
    
    
    (112,989
    )
    
    
    15,389
    
    
    
    394,549
    
    
    
    (379,160
    )Costs and expensesCost of sales of real estate
    
    
    7,015
    
    
    
    275,340
    
    
    
    (268,325
    )
    
    
    8,801
    
    
    
    559,842
    
    
    
    (551,041
    )Selling, general and
administrative expenses
    
    
    11,423
    
    
    
    31,556
    
    
    
    (20,133
    )
    
    
    35,937
    
    
    
    96,887
    
    
    
    (60,950
    )Interest expense
    
    
    1,785
    
    
    
    
    
    
    
    1,785
    
    
    
    6,650
    
    
    
    
    
    
    
    6,650Other expenses
    
    
    
    
    
    
    1,112
    
    
    
    (1,112
    )
    
    
    
    
    
    
    2,007
    
    
    
    (2,007
    )Total costs and expenses
    
    
    20,223
    
    
    
    308,008
    
    
    
    (287,785
    )
    
    
    51,388
    
    
    
    658,736
    
    
    
    (607,348
    )Earnings from Bluegreen Corporation
    
    
    2,241
    
    
    
    4,418
    
    
    
    (2,177
    )
    
    
    3,978
    
    
    
    7,519
    
    
    
    (3,541
    )Interest and other income
    
    
    1,247
    
    
    
    3,109
    
    
    
    (1,862
    )
    
    
    4,792
    
    
    
    8,743
    
    
    
    (3,951
    )Impairment of investment in Bluegreen
    
    
    (53,576
    )
    
    
    
    
    
    
    (53,576
    )
    
    
    (53,576
    )
    
    
    
    
    
    
    (53,576
    )Loss from continuing
operations before income taxes
    
    
    (59,027
    )
    
    
    (176,208
    )
    
    
    117,181
    
    
    
    (80,805
    )
    
    
    (247,925
    )
    
    
    167,120Benefit for income taxes
    
    
    
    
    
    
    6,228
    
    
    
    (6,228
    )
    
    
    
    
    
    
    20,729
    
    
    
    (20,729
    )Loss from continuing operations
    
    
    (59,027
    )
    
    
    (169,980
    )
    
    
    110,953
    
    
    
    (80,805
    )
    
    
    (227,196
    )
    
    
    146,391Discontinued operations:Income from discontinued
operations, net of tax
    
    
    3,024
    
    
    
    812
    
    
    
    2,212
    
    
    
    5,429
    
    
    
    917
    
    
    
    4,512Net loss
    
    $
    (56,003
    )
    
    
    (169,168
    )
    
    
    113,165
    
    
    
    (75,376
    )
    
    
    (226,279
    )
    
    
    150,903
 For the Three Months Ended September 30, 2008 Compared to the Same 2007 Period:
   38




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39




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##### Table of Contents



For the Nine Months Ended September 30, 2008 Compared to the Same 2007 Period:
  40




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41




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42




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LAND DIVISION RESULTS OF OPERATIONS
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(Dollars in thousands)
    
    ( U n a u d i t e d )
    
    
    ( U n a u d i t e d )RevenuesSales of real estate
    
    $
    8,450
    
    
    
    757
    
    
    
    7,693
    
    
    
    10,315
    
    
    
    3,451
    
    
    
    6,864Other revenues
    
    
    486
    
    
    
    711
    
    
    
    (225
    )
    
    
    1,532
    
    
    
    2,494
    
    
    
    (962
    )Total revenues
    
    
    8,936
    
    
    
    1,468
    
    
    
    7,468
    
    
    
    11,847
    
    
    
    5,945
    
    
    
    5,902Costs and expensesCost of sales of real estate
    
    
    5,029
    
    
    
    256
    
    
    
    4,773
    
    
    
    6,202
    
    
    
    811
    
    
    
    5,391Selling, general and
administrative expenses
    
    
    5,078
    
    
    
    4,152
    
    
    
    926
    
    
    
    14,864
    
    
    
    11,421
    
    
    
    3,443Interest expense
    
    
    40
    
    
    
    829
    
    
    
    (789
    )
    
    
    1,213
    
    
    
    1,851
    
    
    
    (638
    )Total costs and expenses
    
    
    10,147
    
    
    
    5,237
    
    
    
    4,910
    
    
    
    22,279
    
    
    
    14,083
    
    
    
    8,196Interest and other income
    
    
    961
    
    
    
    1,354
    
    
    
    (393
    )
    
    
    2,517
    
    
    
    3,414
    
    
    
    (897
    )Loss from continuing
operations before income
taxes
    
    
    (250
    )
    
    
    (2,415
    )
    
    
    2,165
    
    
    
    (7,915
    )
    
    
    (4,724
    )
    
    
    (3,191
    )Benefit for income taxes
    
    
    
    
    
    
    728
    
    
    
    (728
    )
    
    
    
    
    
    
    1,701
    
    
    
    (1,701
    )Loss from continuing operations
    
    
    (250
    )
    
    
    (1,687
    )
    
    
    1,437
    
    
    
    (7,915
    )
    
    
    (3,023
    )
    
    
    (4,892
    )Discontinued operations:Income from discontinued
operations, net of tax
    
    
    3,024
    
    
    
    812
    
    
    
    2,212
    
    
    
    5,429
    
    
    
    917
    
    
    
    4,512Net income (loss)
    
    $
    2,774
    
    
    
    (875
    )
    
    
    3,649
    
    
    
    (2,486
    )
    
    
    (2,106
    )
    
    
    (380
    )Acres sold (a)
    
    
    36
    
    
    
    1
    
    
    
    35
    
    
    
    39
    
    
    
    2
    
    
    
    37Margin percentage (b)
    
    
    40.5
    %
    
    
    66.2
    %
    
    
    (25.7
    )%
    
    
    39.9
    %
    
    
    76.5
    %
    
    
    (36.6
    )%Unsold saleable acres (c)
    
    
    6,641
    
    
    
    6,717
    
    
    
    (76
    )
    
    
    6,641
    
    
    
    6,717
    
    
    
    (76
    )Acres subject to sales
contracts  third parties
    
    
    17
    
    
    
    291
    
    
    
    (274
    )
    
    
    17
    
    
    
    291
    
    
    
    (274
    )Aggregate sales price of acres
subject to sales contracts to
third parties
    
    $
    1,879
    
    
    
    92,451
    
    
    
    (90,572
    )
    
    
    1,879
    
    
    
    92,451
    
    
    
    (90,572
    )
 
 (a)
    
    Includes 5 acres sold in the third quarter of 2008 related to assets held for sale.(b)
    
    Sales of real estate and margin percentage include lot sales, revenues from look back provisions and recognition of deferred revenue associated with sales in
prior periods. Excludes margin percentage related to assets held for sale, which was 42.8% for the three and nine months ended September 30, 2008.(c)
    
    Includes approximately 48 acres related to assets held for sale as of September 30, 2008.  43




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For the Three Months Ended September 30, 2008 Compared to the Same 2007 Period:
      44




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For the Nine Months Ended September 30, 2008 Compared to the Same 2007 Period:
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OTHER OPERATIONS RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(In thousands)
    
    ( U n a u d i t e d )
    
    
    ( U n a u d i t e d )RevenuesSales of real estate
    
    $
    1,847
    
    
    
    
    
    
    
    1,847
    
    
    
    2,482
    
    
    
    6,574
    
    
    
    (4,092
    )Other revenues
    
    
    276
    
    
    
    258
    
    
    
    18
    
    
    
    786
    
    
    
    693
    
    
    
    93Total revenues
    
    
    2,123
    
    
    
    258
    
    
    
    1,865
    
    
    
    3,268
    
    
    
    7,267
    
    
    
    (3,999
    )Costs and expensesCost of sales of real estate
    
    
    1,906
    
    
    
    10,259
    
    
    
    (8,353
    )
    
    
    2,493
    
    
    
    16,778
    
    
    
    (14,285
    )Selling, general and
administrative expenses
    
    
    6,496
    
    
    
    6,776
    
    
    
    (280
    )
    
    
    21,243
    
    
    
    21,940
    
    
    
    (697
    )Interest expense
    
    
    1,745
    
    
    
    
    
    
    
    1,745
    
    
    
    6,522
    
    
    
    
    
    
    
    6,522Other expenses
    
    
    
    
    
    
    536
    
    
    
    (536
    )
    
    
    
    
    
    
    536
    
    
    
    (536
    )Total costs and expenses
    
    
    10,147
    
    
    
    17,571
    
    
    
    (7,424
    )
    
    
    30,258
    
    
    
    39,254
    
    
    
    (8,996
    )Earnings from Bluegreen Corporation
    
    
    2,241
    
    
    
    4,418
    
    
    
    (2,177
    )
    
    
    3,978
    
    
    
    7,519
    
    
    
    (3,541
    )Interest and other income
    
    
    470
    
    
    
    285
    
    
    
    185
    
    
    
    3,544
    
    
    
    933
    
    
    
    2,611Impairment of investment in Bluegreen
    
    
    (53,576
    )
    
    
    
    
    
    
    (53,576
    )
    
    
    (53,576
    )
    
    
    
    
    
    
    (53,576
    )Loss before income taxes
    
    
    (58,889
    )
    
    
    (12,610
    )
    
    
    (46,279
    )
    
    
    (73,044
    )
    
    
    (23,535
    )
    
    
    (49,509
    )Benefit for income taxes
    
    
    
    
    
    
    4,594
    
    
    
    (4,594
    )
    
    
    
    
    
    
    7,500
    
    
    
    (7,500
    )Net loss
    
    $
    (58,889
    )
    
    
    (8,016
    )
    
    
    (50,873
    )
    
    
    (73,044
    )
    
    
    (16,035
    )
    
    
    (57,009
    )
  For the Three Months Ended September 30, 2008 Compared to the Same 2007 Period:
  46




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##### Table of Contents



For the Nine Months Ended September 30, 2008 Compared to the Same 2007 Period:
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PRIMARY HOMEBUILDING SEGMENT RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(Dollars in thousands)
    
    ( U n a u d i t e d )
    
    
    ( U n a u d i t e d )RevenuesSales of real estate
    
    $
    
    
    
    
    112,885
    
    
    
    (112,885
    )
    
    
    
    
    
    
    340,202
    
    
    
    (340,202
    )Other revenues
    
    
    
    
    
    
    614
    
    
    
    (614
    )
    
    
    
    
    
    
    2,213
    
    
    
    (2,213
    )Total revenues
    
    
    
    
    
    
    113,499
    
    
    
    (113,499
    )
    
    
    
    
    
    
    342,415
    
    
    
    (342,415
    )Costs and expensesCost of sales of real estate
    
    
    
    
    
    
    247,388
    
    
    
    (247,388
    )
    
    
    
    
    
    
    496,663
    
    
    
    (496,663
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    19,252
    
    
    
    (19,252
    )
    
    
    
    
    
    
    58,348
    
    
    
    (58,348
    )Other expenses
    
    
    
    
    
    
    575
    
    
    
    (575
    )
    
    
    
    
    
    
    1,470
    
    
    
    (1,470
    )Total costs and expenses
    
    
    
    
    
    
    267,215
    
    
    
    (267,215
    )
    
    
    
    
    
    
    556,481
    
    
    
    (556,481
    )Interest and other income
    
    
    
    
    
    
    2,274
    
    
    
    (2,274
    )
    
    
    
    
    
    
    6,475
    
    
    
    (6,475
    )Loss before income taxes
    
    
    
    
    
    
    (151,442
    )
    
    
    151,442
    
    
    
    
    
    
    
    (207,591
    )
    
    
    207,591Benefit for income taxes
    
    
    
    
    
    
    1,866
    
    
    
    (1,866
    )
    
    
    
    
    
    
    11,680
    
    
    
    (11,680
    )Net loss
    
    $
    
    
    
    
    (149,576
    )
    
    
    149,576
    
    
    
    
    
    
    
    (195,911
    )
    
    
    195,911Homes delivered (units)
    
    
    
    
    
    
    332
    
    
    
    (332
    )
    
    
    
    
    
    
    982
    
    
    
    (982
    )Construction starts (units)
    
    
    
    
    
    
    181
    
    
    
    (181
    )
    
    
    
    
    
    
    558
    
    
    
    (558
    )Average selling price of
homes delivered
    
    $
    
    
    
    
    316
    
    
    
    (316
    )
    
    
    
    
    
    
    338
    
    
    
    (338
    )Margin percentage
    
    
    
    
    
    
    (119.2
    )%
    
    
    119.2
    %
    
    
    
    
    
    
    (46.0
    )%
    
    
    46.0
    %Gross orders (units)
    
    
    
    
    
    
    159
    
    
    
    (159
    )
    
    
    
    
    
    
    753
    
    
    
    (753
    )Gross orders (value)
    
    $
    
    
    
    
    47,037
    
    
    
    (47,037
    )
    
    
    
    
    
    
    219,687
    
    
    
    (219,687
    )Cancellations (units)
    
    
    
    
    
    
    102
    
    
    
    (102
    )
    
    
    
    
    
    
    352
    
    
    
    (352
    )Net orders (units)
    
    
    
    
    
    
    57
    
    
    
    (57
    )
    
    
    
    
    
    
    401
    
    
    
    (401
    )Backlog of homes (units)
    
    
    
    
    
    
    545
    
    
    
    (545
    )
    
    
    
    
    
    
    545
    
    
    
    (545
    )Backlog of homes (value)
    
    $
    
    
    
    
    179,796
    
    
    
    (179,796
    )
    
    
    
    
    
    
    179,796
    
    
    
    (179,796
    )
   49




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TENNESSEE HOMEBUILDING SEGMENT RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(Dollars in thousands)
    
    ( U n a u d i t e d )
    
    
    ( U n a u d i t e d )RevenuesSales of real estate
    
    $
    
    
    
    
    9,339
    
    
    
    (9,339
    )
    
    
    
    
    
    
    39,844
    
    
    
    (39,844
    )Total revenues
    
    
    
    
    
    
    9,339
    
    
    
    (9,339
    )
    
    
    
    
    
    
    39,844
    
    
    
    (39,844
    )Costs and expensesCost of sales of real estate
    
    
    
    
    
    
    19,822
    
    
    
    (19,822
    )
    
    
    
    
    
    
    49,156
    
    
    
    (49,156
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    1,552
    
    
    
    (1,552
    )
    
    
    
    
    
    
    5,416
    
    
    
    (5,416
    )Total costs and expenses
    
    
    
    
    
    
    21,374
    
    
    
    (21,374
    )
    
    
    
    
    
    
    54,572
    
    
    
    (54,572
    )Interest and other income
    
    
    
    
    
    
    25
    
    
    
    (25
    )
    
    
    
    
    
    
    77
    
    
    
    (77
    )Loss before income taxes
    
    
    
    
    
    
    (12,010
    )
    
    
    12,010
    
    
    
    
    
    
    
    (14,651
    )
    
    
    14,651Benefit for income taxes
    
    
    
    
    
    
    (100
    )
    
    
    100
    
    
    
    
    
    
    
    824
    
    
    
    (824
    )Net loss
    
    $
    
    
    
    
    (12,110
    )
    
    
    12,110
    
    
    
    
    
    
    
    (13,827
    )
    
    
    13,827Homes delivered (units)
    
    
    
    
    
    
    43
    
    
    
    (43
    )
    
    
    
    
    
    
    134
    
    
    
    (134
    )Construction starts (units)
    
    
    
    
    
    
    55
    
    
    
    (55
    )
    
    
    
    
    
    
    167
    
    
    
    (167
    )Average selling price of
homes delivered
    
    $
    
    
    
    
    196
    
    
    
    (196
    )
    
    
    
    
    
    
    207
    
    
    
    (207
    )Margin percentage
    
    
    
    
    
    
    (112.2
    )%
    
    
    112.2
    %
    
    
    
    
    
    
    (23.4
    )%
    
    
    23.4
    %Gross orders (units)
    
    
    
    
    
    
    47
    
    
    
    (47
    )
    
    
    
    
    
    
    216
    
    
    
    (216
    )Gross orders (value)
    
    $
    
    
    
    
    10,649
    
    
    
    (10,649
    )
    
    
    
    
    
    
    47,283
    
    
    
    (47,283
    )Cancellations (units)
    
    
    
    
    
    
    55
    
    
    
    (55
    )
    
    
    
    
    
    
    118
    
    
    
    (118
    )Net orders (units)
    
    
    
    
    
    
    (8
    )
    
    
    8
    
    
    
    
    
    
    
    98
    
    
    
    (98
    )Backlog of homes (units)
    
    
    
    
    
    
    86
    
    
    
    (86
    )
    
    
    
    
    
    
    86
    
    
    
    (86
    )Backlog of homes (value)
    
    $
    
    
    
    
    17,608
    
    
    
    (17,608
    )
    
    
    
    
    
    
    17,608
    
    
    
    (17,608
    )
  50




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FINANCIAL CONDITION
 September 30, 2008 compared to December 31, 2007
  
    
    a net decrease in cash and cash equivalents of $51.3 million, which resulted from
cash used in operations of $16.3 million, cash used in investing activities of $12.1
million and cash used in financing activities of $22.9 million;
    
    a decrease in current income tax receivable as a result of a $29.7 million federal
income tax refund;
    
    a decrease in the carrying value of our investment in Bluegreen due to an
other-than-temporary impairment charge of $53.6 million;
    
    a net increase of the investment in other equity securities of $11.4 million as a
result of the acquisition (net of shares sold) of shares of Office Depot and a $3.0
million investment in Pizza Fusion;
    
    a net increase in inventory of real estate of $13.4 million mainly due to the land
development activities of the Land Division; and
    
    a decrease in assets held for sale of $3.5 million mainly as a result of the sale of
three ground lease parcels in the Land Division.
  
    
    a net decrease in notes and mortgage notes payable of $18.4 million, primarily due
to curtailment payments made in connection with a development loan collateralized by
land in Tradition Hilton Head;
    
    a net decrease in accounts payable and other accrued liabilities of approximately
$6.8 million mainly attributable to decreased severance and construction related
accruals due to payments made during the nine months ended September 30, 2008; and
    
    a decrease in liabilities related to assets held for sale of $3.1 million mainly as
a result of the repayment of debt in connection with the sale of three ground lease
parcels in the Land Division.
 LIQUIDITY AND CAPITAL RESOURCES
   51




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Woodbridge (Parent Company level)
     52




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Core Communities
    53




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Off Balance Sheet Arrangements and Contractual Obligations
  54




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Accounting for Contingencies
 Accounting for Special
Assessments and Tax Increment Financing
  Payments due by periodLess than
    
    
    2 - 3
    
    
    4 - 5
    
    
    More thanCategory
    
    Total
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 yearsLong-term debt obligations (1) (2)
    
    $
    256,417
    
    
    
    27,936
    
    
    
    116,010
    
    
    
    3,873
    
    
    
    108,598Long-term debt obligations
associated with assets held for
sale
    
    
    75,110
    
    
    
    272
    
    
    
    71,788
    
    
    
    109
    
    
    
    2,941Operating lease obligations
    
    
    4,430
    
    
    
    1,508
    
    
    
    1,363
    
    
    
    440
    
    
    
    1,119Total obligations
    
    $
    335,957
    
    
    
    29,716
    
    
    
    189,161
    
    
    
    4,422
    
    
    
    112,658
 
 (1)
    
    Amounts exclude interest because terms of repayment are based on construction activity and
sales volume. In addition, a large portion of our debt is based on variable rates.(2)
    
    These amounts represent scheduled principal payments. Some of those borrowings require the
repayment of specified amounts upon a sale of portions of the property collateralizing those
obligations, as well as curtailment repayments prior to scheduled maturity pursuant to
re-margining and minimum sales requirements. 55




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Accounting for Uncertainty in Income Taxes  an interpretation of FASB No. 109
     NEW ACCOUNTING PRONOUNCEMENTS.
  56




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
 ITEM 4.
    
    CONTROLS AND PROCEDURES
     57




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PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  Chapter 11 Cases
    Surety Bond Claim
  
 Item 1A. Risk Factors
  We are subject to the risks of the businesses that we currently hold investments in, and our future
acquisitions may reduce our earnings, require us to obtain additional financing and expose us to
additional risks.
 58




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##### Table of Contents




    
    fail to accomplish our strategic objectives;
    
    not perform as expected; and/or
 
    
    expose us to the risks of the business that we acquire.
  If current economic and credit market conditions do not improve and the book value of our
investments continue to exceed the trading value of the shares we own, we may incur additional
impairment charges in the future relating to those investments, which would adversely impact our
financial condition and operating results.
    If we cannot comply with the continued listing requirements of the New York Stock Exchange, our
Class A Common Stock will be subject to delisting from the New York Stock Exchange.
  59




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The commercial property market has been adversely affected by the current economic and credit
environment.
  
    
    Core is at risk to the extent that a significant tenant or a number of tenants file for
bankruptcy protection, creating the possibility that past due rents may never be recovered.
    
    Leases with certain existing tenants may become overly burdensome to the lessee due to
reduced business activity. Lease concessions and modifications may be necessary to avoid
defaults.
    
    Economic conditions and availability of credit may deteriorate further, causing market
capitalization rates on commercial properties to increase beyond present levels, thus
reducing the value at which commercial projects can be sold.
    
    Reduced net operating income for the commercial leasing projects may cause project loans
to be in violation of certain debt service coverage ratio requirements. This could require
Core to make additional principal curtailment payments sufficient to bring the loans into
compliance.
 
 Item 6.
    
    Exhibits
  Exhibit 10.1*
    
    Amended and Restated 2003 Stock Incentive Plan (as amended
on September 26, 2008).Exhibit 31.1*
    
    CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.Exhibit 31.2*
    
    CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.Exhibit 32.1**
    
    CEO Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.Exhibit 32.2**
    
    CFO Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 *
    
    Exhibits filed with this Form 10-Q**
    
    Exhibits furnished with this Form 10-Q 60




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WOODBRIDGE HOLDINGS CORPORATIONDate:      November 10, 2008
    By:
    /s/  Alan B. LevanAlan B. Levan, Chief Executive Officer Date:      November 10, 2008
    By:
    /s/  John K. GrelleJohn K. Grelle, Chief Financial Officer 61