##### 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
 SEPTEMBER 30, 2006
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
  001-31931
 LEVITT CORPORATION
  FLORIDA
    
    11-3675068(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 2100 W. Cypress Creek Road,Fort Lauderdale, FL
    
    33309(Address of principal executive offices)
    
    (Zip Code)
 (954) 940-4950
  x o
  o x o
  o x
  Class
    
    Outstanding at November 1, 2006Class A Common stock, $0.01 par value
    
    18,609,024Class B Common stock, $0.01 par value
    
    1,219,031




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##### Table of Contents



PART I.
    
    FINANCIAL INFORMATION
    
    
    3Item 1.
    
    Financial Statements:
    
    
    3Consolidated Statements of Financial Condition as of September 30, 2006 and December 31, 2005  Unaudited
    
    
    3Consolidated Statements of Operations for the three and nine months ended September 30, 2006 and 2005  Unaudited
    
    
    4Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2006 and 2005  Unaudited
    
    
    5Consolidated Statement of Shareholders Equity for the nine months ended September 30, 2006  Unaudited
    
    
    6Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and 2005  Unaudited
    
    
    7Notes to Unaudited Consolidated Financial Statements
    
    
    9Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 4.
    
    Controls and Procedures
    
    
    47PART II.
    
    OTHER INFORMATION
    
    
    49Item 1.
    
    Legal Proceedings
    
    
    49Item 1A.
    
    Risk Factors
    
    
    49Item 6.
    
    Exhibits
    
    
    49SIGNATURES
    
    
    50EX-10.0 Agreement with Elliott WienerEx-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-31.3 Section 302 Certification of CAOEx-32.1 Section 906 Certification of CEOEx-32.2 Section 906 Certification of CFOEx-32.3 Section 906 Certification of CAO
 2




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##### Table of Contents



PART I. FINANCIAL INFORMATION 3
 
 Item 1. Financial Statements:
 
 Levitt Corporation
Consolidated Statements of Financial Condition  Unaudited
(In thousands, except share data)
 September 30,
    
    December 31,2006
    
    2005AssetsCash and cash equivalents
    
    $
    65,231
    
    
    
    113,562Restricted cash
    
    
    408
    
    
    
    1,818Inventory of real estate
    
    
    845,565
    
    
    
    611,260Investment in Bluegreen Corporation
    
    
    106,045
    
    
    
    95,828Property and equipment, net
    
    
    70,278
    
    
    
    44,250Other assets
    
    
    29,069
    
    
    
    28,955Total assets
    
    $
    1,116,596
    
    
    
    895,673Liabilities and Shareholders EquityAccounts payable and accrued liabilities
    
    $
    101,083
    
    
    
    66,652Customer deposits
    
    
    54,017
    
    
    
    51,686Current income tax payable
    
    
    
    
    
    
    12,551Notes and mortgage notes payable
    
    
    518,170
    
    
    
    353,846Junior subordinated debentures
    
    
    85,052
    
    
    
    54,124Deferred tax liability, net
    
    
    4,942
    
    
    
    7,028Total liabilities
    
    
    763,264
    
    
    
    545,887Shareholders equity:Preferred
stock, $0.01 par value
Authorized: 5,000,000 shares
Issued and outstanding: no shares
    
    
    
    
    
    
    Class A
Common Stock, $0.01 par value
Authorized: 50,000,000 shares
Issued and outstanding: 18,609,024 and 18,604,053 shares, respectively
    
    
    186
    
    
    
    186Class B
Common Stock, $0.01 par value
Authorized: 10,000,000 shares
Issued and outstanding: 1,219,031 and 1,219,031 shares, respectively
    
    
    12
    
    
    
    12Additional paid-in capital
    
    
    183,515
    
    
    
    181,084Unearned compensation
    
    
    
    
    
    
    (110
    )Retained earnings
    
    
    167,354
    
    
    
    166,969Accumulated other comprehensive income
    
    
    2,265
    
    
    
    1,645Total shareholders equity
    
    
    353,332
    
    
    
    349,786Total liabilities and shareholders equity
    
    $
    1,116,596
    
    
    
    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
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2006
    
    2005
    
    2006
    
    2005Revenues:Sales of real estate
    
    $
    130,939
    
    
    
    128,520
    
    
    
    387,140
    
    
    
    434,480Title and mortgage operations
    
    
    936
    
    
    
    962
    
    
    
    2,962
    
    
    
    2,857Total revenues
    
    
    131,875
    
    
    
    129,482
    
    
    
    390,102
    
    
    
    437,337Costs and expenses:Cost of sales of real estate
    
    
    104,520
    
    
    
    98,455
    
    
    
    307,485
    
    
    
    313,591Selling, general and administrative expenses
    
    
    32,736
    
    
    
    20,070
    
    
    
    89,957
    
    
    
    62,675Other expenses
    
    
    615
    
    
    
    1,448
    
    
    
    7,906
    
    
    
    3,390Total costs and expenses
    
    
    137,871
    
    
    
    119,973
    
    
    
    405,348
    
    
    
    379,656Earnings from Bluegreen Corporation
    
    
    6,923
    
    
    
    5,951
    
    
    
    9,026
    
    
    
    12,818Loss from real estate joint ventures
    
    
    (128
    )
    
    
    (207
    )
    
    
    (205
    )
    
    
    (75
    )Interest and other income
    
    
    3,569
    
    
    
    1,924
    
    
    
    8,598
    
    
    
    4,699Income before income taxes
    
    
    4,368
    
    
    
    17,177
    
    
    
    2,173
    
    
    
    75,123Provision for income taxes
    
    
    1,395
    
    
    
    6,469
    
    
    
    598
    
    
    
    28,545Net income
    
    $
    2,973
    
    
    
    10,708
    
    
    
    1,575
    
    
    
    46,578Earnings per common share:Basic
    
    $
    0.15
    
    
    
    0.54
    
    
    
    0.08
    
    
    
    2.35Diluted
    
    $
    0.15
    
    
    
    0.53
    
    
    
    0.07
    
    
    
    2.32Weighted average common shares outstanding:Basic
    
    
    19,824
    
    
    
    19,817
    
    
    
    19,822
    
    
    
    19,816Diluted
    
    
    19,831
    
    
    
    19,944
    
    
    
    19,828
    
    
    
    19,952Dividends declared per common share:Class A common stock
    
    $
    0.02
    
    
    
    0.02
    
    
    
    0.06
    
    
    
    0.06Class B common stock
    
    $
    0.02
    
    
    
    0.02
    
    
    
    0.06
    
    
    
    0.06
  4




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##### Table of Contents



Levitt Corporation
Consolidated Statements of Comprehensive Income  Unaudited
(In thousands)
 Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2006
    
    2005
    
    2006
    
    2005Net income
    
    $
    2,973
    
    
    
    10,708
    
    
    
    1,575
    
    
    
    46,578Other comprehensive income:Pro-rata share of unrealized gain
recognized by Bluegreen Corporation on retained
interests in notes receivable sold
    
    
    1,384
    
    
    
    184
    
    
    
    1,009
    
    
    
    432Provision for income taxes
    
    
    (534
    )
    
    
    (71
    )
    
    
    (389
    )
    
    
    (167
    )Pro-rata share of unrealized gain
recognized by Bluegreen Corporation on retained
interests in notes receivable sold(net of tax)
    
    
    850
    
    
    
    113
    
    
    
    620
    
    
    
    265Comprehensive income
    
    $
    3,823
    
    
    
    10,821
    
    
    
    2,195
    
    
    
    46,843
  5




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##### Table of Contents



Levitt Corporation
Consolidated Statement of Shareholders Equity  Unaudited
Nine Months Ended September 30, 2006
(In thousands)
 Unearned
    
    AccumulatedClass A
    
    Class B
    
    Additional
    
    
    
    
    
    Compensation
    
    Compre-Class A
    
    Class B
    
    Common
    
    Common
    
    Paid-In
    
    Retained
    
    Restricted
    
    hensiveShares
    
    Shares
    
    Stock
    
    Stock
    
    Capital
    
    Earnings
    
    Stock Grants
    
    Income
    
    TotalBalance at December 31, 2005
    
    
    18,604
    
    
    
    1,219
    
    
    $
    186
    
    
    
    12
    
    
    
    181,084
    
    
    
    166,969
    
    
    
    (110
    )
    
    
    1,645
    
    
    
    349,786Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,575
    
    
    
    
    
    
    
    
    
    
    
    1,575Pro-rata share of
unrealized gain recognized
by Bluegreen on sale of
retained interests, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    620
    
    
    
    620Issuance of restricted stock
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of Bluegreen
common stock, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,190
    )
    
    
    
    
    
    
    
    
    
    
    (1,190
    )Share based compensation
related to stock options
and restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,428
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,428Reversal of unamortized
stock compensation related
to restricted stock upon
adoption of SFAS 123(R)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    110
    
    
    
    
    
    
    
    Balance at September 30,
2006
    
    
    18,609
    
    
    
    1,219
    
    
    $
    186
    
    
    
    12
    
    
    
    183,515
    
    
    
    167,354
    
    
    
    
    
    
    
    2,265
    
    
    
    353,332
  6




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##### Table of Contents



Levitt Corporation
Consolidated Statements of Cash Flows  Unaudited
(In thousands)
 Nine Months EndedSeptember 30,2006
    
    2005Operating activities:Net income
    
    $
    1,575
    
    
    
    46,578Adjustments to reconcile net income to net cash
used in operating activities:Depreciation and amortization
    
    
    1,517
    
    
    
    1,348Change in deferred income taxes
    
    
    (2,545
    )
    
    
    3,532Earnings from Bluegreen Corporation
    
    
    (9,026
    )
    
    
    (12,818
    )Earnings from unconsolidated trusts
    
    
    (122
    )
    
    
    (61
    )Loss from real estate joint ventures
    
    
    205
    
    
    
    75Share-based compensation expense related to
stock options and restricted stock
    
    
    2,428
    
    
    
    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
    
    
    1,410
    
    
    
    928Inventory of real estate
    
    
    (248,089
    )
    
    
    (111,832
    )Other assets
    
    
    4,224
    
    
    
    (502
    )Accounts payable and accrued liabilities
    
    
    21,088
    
    
    
    9,448Customer deposits
    
    
    2,331
    
    
    
    1,917Net cash used in operating activities
    
    
    (220,284
    )
    
    
    (61,387
    )Investing activities:Investment in real estate joint ventures
    
    
    (465
    )
    
    
    (25
    )Distributions from real estate joint ventures
    
    
    138
    
    
    
    379Investment in unconsolidated trusts
    
    
    (928
    )
    
    
    (1,624
    )Distributions from unconsolidated trusts
    
    
    88
    
    
    
    67Proceeds from sale of property and equipment
    
    
    1,943
    
    
    
    Capital expenditures
    
    
    (20,410
    )
    
    
    (10,193
    )Net cash used in investing activities
    
    
    (19,634
    )
    
    
    (11,396
    )Financing activities:Proceeds from notes and mortgage notes payable
    
    
    312,855
    
    
    
    205,730Proceeds from notes and mortgage notes payable to affiliates
    
    
    
    
    
    
    9,767Proceeds from junior subordinated debentures
    
    
    30,928
    
    
    
    54,124Repayment of notes and mortgage notes payable
    
    
    (148,308
    )
    
    
    (166,577
    )Repayment of notes and mortgage notes payable to affiliates
    
    
    (223
    )
    
    
    (55,275
    )Payments for debt issuance costs
    
    
    (2,475
    )
    
    
    (2,146
    )Cash dividends paid
    
    
    (1,190
    )
    
    
    (1,188
    )Net cash provided by financing activities
    
    
    191,587
    
    
    
    44,435Decrease in cash and cash equivalents
    
    
    (48,331
    )
    
    
    (28,348
    )Cash and cash equivalents at the beginning of period
    
    
    113,562
    
    
    
    125,522Cash and cash equivalents at end of period
    
    $
    65,231
    
    
    
    97,174
 7




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##### Table of Contents



Levitt Corporation
Consolidated Statements of Cash Flows  Unaudited
(In thousands)
 For the Nine MonthsEnded September 30,2006
    
    2005Supplemental cash flow informationInterest paid on borrowings, net of amounts capitalized
    
    $
    963
    
    
    
    (725
    )Income taxes paid
    
    
    16,344
    
    
    
    19,214Supplemental disclosure of non-cash operating,
investing and financing activities:Change in shareholders equity resulting from pro-rata
share of unrealized gain recognized by Bluegreen
on sale of retained interests, net of tax
    
    $
    620
    
    
    
    265Change in shareholders equity resulting from the
issuance of Bluegreen common stock, net of tax
    
    $
    113
    
    
    
    (45
    )Decrease in inventory from reclassification to property
and equipment
    
    $
    7,978
    
    
    
    
  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
    
    Nine MonthsEnded
    
    EndedSeptember 30,
    
    September 30,2005
    
    2005Pro forma net income:Net income, as reported
    
    $
    10,708
    
    
    
    46,578Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related income tax effect
    
    
    (369
    )
    
    
    (675
    )Pro forma net income
    
    $
    10,339
    
    
    
    45,903Basic earnings per share:As reported
    
    $
    0.54
    
    
    
    2.35Pro forma
    
    $
    0.52
    
    
    
    2.32Diluted earnings per share:As reported
    
    $
    0.53
    
    
    
    2.32Pro forma
    
    $
    0.51
    
    
    
    2.29
   Three months ended
    
    Nine months endedSeptember 30, 2006
    
    September 30, 2006Expected volatility
    
    37.7204%
    
    37.3701% - 37.7204%Expected dividend yield
    
    .50% - .61%
    
    .39% - .61%Risk-free interest rate
    
    4.987% - 5.061%
    
    4.987% - 5.061%Expected life
    
    5.0 - 7.5 years
    
    5.0 - 7.5 yearsForfeiture rate  executives
    
    5%
    
    5%Forfeiture rate  non-executives
    
    10%
    
    10%
 10




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##### Table of Contents



Weighted
    
    Weighted Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicNumber
    
    Exercise
    
    Contractual
    
    Valueof Options
    
    Price
    
    Term
    
    (thousands)Options outstanding at December
31, 2005
    
    
    1,305,176
    
    
    $
    25.59
    
    
    
    
    
    
    $
    Granted
    
    
    689,655
    
    
    
    13.60
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    156,250
    
    
    $
    26.19
    
    
    
    
    
    
    
    Options outstanding at September
30, 2006
    
    
    1,838,581
    
    
    $
    21.04
    
    
    8.65 years
    
    $
    Vested & expected to vest
in the future at September 30, 2006
    
    
    1,504,702
    
    
    $
    21.04
    
    
    8.65 years
    
    $
    Options exercisable at September
30, 2006
    
    
    99,281
    
    
    $
    19.56
    
    
    8.53 years
    
    $
    Stock available for equity
compensation
grants at September 30, 2006
    
    
    1,149,561
 11




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##### Table of Contents



Weighted Average
    
    Weighted Average
    
    Aggregate IntrinsicGrant Date
    
    Remaining
    
    Value (inShares
    
    Fair Value
    
    Contractual Term
    
    thousands)Non-vested at December 31, 2005
    
    
    1,250,000
    
    
    $
    13.44
    
    
    
    
    $Grants
    
    
    689,655
    
    
    $
    6.46
    
    
    
    
    Vested
    
    
    44,105
    
    
    $
    6.33
    
    
    
    
    Forfeited
    
    
    156,250
    
    
    $
    13.23
    
    
    
    
    Non-vested at September 30, 2006
    
    
    1,739,300
    
    
    $
    10.88
    
    
    8.65 years
    
    $
   3.
    
    Impairment of Goodwill
  12




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##### Table of Contents



4.
    
    Inventory of Real Estate
  September 30,
    
    December 31,2006
    
    2005Land and land development costs
    
    $
    592,776
    
    
    
    457,826Construction costs
    
    
    183,823
    
    
    
    112,566Capitalized interest
    
    
    40,544
    
    
    
    21,108Other costs
    
    
    28,422
    
    
    
    19,760$
    845,565
    
    
    
    611,260
   5.
    
    Interest
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Interest incurred to non-affiliates
    
    $
    11,534
    
    
    
    4,899
    
    
    
    29,092
    
    
    
    11,674Interest incurred to affiliates
    
    
    
    
    
    
    60
    
    
    
    3
    
    
    
    880Interest capitalized
    
    
    (11,534
    )
    
    
    (4,959
    )
    
    
    (29,095
    )
    
    
    (12,554
    )Interest expense, net
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expensed in cost of sales
    
    $
    3,975
    
    
    
    2,078
    
    
    
    9,659
    
    
    
    7,367
 13




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##### Table of Contents



6.
    
    Investment in Bluegreen Corporation
   Unaudited Condensed Consolidated Balance Sheets
 September 30,
    
    December 31,2006
    
    2005Total assets
    
    $
    842,067
    
    
    
    694,243Total liabilities
    
    $
    481,933
    
    
    
    371,069Minority interest
    
    
    13,284
    
    
    
    9,508Total shareholders equity
    
    
    346,850
    
    
    
    313,666Total liabilities and shareholders equity
    
    $
    842,067
    
    
    
    694,243
 Unaudited Condensed Consolidated Statements of Income
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Revenues and other income
    
    $
    207,569
    
    
    
    204,173
    
    
    
    519,787
    
    
    
    529,960Cost and other expenses
    
    
    170,134
    
    
    
    172,781
    
    
    
    462,399
    
    
    
    462,197Income before minority interest and
provision for income taxes
    
    
    37,435
    
    
    
    31,392
    
    
    
    57,388
    
    
    
    67,763Minority interest
    
    
    2,241
    
    
    
    1,584
    
    
    
    4,940
    
    
    
    3,305Income before provision for income taxes
    
    
    35,194
    
    
    
    29,808
    
    
    
    52,448
    
    
    
    64,458Provision for income taxes
    
    
    13,287
    
    
    
    11,476
    
    
    
    19,930
    
    
    
    24,816Income before cumulative effect of
change in accounting principle
    
    
    21,907
    
    
    
    18,332
    
    
    
    32,518
    
    
    
    39,642Cumulative 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
    
    $
    21,907
    
    
    
    18,332
    
    
    
    28,024
    
    
    
    39,642
 14




---



##### Table of Contents



7.
    
    Debt
      15




---



##### Table of Contents



8.
    
    Commitments and Contingencies
   Purchase
    
    
    
    
    
    ExpectedPrice
    
    Units
    
    ClosingHomebuilding Division
    
    $46.0 million
    
    2,000 units
    
    
    2007-2009Other Operations
    
    3.6 million
    
    90 units
    
    
    2006
  16




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##### Table of Contents



9.
    
    Earnings per Share
   Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Numerator:Basic earnings per common share:Net income  basic
    
    $
    2,973
    
    
    
    10,708
    
    
    
    1,575
    
    
    
    46,578Diluted earnings per common share:Net income  basic
    
    $
    2,973
    
    
    
    10,708
    
    
    
    1,575
    
    
    
    46,578Pro rata share of the net effect of Bluegreen dilutive securities
    
    
    (66
    )
    
    
    (96
    )
    
    
    (95
    )
    
    
    (213
    )Net income  diluted
    
    $
    2,907
    
    
    
    10,612
    
    
    
    1,480
    
    
    
    46,365Denominator:Basic average shares outstanding
    
    
    19,824
    
    
    
    19,817
    
    
    
    19,822
    
    
    
    19,816Net effect of stock options assumed to be exercised
    
    
    7
    
    
    
    127
    
    
    
    6
    
    
    
    136Diluted average shares outstanding
    
    
    19,831
    
    
    
    19,944
    
    
    
    19,828
    
    
    
    19,952Earnings per common share:Basic
    
    $
    0.15
    
    
    
    0.54
    
    
    
    0.08
    
    
    
    2.35Diluted
    
    $
    0.15
    
    
    
    0.53
    
    
    
    0.07
    
    
    
    2.32
 10.
    
    Dividends
     17




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##### Table of Contents



11.
    
    Other Expenses and Interest and Other Income
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Other expensesTitle and mortgage operations
expenses
    
    $
    615
    
    
    
    618
    
    
    
    1,857
    
    
    
    1,883Litigation settlement reserve
    
    
    
    
    
    
    830
    
    
    
    
    
    
    
    830Penalty on debt prepayment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    677Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    1,307
    
    
    
    Impairment of inventory of
real estate
    
    
    
    
    
    
    
    
    
    
    4,742
    
    
    
    Total other expenses
    
    $
    615
    
    
    
    1,448
    
    
    
    7,906
    
    
    
    3,390Interest and other incomeInterest income
    
    $
    813
    
    
    
    607
    
    
    
    2,325
    
    
    
    1,814Contingent gain receipt
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    500Rental income
    
    
    820
    
    
    
    404
    
    
    
    2,390
    
    
    
    1,432Forfeited buyer deposits
    
    
    740
    
    
    
    7
    
    
    
    832
    
    
    
    66Gain on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    1,329
    
    
    
    Other income
    
    
    1,196
    
    
    
    406
    
    
    
    1,722
    
    
    
    887Total interest and other income
    
    $
    3,569
    
    
    
    1,924
    
    
    
    8,598
    
    
    
    4,699
  12.
    
    Income Taxes
  13.
    
    Segment Reporting
  18




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    
    
    
    OtherSeptember 30, 2006
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    122,637
    
    
    
    8,302
    
    
    
    
    
    
    
    
    
    
    
    130,939Title and mortgage operations
    
    
    936
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    936Total revenues
    
    
    123,573
    
    
    
    8,302
    
    
    
    
    
    
    
    
    
    
    
    131,875Costs and expensesCost of sales of real estate
    
    
    99,069
    
    
    
    4,760
    
    
    
    749
    
    
    
    (58
    )
    
    
    104,520Selling, general and administrative
expenses
    
    
    21,335
    
    
    
    4,331
    
    
    
    7,070
    
    
    
    
    
    
    
    32,736Other expenses
    
    
    615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    615Total costs and expenses
    
    
    121,019
    
    
    
    9,091
    
    
    
    7,819
    
    
    
    (58
    )
    
    
    137,871Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    6,923
    
    
    
    
    
    
    
    6,923(Loss) earnings from real estate
joint ventures
    
    
    (154
    )
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    (128
    )Interest and other income
    
    
    939
    
    
    
    1,874
    
    
    
    777
    
    
    
    (21
    )
    
    
    3,569Income (loss) before income taxes
    
    
    3,339
    
    
    
    1,085
    
    
    
    (93
    )
    
    
    37
    
    
    
    4,368Provision (benefit) for income taxes
    
    
    1,243
    
    
    
    423
    
    
    
    (271
    )
    
    
    
    
    
    
    1,395Net income
    
    $
    2,096
    
    
    
    662
    
    
    
    178
    
    
    
    37
    
    
    
    2,973Inventory of real estate
    
    $
    659,637
    
    
    
    183,199
    
    
    
    20,084
    
    
    
    (17,355
    )
    
    
    845,565Total assets
    
    $
    681,847
    
    
    
    249,794
    
    
    
    195,791
    
    
    
    (10,836
    )
    
    
    1,116,596Total debt
    
    $
    408,254
    
    
    
    86,884
    
    
    
    108,084
    
    
    
    
    
    
    
    603,222
 19




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    
    
    
    OtherSeptember 30, 2005
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    110,674
    
    
    
    17,914
    
    
    
    
    
    
    
    (68
    )
    
    
    128,520Title and mortgage operations
    
    
    962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    962Total revenues
    
    
    111,636
    
    
    
    17,914
    
    
    
    
    
    
    
    (68
    )
    
    
    129,482Costs and expensesCost of sales of real estate
    
    
    87,266
    
    
    
    10,783
    
    
    
    555
    
    
    
    (149
    )
    
    
    98,455Selling, general and administrative
expenses
    
    
    13,755
    
    
    
    2,436
    
    
    
    3,879
    
    
    
    
    
    
    
    20,070Other expenses
    
    
    1,448
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,448Total costs and expenses
    
    
    102,469
    
    
    
    13,219
    
    
    
    4,434
    
    
    
    (149
    )
    
    
    119,973Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    5,951
    
    
    
    
    
    
    
    5,951Loss from real estate joint ventures
    
    
    
    
    
    
    
    
    
    
    (207
    )
    
    
    
    
    
    
    (207
    )Interest and other income
    
    
    137
    
    
    
    609
    
    
    
    1,178
    
    
    
    
    
    
    
    1,924Income before income taxes
    
    
    9,304
    
    
    
    5,304
    
    
    
    2,488
    
    
    
    81
    
    
    
    17,177Provision for income taxes
    
    
    3,502
    
    
    
    2,048
    
    
    
    900
    
    
    
    19
    
    
    
    6,469Net income
    
    $
    5,802
    
    
    
    3,256
    
    
    
    1,588
    
    
    
    62
    
    
    
    10,708Inventory of real estate
    
    $
    378,377
    
    
    
    154,488
    
    
    
    9,565
    
    
    
    (17,127
    )
    
    
    525,303Total assets
    
    $
    406,241
    
    
    
    217,673
    
    
    
    180,147
    
    
    
    (17,127
    )
    
    
    786,934Total debt
    
    $
    189,095
    
    
    
    55,760
    
    
    
    71,140
    
    
    
    
    
    
    
    315,995
 Nine Months Ended
    
    
    
    
    
    
    
    
    
    OtherSeptember 30, 2006
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    357,486
    
    
    
    29,660
    
    
    
    
    
    
    
    (6
    )
    
    
    387,140Title and mortgage operations
    
    
    2,962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,962Total revenues
    
    
    360,448
    
    
    
    29,660
    
    
    
    
    
    
    
    (6
    )
    
    
    390,102Costs and expensesCost of sales of real estate
    
    
    288,185
    
    
    
    17,497
    
    
    
    2,047
    
    
    
    (243
    )
    
    
    307,486Selling, general and administrative
expenses
    
    
    59,475
    
    
    
    10,151
    
    
    
    20,330
    
    
    
    
    
    
    
    89,956Other expenses
    
    
    7,906
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,906Total costs and expenses
    
    
    355,566
    
    
    
    27,648
    
    
    
    22,377
    
    
    
    (243
    )
    
    
    405,348Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    9,026
    
    
    
    
    
    
    
    9,026Loss from real estate joint ventures
    
    
    (154
    )
    
    
    
    
    
    
    (51
    )
    
    
    
    
    
    
    (205
    )Interest and other income
    
    
    1,364
    
    
    
    4,973
    
    
    
    2,318
    
    
    
    (57
    )
    
    
    8,598Income (loss) before income taxes
    
    
    6,092
    
    
    
    6,985
    
    
    
    (11,084
    )
    
    
    180
    
    
    
    2,173Provision (benefit) for income taxes
    
    
    2,912
    
    
    
    2,628
    
    
    
    (5,006
    )
    
    
    64
    
    
    
    598Net income (loss)
    
    $
    3,180
    
    
    
    4,357
    
    
    
    (6,078
    )
    
    
    116
    
    
    
    1,575Inventory of real estate
    
    $
    659,637
    
    
    
    183,199
    
    
    
    20,084
    
    
    
    (17,355
    )
    
    
    845,565Total assets
    
    $
    681,847
    
    
    
    249,794
    
    
    
    195,791
    
    
    
    (10,836
    )
    
    
    1,116,596Total debt
    
    $
    408,254
    
    
    
    86,884
    
    
    
    108,084
    
    
    
    
    
    
    
    603,222
 20




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##### Table of Contents



Nine Months Ended
    
    
    
    
    
    
    
    
    
    OtherSeptember 30, 2005
    
    Homebuilding
    
    Land
    
    Operations
    
    Eliminations
    
    TotalRevenuesSales of real estate
    
    $
    335,756
    
    
    
    84,614
    
    
    
    14,709
    
    
    
    (599
    )
    
    
    434,480Title and mortgage operations
    
    
    2,857
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,857Total revenues
    
    
    338,613
    
    
    
    84,614
    
    
    
    14,709
    
    
    
    (599
    )
    
    
    437,337Costs and expensesCost of sales of real estate
    
    
    265,118
    
    
    
    38,055
    
    
    
    12,505
    
    
    
    (2,087
    )
    
    
    313,591Selling, general and
administrative expenses
    
    
    42,095
    
    
    
    8,831
    
    
    
    11,749
    
    
    
    
    
    
    
    62,675Other expenses
    
    
    2,713
    
    
    
    677
    
    
    
    
    
    
    
    
    
    
    
    3,390Total costs and expenses
    
    
    309,926
    
    
    
    47,563
    
    
    
    24,254
    
    
    
    (2,087
    )
    
    
    379,656Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    12,818
    
    
    
    
    
    
    
    12,818Earnings (loss) from real estate
joint ventures
    
    
    104
    
    
    
    
    
    
    
    (179
    )
    
    
    
    
    
    
    (75
    )Interest and other income
    
    
    550
    
    
    
    1,455
    
    
    
    2,694
    
    
    
    
    
    
    
    4,699Income before income taxes
    
    
    29,341
    
    
    
    38,506
    
    
    
    5,788
    
    
    
    1,488
    
    
    
    75,123Provision for income taxes
    
    
    11,056
    
    
    
    14,860
    
    
    
    2,055
    
    
    
    574
    
    
    
    28,545Net income
    
    $
    18,285
    
    
    
    23,646
    
    
    
    3,733
    
    
    
    914
    
    
    
    46,578Inventory of real estate
    
    $
    378,377
    
    
    
    154,488
    
    
    
    9,565
    
    
    
    (17,127
    )
    
    
    525,303Total assets
    
    $
    406,241
    
    
    
    217,673
    
    
    
    180,147
    
    
    
    (17,127
    )
    
    
    786,934Total debt
    
    $
    189,095
    
    
    
    55,760
    
    
    
    71,140
    
    
    
    
    
    
    
    315,995
 14.
    
    Parent Company Financial Statements
    21




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##### Table of Contents



Unaudited Condensed Statements of Financial Condition
 September 30,
    
    December 31,2006
    
    2005Total assets
    
    $
    466,023
    
    
    
    435,793Total liabilities
    
    $
    112,691
    
    
    
    86,007Total shareholders equity
    
    
    353,332
    
    
    
    349,786Total liabilities and shareholders equity
    
    $
    466,023
    
    
    
    435,793
 Unaudited Condensed Statements of Operations
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Earnings from Bluegreen Corporation
    
    $
    6,923
    
    
    
    5,951
    
    
    
    9,026
    
    
    
    12,818Loss from real estate joint ventures
    
    
    
    
    
    
    (206
    )
    
    
    
    
    
    
    (194
    )Other revenues
    
    
    439
    
    
    
    757
    
    
    
    1,152
    
    
    
    1,194Costs and expenses
    
    
    7,316
    
    
    
    3,687
    
    
    
    20,716
    
    
    
    10,952Income (loss) before income taxes
    
    
    46
    
    
    
    2,815
    
    
    
    (10,538
    )
    
    
    2,866(Benefit) provision for income taxes
    
    
    (187
    )
    
    
    1,026
    
    
    
    (4,765
    )
    
    
    927Net income (loss) before undistributed
earnings from consolidated
subsidiaries
    
    
    233
    
    
    
    1,789
    
    
    
    (5,773
    )
    
    
    1,939Earnings from consolidated
subsidiaries, net of income taxes
    
    
    2,740
    
    
    
    8,919
    
    
    
    7,348
    
    
    
    44,639Net income
    
    $
    2,973
    
    
    
    10,708
    
    
    
    1,575
    
    
    
    46,578
  15.
    
    Certain Relationships and Related Party Transactions
   22




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##### Table of Contents



16.
    
    Litigation
   17.
    
    New Accounting Pronouncements
   23




---



##### Table of Contents



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
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    Change(In thousands)
    
    (Unaudited)
    
    (Unaudited)RevenuesSales of real estate
    
    $
    130,939
    
    
    
    128,520
    
    
    
    2,419
    
    
    
    387,140
    
    
    
    434,480
    
    
    
    (47,340
    )Title and mortgage operations
    
    
    936
    
    
    
    962
    
    
    
    (26
    )
    
    
    2,962
    
    
    
    2,857
    
    
    
    105Total revenues
    
    
    131,875
    
    
    
    129,482
    
    
    
    2,393
    
    
    
    390,102
    
    
    
    437,337
    
    
    
    (47,235
    )Costs and expensesCost of sales of real estate
    
    
    104,520
    
    
    
    98,455
    
    
    
    6,065
    
    
    
    307,485
    
    
    
    313,591
    
    
    
    (6,106
    )Selling, general and administrative
expenses
    
    
    32,736
    
    
    
    20,070
    
    
    
    12,666
    
    
    
    89,957
    
    
    
    62,675
    
    
    
    27,282Other expenses
    
    
    615
    
    
    
    1,448
    
    
    
    (833
    )
    
    
    7,906
    
    
    
    3,390
    
    
    
    4,516Total costs and expenses
    
    
    137,871
    
    
    
    119,973
    
    
    
    17,898
    
    
    
    405,348
    
    
    
    379,656
    
    
    
    25,692Earnings from Bluegreen Corporation
    
    
    6,923
    
    
    
    5,951
    
    
    
    972
    
    
    
    9,026
    
    
    
    12,818
    
    
    
    (3,792
    )Loss from real estate joint ventures
    
    
    (128
    )
    
    
    (207
    )
    
    
    79
    
    
    
    (205
    )
    
    
    (75
    )
    
    
    (130
    )Interest and other income
    
    
    3,569
    
    
    
    1,924
    
    
    
    1,645
    
    
    
    8,598
    
    
    
    4,699
    
    
    
    3,899Income before income taxes
    
    
    4,368
    
    
    
    17,177
    
    
    
    (12,809
    )
    
    
    2,173
    
    
    
    75,123
    
    
    
    (72,950
    )Provision for income taxes
    
    
    1,395
    
    
    
    6,469
    
    
    
    (5,074
    )
    
    
    598
    
    
    
    28,545
    
    
    
    (27,947
    )Net income
    
    $
    2,973
    
    
    
    10,708
    
    
    
    (7,735
    )
    
    
    1,575
    
    
    
    46,578
    
    
    
    (45,003
    )
 For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
    29




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##### Table of Contents



30




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##### Table of Contents



For the Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
    31




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##### Table of Contents



32




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##### Table of Contents



33




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##### Table of Contents



HOMEBUILDING DIVISION RESULTS OF OPERATIONS
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    Change(In thousands, except unit information)
    
    (Unaudited)
    
    (Unaudited)RevenuesSales of real estate
    
    $
    122,637
    
    
    
    110,674
    
    
    
    11,963
    
    
    
    357,486
    
    
    
    335,756
    
    
    
    21,730Title and mortgage operations
    
    
    936
    
    
    
    962
    
    
    
    (26
    )
    
    
    2,962
    
    
    
    2,857
    
    
    
    105Total revenues
    
    
    123,573
    
    
    
    111,636
    
    
    
    11,937
    
    
    
    360,448
    
    
    
    338,613
    
    
    
    21,835Costs and expensesCost of sales of real estate
    
    
    99,069
    
    
    
    87,266
    
    
    
    11,803
    
    
    
    288,185
    
    
    
    265,118
    
    
    
    23,067Selling, general and administrative expenses
    
    
    21,335
    
    
    
    13,755
    
    
    
    7,580
    
    
    
    59,475
    
    
    
    42,095
    
    
    
    17,380Other expenses
    
    
    615
    
    
    
    1,448
    
    
    
    (833
    )
    
    
    7,906
    
    
    
    2,713
    
    
    
    5,193Total costs and expenses
    
    
    121,019
    
    
    
    102,469
    
    
    
    18,550
    
    
    
    355,566
    
    
    
    309,926
    
    
    
    45,640(Loss) earnings from real estate
joint ventures
    
    
    (154
    )
    
    
    
    
    
    
    (154
    )
    
    
    (154
    )
    
    
    104
    
    
    
    (258
    )Interest and other income
    
    
    939
    
    
    
    137
    
    
    
    802
    
    
    
    1,364
    
    
    
    550
    
    
    
    814Income before income taxes
    
    
    3,339
    
    
    
    9,304
    
    
    
    (5,965
    )
    
    
    6,092
    
    
    
    29,341
    
    
    
    (23,249
    )Provision for income taxes
    
    
    1,243
    
    
    
    3,502
    
    
    
    (2,259
    )
    
    
    2,912
    
    
    
    11,056
    
    
    
    (8,144
    )Net income
    
    $
    2,096
    
    
    
    5,802
    
    
    
    (3,706
    )
    
    
    3,180
    
    
    
    18,285
    
    
    
    (15,105
    )Homes delivered (units)
    
    
    403
    
    
    
    439
    
    
    
    (36
    )
    
    
    1,234
    
    
    
    1,388
    
    
    
    (154
    )Construction starts (units)
    
    
    483
    
    
    
    545
    
    
    
    (62
    )
    
    
    1,405
    
    
    
    1,370
    
    
    
    35Average selling price of homes
delivered
    
    $
    304
    
    
    
    252
    
    
    
    52
    
    
    
    290
    
    
    
    242
    
    
    
    48Margin percentage on homes delivered
    
    
    19.2
    %
    
    
    21.2
    %
    
    
    -2.0
    %
    
    
    19.4
    %
    
    
    21.0
    %
    
    
    -1.6
    %Net new sales contracts (units)
    
    
    196
    
    
    
    243
    
    
    
    (47
    )
    
    
    1,034
    
    
    
    1,277
    
    
    
    (243
    )Net new sales contracts (value)
    
    $
    68,059
    
    
    
    82,725
    
    
    
    (14,666
    )
    
    
    354,750
    
    
    
    381,880
    
    
    
    (27,130
    )Backlog of homes (units)
    
    
    1,592
    
    
    
    1,703
    
    
    
    (111
    )
    
    
    1,592
    
    
    
    1,703
    
    
    
    (111
    )Backlog of homes (value)
    
    $
    554,589
    
    
    
    494,836
    
    
    
    59,753
    
    
    
    554,589
    
    
    
    494,836
    
    
    
    59,753
 For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
   34




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Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
      36




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LAND DIVISION RESULTS OF OPERATIONS
 Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    Change(In thousands, except acres information)
    
    (Unaudited)
    
    (Unaudited)RevenuesSales of real estate
    
    $
    8,302
    
    
    
    17,914
    
    
    
    (9,612
    )
    
    
    29,660
    
    
    
    84,614
    
    
    
    (54,954
    )Total revenues
    
    
    8,302
    
    
    
    17,914
    
    
    
    (9,612
    )
    
    
    29,660
    
    
    
    84,614
    
    
    
    (54,954
    )Costs and expensesCost of sales of real estate
    
    
    4,760
    
    
    
    10,783
    
    
    
    (6,023
    )
    
    
    17,497
    
    
    
    38,055
    
    
    
    (20,558
    )Selling, general and administrative expenses
    
    
    4,331
    
    
    
    2,436
    
    
    
    1,895
    
    
    
    10,151
    
    
    
    8,831
    
    
    
    1,320Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    677
    
    
    
    (677
    )Total costs and expenses
    
    
    9,091
    
    
    
    13,219
    
    
    
    (4,128
    )
    
    
    27,648
    
    
    
    47,563
    
    
    
    (19,915
    )Interest and other income
    
    
    1,874
    
    
    
    609
    
    
    
    1,265
    
    
    
    4,973
    
    
    
    1,455
    
    
    
    3,518Income before income taxes
    
    
    1,085
    
    
    
    5,304
    
    
    
    (4,219
    )
    
    
    6,985
    
    
    
    38,506
    
    
    
    (31,521
    )Provision for income taxes
    
    
    423
    
    
    
    2,048
    
    
    
    (1,625
    )
    
    
    2,628
    
    
    
    14,860
    
    
    
    (12,232
    )Net income
    
    $
    662
    
    
    
    3,256
    
    
    
    (2,594
    )
    
    
    4,357
    
    
    
    23,646
    
    
    
    (19,289
    )Acres sold
    
    
    29
    
    
    
    109
    
    
    
    (80
    )
    
    
    134
    
    
    
    1,413
    
    
    
    (1,279
    )Margin percentage
    
    
    42.7
    %
    
    
    39.8
    %
    
    
    2.9
    %
    
    
    41.0
    %
    
    
    55.0
    %
    
    
    -14.0
    %Unsold saleable acres
    
    
    7,109
    
    
    
    7,520
    
    
    
    (411
    )
    
    
    7,109
    
    
    
    7,520
    
    
    
    (411
    )Acres subject to sales contracts
    
    
    69
    
    
    
    435
    
    
    
    (366
    )
    
    
    69
    
    
    
    435
    
    
    
    (366
    )Acres subject to sales contracts (value)
    
    $
    20,281
    
    
    
    43,427
    
    
    
    (23,146
    )
    
    
    20,281
    
    
    
    43,427
    
    
    
    (23,146
    )
   37




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For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
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Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
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OTHER OPERATIONS RESULTS OF OPERATIONS
 Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2006
    
    2005
    
    Change
    
    2006
    
    2005
    
    Change(In thousands)
    
    (Unaudited)
    
    (Unaudited)RevenuesSales of real estate
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,709
    
    
    
    (14,709
    )Total revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,709
    
    
    
    (14,709
    )Costs and expensesCost of sales of real estate
    
    
    749
    
    
    
    555
    
    
    
    194
    
    
    
    2,047
    
    
    
    12,505
    
    
    
    (10,458
    )Selling, general and administrative expenses
    
    
    7,070
    
    
    
    3,879
    
    
    
    3,191
    
    
    
    20,330
    
    
    
    11,749
    
    
    
    8,581Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    7,819
    
    
    
    4,434
    
    
    
    3,385
    
    
    
    22,377
    
    
    
    24,254
    
    
    
    (1,877
    )Earnings from Bluegreen Corporation
    
    
    6,923
    
    
    
    5,951
    
    
    
    972
    
    
    
    9,026
    
    
    
    12,818
    
    
    
    (3,792
    )Earnings (loss) from real estate
joint ventures
    
    
    26
    
    
    
    (207
    )
    
    
    233
    
    
    
    (51
    )
    
    
    (179
    )
    
    
    128Interest and other income
    
    
    777
    
    
    
    1,178
    
    
    
    (401
    )
    
    
    2,318
    
    
    
    2,694
    
    
    
    (376
    )(Loss) income before income taxes
    
    
    (93
    )
    
    
    2,488
    
    
    
    (2,581
    )
    
    
    (11,084
    )
    
    
    5,788
    
    
    
    (16,872
    )(Benefit) provision for income taxes
    
    
    (271
    )
    
    
    900
    
    
    
    (1,171
    )
    
    
    (5,006
    )
    
    
    2,055
    
    
    
    (7,061
    )Net income (loss)
    
    $
    178
    
    
    
    1,588
    
    
    
    (1,410
    )
    
    
    (6,078
    )
    
    
    3,733
    
    
    
    (9,811
    )
   For the Three Months Ended September 30, 2006 Compared to the Same 2005 Period:
   40




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Nine Months Ended September 30, 2006 Compared to the Same 2005 Period:
    41




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FINANCIAL CONDITION
 September 30, 2006 compared to December 31, 2005
   
    
    a net decrease in cash and cash equivalents of $48.3 million, which resulted from
cash used in operations and investing activities of $239.9 million, partially offset by
an increase in cash provided by financing activities of $191.6 million;
    
    a net increase in inventory of real estate of approximately $234.3 million, which
includes approximately $64.8 million in land acquisitions by our Homebuilding
Division; and
    
    an increase of $26.0 million in property and equipment associated with increased
investment in commercial properties under construction at Core Communities, support for
infrastructure in our master planned communities, and hardware and software acquired
for our systems upgrade.
   
    
    a net increase in notes and mortgage notes payable of $164.5 million, primarily
related to project debt associated with 2006 land acquisitions and land development
activities;
    
    an increase of $2.3 million in customer deposits due to a larger percentage of homes
in backlog coming from Florida which historically involves larger deposits.
    
    an increase of $30.9 million in junior subordinated debentures ;
    
    an increase of $34.4 million in accounts payable and accrued liabilities, relating
to accruals for 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 pre-tax income realized by the Company and the timing of
estimated tax payments.
 LIQUIDITY AND CAPITAL RESOURCES
   43




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Off Balance Sheet Arrangements and Contractual Obligations
   Payments due by periodLess than
    
    2 - 3
    
    4 - 5
    
    More thanCategory (2)
    
    Total
    
    1 year
    
    Years
    
    Years
    
    5 yearsLong-term debt obligations (1)
    
    $
    603,222
    
    
    
    61,213
    
    
    
    349,206
    
    
    
    72,340
    
    
    
    120,463Operating lease obligations
    
    
    8,198
    
    
    
    2,209
    
    
    
    3,156
    
    
    
    1,208
    
    
    
    1,625Purchase obligations
    
    
    35,771
    
    
    
    35,771
    
    
    
    
    
    
    
    
    
    
    
    Total Obligations
    
    $
    647,191
    
    
    
    99,193
    
    
    
    352,362
    
    
    
    73,548
    
    
    
    122,088
 
 (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 and some of those borrowings require
the repayment of specified amounts upon a sale of portions of the property securing those
obligations.   45




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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
   NEW ACCOUNTING PRONOUNCEMENTS.
    46




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Item 4. CONTROLS AND PROCEDURES
     47




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48




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
  Exhibit 10.0*
    

Amendment
dated August 28, 2006 to Employment Agreement of Elliott
Wiener dated July 19, 2001.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.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 49




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LEVITT CORPORATIONDate: November 9, 2006
    By:
    /s/  Alan B. LevanAlan B. Levan, Chief Executive OfficerDate: November 9, 2006
    By:
    /s/  George P. ScanlonGeorge P. Scanlon, Executive Vice President,Chief Financial OfficerDate: November 9, 2006
    By:
    /s/  Jeanne T. PraytherJeanne T. Prayther, Chief Accounting Officer 50