Exhibit 99.1
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 BLUEGREEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 December 31,
    
    
    December 31,2007
    
    
    2008ASSETSCash and cash equivalents (including restricted cash of $19,460
and $21,214 at December 31, 2007 and 2008, respectively)
    
    $
    144,973
    
    
    $
    81,775Contracts receivable, net
    
    
    20,532
    
    
    
    7,452Notes receivable (net of allowance of $17,458 and $52,029 at
December 31, 2007 and 2008, respectively)
    
    
    160,665
    
    
    
    340,644Prepaid expenses
    
    
    14,824
    
    
    
    9,801Other assets
    
    
    23,405
    
    
    
    27,488Inventory
    
    
    434,968
    
    
    
    503,269Retained interests in notes receivable sold
    
    
    141,499
    
    
    
    113,577Property and equipment, net
    
    
    94,421
    
    
    
    109,501Goodwill
    
    
    4,291
    
    
    
    Total assets
    
    $
    1,039,578
    
    
    $
    1,193,507LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesAccounts payable
    
    $
    38,901
    
    
    $
    24,900Accrued liabilities and other
    
    
    60,421
    
    
    
    52,283Deferred income
    
    
    36,559
    
    
    
    29,854Deferred income taxes
    
    
    98,362
    
    
    
    91,802Receivable-backed notes payable
    
    
    54,999
    
    
    
    249,117Lines-of-credit and notes payable
    
    
    176,978
    
    
    
    222,73910.50% senior secured notes payable
    
    
    55,000
    
    
    
    Junior subordinated debentures
    
    
    110,827
    
    
    
    110,827Total liabilities
    
    
    632,047
    
    
    
    781,522Minority interest
    
    
    22,423
    
    
    
    29,518Commitments and contingencies (Note 16)Shareholders EquityPreferred stock, $.01 par value, 1,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, $.01 par value, 90,000 shares authorized; 33,957 and
33,996 shares issued at December 31, 2007 and 2008, respectively
    
    
    339
    
    
    
    339Additional paid-in capital
    
    
    178,144
    
    
    
    182,654Treasury stock, 2,756 common shares at both December 31, 2007 and 2008,
at cost
    
    
    (12,885
    )
    
    
    (12,885
    )Accumulated other comprehensive income, net of income taxes
    
    
    9,808
    
    
    
    3,173Retained earnings
    
    
    209,702
    
    
    
    209,186Total shareholders equity
    
    
    385,108
    
    
    
    382,467Total liabilities and shareholders equity
    
    $
    1,039,578
    
    
    $
    1,193,507
 See accompanying notes to consolidated financial statements.




---



##### 



BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2007
    
    
    2008Revenues:Gross sales of real estate
    
    $
    583,788
    
    
    $
    605,250
    
    
    $
    542,632Estimated uncollectible VOI notes receivable
    
    
    (59,497
    )
    
    
    (65,242
    )
    
    
    (75,847
    )Gains on sales of VOI notes receivable
    
    
    44,700
    
    
    
    39,372
    
    
    
    8,245Sales of real estate
    
    
    568,991
    
    
    
    579,380
    
    
    
    475,030Other resort and communities operations revenue
    
    
    61,753
    
    
    
    67,411
    
    
    
    69,182Interest income
    
    
    40,765
    
    
    
    44,703
    
    
    
    57,831671,509
    
    
    
    691,494
    
    
    
    602,043Costs and expenses:Cost of real estate sales
    
    
    179,054
    
    
    
    178,731
    
    
    
    130,267Cost of other resort and communities operations
    
    
    44,356
    
    
    
    49,982
    
    
    
    48,087Selling, general and administrative expenses
    
    
    363,962
    
    
    
    377,552
    
    
    
    369,700Interest expense
    
    
    18,785
    
    
    
    24,272
    
    
    
    20,888Other expense, net
    
    
    2,861
    
    
    
    1,743
    
    
    
    1,637Restructuring charges
    
    
    
    
    
    
    
    
    
    
    15,617Goodwill impairment charge
    
    
    
    
    
    
    
    
    
    
    8,502609,018
    
    
    
    632,280
    
    
    
    594,698Income before minority interest and provision for income taxes
    
    
    62,491
    
    
    
    59,214
    
    
    
    7,345Minority interest in income of consolidated subsidiary
    
    
    7,319
    
    
    
    7,721
    
    
    
    7,095Income before provision for income taxes and cumulative effect of
change in accounting principles
    
    
    55,172
    
    
    
    51,493
    
    
    
    250Provision for income taxes
    
    
    20,861
    
    
    
    19,567
    
    
    
    766Income (loss) before cumulative effect of change in accounting principle
    
    
    34,311
    
    
    
    31,926
    
    
    
    (516
    )Cumulative 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 (loss)
    
    $
    29,817
    
    
    $
    31,926
    
    
    $
    (516
    )Income (loss) before cumulative effect of change in accounting principle
per common share:Basic
    
    $
    1.12
    
    
    $
    1.03
    
    
    $
    (0.02
    )Diluted
    
    $
    1.10
    
    
    $
    1.02
    
    
    $
    (0.02
    )Cumulative effect of change in accounting principle, net of tax and
net of minority interest in income of cumulative effect of change in
accounting principle per common share:Basic
    
    $
    (0.15
    )
    
    $
    
    
    
    $
    Diluted
    
    $
    (0.14
    )
    
    $
    
    
    
    $
    Net income (loss) per common share:Basic
    
    $
    0.98
    
    
    $
    1.03
    
    
    $
    (0.02
    )Diluted
    
    $
    0.96
    
    
    $
    1.02
    
    
    $
    (0.02
    )Weighted average number of common and common equivalent shares:Basic
    
    
    30,557
    
    
    
    30,975
    
    
    
    31,241Diluted
    
    
    31,097
    
    
    
    31,292
    
    
    
    31,241
 See accompanying notes to consolidated financial statements.
 2




---



##### 



BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(in thousands)
 AccumulatedOtherCommon
    
    
    
    
    
    
    Additional
    
    
    Treasury
    
    
    ComprehensiveShares
    
    
    Common
    
    
    Paid-in
    
    
    Stock at
    
    
    Income, Net of
    
    
    RetainedIssued
    
    
    Stock
    
    
    Capital
    
    
    Cost
    
    
    Income Taxes
    
    
    Earnings
    
    
    TotalBalance at December 31, 2005
    
    
    33,268
    
    
    $
    333
    
    
    $
    169,684
    
    
    $
    (12,885
    )
    
    $
    8,575
    
    
    $
    147,959
    
    
    $
    313,666Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,817
    
    
    
    29,817Net change in unrealized gains on
retained interests in notes
receivable sold, net of income
taxes and reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,057
    
    
    
    
    
    
    
    4,057Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,874Shares issued upon exercise of stock
options
    
    
    312
    
    
    
    3
    
    
    
    2,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,645Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    2,103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,103Modification of equity awards and
vesting of restricted stock
    
    
    23
    
    
    
    
    
    
    
    735
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    735Balance at December 31, 2006
    
    
    33,603
    
    
    
    336
    
    
    
    175,164
    
    
    
    (12,885
    )
    
    
    12,632
    
    
    
    177,776
    
    
    
    353,023Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,926
    
    
    
    31,926Net change in unrealized gains or
losses on retained interests in
notes receivable sold, net of
income taxes and reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,824
    )
    
    
    
    
    
    
    (2,824
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,102Shares issued upon exercise of stock
options
    
    
    140
    
    
    
    1
    
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    559Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    2,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,052Vesting of restricted stock
    
    
    214
    
    
    
    2
    
    
    
    370
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    372Balance at December 31, 2007
    
    
    33,957
    
    
    $
    339
    
    
    $
    178,144
    
    
    $
    (12,885
    )
    
    $
    9,808
    
    
    $
    209,702
    
    
    $
    385,108Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (516
    )
    
    
    (516
    )Net change in unrealized gains or
losses on retained interests in
notes receivable sold, net of
income taxes and reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,635
    )
    
    
    
    
    
    
    (6,635
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,151
    )Shares issued upon exercise of stock
options
    
    
    39
    
    
    
    
    
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    4,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,378Balance at December 31, 2008
    
    
    33,996
    
    
    $
    339
    
    
    $
    182,654
    
    
    $
    (12,885
    )
    
    $
    3,173
    
    
    $
    209,186
    
    
    $
    382,467
 See accompanying notes to consolidated financial statements.
 3




---



##### 



BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2007
    
    
    2008Operating activities:Net income (loss)
    
    $
    29,817
    
    
    $
    31,926
    
    
    $
    (516
    )Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:Cumulative effect of change in accounting principle, net
    
    
    5,678
    
    
    
    
    
    
    
    Communities inventory impairment
    
    
    
    
    
    
    
    
    
    
    5,204Non-cash stock compensation expense
    
    
    2,848
    
    
    
    2,422
    
    
    
    4,378Minority interest in income of consolidated subsidiary
    
    
    6,135
    
    
    
    7,721
    
    
    
    7,095Depreciation
    
    
    14,376
    
    
    
    14,489
    
    
    
    13,243Amortization
    
    
    2,793
    
    
    
    3,180
    
    
    
    1,841Gain on sales of notes receivable
    
    
    (44,700
    )
    
    
    (39,372
    )
    
    
    (8,245
    )Loss on disposal of property and equipment
    
    
    2,096
    
    
    
    688
    
    
    
    5,140Provision for loan losses
    
    
    59,489
    
    
    
    65,419
    
    
    
    76,079Provision (benefit) for deferred income taxes
    
    
    12,835
    
    
    
    12,468
    
    
    
    (2,804
    )Interest accretion on retained interests in notes
receivable sold
    
    
    (14,569
    )
    
    
    (15,157
    )
    
    
    (17,729
    )Proceeds from sales of notes receivable
    
    
    218,455
    
    
    
    229,067
    
    
    
    55,705Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    8,502Changes in operating assets and liabilities:Contracts receivable
    
    
    3,854
    
    
    
    3,324
    
    
    
    13,080Notes receivable
    
    
    (283,305
    )
    
    
    (305,972
    )
    
    
    (313,661
    )Prepaid expenses and other assets
    
    
    (12,009
    )
    
    
    (473
    )
    
    
    3,898Inventory
    
    
    (8,273
    )
    
    
    (59,322
    )
    
    
    (53,470
    )Accounts payable, accrued liabilities and other
    
    
    12,906
    
    
    
    28,471
    
    
    
    (26,407
    )Net cash provided (used) by operating activities
    
    
    8,426
    
    
    
    (21,121
    )
    
    
    (228,667
    )Investing activities:Cash received from retained interests in notes receivable
sold
    
    
    30,032
    
    
    
    35,949
    
    
    
    44,884Business acquisitions
    
    
    
    
    
    
    
    
    
    
    (6,105
    )Investments in statutory business trusts
    
    
    (928
    )
    
    
    (619
    )
    
    
    Purchases of property and equipment
    
    
    (24,736
    )
    
    
    (15,855
    )
    
    
    (22,883
    )Proceeds from sales of property and equipment
    
    
    93
    
    
    
    2
    
    
    
    58Net cash provided by investing activities
    
    
    4,461
    
    
    
    19,477
    
    
    
    15,954Financing activities:Proceeds from borrowings collateralized by notes
receivable
    
    
    68,393
    
    
    
    151,973
    
    
    
    287,478Payments on borrowings collateralized by notes receivable
    
    
    (85,114
    )
    
    
    (120,145
    )
    
    
    (94,964
    )Proceeds from borrowings under line-of-credit facilities
and
notes payable
    
    
    56,670
    
    
    
    147,835
    
    
    
    105,832Payments under line-of-credit facilities and notes payable
    
    
    (94,586
    )
    
    
    (123,320
    )
    
    
    (90,907
    )Payments on 10.50% senior secured notes
    
    
    
    
    
    
    
    
    
    
    (55,000
    )Proceeds from issuance of junior subordinated debentures
    
    
    30,928
    
    
    
    20,619
    
    
    
    Payments of debt issuance costs
    
    
    (4,438
    )
    
    
    (2,052
    )
    
    
    (3,056
    )Proceeds from exercise of employee and director stock
options
    
    
    2,645
    
    
    
    559
    
    
    
    132Distributions to minority interest
    
    
    (941
    )
    
    
    
    
    
    
    Net cash (used) provided by financing activities
    
    
    (26,443
    )
    
    
    75,469
    
    
    
    149,515Net (decrease) increase in cash and cash equivalents
    
    
    (13,556
    )
    
    
    73,825
    
    
    
    (63,198
    )Cash and cash equivalents at beginning of period
    
    
    84,704
    
    
    
    71,148
    
    
    
    144,973Cash and cash equivalents at end of period
    
    
    71,148
    
    
    
    144,973
    
    
    
    81,775Restricted cash and cash equivalents at end of period
    
    
    (21,476
    )
    
    
    (19,460
    )
    
    
    (21,214
    )Unrestricted cash and cash equivalents at end of period
    
    $
    49,672
    
    
    $
    125,513
    
    
    $
    60,561
 See accompanying notes to consolidated financial statements
 4




---



##### 



BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)
(in thousands)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2007
    
    
    2008Supplemental schedule of non-cash operating,
investing and financing activities:Inventory acquired through financing
    
    $
    95,698
    
    
    $
    26,425
    
    
    $
    10,132Property and equipment acquired through financing
    
    $
    4,640
    
    
    $
    1,188
    
    
    $
    4,639Retained interests in notes receivable sold
    
    $
    33,967
    
    
    $
    36,222
    
    
    $
    9,624Change in net unrealized gains on retained
interests in notes receivable sold
    
    $
    6,423
    
    
    $
    (4,554
    )
    
    $
    (10,391
    )Supplemental schedule of operating cash flow
information:Interest paid, net of amounts capitalized
    
    $
    17,171
    
    
    $
    24,407
    
    
    $
    21,813Income taxes paid
    
    $
    10,064
    
    
    $
    9,823
    
    
    $
    5,390
 See accompanying notes to consolidated financial statements.
 5




---



##### 



BLUEGREEN CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Significant Accounting Policies
 Organization
 ®
    Principles of Consolidation
  6




---



##### 



Use of Estimates
  Cash and Cash Equivalents
   Revenue Recognition and Contracts Receivable
 Accounting for Sales of Real Estate, Accounting for Real Estate
Time-Sharing Transactions
    7




---



##### 



Activity
    
    Revenue is recognized as:Resort title fees
    
    Escrow amounts are released and title documents are
completed.Resort Management and service fees
    
    Management services are rendered.Rental and Sampler program
    
    Guests complete stays at the resorts. Rental and
Sampler program proceeds are classified as a
reduction to Cost of other resort and communities
operations.Realty commissions
    
    Sales of third-party-owned real estate are completed.Golf course and ski hill daily fees
    
    Services are provided.
  Notes Receivable
  Accounting for Contingencies, Selected Loan Loss Allowance Methodology and Documentation Issues,
 Retained Interest in Notes Receivable Sold
 Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
 8




---



##### 



Accounting for Certain
Investments in Debt and Equity Securities
  Inventory
 Accounting for Costs and Initial Rental Operations of Real Estate
Projects
 Accounting for the
Impairment or Disposal of Long-Lived Assets
 Deferred Financing Costs
  Property and Equipment
  9




---



##### 



Goodwill
 Goodwill and Other
Intangible Assets.
 Treasury Stock
  Advertising Expense
  Stock-Based Compensation
 Share-Based
Payment (revised 2004)
  During the year ended December 31,2006
    
    2007
    
    2008Risk free investment rate
    
    
    5.0
    %
    
    
    4.9
    %
    
    
    3.1
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Volatility factor of expected market price
    
    
    53.0
    %
    
    
    45.8
    %
    
    
    49.4
    %Life of option
    
    5.8 years
    
    5.0 years
    
    5.5 years
   10




---



##### 



Earnings (Loss) Per Common Share
   Year Ended December 31,2006
    
    
    2007
    
    
    2008Basic and diluted earnings per common share  numerator:Net income (loss)
    
    $
    29,817
    
    
    $
    31,926
    
    
    $
    (516
    )Denominator:Denominator for basic earnings (loss) per common
share-weighted-average shares
    
    
    30,557
    
    
    
    30,975
    
    
    
    31,241Effect of dilutive securities:Stock options and unvested restricted stock
    
    
    540
    
    
    
    317
    
    
    
    Denominator for diluted earnings (loss) per common
share-adjusted weighted-average shares and assumed
conversions
    
    
    31,097
    
    
    
    31,292
    
    
    
    31,241Basic earnings (loss) per common share:
    
    $
    0.98
    
    
    $
    1.03
    
    
    $
    (0.02
    )Diluted earnings (loss) per common share:
    
    $
    0.96
    
    
    $
    1.02
    
    
    $
    (0.02
    )
 Comprehensive Income (Loss)
 Reporting Comprehensive Income
 Business Combinations
 Business Combinations Determining Whether a Nonmonetary Transaction Involves
Receipt of Productive Assets or of a Business.
 11




---



##### 



Recently Adopted Accounting Pronouncements
 Fair Value Measurements
  Level 1:
 Level 2:
 Level 3:
 The Fair Value Option for Financial Assets and
Financial Liabilities Including an Amendment of FASB Statement No. 115
 Determining the Fair Value
of a Financial Asset When the Market for That Asset Is Not Active
 Disclosures by Public Entities
(Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities
 Amendments to the Impairment Guidance of EITF
Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests
and Beneficial Interests That Continue to be Held by a Transferor in Securitized Financial Assets
 12




---



##### 



Accounting Pronouncements Not Yet Adopted
  Business Combinations
 Non-controlling Interests in Consolidated
Financial Statements-an Amendment of Accounting Research Bulletin (ARB) No. 51
 2. Cumulative Effect of Change in Accounting Principle
 Accounting for Real Estate Time-Sharing
Transactions Accounting for Sales of Real
Estate Accounting for Costs and Initial Rental Operations of Real Estate
Projects Accounting for Real Estate Time-Sharing Transactions
  3. Restructuring Charges
  13




---



##### 



Accounting for Costs
Associated with Exit or Disposal Activities.
  Cash Payments
    
    
    Liability atCharges
    
    
    made during
    
    
    December 31,during 2008
    
    
    2008
    
    
    2008Severance and benefit-related costs(1)
    
    $
    5,608
    
    
    $
    2,068
    
    
    $
    3,540Lease termination obligation(2)
    
    
    4,766
    
    
    
    687
    
    
    
    4,079Fixed Assets write-downs, net of proceeds (3)
    
    
    3,760
    
    
    
    
    
    
    
    Other
    
    
    1,483
    
    
    
    173
    
    
    
    349Total Restructuring
    
    $
    15,617
    
    
    $
    2,928
    
    
    $
    7,968
 
 (1)
    
    Includes severance payments made to employees, payroll taxes and other benefit
relates costs in connection with the terminations of approximately 2,200 employees.(2)
    
    Includes costs associated with noncancelable property and equipment leases that
we have ceased to use, as well as termination fees related to the cancellation of
certain contractual lease obligations. Included in this amount are future minimum lease
payments in excess of estimated sublease income, fees and expenses for which the
provisions of SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activitieswere satisfied.(3)
    
    Includes write-downs of $1.6 million and $2.2 million for leasehold
improvements and property and equipment, respectively, net of a nominal amount of cash
received in connections with selling some of our assets. 4. Joint Venture
    14




---



##### 



5. Notes Receivable
  As of December 31,2007
    
    
    2008Notes receivable secured by VOIs
    
    $
    172,787
    
    
    $
    388,014Notes receivable secured by homesites
    
    
    5,336
    
    
    
    4,659Notes receivable, gross
    
    
    178,123
    
    
    
    392,673Allowance for loan losses
    
    
    (17,458
    )
    
    
    (52,029
    )Notes receivable, net
    
    $
    160,665
    
    
    $
    340,644
    Year EndedDecember 31,2007
    
    
    2008Balance, beginning of year
    
    $
    13,499
    
    
    $
    17,458Provision for loan losses
    
    
    65,419
    
    
    
    76,079Less: Allowance on sold receivables
    
    
    (42,750
    )
    
    
    (10,964
    )Less: Write-offs of uncollectible receivables
    
    
    (18,710
    )
    
    
    (30,544
    )Balance, end of year
    
    $
    17,458
    
    
    $
    52,029
  2007
    
    
    2008Due in 1 year
    
    $
    39,838
    
    
    $
    58,989Due in 2 years
    
    
    10,761
    
    
    
    23,988Due in 3 years
    
    
    11,953
    
    
    
    27,537Due in 4 years
    
    
    13,662
    
    
    
    31,473Due in 5 years
    
    
    15,412
    
    
    
    35,712Thereafter
    
    
    86,497
    
    
    
    214,974Total
    
    $
    178,123
    
    
    $
    392,673
 15




---



##### 



Bluegreen
    
    
    BluegreenResorts
    
    
    Communities
    
    
    TotalDecember 31, 2007:Notes receivable
    
    $
    172,787
    
    
    $
    5,336
    
    
    $
    178,123Allowance for loan losses
    
    
    (17,196
    )
    
    
    (262
    )
    
    
    (17,458
    )Notes receivable, net
    
    $
    155,591
    
    
    $
    5,074
    
    
    $
    160,665Allowance as a % of gross notes
receivable
    
    
    10
    %
    
    
    5
    %
    
    
    10
    %December 31, 2008:Notes receivable
    
    $
    388,014
    
    
    $
    4,659
    
    
    $
    392,673Allowance for loan losses
    
    
    (51,785
    )
    
    
    (244
    )
    
    
    (52,029
    )Notes receivable, net
    
    $
    336,229
    
    
    $
    4,415
    
    
    $
    340,644Allowance as a % of gross notes
receivable
    
    
    13
    %
    
    
    5
    %
    
    
    13
    %
 6. Sales of Notes Receivable
  Year Ended
December 31, 2006:
 AggregatePrincipal
    
    
    
    
    
    
    
    
    
    
    Initial FairBalance of
    
    
    
    
    
    
    
    
    
    
    Value ofNotes
    
    
    Purchase
    
    
    Gain
    
    
    RetainedFacility
    
    Receivable
    
    
    Price
    
    
    Recognized
    
    
    Interest2005 Term Securitization
    
    $
    18.6
    
    
    $
    16.7
    
    
    $
    4.6
    
    
    $
    3.82006-A GE Purchase
Facility
    
    
    72.0
    
    
    
    64.8
    
    
    
    11.1
    
    
    
    8.52006 Term Securitization
    
    
    153.0
    
    
    
    137.0
    
    
    
    29.0
    
    
    
    29.6Total
    
    $
    243.6
    
    
    $
    218.5
    
    
    $
    44.7
    
    
    $
    41.9
 Year Ended
December 31, 2007:
 AggregatePrincipal
    
    
    
    
    
    
    
    
    
    
    Initial FairBalance of
    
    
    
    
    
    
    
    
    
    
    Value ofNotes
    
    
    Purchase
    
    
    Gain
    
    
    RetainedFacility
    
    Receivable
    
    
    Price
    
    
    Recognized
    
    
    Interest2006-A GE Purchase Facility
    
    $
    66.9
    
    
    $
    60.2
    
    
    $
    10.6
    
    
    $
    8.32007 Term Securitization
    
    
    200.0
    
    
    
    168.9
    
    
    
    28.8
    
    
    
    36.3Total
    
    $
    266.9
    
    
    $
    229.1
    
    
    $
    39.4
    
    
    $
    44.6
 16




---



##### 



Year Ended
December 31, 2008:
 AggregatePrincipal
    
    
    
    
    
    
    
    
    
    
    Initial FairBalance of
    
    
    
    
    
    
    
    
    
    
    Value ofNotes
    
    
    Purchase
    
    
    Gain
    
    
    RetainedFacility
    
    Receivable
    
    
    Price
    
    
    Recognized
    
    
    Interest2008 Term Securitization
    
    $
    68.6
    
    
    $
    60.0
    
    
    $
    8.2
    
    
    $
    11.7
  For the year ended December 31,2006

    
    2007

    
    2008Prepayment rates
    

    17% - 9%

    
29% - 11%

    

31% - 17%Loss severity rates
    
35% - 71%

    
38% - 72%

    
38%Default rates
    
11% - 1%

    
12% - 1%

    

7.2% - 1.0%Discount rates
    
9%

    

9% - 12.6%

    
13.4%
   2005 Term Securitization.
 2006 GE Purchase Facility.
 17




---



##### 



2006 Term Securitization
 2007 Term Securitization.
 2008 Term Securitization.
  18




---



##### 



7. Retained Interests in Notes Receivable Sold
  GrossAmortized
    
    
    UnrealizedAs of December 31, 2007:
    
    Cost
    
    
    Gain (Loss)
    
    
    Fair Value2002 Term Securitization
    
    $
    8,842
    
    
    $
    
    
    
    $
    8,8422004 Term Securitization
    
    
    11,934
    
    
    
    2,797
    
    
    
    14,7312004 GE Purchase Facility (see Note 6)
    
    
    5,633
    
    
    
    (609
    )
    
    
    5,0242005 Term Securitization (see Note 6)
    
    
    29,268
    
    
    
    2,230
    
    
    
    31,4982006 GE Purchase Facility (see Note 6)
    
    
    15,481
    
    
    
    953
    
    
    
    16,4342006 Term Securitization (see Note 6)
    
    
    24,522
    
    
    
    1,529
    
    
    
    26,0512007 Term Securitization (see Note 6)
    
    
    30,000
    
    
    
    8,919
    
    
    
    38,919Total
    
    $
    125,680
    
    
    $
    15,819
    
    
    $
    141,499
 GrossAmortized
    
    
    UnrealizedAs of December 31, 2008:
    
    Cost
    
    
    Gain (Loss)
    
    
    Fair Value2002 Term Securitization
    
    $
    7,505
    
    
    $
    
    
    
    $
    7,5052004 Term Securitization
    
    
    8,508
    
    
    
    1,037
    
    
    
    9,5452004 GE Purchase Facility
    
    
    3,380
    
    
    
    78
    
    
    
    3,4582005 Term Securitization (see Note 6)
    
    
    16,267
    
    
    
    
    
    
    
    16,2672006 GE Purchase Facility (see Note 6)
    
    
    16,177
    
    
    
    (1,687
    )(1)
    
    
    14,4902006 Term Securitization (see Note 6)
    
    
    13,730
    
    
    
    670
    
    
    
    14,4002007 Term Securitization (see Note 6)
    
    
    31,145
    
    
    
    5,029
    
    
    
    36,1742008 Term Securitization (see Note 6)
    
    
    11,437
    
    
    
    301
    
    
    
    11,738Total
    
    $
    108,149
    
    
    $
    5,428
    
    
    $
    113,577
 
 (1)
    
    This security has been in a continuous unrealized loss position for less than
12 months.   AmortizedCost
    
    
    Fair ValueAfter one year but within five
    
    $
    7,505
    
    
    $
    7,505After five years but within ten
    
    
    100,644
    
    
    
    106,072Total
    
    $
    108,149
    
    
    $
    113,577
  As of December 31,2007
    
    2008Prepayment rates
    

33% - 6%

    
23% - 4%Loss severity rates
    
18% - 72%

    
3% - 38%Default rates
    
12% - 0%

    
12% - 0%Discount rates
    
12.6%

    
19.5%
 19




---



##### 



Hypothetical Fair Value at December 31, 2008
 Prepayment Rate
    
    Loss Severity Rate
    
    Default Rate
    
    Discount RateAdverse Change Percentage
    
    10%
    
    20%
    
    10%
    
    20%
    
    10%
    
    20%
    
    10%
    
    20%2002 Term Securitization
    
    $
    7,495
    
    
    $
    7,486
    
    
    $
    7,499
    
    
    $
    7,494
    
    
    $
    7,485
    
    
    $
    7,466
    
    
    $
    7,014
    
    
    $
    6,5782004 Term Securitization
    
    
    9,469
    
    
    
    9,399
    
    
    
    9,493
    
    
    
    9,442
    
    
    
    9,482
    
    
    
    9,419
    
    
    
    9,189
    
    
    
    8,8692004 GE Purchase Facility
    
    
    3,455
    
    
    
    3,451
    
    
    
    3,390
    
    
    
    3,322
    
    
    
    3,354
    
    
    
    3,256
    
    
    
    3,312
    
    
    
    3,1842005 Term Securitization
    
    
    16,182
    
    
    
    16,103
    
    
    
    15,781
    
    
    
    15,296
    
    
    
    15,636
    
    
    
    15,014
    
    
    
    15,570
    
    
    
    14,9542006 GE Purchase Facility
    
    
    14,467
    
    
    
    14,445
    
    
    
    13,957
    
    
    
    13,423
    
    
    
    13,875
    
    
    
    13,276
    
    
    
    13,859
    
    
    
    13,3062006 Term Securitization
    
    
    14,278
    
    
    
    14,158
    
    
    
    14,109
    
    
    
    13,818
    
    
    
    14,040
    
    
    
    13,685
    
    
    
    13,888
    
    
    
    13,4342007 Term Securitization
    
    
    35,949
    
    
    
    35,730
    
    
    
    35,816
    
    
    
    35,458
    
    
    
    35,774
    
    
    
    35,380
    
    
    
    35,106
    
    
    
    34,1592008 Term Securitization
    
    
    11,687
    
    
    
    11,639
    
    
    
    11,498
    
    
    
    11,259
    
    
    
    11,465
    
    
    
    11,189
    
    
    
    11,277
    
    
    
    10,868
  For the Year Ended December 31,2006
    
    2007
    
    2008Proceeds from new sales of receivables
    
    $
    218,455
    
    
    $
    229,067
    
    
    $
    55,705Collections on previously sold receivables
    
    
    (145,096
    )
    
    
    (173,448
    )
    
    
    (175,551
    )Servicing fees received
    
    
    6,955
    
    
    
    8,697
    
    
    
    9,436Purchases of defaulted receivables
    
    
    (1,122
    )
    
    
    (3,420
    )
    
    
    (3,547
    )Resales of foreclosed assets
    
    
    (40,566
    )
    
    
    (44,786
    )
    
    
    (50,314
    )Remarketing fees received
    
    
    23,163
    
    
    
    25,858
    
    
    
    29,581Cash received on retained interests in
notes receivable sold
    
    
    30,032
    
    
    
    35,949
    
    
    
    44,884Cash paid to fund required reserve accounts
    
    
    (13,495
    )
    
    
    (10,044
    )
    
    
    (8,288
    )Purchases of upgraded accounts
    
    
    (17,447
    )
    
    
    (28,251
    )
    
    
    (47,045
    )
  20




---



##### 



As ofDecember 31, 2008Principal
    
    
    
    
    
    Year EndedTotal
    
    Amount
    
    Balance
    
    December 31, 2008Principal
    
    of Sold Loans
    
    Owed to Note
    
    CreditAmount of
    
    60 or More
    
    Receivable
    
    Losses, NetSold Loans
    
    Days Past Due
    
    Purchasers
    
    of Recoveries2002 Term Securitization
    
    $
    18,435
    
    
    $
    565
    
    
    $
    18,254
    
    
    $
    2322004 Term Securitization
    
    
    37,234
    
    
    
    1,248
    
    
    
    35,098
    
    
    
    4292004 GE Purchase Facility
    
    
    16,880
    
    
    
    656
    
    
    
    14,699
    
    
    
    6252005 Term Securitization
    
    
    95,152
    
    
    
    3,609
    
    
    
    87,696
    
    
    
    2,9412006 GE Purchase Facility
    
    
    83,690
    
    
    
    2,823
    
    
    
    75,055
    
    
    
    4,1902006 Term Securitization
    
    
    80,719
    
    
    
    3,339
    
    
    
    75,223
    
    
    
    3,2582007 Term Securitization
    
    
    154,724
    
    
    
    5,922
    
    
    
    140,297
    
    
    
    4,7272008 Term Securitization
    
    
    58,662
    
    
    
    1,935
    
    
    
    52,487
    
    
    
    764
  8. Inventory
  As of December 31,2007
    
    
    2008Bluegreen Resorts
    
    $
    288,969
    
    
    $
    342,779Bluegreen Communities
    
    
    145,999
    
    
    
    160,490$
    434,968
    
    
    $
    503,269
    21




---



##### 



9. Property and Equipment
  As of December 31,Useful Life
    
    
    2007
    
    
    2008Office equipment, furniture and fixtures
    
    3-14 years
    
    $
    67,894
    
    
    $
    62,572Golf course land, land improvements, buildings and equipment
    
    5-39 years
    
    
    32,462
    
    
    
    33,346Land, buildings and building improvements
    
    3-31 years
    
    
    42,694
    
    
    
    67,359Leasehold improvements
    
    2-14 years
    
    
    15,663
    
    
    
    12,650Transportation and equipment
    
    3-5 years
    
    
    2,435
    
    
    
    2,334161,148
    
    
    
    178,261Accumulated depreciation and amortization of leasehold
improvements
    
    
    
    
    
    
    (66,727
    )
    
    
    (68,760
    )Total
    
    
    
    
    
    $
    94,421
    
    
    $
    109,501
 10. Receivable-Backed Notes Payable
  As ofDecember 31, 2007
    
    
    December 31, 2008Balance of
    
    
    
    
    
    
    
    
    
    
    Balance ofPledged/
    
    
    
    
    
    
    
    
    
    
    Pledged/Debt
    
    
    Interest
    
    
    Secured
    
    
    Debt
    
    
    Interest
    
    
    SecuredBalance
    
    
    Rate
    
    
    Receivables
    
    
    Balance
    
    
    Rate
    
    
    Receivables2008 BB&T Purchase Facility
    
    $
    16,967
    
    
    
    5.85
    %
    
    $
    19,890
    
    
    $
    139,057
    
    
    
    2.19
    %
    
    $
    167,538Liberty Bank Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,505
    
    
    
    5.75
    %
    
    
    48,603GE Bluegreen/Big Cedar Receivables
Facility
    
    
    24,100
    
    
    
    6.35
    %
    
    
    27,079
    
    
    
    33,725
    
    
    
    2.19
    %
    
    
    39,681Foothill Facility
    
    
    1,050
    
    
    
    7.75
    %
    
    
    2,196
    
    
    
    24,096
    
    
    
    4.00
    %
    
    
    26,117GMAC Receivables Facility
    
    
    11,400
    
    
    
    8.60
    %
    
    
    12,775
    
    
    
    7,698
    
    
    
    4.44
    %
    
    
    8,737Textron Facility
    
    
    1,482
    
    
    
    8.25
    %
    
    
    1,697
    
    
    
    1,036
    
    
    
    6.00
    %
    
    
    1,194Total
    
    $
    54,999
    
    
    
    
    
    
    $
    63,637
    
    
    $
    249,117
    
    
    
    
    
    
    $
    291,870
 2008 BB&T Purchase Facility
  Liberty Bank Facility
 22




---



##### 



GE Bluegreen/Big Cedar Receivables Facility
 The Foothill Facility.
 The GMAC Receivables Facility
 23




---



##### 



The Textron Facility.
 11. Lines-of-Credit and Notes Payable
  As ofDecember 31, 2007
    
    
    December 31, 2008Interest
    
    
    
    
    
    
    InterestBalance
    
    
    Rates
    
    
    Balance
    
    
    RatesThe GMAC Communities Facility
    
    $
    66,418
    
    
    
    8.25
    %
    
    $
    59,372
    
    
    
    4.25
    %The GMAC AD&C Facility
    
    
    81,662
    
    
    
    9.10
    %
    
    
    99,776
    
    
    
    4.94
    %Textron AD&C Facility
    
    
    9,701
    
    
    
    8.50
    %
    
    
    15,456
    
    
    
    4.50 -4.75
    %Wachovia Notes Payable
    
    
    16,353
    
    
    
    6.60 - 6.95
    %
    
    
    30,347
    
    
    
    2.44 - 2.79
    %Wachovia Line-of-Credit
    
    
    
    
    
    
    
    
    
    
    9,949
    
    
    
    2.19
    %Fifth Third Bank Note Payable
    
    
    
    
    
    
    
    
    
    
    3,400
    
    
    
    3.44
    %Other
    
    
    2,844
    
    
    
    3.29 - 11.03
    %
    
    
    4,439
    
    
    
    5.86 - 11.03
    %Total
    
    $
    176,978
    
    
    
    
    
    
    $
    222,739
  2009
    
    $
    100,8352010
    
    
    49,3692011
    
    
    59,6732012
    
    
    3,3762013
    
    
    3,796Thereafter
    
    
    5,690Total
    
    $
    222,739
 The GMAC Communities Facility
 24




---



##### 



The GMAC AD&C Facility
  Textron AD&C Facility
   Wachovia Notes Payable
  25




---



##### 



The Wachovia Line-of-Credit
  Fifth Third Bank
  12. Senior Secured Notes Payable
  13. Junior Subordinated Debentures
  26




---



##### 



Outstanding
    
    InitialAmount of
    
    Equity
    
    
    
    
    
    Fixed
    
    Variable
    
    BeginningJunior
    
    To
    
    
    
    
    
    Interest
    
    Interest
    
    OptionalSubordinated
    
    Trust
    
    Issue
    
    Rate
    
    Rate
    
    Redemption
    
    MaturityTrust
    
    Debentures
    
    (3)
    
    Date
    
    (1)
    
    (2)
    
    Date
    
    DateBluegreen Statutory
Trust I
    
    $
    23,196
    
    
    $
    696
    
    
    
    3/15/05
    
    
    
    9.160
    %
    
    3-month LIBOR + 4.90%
    
    
    3/30/10
    
    
    
    3/30/35Bluegreen Statutory
Trust II
    
    
    25,774
    
    
    
    774
    
    
    
    5/04/05
    
    
    
    9.158
    %
    
    3-month LIBOR + 4.85%
    
    
    7/30/10
    
    
    
    7/30/35Bluegreen Statutory
Trust III
    
    
    10,310
    
    
    
    310
    
    
    
    5/10/05
    
    
    
    9.193
    %
    
    3-month LIBOR + 4.85%
    
    
    7/30/10
    
    
    
    7/30/35Bluegreen Statutory
Trust IV
    
    
    15,464
    
    
    
    464
    
    
    
    4/24/06
    
    
    
    10.130
    %
    
    3-month LIBOR + 4.85%
    
    
    6/30/11
    
    
    
    6/30/36Bluegreen Statutory
Trust V
    
    
    15,464
    
    
    
    464
    
    
    
    7/21/06
    
    
    
    10.280
    %
    
    3-month LIBOR + 4.85%
    
    
    9/30/11
    
    
    
    9/30/36Bluegreen Statutory
Trust VI
    
    
    20,619
    
    
    
    619
    
    
    
    2/26/07
    
    
    
    9.842
    %
    
    3-month LIBOR + 4.80%
    
    
    4/30/12
    
    
    
    4/30/37$
    110,827
    
    
    $
    3,327
 
 (1)
    
    Both the trust preferred securities and junior subordinated debentures bear interest at a
fixed interest rate from the issue date through the beginning optional redemption date.(2)
    
    Both the trust preferred securities and junior subordinated debentures bear interest at a
variable interest rate from the beginning optional redemption date through the maturity date.(3)
    
    Initial equity in trust is recorded as part of other assets in our consolidated balance
sheets. 14. Fair Value of Financial Instruments
  Cash and cash equivalents:
 Contracts receivable:
 Notes receivable:
 Lines-of-credit, notes payable, receivable-backed notes payable and junior subordinated debentures:
 10.50% senior secured notes payable and junior subordinated debentures:
 27




---



##### 



As of December 31, 2007
    
    As of December 31, 2008Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueCash and cash equivalents
    
    $
    144,973
    
    
    $
    144,973
    
    
    $
    81,775
    
    
    $
    81,775Contracts receivable, net
    
    
    20,532
    
    
    
    20,532
    
    
    
    7,452
    
    
    
    7,452Notes receivable, net
    
    
    160,665
    
    
    
    160,665
    
    
    
    340,644
    
    
    
    340,644Lines-of-credit, notes payable, and receivable-backed notes payable
    
    
    231,977
    
    
    
    231,977
    
    
    
    471,856
    
    
    
    471,85610.50% senior secured notes payable
    
    
    55,000
    
    
    
    54,725
    
    
    
    
    
    
    
    Junior subordinated debentures
    
    
    110,827
    
    
    
    103,351
    
    
    
    110,827
    
    
    
    47,161
 15. Common Stock and Stock Option Plans
 Shareholders Rights Plan
  Stock Option Plans
    Stock Option Awards
    
    Restricted Stock AwardsWeighted averagegrant date fairEmployees
    
    Directors
    
    value
    
    Employees
    
    Directors2006
    
    
    440
    
    
    
    143
    
    
    $
    6.58
    
    
    
    
    
    
    
    172007
    
    
    
    
    
    
    137
    
    
    $
    5.58
    
    
    
    197
    
    
    
    172008
    
    
    777
    
    
    
    295
    
    
    $
    3.18
    
    
    
    1,184
    
    
    
    184Total
    
    
    1,217
    
    
    
    575
    
    
    
    
    
    
    
    1,381
    
    
    
    218
 28




---



##### 



WeightedAverageRemainingRecognition
    
    UnrecognizedAs of December 31, 2008
    
    Period
    
    Compensation(in years)
    
    (000s)Stock Option Awards
    
    
    3.4
    
    
    $
    7,062Restricted Stock Awards
    
    
    4.2
    
    
    $
    10,545
  WeightedAverage
    
    Number ofOutstanding
    
    Exercise Price
    
    SharesOptions
    
    Per Share
    
    ExercisableBalance at December 31, 2006
    
    
    2,064
    
    
    $
    11.31
    
    
    
    481Granted
    
    
    137
    
    
    $
    11.98Forfeited
    
    
    (123
    )
    
    $
    17.05Exercised
    
    
    (140
    )
    
    $
    3.99Balance at December 31, 2007
    
    
    1,938
    
    
    $
    11.51
    
    
    
    579Granted
    
    
    1,072
    
    
    $
    7.60Forfeited
    
    
    (242
    )
    
    $
    13.51Expired
    
    
    (20
    )
    
    $
    9.11Exercised
    
    
    (39
    )
    
    $
    3.48Balance at December 31, 2008
    
    
    2,709
    
    
    $
    9.91
    
    
    
    871
  Weighted-AverageNumber
    
    Grant-DateNon-vested Restricted Shares
    
    of Shares
    
    Fair Value per ShareUnvested at January 1, 2008
    
    
    207
    
    
    $
    11.98Granted
    
    
    1,368
    
    
    
    7.64Vested
    
    
    (27
    )
    
    
    8.20Forfeited
    
    
    (131
    )
    
    
    9.01Unvested at December 31, 2008
    
    
    1,417
    
    
    $
    8.14
  29




---



##### 



Weighted-Average
    
    
    
    
    
    
    Weighted-Remaining
    
    


    Weighted-
    
    
    AverageNumber
    
    
    Number of
    
    
    Contractual
    
    

    Average
    
    
    Exercise Priceof Options
    
    
    Vested Options
    
    
    Term
    
    

    Exercise Price
    
    
    (Vested Only)(In 000s)
    
    
    (In 000s)
    
    
    (In years)$2.11 - $3.00
    
    
    35
    
    
    
    35
    
    
    
    2.4
    
    
    $
    2.21
    
    
    $
    2.21$3.01 - $4.52
    
    
    379
    
    
    
    379
    
    
    
    3.8
    
    
    $
    3.46
    
    
    $
    3.46$4.53 - $6.79
    
    
    183
    
    
    
    183
    
    
    
    5.8
    
    
    $
    5.92
    
    
    $
    5.92$6.80 - $10.20
    
    
    983
    
    
    
    19
    
    
    
    7.4
    
    
    $
    7.70
    
    
    $
    8.50$10.21 - $15.31
    
    
    604
    
    
    
    114
    
    
    
    8.5
    
    
    $
    11.94
    
    
    $
    11.47$15.32 - $18.36
    
    
    525
    
    
    
    141
    
    
    
    6.6
    
    
    $
    18.27
    
    
    $
    18.042,709
    
    
    
    871
    
    
    
    6.8
    
    
    $
    9.91
    
    
    $
    7.45
 Bluegreen Corporation 2008 Stock Incentive Plan
  16. Commitments and Contingencies
    Note 3):
 2009
    
    $
    11,3512010
    
    
    10,8342011
    
    
    8,0812012
    
    
    6,7452013
    
    
    4,812Thereafter
    
    
    23,228Total future minimum lease payments
    
    $
    65,051
  Accounting for Contingencies
 30




---



##### 



Bluegreen Resorts
 Tennessee Tax Audit
  Shore Crest Claim
 Shore Crest Vacation Villas
II Owners Association, Inc., Bluegreen Corporation vs. Welbro Constructors, S.C., Inc. et al. Case
No.: 04-CP-26-500 Shore Crest Vacation Villas Owners Association, Inc., Bluegreen
Vacations Unlimited, Inc., as successor to Patten Resorts, Inc. and as successor to Bluegreen
Resorts, Inc. vs. Welbro Constructors Inc. et al. Case No. 04-CP-26-499
 LeisurePath Vacation Club
 Michelle Alamo, Ernest Alamo, Toniann Quinn and Terrance Quinn v. Vacation Station, LLC,
LeisurePath Vacation Club, LeisurePath, Inc., Bluegreen Corporation, Superior Court of New Jersey,
Bergen County, Docket No. L-6716-05 Enrique Merino et al. v. Leisure Path, Inc. et al.,
Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7084-08
 Missouri Attorney General Investigation
  31




---



##### 



Kelly Fair Labor Standards Act Lawsuit
 Steven Craig Kelly and Jack Clark, individually and on
behalf of others similarly situated v. Bluegreen Corporation
 Pennsylvania Attorney General Lawsuit
 Commonwealth of Pennsylvania Acting by
Attorney General Thomas W. Corbett, Jr. v. Bluegreen Corporation, Bluegreen Resorts, Bluegreen
Vacations Unlimited, Inc. and Great Vacation Destinations, Inc.
 Bluegreen Communities
 Mountain Lakes Mineral Rights
 Betty Yvon
Lesley et a1 v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P. #et al. Betty Yvon Lesley et a1 v. Bluff Dale Development Corporation,
Bluegreen Southwest One. L.P. #et al. Bluegreen
Southwest One, L.P. et al. v. Betty Yvon Lesley et al.
 32




---



##### 



Lesley Property Owners Association of Mountain
Lakes Ranch, Inc. v. Bluegreen Southwest One, L.P. et al. th
 17. Income Taxes
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2007
    
    
    2008Federal:Current
    
    $
    7,397
    
    
    $
    5,124
    
    
    $
    2,385Deferred
    
    
    11,913
    
    
    
    12,749
    
    
    
    (1,672
    )19,310
    
    
    
    17,873
    
    
    
    713State and other:Current
    
    
    629
    
    
    
    1,976
    
    
    
    1,185Deferred
    
    
    922
    
    
    
    (282
    )
    
    
    (1,132
    )1,551
    
    
    
    1,694
    
    
    
    53Total
    
    $
    20,861
    
    
    $
    19,567
    
    
    $
    766
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember
    
    
    December 31,
    
    
    December 31,31, 2006
    
    
    2007
    
    
    2008Income tax expense at statutory rate
    
    $
    19,310
    
    
    $
    18,024
    
    
    $
    88Effect of state taxes, net of federal tax benefit
    
    
    1,236
    
    
    
    1,004
    
    
    
    10Effect of state rate changes on net deferred liabilities
    
    
    
    
    
    
    
    
    
    
    (1,732
    )Change in state valuation allowance
    
    
    
    
    
    
    
    
    
    
    1,404Non-deductible items
    
    
    315
    
    
    
    349
    
    
    
    1,018Other
    
    
    
    
    
    
    190
    
    
    
    (22
    )$
    20,861
    
    
    $
    19,567
    
    
    $
    766
 33




---



##### 



December 31,
    
    
    December 31,2007
    
    
    2008Deferred federal and state tax liabilities (assets):Installment sales treatment of notes
    
    $
    234,528
    
    
    $
    263,122Deferred federal and state loss carryforwards/AMT credits
(net of valuation allowance of $1.8 million and $3.2
million as of December 31, 2007 and 2008, respectively)
    
    
    (146,889
    )
    
    
    (164,797
    )Book over tax carrying value of retained interests in notes
receivable sold
    
    
    17,648
    
    
    
    24,284Book reserves for loan losses and inventory
    
    
    (9,070
    )
    
    
    (23,181
    )Tax over book depreciation
    
    
    4,862
    
    
    
    4,436Unrealized gains on retained interests in notes receivable
sold (see Note 7)
    
    
    5,739
    
    
    
    1,995Deferral of VOI sales under SFAS No. 152
    
    
    (5,016
    )
    
    
    (94
    )Deferral of rent
    
    
    
    
    
    
    (2,284
    )Restructuring
    
    
    
    
    
    
    (1,810
    )Accrued contingencies
    
    
    (1,187
    )
    
    
    (2,533
    )Goodwill
    
    
    306
    
    
    
    (2,107
    )Stock-based compensation
    
    
    (1,484
    )
    
    
    (2,788
    )Other
    
    
    (1,075
    )
    
    
    (2,441
    )Deferred income taxes
    
    $
    98,362
    
    
    $
    91,802Total deferred federal and state tax liabilities
    
    $
    266,590
    
    
    $
    303,481Total deferred federal and state tax assets
    
    
    (168,228
    )
    
    
    (211,679
    )Deferred income taxes
    
    $
    98,362
    
    
    $
    91,802
      34




---



##### 



Accounting for Uncertainty in Income Taxes-an
Interpretation of FASB Statement No. 109
  18. Employee Retirement Savings Plan and Other Employee Matters
   19. Business Segments
    Bluegreen
    
    BluegreenResorts
    
    Communities
    
    TotalsFor the year ended December 31, 2006:Sales of real estate
    
    $
    404,950
    (1)
    
    $
    164,041
    
    
    $
    568,991
    (1)Other resort and communities operations revenue
    
    
    49,831
    
    
    
    11,922
    
    
    
    61,753Depreciation expense
    
    
    8,322
    
    
    
    1,641
    
    
    
    9,963Field operating profit
    
    
    54,310
    
    
    
    35,824
    
    
    
    90,134
 35




---



##### 



Bluegreen
    
    BluegreenResorts
    
    Communities
    
    TotalsFor the year ended December 31, 2007:Sales of real estate
    
    $
    450,163
    (1)
    
    $
    129,217
    
    
    $
    579,380Other resort and communities operations revenue
    
    
    53,624
    
    
    
    13,787
    
    
    
    67,411Depreciation expense
    
    
    8,356
    
    
    
    1,715
    
    
    
    10,071Field operating profit
    
    
    62,890
    
    
    
    23,633
    
    
    
    86,523For the year ended December 31, 2008:Sales of real estate
    
    $
    428,010
    (1)
    
    $
    47,020
    
    
    $
    475,030Other resort and communities operations revenue
    
    
    58,473
    
    
    
    10,709
    
    
    
    69,182Depreciation expense
    
    
    7,294
    
    
    
    1,618
    
    
    
    8,912Field operating profit (loss)
    
    
    46,999
    (2)
    
    
    (3,562
    )(3)
    
    
    43,437
 
 (1)
    
    For the years ended December 31, 2006, 2007 and 2008, includes approximately $44.7 million,
$39.4 million and $8.2 million, respectively related to gains on the sales of VOI notes
receivable through off-balance sheet transactions.(2)
    
    Amount excludes $15.6 million related to the restructuring and $8.5 million related to the
impairment of goodwill, both previously discussed.(3)
    
    Amount includes a charge of $5.2 million related to the impairment of certain completed
communities projects (See Note 8) Bluegreen
    
    
    BluegreenResorts
    
    
    Communities
    
    
    TotalAs of December 31, 2007Notes Receivable
    
    $
    155,591
    
    
    $
    5,074
    
    
    $
    160,665Inventory
    
    
    288,969
    
    
    
    145,999
    
    
    
    434,968Goodwill
    
    
    4,291
    
    
    
    
    
    
    
    4,291
 Bluegreen
    
    BluegreenResorts
    
    Communities
    
    TotalAs of December 31, 2008Notes Receivable
    
    $
    336,229
    
    
    $
    4,415
    
    
    $
    340,644Inventory
    
    
    342,779
    
    
    
    160,490
    
    
    
    503,269Goodwill
    
    
    
    
    
    
    
    
    
    
    
 Reconciliations to Consolidated Amounts
  Year Ended December 31,2006
    
    
    2007
    
    
    2008Field operating profit for reportable segments
    
    $
    90,134
    
    
    $
    86,523
    
    
    $
    43,437Interest income
    
    
    40,765
    
    
    
    44,703
    
    
    
    57,831Other expense, net
    
    
    (2,861
    )
    
    
    (1,743
    )
    
    
    (1,637
    )Corporate general and administrative expenses
    
    
    (46,762
    )
    
    
    (45,997
    )
    
    
    (47,279
    )Interest expense
    
    
    (18,785
    )
    
    
    (24,272
    )
    
    
    (20,888
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (15,617
    )Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    (8,502
    )Consolidated income before minority interest and
provision for income taxes
    
    $
    62,491
    
    
    $
    59,214
    
    
    $
    7,345
 36




---



##### 



Year Ended December 31,2006
    
    
    2007
    
    
    2008Depreciation expense for reportable segments
    
    $
    9,963
    
    
    $
    10,071
    
    
    $
    8,912Depreciation expense for corporate fixed assets
    
    
    4,413
    
    
    
    4,418
    
    
    
    4,331Consolidated depreciation expense
    
    $
    14,376
    
    
    $
    14,489
    
    
    $
    13,243
  As of December 31,2007
    
    
    2008Notes receivable for reportable segments
    
    $
    160,665
    
    
    $
    340,644Inventory for reportable segments
    
    
    434,968
    
    
    
    503,269Goodwill
    
    
    4,291
    
    
    
    Assets not allocated to reportable segments
    
    
    439,654
    
    
    
    349,594Total assets
    
    $
    1,039,578
    
    
    $
    1,193,507
 Geographic Information
  Year Ended December 31,2006
    
    
    2007
    
    
    2008United States
    
    $
    560,749
    
    
    $
    571,931
    
    
    $
    467,500Aruba
    
    
    8,242
    
    
    
    7,449
    
    
    
    7,530Consolidated totals
    
    $
    568,991
    
    
    $
    579,380
    
    
    $
    475,030
  As of December 31,2007
    
    
    2008United States
    
    $
    1,031,640
    
    
    $
    1,183,176Aruba
    
    
    7,938
    
    
    
    10,331Totals assets
    
    $
    1,039,578
    
    
    $
    1,193,507
 20. Quarterly Financial Information (Unaudited)
  For the Three Months EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2007
    
    2007
    
    2007
    
    2007Sales of real estate
    
    $
    121,798
    
    
    $
    143,274
    
    
    $
    176,717
    
    
    $
    137,591Gross profit
    
    
    85,066
    
    
    
    96,969
    
    
    
    121,157
    
    
    
    97,457Net income
    
    
    5,333
    
    
    
    4,092
    
    
    
    13,953
    
    
    
    8,548Net income per common share:Basic
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.45
    
    
    $
    0.28Diluted
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.45
    
    
    $
    0.27
 37




---



##### 



For the Three Months EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2008
    
    2008
    
    2008
    
    2008Sales of real estate
    
    $
    111,256
    
    
    $
    120,086
    
    
    $
    146,907
    
    
    $
    96,781Gross profit
    
    
    80,298
    
    
    
    89,114
    
    
    
    108,690
    
    
    
    66,661Net income (loss)
    
    
    1,396
    
    
    
    3,445
    
    
    
    6,821
    
    
    
    (12,178
    )(1)Net income (loss) per common share:Basic
    
    $
    0.04
    
    
    $
    0.11
    
    
    $
    0.22
    
    
    $
    (0.39
    )(1)Diluted
    
    $
    0.04
    
    
    $
    0.11
    
    
    $
    0.21
    
    
    $
    (0.39
    )
 
 (1)
    
    Amount reflects $15.6 million for the previously discussed restructuring, $8.5 million
of impairment charges for goodwill in our Resorts Division, and $5.2 million inventory
impairment charges recognized on certain of our Communities Division real estate
developments. 38




---



##### 



(2)
 Report of Independent Registered Public Accounting Firm
 
    Share-Based Payment Accounting for Real
Estate Time-Sharing Transactions
  /s/ Ernst & Young LLPCertified Public Accountants
 
 39