##### 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
 MARCH 31, 2006
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
  01-31931
 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) 760-5200
  x o
  o x o
  x o
  Class
    
    Outstanding at May 5, 2006Class A common stock, $0.01 par value
Class B common stock, $0.01 par value
    
    18,604,053
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 March 31, 2006 (unaudited) and December 31, 2005 (audited)
    
    
    3Consolidated Statements of Operations for the three months ended March 31, 2006 and 2005 - Unaudited
    
    
    4Consolidated Statements of Comprehensive Income for the three months ended March 31, 2006 and 2005 - Unaudited
    
    
    5Consolidated Statement of Shareholders Equity for the three months ended March 31, 2006 - Unaudited
    
    
    6Consolidated Statements of Cash Flows for the three months ended March 31, 2006 and 2005  Unaudited
    
    
    7Notes to Unaudited Consolidated Financial Statements for the three months ended March 31, 2006 and 2005
    
    
    9Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 4.
    
    Controls and Procedures
    
    
    36PART II.
    
    OTHER INFORMATION
    
    
    37Item 1.
    
    Legal Proceedings
    
    
    37Item 1A.
    
    Risk Factors
    
    
    37Item 6.
    
    Exhibits
    
    
    37SIGNATURES
    
    
    38Section 302 CEO CertificationSection 302 CFO CertificationSection 906 CEO CertificationSection 906 CFO Certification
 2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements:
 
 Levitt Corporation
Consolidated Statements of Financial Condition  Unaudited
(In thousands, except share data)
 March 31,
    
    
    December 31,2006
    
    
    2005AssetsCash and cash equivalents
    
    $
    75,772
    
    
    
    113,562Restricted cash
    
    
    1,157
    
    
    
    1,818Inventory of real estate
    
    
    698,811
    
    
    
    611,260Investment in Bluegreen Corporation
    
    
    95,948
    
    
    
    95,828Property and equipment, net
    
    
    52,899
    
    
    
    44,250Other assets
    
    
    27,980
    
    
    
    28,955Total assets
    
    $
    952,567
    
    
    
    895,673Liabilities and Shareholders EquityAccounts payable and accrued liabilities
    
    $
    63,252
    
    
    
    66,652Customer deposits
    
    
    57,081
    
    
    
    51,686Current income tax payable
    
    
    
    
    
    
    12,551Notes and mortgage notes payable
    
    
    421,715
    
    
    
    353,623Notes and mortgage notes payable to affiliates
    
    
    
    
    
    
    223Junior subordinated debentures
    
    
    54,124
    
    
    
    54,124Deferred tax liability, net
    
    
    6,857
    
    
    
    7,028Total liabilities
    
    
    603,029
    
    
    
    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: 18,604,053 shares
    
    
    186
    
    
    
    186Class B
Common Stock, $0.01 par value
Authorized: 10,000,000 shares
Issued and outstanding: 1,219,031 shares
    
    
    12
    
    
    
    12Additional paid-in capital
    
    
    181,620
    
    
    
    181,084Unearned compensation
    
    
    
    
    
    
    (110
    )Retained earnings
    
    
    165,911
    
    
    
    166,969Accumulated other comprehensive income
    
    
    1,809
    
    
    
    1,645Total shareholders equity
    
    
    349,538
    
    
    
    349,786Total liabilities and shareholders equity
    
    $
    952,567
    
    
    
    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 EndedMarch 31,2006
    
    
    2005Revenues:Sales of real estate
    
    $
    125,543
    
    
    
    198,866Title and mortgage operations
    
    
    1,008
    
    
    
    948Total revenues
    
    
    126,551
    
    
    
    199,814Costs and expenses:Cost of sales of real estate
    
    
    102,055
    
    
    
    130,589Selling, general and administrative expenses
    
    
    26,755
    
    
    
    23,146Other expenses
    
    
    626
    
    
    
    1,316Total costs and expenses
    
    
    129,436
    
    
    
    155,051(Loss) earnings from Bluegreen Corporation
    
    
    (49
    )
    
    
    2,138Earnings from real estate joint ventures
    
    
    
    
    
    
    90Interest and other income
    
    
    1,832
    
    
    
    1,322(Loss) income before income taxes
    
    
    (1,102
    )
    
    
    48,313(Benefit) provision for income taxes
    
    
    (442
    )
    
    
    18,495Net (loss) income
    
    $
    (660
    )
    
    
    29,818(Loss) earnings per share:Basic
    
    $
    (0.03
    )
    
    
    1.50Diluted
    
    $
    (0.03
    )
    
    
    1.49Weighted average common shares outstanding:Basic
    
    
    19,821
    
    
    
    19,816Diluted
    
    
    19,821
    
    
    
    19,965Dividends declared per common share:Class A common stock
    
    $
    0.02
    
    
    
    0.02Class B common stock
    
    $
    0.02
    
    
    
    0.02
  4




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##### Table of Contents



Levitt Corporation
Consolidated Statements of Comprehensive Income  Unaudited
(In thousands)
 Three MonthsEnded March 31,2006
    
    
    2005Net (loss) income
    
    $
    (660
    )
    
    
    29,818Other comprehensive income:Pro-rata share of unrealized gain
recognized by Bluegreen Corporation on retained
interests in notes receivable sold
    
    
    267
    
    
    
    142Provision for income taxes
    
    
    (103
    )
    
    
    (55
    )Pro-rata share of unrealized gain
recognized by Bluegreen Corporation on retained
interests in notes receivable sold (net of tax)
    
    
    164
    
    
    
    87Comprehensive (loss) income
    
    $
    (496
    )
    
    
    29,905
  5




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##### Table of Contents



Levitt Corporation
Consolidated Statement of Shareholders Equity  Unaudited
Three Months Ended March 31, 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (660
    )
    
    
    
    
    
    
    
    
    
    
    (660
    )Pro-rata share of unrealized gain
recognized by Bluegreen on
sale of retained interests, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164
    
    
    
    164Issuance of Bluegreen common
stock, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (398
    )
    
    
    
    
    
    
    
    
    
    
    (398
    )Share based compensation
related to stock options and restricted
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706Reclassification of unamortized
stock compensation related
to restricted stock upon adoption of SFAS 123 (R)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    110
    
    
    
    
    
    
    
    Balance at March 31, 2006
    
    
    18,604
    
    
    
    1,219
    
    
    $
    186
    
    
    
    12
    
    
    
    181,620
    
    
    
    165,911
    
    
    
    
    
    
    
    1,809
    
    
    
    349,538
  6




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Levitt Corporation
Consolidated Statements of Cash Flows  Unaudited
(In thousands)
 Three Months EndedMarch 31,2006
    
    
    2005Operating activities:Net (loss) income
    
    $
    (660
    )
    
    
    29,818Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    550
    
    
    
    362Change in deferred income taxes
    
    
    (236
    )
    
    
    (260
    )Loss (earnings) from Bluegreen Corporation
    
    
    49
    
    
    
    (2,138
    )Earnings from unconsolidated trust
    
    
    (33
    )
    
    
    (3
    )Earnings from real estate joint ventures
    
    
    
    
    
    
    (90
    )Share-based compensation expense related to
stock options and restricted stock
    
    
    706
    
    
    
    Changes in operating assets and liabilities:Restricted cash
    
    
    661
    
    
    
    976Inventory of real estate
    
    
    (94,105
    )
    
    
    11,653Notes receivable
    
    
    178
    
    
    
    200Other assets
    
    
    1,056
    
    
    
    (1,272
    )Accounts payable, accrued expenses and
other liabilities
    
    
    (10,556
    )
    
    
    12,994Net cash (used in) provided by operating activities
    
    
    (102,390
    )
    
    
    52,240Investing activities:Investment in and advances to real estate joint ventures
    
    
    (402
    )
    
    
    Distributions of capital from real estate joint ventures
    
    
    138
    
    
    
    223Investment in unconsolidated trust
    
    
    
    
    
    
    (696
    )Distributions from consolidated trusts
    
    
    33
    
    
    
    Additions to property and equipment
    
    
    (2,640
    )
    
    
    (4,052
    )Net cash used in investing activities
    
    
    (2,871
    )
    
    
    (4,525
    )Financing activities:Proceeds from notes and mortgage notes payable
    
    
    136,660
    
    
    
    74,984Proceeds from notes and mortgage notes payable to affiliates
    
    
    
    
    
    
    5,148Proceeds from junior subordinated debentures
    
    
    
    
    
    
    23,196Repayment of notes and mortgage notes payable
    
    
    (68,568
    )
    
    
    (112,295
    )Repayment of notes and mortgage notes payable to affiliates
    
    
    (223
    )
    
    
    (28,164
    )Payments for debt offering costs
    
    
    
    
    
    
    (926
    )Cash dividends paid
    
    
    (398
    )
    
    
    (396
    )Net cash provided by (used in) financing activities
    
    
    67,471
    
    
    
    (38,453
    )(Decrease) increase in cash and cash equivalents
    
    
    (37,790
    )
    
    
    9,262Cash and cash equivalents at the beginning of period
    
    
    113,562
    
    
    
    125,522Cash and cash equivalents at end of period
    
    $
    75,772
    
    
    
    134,784
  7




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##### Table of Contents



Levitt Corporation
Consolidated Statements of Cash Flows  Unaudited
(In thousands)
 For the Three MonthsEnded March 31,2006
    
    
    2005Supplemental cash flow informationInterest paid on borrowings, net of amounts capitalized
    
    $
    (500
    )
    
    
    (247
    )Income taxes paid
    
    
    12,200
    
    
    
    4,200Supplemental 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
    
    $
    164
    
    
    
    87Change in shareholders equity resulting from the
issuance of Bluegreen common stock, net of tax
    
    $
    (60
    )
    
    
    (56
    )Decrease in inventory from reclassification as property
and equipment
    
    $
    (6,554
    )
    
    
    Increase in
property and equipment reclassified from inventory
    
    $
    6,554
    
    
    
    
  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



March 31, 2005Pro forma net incomeNet income, as reported
    
    $
    29,818Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related income tax effect
    
    
    (223
    )Pro forma net income
    
    $
    29,595Basic earnings per share:As reported
    
    $
    1.50Pro forma
    
    $
    1.49Diluted earnings per share:As reported
    
    $
    1.49Pro forma
    
    $
    1.49
  Expected volatility
    
    37.99% - 50.35%Weighted-average volatility
    
    44.64%Expected dividend yield
    
    0.00% - 0.33%Weighted-average dividend yield
    
    0.13%Risk-free interest rate
    
    4.02% - 4.40%Weighted-average risk-free rate
    
    4.30%Expected life
    
    7.5 yearsForfeiture rate  executives
    
    5.0%Forfeiture rate  non-executives
    
    10.0%
 10




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##### Table of Contents



WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber
    
    
    Exercise
    
    
    Contractual
    
    
    Valueof Options
    
    
    Price
    
    
    Term
    
    
    (thousands)Options outstanding at December 31,
2005
    
    
    1,305,176
    
    
    $
    25.59
    
    
    
    
    
    
    $
    1,189Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    39,500
    
    
    $
    25.31
    
    
    
    
    
    
    
    6Options outstanding at March 31, 2006
    
    
    1,265,676
    
    
    $
    25.60
    
    
    8.48 years
    
    $
    1,183Vested & expected to vest
in the future at March 31, 2006
    
    
    943,759
    
    
    $
    25.60
    
    
    8.48 years
    
    $
    882Options exercisable at March 31, 2006
    
    
    55,176
    
    
    $
    22.33
    
    
    8.04 years
    
    $
    85Stock available for equity
compensation
grants at March 31, 2006
    
    
    227,437
  Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateGrant Date
    
    
    Remaining
    
    
    Intrinsic ValueShares
    
    
    Fair Value
    
    
    Contractual Term
    
    
    (in thousands)Non-vested at December 31, 2005
    
    
    1,250,000
    
    
    $
    13.44
    
    
    
    
    
    
    $
    1,104Grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    39,500
    
    
    $
    12.23
    
    
    
     
    
    
    
    6Non-vested at March 31, 2006
    
    
    1,210,500
    
    
    $
    13.48
    
    
    $
    8.50
    
    
    $
    1,098
  11




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##### Table of Contents



3. Inventory of Real Estate
  March 31,
    
    
    December 31,2006
    
    
    2005Land and land development costs
    
    $
    526,798
    
    
    
    457,826Construction costs
    
    
    123,584
    
    
    
    112,566Capitalized interest
    
    
    26,543
    
    
    
    21,108Other costs
    
    
    21,886
    
    
    
    19,760$
    698,811
    
    
    
    611,260
 4. Interest
  Three Months EndedMarch 31,2006
    
    
    2005Interest incurred to non-affiliates
    
    $
    8,029
    
    
    
    2,881Interest incurred to affiliates
    
    
    
    
    
    
    613Interest capitalized
    
    
    (8,029
    )
    
    
    (3,494
    )Interest expense, net
    
    $
    
    
    
    
    Interest expensed in cost of sales
    
    $
    2,594
    
    
    
    2,624
 12




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5. Investment in Bluegreen Corporation
   Unaudited Condensed Consolidated Balance Sheets
 March 31,
    
    
    December 31,2006
    
    
    2005Total assets
    
    $
    733,391
    
    
    
    694,243Total liabilities
    
    $
    409,509
    
    
    
    371,069Minority interest
    
    
    9,366
    
    
    
    9,508Total shareholders equity
    
    
    314,516
    
    
    
    313,666Total liabilities and shareholders equity
    
    $
    733,391
    
    
    
    694,243
 Unaudited Condensed Consolidated Statements of Income
 Three Months EndedMarch 31,March 31,
    
    
    20052006
    
    
    (Restated)Revenues and other income
    
    $
    148,379
    
    
    
    134,651Cost and other expenses
    
    
    140,802
    
    
    
    123,472Income before minority interest and
provision for income taxes
    
    
    7,577
    
    
    
    11,179Minority interest
    
    
    1,022
    
    
    
    773Income before provision for income taxes
    
    
    6,555
    
    
    
    10,406Provision for income taxes
    
    
    2,524
    
    
    
    4,006Income before cumulative effect of
change in accounting principle
    
    
    4,031
    
    
    
    6,400Cumulative effect of
change in accounting principle, net of tax
    
    
    (4,494
    )
    
    
    Net (loss) income
    
    $
    (463
    )
    
    
    6,400
  13




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##### Table of Contents



6. Debt
   7. Commitments and Contingencies
  Purchase
    
    
    
    
    
    
    ExpectedPrice
    
    
    Units
    
    
    ClosingHomebuilding Division
    
    $159.6 million
    
    4,192 units
    
    2006-2007Other Operations
    
    3.5 million
    
    90 units
    
    2006
    14




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##### Table of Contents



8. Earnings per Share
   Three Months EndedMarch 31,2006
    
    
    2005Numerator:Basic (loss) earnings per common share:Net (loss) income  basic
    
    $
    (660
    )
    
    
    29,818Diluted earnings per common share:Net (loss) income  basic
    
    $
    (660
    )
    
    
    29,818Pro rata share of the net effect of
Bluegreen dilutive securities
    
    
    
    
    
    
    (39
    )Net (loss) income  diluted
    
    $
    (660
    )
    
    
    29,779Denominator:Basic average shares outstanding
    
    
    19,821
    
    
    
    19,816Common stock equivalents
    
    
    
    
    
    
    149Diluted average shares outstanding
    
    
    19,821
    
    
    
    19,965(Loss) earnings per common share:Basic
    
    $
    (0.03
    )
    
    
    1.50Diluted
    
    $
    (0.03
    )
    
    
    1.49
 9. Dividends
   15




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##### Table of Contents



10. Other Expenses and Interest and Other Income
  Three Months EndedMarch 31,2006
    
    
    2005Other expensesTitle and mortgage operations expenses
    
    $
    626
    
    
    
    639Penalty on debt prepayment
    
    
    
    
    
    
    677Total other expenses
    
    $
    626
    
    
    
    1,316Interest and other incomeInterest income
    
    $
    785
    
    
    
    518Other income
    
    
    1,047
    
    
    
    804Total interest and other income
    
    $
    1,832
    
    
    
    1,322
 11. Segment Reporting
   16




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Three Months Ended
    
    
    
    
    
    
    
    
    
    OtherMarch 31, 2006
    
    Homebuilding
    
    
    Land
    
    
    Operations
    
    
    Eliminations
    
    
    TotalRevenuesSales of real estate
    
    $
    118,275
    
    
    
    7,272
    
    
    
    
    
    
    
    (4
    )
    
    
    125,543Title and mortgage operations
    
    
    1,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,008Total revenues
    
    
    119,283
    
    
    
    7,272
    
    
    
    
    
    
    
    (4
    )
    
    
    126,551Costs and expensesCost of sales of real estate
    
    
    96,497
    
    
    
    5,019
    
    
    
    642
    
    
    
    (103
    )
    
    
    102,055Selling, general and
administrative expenses
    
    
    17,572
    
    
    
    2,786
    
    
    
    6,397
    
    
    
    
    
    
    
    26,755Other expenses
    
    
    626
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    626Total costs and expenses
    
    
    114,695
    
    
    
    7,805
    
    
    
    7,039
    
    
    
    (103
    )
    
    
    129,436Loss from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    (49
    )Interest and other income
    
    
    177
    
    
    
    988
    
    
    
    682
    
    
    
    (15
    )
    
    
    1,832Income (loss) before income taxes
    
    
    4,765
    
    
    
    455
    
    
    
    (6,406
    )
    
    
    84
    
    
    
    (1,102
    )Provision (benefit)for income taxes
    
    
    1,754
    
    
    
    137
    
    
    
    (2,364
    )
    
    
    31
    
    
    
    (442
    )Net income (loss)
    
    $
    3,011
    
    
    
    318
    
    
    
    (4,042
    )
    
    
    53
    
    
    
    (660
    )Inventory of real estate
    
    $
    553,905
    
    
    
    147,910
    
    
    
    14,492
    
    
    
    (17,496
    )
    
    
    698,811Total assets
    
    $
    583,589
    
    
    
    213,109
    
    
    
    173,396
    
    
    
    (17,527
    )
    
    
    952,567Total debt
    
    $
    338,347
    
    
    
    64,350
    
    
    
    73,142
    
    
    
    
    
    
    
    475,839
 Three Months Ended
    
    
    
    
    
    
    
    
    
    OtherMarch 31, 2005
    
    Homebuilding
    
    
    Land
    
    
    Operations
    
    
    Eliminations
    
    
    TotalRevenuesSales of real estate
    
    $
    117,987
    
    
    
    66,551
    
    
    
    14,709
    
    
    
    (381
    )
    
    
    198,866Title and mortgage operations
    
    
    948
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    948Total revenues
    
    
    118,935
    
    
    
    66,551
    
    
    
    14,709
    
    
    
    (381
    )
    
    
    199,814Costs and expensesCost of sales of real estate
    
    
    93,579
    
    
    
    27,090
    
    
    
    11,326
    
    
    
    (1,406
    )
    
    
    130,589Selling, general and
administrative expenses
    
    
    14,608
    
    
    
    4,446
    
    
    
    4,092
    
    
    
    
    
    
    
    23,146Other expenses
    
    
    639
    
    
    
    677
    
    
    
    
    
    
    
    
    
    
    
    1,316Total costs and expenses
    
    
    108,826
    
    
    
    32,213
    
    
    
    15,418
    
    
    
    (1,406
    )
    
    
    155,051Earnings from Bluegreen Corporation
    
    
    
    
    
    
    
    
    
    
    2,138
    
    
    
    
    
    
    
    2,138Loss from joint ventures
    
    
    104
    
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    90Interest and other income
    
    
    214
    
    
    
    421
    
    
    
    687
    
    
    
    
    
    
    
    1,322Income before income taxes
    
    
    10,427
    
    
    
    34,759
    
    
    
    2,102
    
    
    
    1,025
    
    
    
    48,313Provision for income taxes
    
    
    3,901
    
    
    
    13,436
    
    
    
    763
    
    
    
    395
    
    
    
    18,495Net income
    
    $
    6,526
    
    
    
    21,323
    
    
    
    1,339
    
    
    
    630
    
    
    
    29,818Inventory of real estate
    
    $
    307,988
    
    
    
    106,645
    
    
    
    4,776
    
    
    
    (17,591
    )
    
    
    401,818Total assets
    
    $
    353,412
    
    
    
    197,144
    
    
    
    150,578
    
    
    
    (17,591
    )
    
    
    683,543Total debt
    
    $
    151,430
    
    
    
    23,464
    
    
    
    56,201
    
    
    
    
    
    
    
    231,095
 17




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##### Table of Contents



12. Parent Company Financial Statements
     Condensed Statements of Financial Condition
 March 31,
    
    
    December 31,2006
    
    
    2005Total assets
    
    $
    429,138
    
    
    
    435,793Total liabilities
    
    $
    79,599
    
    
    
    86,007Total shareholders equity
    
    
    349,539
    
    
    
    349,786Total liabilities and shareholders equity
    
    $
    429,138
    
    
    
    435,793
 Condensed Statements of Income
 Three MonthsEnded March 31,2006
    
    
    2005(Loss) earnings from Bluegreen Corporation
    
    $
    (49
    )
    
    
    2,138Loss from real estate joint ventures
    
    
    
    
    
    
    (14
    )Other revenues
    
    
    331
    
    
    
    177Costs and expenses
    
    
    6,249
    
    
    
    3,389Loss before income taxes
    
    
    (5,967
    )
    
    
    (1,088
    )Benefit for income taxes
    
    
    (2,177
    )
    
    
    (469
    )Net loss before undistributed earnings from consolidated
subsidiaries
    
    
    (3,790
    )
    
    
    (619
    )Earnings from consolidated subsidiaries, net of income taxes
    
    
    3,130
    
    
    
    30,437Net (loss) income
    
    $
    (660
    )
    
    
    29,818
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13. Certain Relationships and Related Party Transactions
      14. New Accounting Pronouncements
  19




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15. Litigation
  20




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Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   21




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Executive Overview
  Overview
   22




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Future prospects based on continued expansion
    Critical Accounting Policies and Estimates
  Stock-based Compensation
  23




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CONSOLIDATED RESULTS OF OPERATIONS
 Three MonthsEnded March 31,2006
    
    
    2005
    
    
    Change(In thousands)RevenuesSales of real estate
    
    $
    125,543
    
    
    
    198,866
    
    
    
    (73,323
    )Title and mortgage operations
    
    
    1,008
    
    
    
    948
    
    
    
    60Total revenues
    
    
    126,551
    
    
    
    199,814
    
    
    
    (73,263
    )Costs and expensesCost of sales of real estate
    
    
    102,055
    
    
    
    130,589
    
    
    
    (28,534
    )Selling, general and administrative expenses
    
    
    26,755
    
    
    
    23,146
    
    
    
    3,609Other expenses
    
    
    626
    
    
    
    1,316
    
    
    
    (690
    )Total costs and expenses
    
    
    129,436
    
    
    
    155,051
    
    
    
    (25,615
    )(Loss) earnings from Bluegreen Corporation
    
    
    (49
    )
    
    
    2,138
    
    
    
    (2,187
    )Earnings from joint ventures
    
    
    
    
    
    
    90
    
    
    
    (90
    )Interest and other income
    
    
    1,832
    
    
    
    1,322
    
    
    
    510(Loss) income before income taxes
    
    
    (1,102
    )
    
    
    48,313
    
    
    
    (49,415
    )(Benefit) provision from income taxes
    
    
    (442
    )
    
    
    18,495
    
    
    
    (18,937
    )Net (loss) income
    
    $
    (660
    )
    
    
    29,818
    
    
    
    (30,478
    )
 For the Three Months Ended March 31, 2006 Compared to the Same 2005 Period:
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HOMEBUILDING DIVISION RESULTS OF OPERATIONS
 Three MonthsEnded March 31,2006
    
    
    2005
    
    
    Change(Dollars in thousands)RevenuesSales of real estate
    
    $
    118,275
    
    
    
    117,987
    
    
    
    288Title and mortgage operations
    
    
    1,008
    
    
    
    948
    
    
    
    60Total revenues
    
    
    119,283
    
    
    
    118,935
    
    
    
    348Costs and expensesCost of sales of real estate
    
    
    96,497
    
    
    
    93,579
    
    
    
    2,918Selling, general and administrative expenses
    
    
    17,572
    
    
    
    14,608
    
    
    
    2,964Other expenses
    
    
    626
    
    
    
    639
    
    
    
    (13
    )Total costs and expenses
    
    
    114,695
    
    
    
    108,826
    
    
    
    5,869Earnings from joint ventures
    
    
    
    
    
    
    104
    
    
    
    (104
    )Interest and other income
    
    
    177
    
    
    
    214
    
    
    
    (37
    )Income before income taxes
    
    
    4,765
    
    
    
    10,427
    
    
    
    (5,662
    )Provision for income taxes
    
    
    1,754
    
    
    
    3,901
    
    
    
    (2,147
    )Net income
    
    $
    3,011
    
    
    
    6,526
    
    
    
    (3,515
    )Homes delivered (units)
    
    
    439
    
    
    
    501
    
    
    
    (62
    )Construction starts (units)
    
    
    390
    
    
    
    347
    
    
    
    43Average selling price of homes delivered
    
    $
    269
    
    
    
    236
    
    
    
    33Margin percentage on homes delivered
    
    
    18.4
    %
    
    
    20.7
    %
    
    
    (2.3
    %)New orders (units)
    
    
    506
    
    
    
    605
    
    
    
    (99
    )New orders (value)
    
    $
    169,387
    
    
    
    165,346
    
    
    
    4,041Backlog of homes (units)
    
    
    1,859
    
    
    
    1,918
    
    
    
    (59
    )Backlog of homes (value)
    
    $
    608,437
    
    
    
    496,006
    
    
    
    112,431
 For the Three Months Ended March 31, 2006 Compared to the Same 2005 Period:
  26




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LAND DIVISION RESULTS OF OPERATIONS
 Three MonthsEnded March 31,2006
    
    
    2005
    
    
    Change(Dollars in thousands)RevenuesSales of real estate
    
    $
    7,272
    
    
    
    66,551
    
    
    
    (59,279
    )Total revenues
    
    
    7,272
    
    
    
    66,551
    
    
    
    (59,279
    )Costs and expensesCost of sales of real estate
    
    
    5,019
    
    
    
    27,090
    
    
    
    (22,071
    )Selling, general and
administrative expenses
    
    
    2,786
    
    
    
    4,446
    
    
    
    (1,660
    )Other expense
    
    
    
    
    
    
    677
    
    
    
    (677
    )Total costs and expenses
    
    
    7,805
    
    
    
    32,213
    
    
    
    (24,408
    )Interest and other income
    
    
    988
    
    
    
    421
    
    
    
    567Income before income taxes
    
    
    455
    
    
    
    34,759
    
    
    
    (34,304
    )Provision for income taxes
    
    
    137
    
    
    
    13,436
    
    
    
    (13,299
    )Net income
    
    $
    318
    
    
    
    21,323
    
    
    
    (21,005
    )Acres sold
    
    
    56
    
    
    
    1,304
    
    
    
    (1,248
    )Margin percentage
    
    
    31.0
    %
    
    
    59.3
    %
    
    
    (28.3
    %)Unsold saleable acres (estimate)
    
    
    7,231
    
    
    
    4,657
    
    
    
    2,574Backlog of land (acres)
    
    
    195
    
    
    
    543
    
    
    
    (348
    )Backlog of land (value)
    
    $
    33,717
    
    
    
    59,624
    
    
    
    (25,907
    )
    28




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For the Three Months Ended March 31, 2006 Compared to the Same 2005 Period:
      29




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##### Table of Contents



OTHER OPERATIONS RESULTS OF OPERATIONS
 Three MonthsEnded March 31,2006
    
    
    2005
    
    
    Change(In thousands)RevenuesSales of real estate
    
    $
    
    
    
    
    14,709
    
    
    
    (14,709
    )Total revenues
    
    
    
    
    
    
    14,709
    
    
    
    (14,709
    )Costs and expensesCost of sales of real estate
    
    
    642
    
    
    
    11,326
    
    
    
    (10,684
    )Selling, general and administrative expenses
    
    
    6,397
    
    
    
    4,092
    
    
    
    2,305Total costs and expenses
    
    
    7,039
    
    
    
    15,418
    
    
    
    (8,379
    )(Loss) earnings from Bluegreen Corporation
    
    
    (49
    )
    
    
    2,138
    
    
    
    (2,187
    )Loss earnings from real estate joint ventures
    
    
    
    
    
    
    (14
    )
    
    
    14Interest and other income
    
    
    682
    
    
    
    687
    
    
    
    5(Loss) income before income taxes
    
    
    (6,406
    )
    
    
    2,102
    
    
    
    (8,508
    )(Benefit) provision for income taxes
    
    
    (2,364
    )
    
    
    763
    
    
    
    (3,127
    )Net (loss) income
    
    $
    (4,042
    )
    
    
    1,339
    
    
    
    (5,381
    )
  For the Three Months Ended March 31, 2006 Compared to the Same 2005 Period:
  30




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31




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FINANCIAL CONDITION
 March 31, 2006 compared to December 31, 2005
   
    
    a net decrease in cash and cash equivalents of $37.8 million, which resulted from
cash used in operations and investing activities, partially offset by an increase in
cash provided by financing activities;
    
    a net increase in inventory of real estate of approximately $87.5 million resulting
from land acquisitions by our Homebuilding Division and increases in land development
and construction costs; and
    
    an increase of $8.0 million in property and equipment associated with increased
investment in commercial properties under construction in Tradition, and hardware and
software acquired for our technology infrastructure upgrade.
   
    
    a net increase in notes and mortgage notes payable of $67.9 million, primarily
related to project debt associated with 2006 land acquisitions;
    
    an increase of $5.4 million in customer deposits associated with our larger
homebuilding backlog;
    
    a decrease in the current tax liability of approximately $13.0 million relating
primarily to the decrease in our taxable income to a loss position and the timing of
estimate tax payments; and
    
    a net decrease in other accrued liabilities of approximately $3.0 million.
 32




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LIQUIDITY AND CAPITAL RESOURCES
      Off Balance Sheet Arrangements and Contractual Obligations
  33




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##### Table of Contents



Payments due by periodLess than
    
    
    2 - 3
    
    
    4 - 5
    
    
    More thanCategory
    
    Total
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 yearsLong-term debt obligations(1)
    
    $
    475,839
    
    
    
    41,033
    
    
    
    301,528
    
    
    
    32,817
    
    
    
    100,461Operating lease obligations
    
    
    7,000
    
    
    
    1,657
    
    
    
    2,559
    
    
    
    1,189
    
    
    
    1,595Purchase obligations
    
    
    97,047
    
    
    
    88,150
    
    
    
    8,897
    
    
    
    
    
    
    
    Total Obligations
    
    $
    579,886
    
    
    
    130,840
    
    
    
    312,984
    
    
    
    34,006
    
    
    
    102,056
 
 (1)
    
    Amounts exclude interest   
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  34




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NEW ACCOUNTING PRONOUNCEMENTS.
    35




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##### Table of Contents



Item 4. CONTROLS AND PROCEDURES
       36




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 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 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.
 
 *
    
    Exhibits filed with this Form 10-Q 37




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##### Table of Contents



LEVITT CORPORATIONDate: May 10, 2006
    By:
    /s/  Alan B. LevanAlan B. Levan, Chief Executive OfficerDate: May 10, 2006
    By:
    /s/  George P. ScanlonGeorge P. Scanlon, Executive Vice President,Chief Financial Officer 38