##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended JUNE 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-31931
 LEVITT CORPORATION
  FLORIDA
    
    11-3675068(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2100 W. Cypress Creek Road,Fort Lauderdale, FL
    
    33309(Address of principal executive offices)
    
    (Zip Code)
 (954) 940-4950
  þ o
  o þ o
  o þ
  Class
    
    Outstanding at August 1, 2006Class A Common stock, $0.01 par value
    
    18,604,053Class B Common stock, $0.01 par value
    
    1,219,031




---



##### 



PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:Consolidated Statements of Financial Condition as of June 30, 2006 and December 31, 2005  UnauditedConsolidated Statements of Operations for the three and six months ended June 30, 2006 and 2005  UnauditedConsolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2006 and 2005  UnauditedConsolidated Statement of Shareholders Equity for the six months ended June 30, 2006  UnauditedConsolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005  UnauditedNotes to Unaudited Consolidated Financial StatementsItem 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RiskItem 4.
    
    Controls and ProceduresPART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk FactorsItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 6.
    
    ExhibitsSIGNATURESEx-31.1 Certification of CEOEx-31.2 Certification of CFOEx-31.3 Certification of CAOEx-32.1 Certification of CEOEx-32.2 Certification of CFOEx-32.3 Certification of CAO
  2




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##### Table of Contents



Levitt Corporation
 
 Consolidated Statements of Financial Condition  Unaudited
 (In thousands, except share data)
 June 30,
    
    
    December 31,2006
    
    
    2005AssetsCash and cash equivalents
    
    $
    73,306
    
    
    
    113,562Restricted cash
    
    
    750
    
    
    
    1,818Inventory of real estate
    
    
    754,655
    
    
    
    611,260Investment in Bluegreen Corporation
    
    
    97,555
    
    
    
    95,828Property and equipment, net
    
    
    62,888
    
    
    
    44,250Other assets
    
    
    29,262
    
    
    
    28,955Total assets
    
    $
    1,018,416
    
    
    
    895,673Liabilities and Shareholders EquityAccounts payable and accrued liabilities
    
    $
    84,586
    
    
    
    66,652Customer deposits
    
    
    56,796
    
    
    
    51,686Current income tax payable
    
    
    
    
    
    
    12,551Notes and mortgage notes payable
    
    
    454,066
    
    
    
    353,846Junior subordinated debentures
    
    
    69,588
    
    
    
    54,124Deferred tax liability, net
    
    
    4,643
    
    
    
    7,028Total liabilities
    
    
    669,679
    
    
    
    545,887Shareholders equity:Preferred stock, $0.01 par valueAuthorized: 5,000,000 sharesIssued and outstanding: no shares
    
    
    
    
    
    
    Class A Common Stock, $0.01 par valueAuthorized: 50,000,000 sharesIssued and outstanding: 18,604,053 shares
    
    
    186
    
    
    
    186Class B Common Stock, $0.01 par valueAuthorized: 10,000,000 sharesIssued and outstanding: 1,219,031 shares
    
    
    12
    
    
    
    12Additional paid-in capital
    
    
    182,346
    
    
    
    181,084Unearned compensation
    
    
    
    
    
    
    (110
    )Retained earnings
    
    
    164,778
    
    
    
    166,969Accumulated other comprehensive income
    
    
    1,415
    
    
    
    1,645Total shareholders equity
    
    
    348,737
    
    
    
    349,786Total liabilities and shareholders equity
    
    $
    1,018,416
    
    
    
    895,673
  3




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##### Table of Contents



Levitt Corporation
 
 Consolidated Statements of Operations  Unaudited
 (In thousands, except per share data)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Sales of real estate
    
    $
    130,658
    
    
    
    107,094
    
    
    
    256,201
    
    
    
    305,960Title and mortgage operations
    
    
    1,018
    
    
    
    947
    
    
    
    2,026
    
    
    
    1,895Total revenues
    
    
    131,676
    
    
    
    108,041
    
    
    
    258,227
    
    
    
    307,855Costs and expenses:Cost of sales of real estate
    
    
    100,910
    
    
    
    84,547
    
    
    
    202,965
    
    
    
    215,136Selling, general and administrative expenses
    
    
    30,466
    
    
    
    19,459
    
    
    
    57,221
    
    
    
    42,605Other expenses
    
    
    6,665
    
    
    
    626
    
    
    
    7,291
    
    
    
    1,942Total costs and expenses
    
    
    138,041
    
    
    
    104,632
    
    
    
    267,477
    
    
    
    259,683Earnings from Bluegreen Corporation
    
    
    2,152
    
    
    
    4,729
    
    
    
    2,103
    
    
    
    6,867(Loss) earnings from real estate joint ventures
    
    
    (77
    )
    
    
    42
    
    
    
    (77
    )
    
    
    132Interest and other income
    
    
    3,198
    
    
    
    1,453
    
    
    
    5,030
    
    
    
    2,775(Loss) income before income taxes
    
    
    (1,092
    )
    
    
    9,633
    
    
    
    (2,194
    )
    
    
    57,946(Benefit) Provision for income taxes
    
    
    (355
    )
    
    
    3,581
    
    
    
    (797
    )
    
    
    22,076Net (loss) income
    
    
    (737
    )
    
    
    6,052
    
    
    
    (1,397
    )
    
    
    35,870(Loss) earnings per common share:Basic
    
    $
    (0.04
    )
    
    
    0.31
    
    
    
    (0.07
    )
    
    
    1.81Diluted
    
    $
    (0.04
    )
    
    
    0.30
    
    
    
    (0.07
    )
    
    
    1.79Weighted average common shares outstanding:Basic
    
    
    19,823
    
    
    
    19,816
    
    
    
    19,822
    
    
    
    19,816Diluted
    
    
    19,823
    
    
    
    19,949
    
    
    
    19,822
    
    
    
    19,957Dividends declared per common share:Class A common stock
    
    $
    0.02
    
    
    
    0.02
    
    
    
    0.04
    
    
    
    0.04Class B common stock
    
    $
    0.02
    
    
    
    0.02
    
    
    
    0.04
    
    
    
    0.04
  4




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##### Table of Contents



Levitt Corporation
 
 Consolidated Statements of Comprehensive (Loss) Income  Unaudited
 (In thousands)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net (loss) income
    
    $
    (737
    )
    
    
    6,052
    
    
    
    (1,397
    )
    
    
    35,870Other comprehensive (loss) income:Pro-rata share of unrealized (loss) gain
recognized by Bluegreen Corporation on retained
interests in notes receivable sold
    
    
    (642
    )
    
    
    106
    
    
    
    (375
    )
    
    
    248Benefit (provision) for income taxes
    
    
    248
    
    
    
    (41
    )
    
    
    145
    
    
    
    (96
    )Pro-rata share of unrealized (loss) gain
recognized by Bluegreen Corporation on retained
interests in notes receivable sold (net of tax)
    
    
    (394
    )
    
    
    65
    
    
    
    (230
    )
    
    
    152Comprehensive (loss) income
    
    $
    (1,131
    )
    
    
    6,117
    
    
    
    (1,627
    )
    
    
    36,022
  5




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##### Table of Contents



Levitt Corporation
 
 Consolidated Statement of Shareholders Equity  Unaudited
 Six Months Ended June 30, 2006
 (In thousands)
 AccumulatedCompre-Class A
    
    
    Class B
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    hensiveClass A
    
    
    Class B
    
    
    Common
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Unearned
    
    
    IncomeShares
    
    
    Shares
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Compensation
    
    
    (Loss)
    
    
    TotalBalance at December 31,
2005
    
    
    18,604
    
    
    
    1,219
    
    
    $
    186
    
    
    
    12
    
    
    
    181,084
    
    
    
    166,969
    
    
    
    (110
    )
    
    
    1,645
    
    
    
    349,786Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,397
    )
    
    
    
    
    
    
    
    
    
    
    (1,397
    )Pro-rata share of
unrealized gain
recognized by Bluegreen
on sale of retained
interests, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (230
    )
    
    
    (230
    )Issuance of Bluegreen
common stock, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (794
    )
    
    
    
    
    
    
    
    
    
    
    (794
    )Share based
compensation
related to stock
options and
restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,373
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,373Reclassification of
unamortized stock
compensation related
to restricted stock
upon adoption of
SFAS 123 (R)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    110
    
    
    
    
    
    
    
    Balance at June 30, 2006
    
    
    18,604
    
    
    
    1,219
    
    
    $
    186
    
    
    
    12
    
    
    
    182,346
    
    
    
    164,778
    
    
    
    
    
    
    
    1,415
    
    
    
    348,737
  6




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##### Table of Contents



Levitt Corporation
 
 Consolidated Statements of Cash Flows  Unaudited
 (In thousands)
 Six Months EndedJune 30,2006
    
    
    2005Operating activities:Net (loss) income
    
    $
    (1,397
    )
    
    
    35,870Adjustments to reconcile net (loss) income to net cash
used in operating activities:Depreciation and amortization
    
    
    964
    
    
    
    841Change in deferred income taxes
    
    
    (2,240
    )
    
    
    675Earnings from Bluegreen Corporation
    
    
    (2,103
    )
    
    
    (6,867
    )Earnings from unconsolidated trusts
    
    
    (79
    )
    
    
    (28
    )Loss (earnings) from real estate joint ventures
    
    
    77
    
    
    
    (132
    )Share-based compensation expense related to
stock options and restricted stock
    
    
    1,373
    
    
    
    Gain on sale of property and equipment
    
    
    (1,329
    )
    
    
    Impairment of inventory and long lived assets
    
    
    6,049
    
    
    
    Changes in operating assets and liabilities:Restricted cash
    
    
    1,068
    
    
    
    1,035Inventory of real estate
    
    
    (157,291
    )
    
    
    (39,711
    )Other assets
    
    
    954
    
    
    
    (8,396
    )Accounts payable and accrued liabilities
    
    
    5,383
    
    
    
    (1,483
    )Customer deposits
    
    
    5,110
    
    
    
    2,816Net cash used in operating activities
    
    
    (143,461
    )
    
    
    (15,380
    )Investing activities:Investment in real estate joint ventures
    
    
    (445
    )
    
    
    (25
    )Distributions from real estate joint ventures
    
    
    138
    
    
    
    275Investment in unconsolidated trusts
    
    
    (464
    )
    
    
    (1,624
    )Distributions from unconsolidated trusts
    
    
    79
    
    
    
    16Proceeds from sale of property and equipment
    
    
    1,943
    
    
    
    Capital expenditures
    
    
    (12,360
    )
    
    
    (6,760
    )Net cash used in investing activities
    
    
    (11,109
    )
    
    
    (8,118
    )Financing activities:Proceeds from notes and mortgage notes payable
    
    
    212,240
    
    
    
    144,406Proceeds from notes and mortgage notes payable to affiliates
    
    
    
    
    
    
    8,994Proceeds from junior subordinated debentures
    
    
    15,464
    
    
    
    54,124Repayment of notes and mortgage notes payable
    
    
    (111,797
    )
    
    
    (156,222
    )Repayment of notes and mortgage notes payable to affiliates
    
    
    (223
    )
    
    
    (50,869
    )Payments for debt issuance costs
    
    
    (576
    )
    
    
    (1,887
    )Cash dividends paid
    
    
    (794
    )
    
    
    (792
    )Net cash provided by (used in) financing activities
    
    
    114,314
    
    
    
    (2,246
    )Decrease in cash and cash equivalents
    
    
    (40,256
    )
    
    
    (25,744
    )Cash and cash equivalents at the beginning of period
    
    
    113,562
    
    
    
    125,522Cash and cash equivalents at end of period
    
    $
    73,306
    
    
    
    99,778
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##### Table of Contents



Levitt Corporation
 Consolidated Statements of Cash Flows  Unaudited
 (In thousands)
 For the Six MonthsEnded June 30,2006
    
    2005Supplemental cash flow informationInterest paid on borrowings, net of amounts capitalized
    
    $
    (890
    )
    
    
    (520
    )Income taxes paid
    
    
    15,700
    
    
    
    19,214Supplemental disclosure of non-cash operating,
investing and financing activities:Change in shareholders equity resulting from pro-rata
share of unrealized (loss) gain recognized by
Bluegreen
on sale of retained interests, net of tax
    
    $
    (230
    )
    
    
    152Change in shareholders equity resulting from the
issuance of Bluegreen common stock, net of tax
    
    $
    (1
    )
    
    
    (18
    )Decrease in inventory from reclassification as property
and equipment
    
    $
    (7,987
    )
    
    
    Increase in property and equipment reclassified from
inventory
    
    $
    7,987
    
    
    
    
  8




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##### Table of Contents



Levitt Corporation
 
 Notes to Unaudited Consolidated Financial Statements
 1. Presentation of Interim Financial Statements
   2. Stock Based Compensation
    9




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2005
    
    
    2005Pro forma
net income:Net income, as reported
    
    $
    6,052
    
    
    
    35,870Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related income tax effect
    
    
    (154
    )
    
    
    (306
    )Pro forma net income
    
    $
    5,898
    
    
    
    35,564Basic earnings per share:As reported
    
    $
    0.31
    
    
    
    1.81Pro forma
    
    $
    0.30
    
    
    
    1.79Diluted earnings per share:As reported
    
    $
    0.30
    
    
    
    1.79Pro forma
    
    $
    0.29
    
    
    
    1.78
   Expected volatility
    
    37.5023%-37.5037%Weighted-average volatility
    
    37.50%Expected dividend yield
    
    .39% - .54%Weighted-average dividend yield
    
    .42%
 10




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##### Table of Contents



Risk-free interest rate
    
    5.02%-5.13%Weighted-average risk-free rate
    
    5.05%Expected life
    
    7.5 yearsForfeiture rate  executives
    
    5.0%Forfeiture rate  non-executives
    
    10.0%
    WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber
    
    
    Exercise
    
    
    Contractual
    
    
    Valueof Options
    
    
    Price
    
    
    Term
    
    
    (thousands)Options outstanding at December 31,
2005
    
    
    1,305,176
    
    
    $
    25.59
    
    
    
    
    
    
    $
    0Granted
    
    
    37,500
    
    
    
    19.40
    
    
    
    
    
    
    $
    6Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    96,250
    
    
    $
    26.03
    
    
    
    
    
    
    $
    0Options outstanding at June 30, 2006
    
    
    1,246,426
    
    
    $
    25.37
    
    
    8.27 years
    
    $
    6Vested & expected to vest
in the future at June 30, 2006
    
    
    1,031,239
    
    
    $
    25.37
    
    
    8.27 years
    
    $
    5Options exercisable at June 30, 2006
    
    
    55,176
    
    
    $
    22.33
    
    
    7.79 years
    
    
    Stock available for equity
compensation
grants at June 30, 2006
    
    
    1,746,687
  11




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##### Table of Contents



WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicGrant Date
    
    
    Contractual
    
    
    Value (inShares
    
    
    Fair Value
    
    
    Term
    
    
    thousands)Non-vested at December 31, 2005
    
    
    1,250,000
    
    
    $
    13.44
    
    
    
    
    
    
    $
    0Grants
    
    
    37,500
    
    
    $
    9.38
    
    
    
    
    
    
    $
    6Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    96,250
    
    
    $
    13.01
    
    
    
    
    
    
    $
    0Non-vested at June 30, 2006
    
    
    1,191,250
    
    
    $
    13.35
    
    
    8.30 years
    
    $
    6
    3. Impairment of Goodwill
  12




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##### Table of Contents



4. Inventory of Real Estate
  June 30,
    
    
    December 31,2006
    
    
    2005Land and land development costs
    
    $
    545,053
    
    
    
    457,826Construction costs
    
    
    150,359
    
    
    
    112,566Capitalized interest
    
    
    32,985
    
    
    
    21,108Other costs
    
    
    26,258
    
    
    
    19,760$
    754,655
    
    
    
    611,260
   13




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##### Table of Contents



5. Interest
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest incurred to non-affiliates
    
    $
    9,533
    
    
    
    3,892
    
    
    
    17,562
    
    
    
    6,775Interest incurred to affiliates
    
    
    
    
    
    
    207
    
    
    
    
    
    
    
    820Interest capitalized
    
    
    (9,533
    )
    
    
    (4,099
    )
    
    
    (17,562
    )
    
    
    (7,595
    )Interest expense, net
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expensed in cost of sales
    
    $
    3,091
    
    
    
    2,194
    
    
    
    5,685
    
    
    
    5,289
 6. Investment in Bluegreen Corporation
   Unaudited Condensed Consolidated Balance Sheets
 June 30,
    
    
    December 31,2006
    
    
    2005Total assets
    
    $
    846,893
    
    
    
    694,243Total liabilities
    
    $
    516,187
    
    
    
    371,069Minority interest
    
    
    11,043
    
    
    
    9,508Total shareholders equity
    
    
    319,663
    
    
    
    313,666Total liabilities and shareholders equity
    
    $
    846,893
    
    
    
    694,243
 14




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##### Table of Contents



Unaudited Condensed Consolidated Statements of Income
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues and other income
    
    $
    165,481
    
    
    
    191,136
    
    
    
    312,218
    
    
    
    325,787Cost and other expenses
    
    
    153,105
    
    
    
    165,944
    
    
    
    292,265
    
    
    
    289,416Income before minority interest and
provision for income taxes
    
    
    12,376
    
    
    
    25,192
    
    
    
    19,953
    
    
    
    36,371Minority interest
    
    
    1,677
    
    
    
    948
    
    
    
    2,699
    
    
    
    1,721Income before provision for income taxes
    
    
    10,699
    
    
    
    24,244
    
    
    
    17,254
    
    
    
    34,650Provision for income taxes
    
    
    4,119
    
    
    
    9,334
    
    
    
    6,643
    
    
    
    13,340Income before cumulative effect of
change in accounting principle
    
    
    6,580
    
    
    
    14,910
    
    
    
    10,611
    
    
    
    21,310Cumulative effect of
change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (5,678
    )
    
    
    Minority interest in cumulative effect of
change in accounting principle
    
    
    
    
    
    
    
    
    
    
    1,184
    
    
    
    Net income
    
    $
    6,580
    
    
    
    14,910
    
    
    
    6,117
    
    
    
    21,310
   7. Debt
    15




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##### Table of Contents



8. Commitments and Contingencies
  Purchase
    
    
    
    
    
    ExpectedPrice
    
    Units
    
    ClosingHomebuilding Division
    
    $175.3 million
    
    5,078 units
    
    
    2006-2007Other Operations
    
    3.5 million
    
    90 units
    
    
    2006
 16




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##### Table of Contents



9. (Loss) Earnings per Share
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Basic (loss) earnings per common share:Net (loss) income  basic
    
    $
    (737
    )
    
    
    6,052
    
    
    
    (1,397
    )
    
    
    35,870Diluted (loss) earnings per common share:Net (loss) income  basic
    
    $
    (737
    )
    
    
    6,052
    
    
    
    (1,397
    )
    
    
    35,870Pro rata share of the net effect of Bluegreen dilutive securities
    
    
    (22
    )
    
    
    (74
    )
    
    
    (23
    )
    
    
    (116
    )Net (loss) income  diluted
    
    $
    (759
    )
    
    
    5,978
    
    
    
    (1,420
    )
    
    
    35,754Denominator:Basic average shares outstanding
    
    
    19,823
    
    
    
    19,816
    
    
    
    19,822
    
    
    
    19,816Net effect of stock options assumed to be exercised
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    141Diluted average shares outstanding
    
    
    19,823
    
    
    
    19,949
    
    
    
    19,822
    
    
    
    19,957(Loss) Earnings per common share:Basic
    
    $
    (.04
    )
    
    
    0.31
    
    
    
    (.07
    )
    
    
    1.81Diluted
    
    $
    (.04
    )
    
    
    0.30
    
    
    
    (.07
    )
    
    
    1.79
 10. Dividends
 17




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##### Table of Contents



11. Other Expenses and Interest and Other Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Other expensesTitle and mortgage operations expenses
    
    $
    616
    
    
    
    626
    
    
    
    1,242
    
    
    
    1,265Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Penalty on debt prepayment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    677Goodwill impairment
    
    
    1,307
    
    
    
    
    
    
    
    1,307
    
    
    
    Impairment of inventory of real estate
    
    
    4,742
    
    
    
    
    
    
    
    4,742
    
    
    
    Total other expenses
    
    $
    6,665
    
    
    
    626
    
    
    
    7,291
    
    
    
    1,942Interest and other incomeInterest income
    
    $
    726
    
    
    
    689
    
    
    
    1,512
    
    
    
    1,207Gain on sale of fixed assets
    
    
    1,329
    
    
    
    
    
    
    
    1,329
    
    
    
    Other income
    
    
    1,143
    
    
    
    764
    
    
    
    2,189
    
    
    
    1,568Total interest and other income
    
    $
    3,198
    
    
    
    1,453
    
    
    
    5,030
    
    
    
    2,775
  12. Segment Reporting
  18




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    
    
    
    OtherJune 30, 2006
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    116,574
    
    
    
    14,086
    
    
    
    
    
    
    
    (2
    )
    
    
    130,658Title and mortgage operations
    
    
    1,018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,018Total revenues
    
    
    117,592
    
    
    
    14,086
    
    
    
    
    
    
    
    (2
    )
    
    
    131,676Costs and expensesCost of sales of real estate
    
    
    92,619
    
    
    
    7,718
    
    
    
    656
    
    
    
    (83
    )
    
    
    100,910Selling, general and administrative
expenses
    
    
    20,568
    
    
    
    3,034
    
    
    
    6,863
    
    
    
    1
    
    
    
    30,466Other expenses
    
    
    6,665
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,665Total costs and expenses
    
    
    119,852
    
    
    
    10,752
    
    
    
    7,519
    
    
    
    (82
    )
    
    
    138,041Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    2,152
    
    
    
    
    
    
    
    2,152Loss from real estate joint ventures
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    (77
    )Interest and other income
    
    
    248
    
    
    
    2,111
    
    
    
    859
    
    
    
    (20
    )
    
    
    3,198(Loss) income before income taxes
    
    
    (2,012
    )
    
    
    5,445
    
    
    
    (4,585
    )
    
    
    60
    
    
    
    (1,092
    )(Benefit) provision for income taxes
    
    
    (85
    )
    
    
    2,068
    
    
    
    (2,371
    )
    
    
    33
    
    
    
    (355
    )Net (loss) income
    
    $
    (1,927
    )
    
    
    3,377
    
    
    
    (2,214
    )
    
    
    27
    
    
    
    (737
    )Inventory of real estate
    
    $
    602,099
    
    
    
    152,470
    
    
    
    17,499
    
    
    
    (17,413
    )
    
    
    754,655Total assets
    
    $
    614,923
    
    
    
    226,799
    
    
    
    187,589
    
    
    
    (10,895
    )
    
    
    1,018,416Total debt
    
    $
    365,018
    
    
    
    67,892
    
    
    
    90,744
    
    
    
    
    
    
    
    523,654
 19




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    
    
    
    OtherJune 30, 2005
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    107,095
    
    
    
    149
    
    
    
    
    
    
    
    (150
    )
    
    
    107,094Title and mortgage operations
    
    
    947
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    947Total revenues
    
    
    108,042
    
    
    
    149
    
    
    
    
    
    
    
    (150
    )
    
    
    108,041Costs and expensesCost of sales of real estate
    
    
    84,273
    
    
    
    182
    
    
    
    624
    
    
    
    (532
    )
    
    
    84,547Selling, general and administrative
expenses
    
    
    13,732
    
    
    
    1,949
    
    
    
    3,778
    
    
    
    
    
    
    
    19,459Other expenses
    
    
    626
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    626Total costs and expenses
    
    
    98,631
    
    
    
    2,131
    
    
    
    4,402
    
    
    
    (532
    )
    
    
    104,632Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    4,729
    
    
    
    
    
    
    
    4,729Earnings from real estate joint ventures
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42Interest and other income
    
    
    199
    
    
    
    425
    
    
    
    829
    
    
    
    
    
    
    
    1,453Income (loss) before income taxes
    
    
    9,610
    
    
    
    (1,557
    )
    
    
    1,198
    
    
    
    382
    
    
    
    9,633Provision (benefit) for income taxes
    
    
    3,653
    
    
    
    (624
    )
    
    
    392
    
    
    
    160
    
    
    
    3,581Net income (loss)
    
    $
    5,957
    
    
    
    (933
    )
    
    
    806
    
    
    
    222
    
    
    
    6,052Inventory of real estate
    
    $
    349,880
    
    
    
    114,038
    
    
    
    6,473
    
    
    
    (17,209
    )
    
    
    453,182Total assets
    
    $
    382,890
    
    
    
    188,792
    
    
    
    161,732
    
    
    
    (17,209
    )
    
    
    716,205Total debt
    
    $
    171,893
    
    
    
    25,668
    
    
    
    71,098
    
    
    
    
    
    
    
    268,659
 Six Months Ended
    
    
    
    
    
    
    
    
    
    OtherJune 30, 2006
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    234,849
    
    
    
    21,358
    
    
    
    
    
    
    
    (6
    )
    
    
    256,201Title and mortgage operations
    
    
    2,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,026Total revenues
    
    
    236,875
    
    
    
    21,358
    
    
    
    
    
    
    
    (6
    )
    
    
    258,227Costs and expensesCost of sales of real estate
    
    
    189,116
    
    
    
    12,737
    
    
    
    1,298
    
    
    
    (186
    )
    
    
    202,965Selling, general and administrative
expenses
    
    
    38,140
    
    
    
    5,820
    
    
    
    13,260
    
    
    
    1
    
    
    
    57,221Other expenses
    
    
    7,291
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,291Total costs and expenses
    
    
    234,547
    
    
    
    18,557
    
    
    
    14,558
    
    
    
    (185
    )
    
    
    267,477Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    2,103
    
    
    
    
    
    
    
    2,103Loss from real estate joint ventures
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    (77
    )Interest and other income
    
    
    425
    
    
    
    3,099
    
    
    
    1,541
    
    
    
    (35
    )
    
    
    5,030Income (loss) before income taxes
    
    
    2,753
    
    
    
    5,900
    
    
    
    (10,991
    )
    
    
    144
    
    
    
    (2,194
    )Provision (benefit)for income taxes
    
    
    1,669
    
    
    
    2,205
    
    
    
    (4,735
    )
    
    
    64
    
    
    
    (797
    )Net income (loss)
    
    $
    1,084
    
    
    
    3,695
    
    
    
    (6,256
    )
    
    
    80
    
    
    
    (1,397
    )Inventory of real estate
    
    $
    602,099
    
    
    
    152,470
    
    
    
    17,499
    
    
    
    (17,413
    )
    
    
    754,655Total assets
    
    $
    614,923
    
    
    
    226,799
    
    
    
    187,589
    
    
    
    (10,895
    )
    
    
    1,018,416Total debt
    
    $
    365,018
    
    
    
    67,892
    
    
    
    90,744
    
    
    
    
    
    
    
    523,654
 20




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##### Table of Contents



Six Months Ended
    
    
    
    
    
    
    
    
    
    OtherJune 30, 2005
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    225,082
    
    
    
    66,700
    
    
    
    14,709
    
    
    
    (531
    )
    
    
    305,960Title and mortgage operations
    
    
    1,895
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,895Total revenues
    
    
    226,977
    
    
    
    66,700
    
    
    
    14,709
    
    
    
    (531
    )
    
    
    307,855Costs and expensesCost of sales of real estate
    
    
    177,852
    
    
    
    27,272
    
    
    
    11,950
    
    
    
    (1,938
    )
    
    
    215,136Selling, general and
administrative expenses
    
    
    28,340
    
    
    
    6,395
    
    
    
    7,870
    
    
    
    
    
    
    
    42,605Other expenses
    
    
    1,265
    
    
    
    677
    
    
    
    
    
    
    
    
    
    
    
    1,942Total costs and expenses
    
    
    207,457
    
    
    
    34,344
    
    
    
    19,820
    
    
    
    (1,938
    )
    
    
    259,683Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    6,867
    
    
    
    
    
    
    
    6,867Earnings from real estate joint ventures
    
    
    104
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    132Interest and other income
    
    
    413
    
    
    
    846
    
    
    
    1,516
    
    
    
    
    
    
    
    2,775Income before income taxes
    
    
    20,037
    
    
    
    33,202
    
    
    
    3,300
    
    
    
    1,407
    
    
    
    57,946Provision for income taxes
    
    
    7,554
    
    
    
    12,812
    
    
    
    1,155
    
    
    
    555
    
    
    
    22,076Net income
    
    $
    12,483
    
    
    
    20,390
    
    
    
    2,145
    
    
    
    852
    
    
    
    35,870Inventory of real estate
    
    $
    349,880
    
    
    
    114,038
    
    
    
    6,473
    
    
    
    (17,209
    )
    
    
    453,182Total assets
    
    $
    382,890
    
    
    
    188,792
    
    
    
    161,732
    
    
    
    (17,209
    )
    
    
    716,205Total debt
    
    $
    171,893
    
    
    
    25,668
    
    
    
    71,098
    
    
    
    
    
    
    
    268,659
 13. Parent Company Financial Statements
    21




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##### Table of Contents



Condensed Statements of Financial Condition
 June 30,
    
    
    December 31,2006
    
    
    2005Total assets
    
    $
    447,939
    
    
    
    435,793Total liabilities
    
    $
    99,202
    
    
    
    86,007Total shareholders equity
    
    
    348,737
    
    
    
    349,786Total liabilities and shareholders equity
    
    $
    447,939
    
    
    
    435,793
 Condensed Statements of Operations
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Earnings from Bluegreen Corporation
    
    $
    2,152
    
    
    
    4,729
    
    
    
    2,103
    
    
    
    6,867Earnings from real estate joint ventures
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    13Other revenues
    
    
    382
    
    
    
    292
    
    
    
    713
    
    
    
    437Costs and expenses
    
    
    7,151
    
    
    
    3,909
    
    
    
    13,400
    
    
    
    7,266(Loss) Income before income taxes
    
    
    (4,617
    )
    
    
    1,139
    
    
    
    (10,584
    )
    
    
    51(Benefit) provision for income taxes
    
    
    (2,402
    )
    
    
    370
    
    
    
    (4,578
    )
    
    
    (98
    )Net (loss) income before undistributed
earnings from consolidated subsidiaries
    
    
    (2,215
    )
    
    
    769
    
    
    
    (6,006
    )
    
    
    149Earnings from consolidated subsidiaries, net
of income taxes
    
    
    1,478
    
    
    
    5,283
    
    
    
    4,608
    
    
    
    35,721Net (loss) income
    
    $
    (737
    )
    
    
    6,052
    
    
    
    (1,398
    )
    
    
    35,870
  14. Certain Relationships and Related Party Transactions
  22




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##### Table of Contents



15. New Accounting Pronouncements
   23




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##### Table of Contents



16. Litigation
   24




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   25




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##### Table of Contents



.
 Executive Overview
  Homebuilding Overview
   26




---



##### Table of Contents



Land Development Overview
   27




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Stock-based Compensation
    28




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##### Table of Contents



CONSOLIDATED RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    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
    
    $
    130,658
    
    
    
    107,094
    
    
    
    23,564
    
    
    
    256,201
    
    
    
    305,960
    
    
    
    (49,759
    )Title and mortgage operations
    
    
    1,018
    
    
    
    947
    
    
    
    71
    
    
    
    2,026
    
    
    
    1,895
    
    
    
    131Total revenues
    
    
    131,676
    
    
    
    108,041
    
    
    
    23,635
    
    
    
    258,227
    
    
    
    307,855
    
    
    
    (49,628
    )Costs and expensesCost of sales of real estate
    
    
    100,910
    
    
    
    84,547
    
    
    
    16,363
    
    
    
    202,965
    
    
    
    215,136
    
    
    
    (12,171
    )Selling, general and administrative
expenses
    
    
    30,466
    
    
    
    19,459
    
    
    
    11,007
    
    
    
    57,221
    
    
    
    42,605
    
    
    
    14,616Other expenses
    
    
    6,665
    
    
    
    626
    
    
    
    6,039
    
    
    
    7,291
    
    
    
    1,942
    
    
    
    5,349Total costs and expenses
    
    
    138,041
    
    
    
    104,632
    
    
    
    33,409
    
    
    
    267,477
    
    
    
    259,683
    
    
    
    7,794Earnings from Bluegreen Corporation
    
    
    2,152
    
    
    
    4,729
    
    
    
    (2,577
    )
    
    
    2,103
    
    
    
    6,867
    
    
    
    (4,764
    )(Loss) earnings from real estate
joint ventures
    
    
    (77
    )
    
    
    42
    
    
    
    (119
    )
    
    
    (77
    )
    
    
    132
    
    
    
    (209
    )Interest and other income
    
    
    3,198
    
    
    
    1,453
    
    
    
    1,745
    
    
    
    5,030
    
    
    
    2,775
    
    
    
    2,255(Loss) income before income taxes
    
    
    (1,092
    )
    
    
    9,633
    
    
    
    (10,725
    )
    
    
    (2,194
    )
    
    
    57,946
    
    
    
    (60,139
    )(Benefit) provision for income taxes
    
    
    (355
    )
    
    
    3,581
    
    
    
    (3,936
    )
    
    
    (797
    )
    
    
    22,076
    
    
    
    (22,873
    )Net (loss) income
    
    $
    (737
    )
    
    
    6,052
    
    
    
    (6,789
    )
    
    
    (1,397
    )
    
    
    35,870
    
    
    
    (37,266
    )
 For the Three Months Ended June 30, 2006 Compared to the Same 2005 Period:
   29




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30




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##### Table of Contents



For the Six Months Ended June 30, 2006 Compared to the Same 2005 Period:
    31




---



##### Table of Contents



32




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##### Table of Contents



HOMEBUILDING DIVISION RESULTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    Change(In thousands, except unit information)
    
    ( U n a u d i t e d )
    
    
    ( U n a u d i t e d )RevenuesSales of real estate
    
    $
    116,574
    
    
    
    107,095
    
    
    
    9,479
    
    
    
    234,849
    
    
    
    225,082
    
    
    
    9,767Title and mortgage operations
    
    
    1,018
    
    
    
    947
    
    
    
    71
    
    
    
    2,026
    
    
    
    1,895
    
    
    
    131Total revenues
    
    
    117,592
    
    
    
    108,042
    
    
    
    9,550
    
    
    
    236,875
    
    
    
    226,977
    
    
    
    9,898Costs and expensesCost of sales of real estate
    
    
    92,619
    
    
    
    84,273
    
    
    
    8,346
    
    
    
    189,116
    
    
    
    177,852
    
    
    
    11,264Selling, general and administrative expenses
    
    
    20,568
    
    
    
    13,732
    
    
    
    6,836
    
    
    
    38,140
    
    
    
    28,340
    
    
    
    9,800Other expenses
    
    
    6,665
    
    
    
    626
    
    
    
    6,039
    
    
    
    7,291
    
    
    
    1,265
    
    
    
    6,026Total costs and expenses
    
    
    119,852
    
    
    
    98,631
    
    
    
    21,221
    
    
    
    234,547
    
    
    
    207,457
    
    
    
    27,090Earnings from real estate joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104
    
    
    
    (104
    )Interest and other income
    
    
    248
    
    
    
    199
    
    
    
    49
    
    
    
    425
    
    
    
    413
    
    
    
    12(Loss) income before income taxes
    
    
    (2,011
    )
    
    
    9,610
    
    
    
    (11,621
    )
    
    
    2,753
    
    
    
    20,037
    
    
    
    (17,284
    )(Benefit) provision for income taxes
    
    
    (85
    )
    
    
    3,653
    
    
    
    (3,738
    )
    
    
    1,669
    
    
    
    7,554
    
    
    
    (5,885
    )Net (loss) income
    
    $
    (1,926
    )
    
    
    5,957
    
    
    
    (7,883
    )
    
    
    1,084
    
    
    
    12,483
    
    
    
    (11,399
    )Homes delivered (units)
    
    
    392
    
    
    
    448
    
    
    
    (56
    )
    
    
    831
    
    
    
    949
    
    
    
    (118
    )Construction starts (units)
    
    
    532
    
    
    
    478
    
    
    
    54
    
    
    
    922
    
    
    
    825
    
    
    
    97Average selling price of homes delivered
    
    $
    297
    
    
    
    239
    
    
    
    58
    
    
    
    283
    
    
    
    237
    
    
    
    46Margin percentage on homes delivered
    
    
    20.5
    %
    
    
    21.3
    %
    
    
    0.8
    %
    
    
    19.5
    %
    
    
    21.0
    %
    
    
    (1.5
    %)New sales contracts (units)
    
    
    332
    
    
    
    429
    
    
    
    (97
    )
    
    
    838
    
    
    
    1,034
    
    
    
    (196
    )New sales contracts (value)
    
    $
    117,304
    
    
    
    133,874
    
    
    
    (16,570
    )
    
    
    286,691
    
    
    
    299,155
    
    
    
    (12,464
    )Backlog of homes (units)
    
    
    1,799
    
    
    
    1,899
    
    
    
    (100
    )
    
    
    1,799
    
    
    
    1,899
    
    
    
    (100
    )Backlog of homes (value)
    
    $
    609,167
    
    
    
    522,785
    
    
    
    (86,382
    )
    
    
    609,167
    
    
    
    522,785
    
    
    
    86,382
 For the Three Months Ended June 30, 2006 Compared to the Same 2005 Period:
   33




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Six Months Ended June 30, 2006 Compared to the Same 2005 Period:
       35




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LAND DIVISION RESULTS OF OPERATIONS
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    Change(In thousands, except acres information)
    
    ( U n a u d i t e d )
    
    
    ( U n a u d i t e d )RevenuesSales of real estate
    
    $
    14,086
    
    
    
    149
    
    
    
    13,937
    
    
    
    21,358
    
    
    
    66,700
    
    
    
    (45,342
    )Total revenues
    
    
    14,086
    
    
    
    149
    
    
    
    13,937
    
    
    
    21,358
    
    
    
    66,700
    
    
    
    (45,342
    )Costs and expensesCost of sales of real estate
    
    
    7,718
    
    
    
    182
    
    
    
    7,536
    
    
    
    12,737
    
    
    
    27,272
    
    
    
    (14,535
    )Selling, general and administrative expenses
    
    
    3,034
    
    
    
    1,949
    
    
    
    1,085
    
    
    
    5,820
    
    
    
    6,395
    
    
    
    (575
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    677
    
    
    
    (677
    )Total costs and expenses
    
    
    10,752
    
    
    
    2,131
    
    
    
    8,621
    
    
    
    18,557
    
    
    
    34,344
    
    
    
    (15,787
    )Interest and other income
    
    
    2,111
    
    
    
    425
    
    
    
    1,686
    
    
    
    3,099
    
    
    
    846
    
    
    
    2,253Income(Loss) before income taxes
    
    
    5,445
    
    
    
    (1,557
    )
    
    
    7,002
    
    
    
    5,900
    
    
    
    33,202
    
    
    
    (27,302
    )Provision(Benefit) for income taxes
    
    
    2,068
    
    
    
    (624
    )
    
    
    2,692
    
    
    
    2,205
    
    
    
    12,812
    
    
    
    (10,607
    )Net income(loss)
    
    $
    3,377
    
    
    
    (933
    )
    
    
    4,310
    
    
    
    3,695
    
    
    
    20,390
    
    
    
    (16,695
    )Acres sold
    
    
    48.5
    
    
    
    
    
    
    
    48.5
    
    
    
    105
    
    
    
    1,304
    
    
    
    (1,199
    )Margin percentage
    
    
    45.2
    %
    
    
    (22.1
    %)
    
    
    67.4
    %
    
    
    40.4
    %
    
    
    59.1
    %
    
    
    (18.7
    %)Unsold saleable acres
    
    
    7,138
    
    
    
    4,657
    
    
    
    2,481
    
    
    
    7,138
    
    
    
    4,657
    
    
    
    2,481Acres subject to sales contracts
    
    
    84
    
    
    
    545
    
    
    
    (461
    )
    
    
    84
    
    
    
    545
    
    
    
    (461
    )Acres subject to sales contracts (value)
    
    $
    15,387
    
    
    
    59,884
    
    
    
    (44,497
    )
    
    
    15,387
    
    
    
    59,884
    
    
    
    (44,497
    )
  36




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For the Three Months Ended June 30, 2006 Compared to the Same 2005 Period:
      Six Months Ended June 30, 2006 Compared to the Same 2005 Period:
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OTHER OPERATIONS RESULTS OF OPERATIONS
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    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
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,709
    
    
    
    (14,709
    )Total revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,709
    
    
    
    (14,709
    )Costs and expensesCost of sales of real estate
    
    
    656
    
    
    
    624
    
    
    
    32
    
    
    
    1,298
    
    
    
    11,950
    
    
    
    (10,652
    )Selling, general and administrative expenses
    
    
    6,863
    
    
    
    3,778
    
    
    
    3,085
    
    
    
    13,260
    
    
    
    7,870
    
    
    
    5,390Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    7,519
    
    
    
    4,402
    
    
    
    3,117
    
    
    
    14,558
    
    
    
    19,820
    
    
    
    (5,262
    )Earnings from Bluegreen Corporation
    
    
    2,152
    
    
    
    4,729
    
    
    
    (2,577
    )
    
    
    2,103
    
    
    
    6,867
    
    
    
    (4,764
    )(Loss) earnings from real estate joint ventures
    
    
    (77
    )
    
    
    42
    
    
    
    (119
    )
    
    
    (77
    )
    
    
    28
    
    
    
    (105
    )Interest and other income
    
    
    859
    
    
    
    829
    
    
    
    (30
    )
    
    
    1,541
    
    
    
    1,516
    
    
    
    25Income before income taxes
    
    
    (4,585
    )
    
    
    1,198
    
    
    
    (5,783
    )
    
    
    (10,991
    )
    
    
    3,300
    
    
    
    (14,291
    )Provision for income taxes
    
    
    (2,371
    )
    
    
    392
    
    
    
    (2,763
    )
    
    
    (4,735
    )
    
    
    1,155
    
    
    
    (5,890
    )Net income
    
    $
    (2,214
    )
    
    
    806
    
    
    
    (3,020
    )
    
    
    (6,256
    )
    
    
    2,145
    
    
    
    (8,401
    )
  For the Three Months Ended June 30, 2006 Compared to the Same 2005 Period:
    39




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Six Months Ended June 30, 2006 Compared to the Same 2005 Period:
     40




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FINANCIAL CONDITION
 June 30, 2006 compared to December 31, 2005
   
    
    a net decrease in cash and cash equivalents of $40.3 million, which resulted from
cash used in operations and investing activities of $155 million, partially offset by
an increase in cash provided by financing activities of $114 million;
    
    a net increase in inventory of real estate of approximately $143.4 million which
includes approximately $64.2 million in land acquisitions by our Homebuilding
Division; and
    
    an increase of $18.6 million in property and equipment associated with increased
investment in commercial properties under construction at Core Communities, and
hardware and software acquired for our systems upgrade.
   
    
    a net increase in notes and mortgage notes payable of $100.4 million, primarily
related to project debt associated with 2006 land acquisitions and land development
activities;
    
    an increase of $5.1 million in customer deposits associated with our larger
homebuilding backlog;
    
    an increase of $15.4 million in junior subordinated debentures;
    
    an increase of $17.9 million in accounts payable and accrued liabilities, relating
to accruals for increased selling general and administrative costs, certain
construction related accruals, and the timing of invoices processed; and
    
    a decrease in the current tax liability of approximately $12.6 million relating
primarily to the decrease in our taxable income to a loss position and the timing of
estimated tax payments.
 LIQUIDITY AND CAPITAL RESOURCES
   42




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Off Balance Sheet Arrangements and Contractual Obligations
   Payments due by periodLess than
    
    
    2 - 3
    
    
    4 - 5
    
    
    More thanCategory
    
    Total
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 yearsLong-term debt obligations (1)
    
    $
    523,654
    
    
    
    39,565
    
    
    
    328,872
    
    
    
    40,520
    
    
    
    114,697Operating lease obligations
    
    
    11,940
    
    
    
    2,868
    
    
    
    3,532
    
    
    
    2,247
    
    
    
    3,294Purchase obligations
    
    
    72,359
    
    
    
    72,359
    
    
    
    
    
    
    
    
    
    
    
    Total Obligations
    
    $
    607,953
    
    
    
    114,792
    
    
    
    332,404
    
    
    
    42,767
    
    
    
    117,991
 
 (1)
    
    Amounts exclude interest   
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  44




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NEW ACCOUNTING PRONOUNCEMENTS.
    45




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Item 4. CONTROLS AND PROCEDURES
       46




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 4. Submission of Matters to a Vote of Security Holders
 Election of Directors
  Nominee
    
    For
    
    WithheldJames Blosser
    
    32,711,235
    
    244,286Darwin Dornbush
    
    32,447,430
    
    508,091Alan B. Levan
    
    32,433,931
    
    521,590
  Approval of Amended and Restated 2003 Stock Incentive Plan
  For
    
    Against
    
    Abstain21,727,119
    
    6,676,740
    
    42,999
 
 Item 6. Exhibits
  Exhibit 31.1*
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2*
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.3*
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 32.1*
    
    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*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 47




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Exhibit 32.3*
    
    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
 48




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LEVITT CORPORATIONDate: August 7, 2006
    By:
    /s/  Alan B. LevanAlan B. Levan, Chief Executive OfficerDate: August 7, 2006
    By:
    /s/  George P. ScanlonGeorge P. Scanlon, Executive Vice President,Chief Financial OfficerDate: August 7, 2006
    By:
    /s/  Jeanne T. PraytherJeanne T. Prayther, Chief Accounting Officer 49