##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 BLUEGREEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 December 31,
    
    
    December 31,2005
    
    
    2006ASSETSCash and cash equivalents (including restricted cash of $18,321
and $21,476 at December 31, 2005 and 2006, respectively)
    
    $
    84,704
    
    
    $
    71,148Contracts receivable, net
    
    
    27,473
    
    
    
    23,856Notes receivable (net of allowance of $10,869 and $13,499 at
December 31, 2005 and 2006, respectively)
    
    
    127,783
    
    
    
    144,251Prepaid expenses
    
    
    6,500
    
    
    
    10,800Other assets
    
    
    17,193
    
    
    
    27,465Inventory, net
    
    
    240,969
    
    
    
    349,333Retained interests in notes receivable sold
    
    
    105,696
    
    
    
    130,623Property and equipment, net
    
    
    79,634
    
    
    
    92,445Goodwill
    
    
    4,291
    
    
    
    4,291Total assets
    
    $
    694,243
    
    
    $
    854,212LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesAccounts payable
    
    $
    11,071
    
    
    $
    18,465Accrued liabilities and other
    
    
    43,801
    
    
    
    49,458Deferred income
    
    
    29,354
    
    
    
    40,270Deferred income taxes
    
    
    75,404
    
    
    
    87,624Receivable-backed notes payable
    
    
    35,731
    
    
    
    21,050Lines-of-credit and notes payable
    
    
    61,428
    
    
    
    124,41210.50% senior secured notes payable
    
    
    55,000
    
    
    
    55,000Junior subordinated debentures
    
    
    59,280
    
    
    
    90,208Total liabilities d
    
    
    371,069
    
    
    
    486,487Minority interest
    
    
    9,508
    
    
    
    14,702Commitments and contingenciesShareholders EquityPreferred stock, $.01 par value, 1,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, $.01 par value, 90,000 shares authorized; 33,193 and
33,603 shares issued at December 31, 2005 and 2006, respectively
    
    
    333
    
    
    
    336Additional paid-in capital
    
    
    169,684
    
    
    
    175,164Treasury stock, 2,756 common shares at both December 31, 2005 and
2006, at cost
    
    
    (12,885
    )
    
    
    (12,885
    )Accumulated other comprehensive income, net of income taxes
    
    
    8,575
    
    
    
    12,632Retained earnings
    
    
    147,959
    
    
    
    177,776Total shareholders equity
    
    
    313,666
    
    
    
    353,023Total liabilities and shareholders equity
    
    $
    694,243
    
    
    $
    854,212
 See accompanying notes to consolidated financial statements.
 1




---



##### 



BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2006(restated)
    
    
    (restated)
    
    
    (restated)Revenues:Gross sales of real estate
    
    $
    502,408
    
    
    $
    550,335
    
    
    $
    622,635Estimated uncollectible VOI notes receivable
    
    
    
    
    
    
    
    
    
    
    (59,489
    )Sales of real estate
    
    
    502,408
    
    
    
    550,335
    
    
    
    563,146Other resort and communities operations revenue
    
    
    66,409
    
    
    
    73,797
    
    
    
    63,610Interest income
    
    
    35,939
    
    
    
    34,798
    
    
    
    40,765Gain on sales of notes receivable
    
    
    25,972
    
    
    
    25,226
    
    
    
    5,852630,728
    
    
    
    684,156
    
    
    
    673,373Cost and expenses:Cost of real estate sales
    
    
    179,728
    
    
    
    177,800
    
    
    
    179,054Cost of other resort and communities operations
    
    
    70,785
    
    
    
    77,317
    
    
    
    53,193Selling, general and administrative expenses
    
    
    262,424
    
    
    
    300,239
    
    
    
    356,989Interest expense
    
    
    18,425
    
    
    
    14,474
    
    
    
    18,785Provision for loan losses
    
    
    24,434
    
    
    
    27,587
    
    
    
    Other expense, net
    
    
    1,666
    
    
    
    6,207
    
    
    
    2,861557,462
    
    
    
    603,624
    
    
    
    610,882Income before minority interest and provision for income taxes
    
    
    73,266
    
    
    
    80,532
    
    
    
    62,491Minority interest in income of consolidated subsidiary
    
    
    4,065
    
    
    
    4,839
    
    
    
    7,319Income before provision for income taxes and cumulative effect
of change in accounting principle
    
    
    69,201
    
    
    
    75,693
    
    
    
    55,172Provision for income taxes
    
    
    26,642
    
    
    
    29,142
    
    
    
    20,861Income before cumulative effect of change in accounting principle
    
    
    42,559
    
    
    
    46,551
    
    
    
    34,311Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (5,678
    )Minority interest in income of cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    1,184Net income
    
    $
    42,559
    
    
    $
    46,551
    
    
    $
    29,817Income before cumulative effect of change in accounting
principle per common share:Basic
    
    $
    1.62
    
    
    $
    1.53
    
    
    $
    1.12Diluted
    
    $
    1.43
    
    
    $
    1.49
    
    
    $
    1.10Cumulative 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 per common share:Basic
    
    $
    1.62
    
    
    $
    1.53
    
    
    $
    0.98Diluted
    
    $
    1.43
    
    
    $
    1.49
    
    
    $
    0.96Weighted average number of common and common equivalent shares:Basic
    
    
    26,251
    
    
    
    30,381
    
    
    
    30,557Diluted
    
    
    30,677
    
    
    
    31,245
    
    
    
    31,097
 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, 2003
    
    
    27,702
    
    
    $
    277
    
    
    $
    124,931
    
    
    $
    (12,885
    )
    
    $
    2,953
    
    
    $
    58,849
    
    
    $
    174,125Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,559
    
    
    
    42,559Net unrealized gains on
retained interests in notes
receivable sold, net of
income taxes and
reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,852
    
    
    
    
    
    
    
    1,852Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,411Shares issued upon exercise
of stock options
    
    
    1,150
    
    
    
    12
    
    
    
    6,582
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,594Income tax benefit from
stock options exercised
    
    
    
    
    
    
    
    
    
    
    1,961
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,961Shares issued in connection
with conversion of 8.25%
convertible subordinated
debentures
    
    
    4,138
    
    
    
    41
    
    
    
    33,934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,975Balance at December 31, 2004
    
    
    32,990
    
    
    
    330
    
    
    
    167,408
    
    
    
    (12,885
    )
    
    
    4,805
    
    
    
    101,408
    
    
    
    261,066Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,551
    
    
    
    46,551Net unrealized gains on
retained interests in notes
receivable sold, net of
income taxes and
reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,770
    
    
    
    
    
    
    
    3,770Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,321Shares issued upon exercise
of stock options
    
    
    271
    
    
    
    3
    
    
    
    1,403
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,406Modification of equity
awards and vesting of
restricted stock
    
    
    6
    
    
    
    
    
    
    
    327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327Income tax benefit from
stock options exercised
    
    
    
    
    
    
    
    
    
    
    541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    541Shares issued in connection
with conversion of 8.25%
convertible subordinated
debentures
    
    
    1
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Balance at December 31, 2005
    
    
    33,268
    
    
    
    333
    
    
    
    169,684
    
    
    
    (12,885
    )
    
    
    8,575
    
    
    
    147,959
    
    
    
    313,666Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,817
    
    
    
    29,817Net 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 option 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
    
    
    $
    353,023
 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 31,2004
    
    
    2005
    
    
    2006(restated)
    
    
    (restated)
    
    
    (restated)Operating activities:Net income
    
    $
    42,559
    
    
    $
    46,551
    
    
    $
    29,817Adjustments to reconcile net income to net cash provided by
operating activities:Cumulative effect of change in accounting principle, net
    
    
    
    
    
    
    
    
    
    
    5,678Non-cash stock compensation expense
    
    
    
    
    
    
    327
    
    
    
    2,848Minority interest in income of consolidated subsidiary
    
    
    4,065
    
    
    
    4,839
    
    
    
    6,135Depreciation
    
    
    9,769
    
    
    
    12,332
    
    
    
    14,376Amortization
    
    
    3,849
    
    
    
    5,807
    
    
    
    2,793Gain on sales of notes receivable
    
    
    (25,972
    )
    
    
    (25,226
    )
    
    
    (44,700
    )Loss on disposal of property and equipment
    
    
    455
    
    
    
    94
    
    
    
    2,096Provision for loan losses
    
    
    24,434
    
    
    
    27,587
    
    
    
    59,489Provision for deferred income taxes
    
    
    18,664
    
    
    
    16,979
    
    
    
    12,835Interest accretion on retained interests in notes
receivable sold
    
    
    (6,035
    )
    
    
    (9,310
    )
    
    
    (14,569
    )Proceeds from sales of notes receivable
    
    
    192,580
    
    
    
    198,260
    
    
    
    218,455Changes in operating assets and liabilities:Contracts receivable
    
    
    (2,563
    )
    
    
    612
    
    
    
    3,854Notes receivable
    
    
    (170,282
    )
    
    
    (220,491
    )
    
    
    (283,305
    )Prepaid expenses and other assets
    
    
    565
    
    
    
    2,120
    
    
    
    (12,009
    )Inventory
    
    
    47,032
    
    
    
    29,022
    
    
    
    (8,273
    )Accounts payable, accrued liabilities and other
    
    
    21,470
    
    
    
    6,022
    
    
    
    12,906Net cash provided by operating activities
    
    
    160,590
    
    
    
    95,525
    
    
    
    8,426Investing activities:Cash received from retained interests in notes receivable
sold
    
    
    8,688
    
    
    
    11,016
    
    
    
    30,032Business acquisition
    
    
    (825
    )
    
    
    (675
    )
    
    
    Investments in statutory business trusts
    
    
    
    
    
    
    (1,780
    )
    
    
    (928
    )Purchases of property and equipment
    
    
    (18,409
    )
    
    
    (16,724
    )
    
    
    (24,736
    )Proceeds from sales of property and equipment
    
    
    8
    
    
    
    22
    
    
    
    93Net cash provided (used) by investing activities
    
    
    (10,538
    )
    
    
    (8,141
    )
    
    
    4,461Financing activities:Proceeds from borrowings collateralized by notes receivable
    
    
    105,680
    
    
    
    24,772
    
    
    
    68,393Payments on borrowings collateralized by notes receivable
    
    
    (174,514
    )
    
    
    (64,714
    )
    
    
    (85,114
    )Proceeds from borrowings under line-of-credit facilities
and notes payable
    
    
    60,657
    
    
    
    26,382
    
    
    
    56,670Payments under line-of-credit facilities and notes payable
    
    
    (100,479
    )
    
    
    (92,071
    )
    
    
    (94,586
    )Payments on 10.50% senior secured notes
    
    
    
    
    
    
    (55,000
    )
    
    
    Payment of 8.25% subordinated convertible debentures
    
    
    (273
    )
    
    
    
    
    
    
    Proceeds from issuance of junior subordinated debentures
    
    
    
    
    
    
    59,280
    
    
    
    30,928Payment of debt issuance costs
    
    
    (5,731
    )
    
    
    (3,300
    )
    
    
    (4,438
    )Proceeds from exercise of employee and director stock
options
    
    
    6,594
    
    
    
    1,406
    
    
    
    2,645Distributions to minority interest
    
    
    
    
    
    
    
    
    
    
    (941
    )Net cash used by financing activities
    
    
    (108,066
    )
    
    
    (103,245
    )
    
    
    (26,443
    )Net increase (decrease) in cash and cash equivalents
    
    
    41,986
    
    
    
    (15,861
    )
    
    
    (13,556
    )Cash and cash equivalents at beginning of period
    
    
    58,579
    
    
    
    100,565
    
    
    
    84,704Cash and cash equivalents at end of period
    
    
    100,565
    
    
    
    84,704
    
    
    
    71,148Restricted cash and cash equivalents at end of period
    
    
    (21,423
    )
    
    
    (18,321
    )
    
    
    (21,476
    )Unrestricted cash and cash equivalents at end of period
    
    $
    79,142
    
    
    $
    66,383
    
    
    $
    49,672
 4




---



##### 



BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)
(in thousands)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2006Supplemental schedule of non-cash operating,
investing and financing activities:Inventory acquired through foreclosure or
deedback in lieu of foreclosure
    
    $
    10,926
    
    
    $
    10,585
    
    
    $
    Inventory acquired through financing
    
    $
    21,276
    
    
    $
    54,054
    
    
    $
    95,698Property and equipment acquired through financing
    
    $
    2,637
    
    
    $
    1,114
    
    
    $
    4,640Offset of Joint Venture distribution of
operating proceeds to minority interest against
the Prepayment (see Note 4)
    
    $
    2,704
    
    
    $
    1,340
    
    
    $
    Retained interests in notes receivable sold
    
    $
    32,816
    
    
    $
    38,913
    
    
    $
    33,967Change in unrealized gains on retained interests
in notes receivable sold
    
    $
    2,998
    
    
    $
    6,130
    
    
    $
    6,423Conversion of 8.25% subordinated convertible
debentures into common stock
    
    $
    34,098
    
    
    $
    5
    
    
    $
    Income tax benefit from stock options exercised
    
    $
    1,961
    
    
    $
    541
    
    
    $
    Supplemental schedule of operating cash flow
information:Interest paid, net of amounts capitalized
    
    $
    19,324
    
    
    $
    15,955
    
    
    $
    17,171Income taxes paid
    
    $
    6,055
    
    
    $
    6,646
    
    
    $
    10,064
 See accompanying notes to consolidated financial statements.
 5




---



##### 



BLUEGREEN CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Significant Accounting Policies
 Organization
  Fiscal Year
  Principles of Consolidation
  Restatement and Basis of Presentation
 Statement of Cash Flows Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities, Accounting
for Real Estate Time-Sharing Transactions
 6




---



##### 



Accounting for Real Estate Time-Sharing Transactions.
 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:Vacation ownership tour sales
    
    Vacation ownership tour sales commissions are earned
per contract terms with third parties.Resort title fees
    
    Escrow amounts are released and title documents are
completed.Management fees
    
    Management services are rendered.Rental commissions
    
    Rental services are provided.Rental income
    
    Guests complete stays at the resorts. Effective
January 1, 2006, rental income is 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.Mini-vacation package sales to third parties
    
    Mini-vacation packages are fulfilled (i.e., guests
use mini- vacation packages to stay at a hotel, take
a cruise, etc.). During 2006, we transitioned our
mini-vacation business so that substantially all
mini-vacation tours are used internally at a
Bluegreen sales office. Mini-vacation packages used
for internal purposes are deferred and recognized as
a credit to marketing expense.
  Notes Receivable
  Accounting for Contingencies, Selected
Loan Loss Allowance Methodology and Documentation Issues,
 Retained Interest in Notes Receivable Sold
  8




---



##### 



Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities
  Accounting for Certain
Investments in Debt and Equity Securities
   Inventory
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 Property and Equipment
  Goodwill
 Goodwill and Other Intangible Assets.
 9




---



##### 



Treasury Stock
  Advertising Expense
  Stock-Based Compensation
 Accounting for Stock-based Compensation Share-Based Payment Accounting for Stock Issued to Employees Accounting for Stock Based CompensationTransition and Disclosure
      10




---



##### 



Year Ended December 31,2004
    
    2005
    
    2006Risk free investment rate
    
    
    2.1
    %
    
    
    3.9
    %
    
    
    5.0
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Volatility factor of expected market price
    
    
    65.0
    %
    
    
    61.0
    %
    
    
    53.0
    %Life of option
    
    3.0 years
    
    5.5 years
    
    5.8 years
    Weighted-AverageNumber
    
    
    Grant-DateNon-vested Shares
    
    of Shares
    
    
    Fair Value(in 000s)Non-vested at January 1, 2006
    
    
    1,334
    
    
    $
    11.10Granted
    
    
    582
    
    
    
    12.02Vested
    
    
    (127
    )
    
    
    6.15Forfeited
    
    
    (206
    )
    
    
    11.33Non-vested at December 31,
2006
    
    
    1,583
    
    
    $
    11.81
  Year Ended December 31,2004
    
    
    2005Net income, as reported
    
    $
    42,559
    
    
    $
    46,551Add: Total stock-based compensation
expense included in the determination of
reported net income, net of related tax
effects
    
    
    
    
    
    
    207Deduct: Total stock-based compensation
expense determined under the fair
value-based method for all awards, net of
related tax effects
    
    
    (308
    )
    
    
    (1,493
    )Pro forma net income
    
    $
    42,251
    
    
    $
    45,265Earnings per share, as reported:Basic
    
    $
    1.62
    
    
    $
    1.53Diluted
    
    $
    1.43
    
    
    $
    1.49Pro forma earnings per share:Basic
    
    $
    1.61
    
    
    $
    1.49Diluted
    
    $
    1.42
    
    
    $
    1.45
 11




---



##### 



Earnings Per Common Share
   Year Ended December 31,2004
    
    
    2005
    
    
    2006Basic earnings per common share  numerator:Net income
    
    $
    42,559
    
    
    $
    46,551
    
    
    $
    29,817Diluted earnings per common share  numerator:Net income  basic
    
    $
    42,559
    
    
    $
    46,551
    
    
    $
    29,817Effect of dilutive securities (net of income tax effects)
    
    
    1,357
    
    
    
    
    
    
    
    Net income  diluted
    
    $
    43,916
    
    
    $
    46,551
    
    
    $
    29,817Denominator:Denominator for basic earnings per common
share-weighted-average shares
    
    
    26,251
    
    
    
    30,381
    
    
    
    30,557Effect of dilutive securities:Stock options
    
    
    1,098
    
    
    
    864
    
    
    
    540Convertible securities
    
    
    3,328
    
    
    
    
    
    
    
    Dilutive potential common shares
    
    
    4,426
    
    
    
    864
    
    
    
    540Denominator for diluted earnings per common
share-adjusted weighted-average shares and assumed
conversions
    
    
    30,677
    
    
    
    31,245
    
    
    
    31,097Basic earnings per common share:
    
    $
    1.62
    
    
    $
    1.53
    
    
    $
    0.98Diluted earnings per common share:
    
    $
    1.43
    
    
    $
    1.49
    
    
    $
    0.96
 Comprehensive Income
 Reporting Comprehensive Income
 Recent Accounting Pronouncements
 Accounting for Servicing of Financial Assets, an
amendment of FASB Statement No. 140
 Accounting for Uncertainty in Income
Taxes
 12




---



##### 



Fair Value Measurements
 Reclassifications
  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
    13




---



##### 



3. Joint Venture
    Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity
  4. Marketing Agreement
  14




---



##### 



5. Notes Receivable and Note Receivable Purchase Facilities
  As of December 31,2005
    
    
    2006Notes receivable secured by VOIs
    
    $
    131,058
    
    
    $
    150,649Notes receivable secured by homesites
    
    
    7,408
    
    
    
    6,915Other notes receivable
    
    
    186
    
    
    
    186Notes receivable, gross
    
    
    138,652
    
    
    
    157,750Reserve for loan losses
    
    
    (10,869
    )
    
    
    (13,499
    )Notes receivable, net
    
    $
    127,783
    
    
    $
    144,251
    Year EndedDecember 31,2005
    
    
    2006Balance, beginning of year
    
    $
    13,663
    
    
    $
    10,869Cumulative adjustment for cumulative effect of
change in accounting principle
    
    
    
    
    
    
    1,164Provision for loan losses (1)
    
    
    27,587
    
    
    
    59,489Less: Allowance on sold receivables
    
    
    (14,607
    )
    
    
    (38,848
    )Less: Write-offs of uncollectible receivables
    
    
    (15,774
    )
    
    
    (19,175
    )Balance, end of year
    
    $
    10,869
    
    
    $
    13,499
 
 (1)
    
    Effective January 1, 2006, SFAS No. 152 requires that the provision for loan loss be
recorded as reduction of VOI sales. 15




---



##### 



2005
    
    
    2006Due in 1 year
    
    $
    21,231
    
    
    $
    28,912Due in 2 years
    
    
    9,684
    
    
    
    10,280Due in 3 years
    
    
    10,469
    
    
    
    11,008Due in 4 years
    
    
    10,997
    
    
    
    12,079Due in 5 years
    
    
    11,888
    
    
    
    13,693Thereafter
    
    
    74,383
    
    
    
    81,778Total
    
    $
    138,652
    
    
    $
    157,750
 Sales of Notes Receivable
  Year Ended
    
    Aggregate Principal
    
    
    
    
    
    
    
    
    
    
    Initial Fair ValueDecember 31, 2004:
    
    Balance of Notes
    
    
    Purchase
    
    
    Gain
    
    
    of RetainedFacility
    
    Receivable Sold
    
    
    Price
    
    
    Recognized
    
    
    Interest2004 Term Securitization
    
    $
    172.1
    
    
    $
    156.6
    
    
    $
    21.1
    
    
    $
    33.32004 GE Purchase Facility
    
    
    43.4
    
    
    
    38.6
    
    
    
    4.9
    
    
    
    6.1Total
    
    $
    215.5
    
    
    $
    195.2
    
    
    $
    26.0
    
    
    $
    39.4
 Year Ended
    
    Aggregate Principal
    
    
    
    
    
    
    
    
    
    
    Initial Fair ValueDecember 31, 2005:
    
    Balance of Notes
    
    
    Purchase
    
    
    Gain
    
    
    of RetainedFacility
    
    Receivable Sold
    
    
    Price
    
    
    Recognized
    
    
    Interest2004 BB&T Purchase Facility
    
    $
    211.9
    
    
    $
    180.1
    
    
    $
    25.0
    
    
    $
    42.42005 Term Securitization
    
    
    16.7
    
    
    
    15.1
    
    
    
    0.2
    
    
    
    3.0Total
    
    $
    228.6
    
    
    $
    195.2
    
    
    $
    25.2
    
    
    $
    45.4
 Year Ended
    
    Aggregate Principal
    
    
    
    
    
    
    
    
    
    
    Initial Fair ValueDecember 31, 2006:
    
    Balance of Notes
    
    
    Purchase
    
    
    Gain
    
    
    of RetainedFacility
    
    Receivable Sold
    
    
    Price
    
    
    Recognized
    
    
    Interest2005 Term Securitization
    
    $
    18.6
    
    
    $
    16.7
    
    
    $
    4.6
    
    
    $
    3.32006-A GE Purchase Facility
    
    
    72.0
    
    
    
    64.8
    
    
    
    11.1
    
    
    
    7.92006 Term Securitization
    
    
    153.0
    
    
    
    137.0
    
    
    
    29.0
    
    
    
    22.8Total
    
    $
    243.6
    
    
    $
    218.5
    
    
    $
    44.7
    
    
    $
    34.0
   16




---



##### 



2004 Term Securitization
  2004 GE Purchase Facility
 2006 GE Purchase Facility )
 2004 BB&T Purchase Facility
  17




---



##### 



2005 Term Securitization
   2006 GE Purchase Facility
   2006 Term Securitization
  18




---



##### 



2006 BB&T Purchase Facility
 6. Retained Interests in Notes Receivable Sold
 Retained Interests in Notes Receivable Sold
  GrossAmortized
    
    
    UnrealizedAs of December 31, 2005:
    
    Cost
    
    
    Gain
    
    
    Fair Value2002 Term Securitization
    
    $
    18,491
    
    
    $
    
    
    
    $
    18,4912004 Term Securitization (see Note 5)
    
    
    33,371
    
    
    
    3,373
    
    
    
    36,7442004 GE Purchase Facility (see Note 5)
    
    
    6,284
    
    
    
    500
    
    
    
    6,7842005 Term Securitization (see Note 5)
    
    
    33,606
    
    
    
    10,071
    
    
    
    43,677Total
    
    $
    91,752
    
    
    $
    13,944
    
    
    $
    105,696
 GrossAmortized
    
    
    UnrealizedAs of December 31, 2006:
    
    Cost
    
    
    Gain
    
    
    Fair Value2002 Term Securitization
    
    $
    12,643
    
    
    $
    472
    
    
    $
    13,1152004 Term Securitization (see Note 5)
    
    
    17,784
    
    
    
    2,785
    
    
    
    20,5692004 GE Purchase Facility (see Note 5)
    
    
    6,695
    
    
    
    56
    
    
    
    6,7512005 Term Securitization (see Note 5)
    
    
    42,469
    
    
    
    8,291
    
    
    
    50,7602006 GE Purchase Facility (see Note 5)
    
    
    7,405
    
    
    
    1,264
    
    
    
    8,6692006 Term Securitization (see Note 5)
    
    
    23,253
    
    
    
    7,506
    
    
    
    30,759Total
    
    $
    110,249
    
    
    $
    20,374
    
    
    $
    130,623
   AmortizedCost
    
    
    Fair ValueAfter one year but within five
    
    $
    
    
    
    $
    After five years but within ten
    
    
    110,249
    
    
    
    130,623Total
    
    $
    110,249
    
    
    $
    130,623
  19




---



##### 



Hypothetical Fair Value at December 31, 2006AdverseChange
    
    2002 Term
    
    2004 Term
    
    2004 GE
    
    2005 Term
    
    2006 GE Purchase
    
    2006 TermPercentage
    
    Securitization
    
    Securitization
    
    Purchase Facility
    
    Securitization
    
    Facility
    
    SecuritizationPrepayment rate:
    
    
    10
    %
    
    $
    12,961
    
    
    $
    20,195
    
    
    $
    6,712
    
    
    $
    49,814
    
    
    $
    8,545
    
    
    $
    30,19420
    %
    
    
    12,812
    
    
    
    19,836
    
    
    
    6,674
    
    
    
    48,925
    
    
    
    8,427
    
    
    
    29,655Loss severity rate:
    
    
    10
    %
    
    
    12,884
    
    
    
    19,977
    
    
    
    6,513
    
    
    
    49,621
    
    
    
    7,936
    
    
    
    29,86020
    %
    
    
    12,653
    
    
    
    19,384
    
    
    
    6,275
    
    
    
    48,481
    
    
    
    7,206
    
    
    
    28,961Default rate:
    
    
    10
    %
    
    
    12,869
    
    
    
    19,916
    
    
    
    6,434
    
    
    
    49,541
    
    
    
    7,765
    
    
    
    29,55220
    %
    
    
    12,626
    
    
    
    19,274
    
    
    
    6,125
    
    
    
    48,340
    
    
    
    6,883
    
    
    
    28,367Discount rate:
    
    
    10
    %
    
    
    12,882
    
    
    
    20,222
    
    
    
    6,594
    
    
    
    49,998
    
    
    
    8,360
    
    
    
    30,02320
    %
    
    
    12,657
    
    
    
    19,886
    
    
    
    6,443
    
    
    
    49,261
    
    
    
    8,065
    
    
    
    29,315
  For the Year Ended December 31,2004
    
    2005
    
    2006Proceeds from new sales of receivables
    
    $
    192,580
    
    
    $
    198,260
    
    
    $
    218,455Collections on previously sold receivables
    
    
    (65,123
    )
    
    
    (104,863
    )
    
    
    (145,096
    )Servicing fees received
    
    
    2,931
    
    
    
    4,969
    
    
    
    6,955Purchases of foreclosed assets
    
    
    
    
    
    
    (631
    )
    
    
    (1,122
    )Resales of foreclosed assets
    
    
    (16,886
    )
    
    
    (30,573
    )
    
    
    (40,566
    )Remarketing fees received
    
    
    8,707
    
    
    
    16,793
    
    
    
    23,163Cash received on retained interests in
notes receivable sold
    
    
    8,688
    
    
    
    11,016
    
    
    
    30,032Cash paid to fund required reserve accounts
    
    
    (3,469
    )
    
    
    (6,445
    )
    
    
    (13,495
    )Purchase of upgraded accounts
    
    
    
    
    
    
    (2,443
    )
    
    
    (17,447
    )
  As ofDecember 31, 2006Principal
    
    Year EndedTotal
    
    Amount
    
    December 31, 2006Principal
    
    of Loans
    
    CreditAmount of
    
    More than 60
    
    Losses, NetLoans
    
    Days Past Due
    
    of Recoveries2002 Term Securitization
    
    $
    45,889
    
    
    $
    1,308
    
    
    $
    1,8992004 Term Securitization
    
    
    82,968
    
    
    
    2,138
    
    
    
    4,2612004 GE Purchase Facility
    
    
    26,390
    
    
    
    426
    
    
    
    2005 Term Securitization
    
    
    176,357
    
    
    
    5,250
    
    
    
    6,2812006 Term Securitization
    
    
    143,645
    
    
    
    3,191
    
    
    
    2006 GE Purchase Facility
    
    
    65,286
    
    
    
    1,052
    
    
    
    
 20




---



##### 



7. Inventory
  As of December 31,2005
    
    
    2006Bluegreen Resorts
    
    $
    173,338
    
    
    $
    233,290Bluegreen Communities
    
    
    67,631
    
    
    
    116,043$
    240,969
    
    
    $
    349,333
   8. Property and Equipment
  December 31,Useful Life
    
    
    2005
    
    
    2006Office equipment, furniture and fixtures
    
    3-14 years
    
    $
    50,720
    
    
    $
    58,795Golf course land, land improvements,
buildings and equipment
    
    7-39 years
    
    
    32,497
    
    
    
    33,684Land, buildings and building improvements
    
    3-31 years
    
    
    25,902
    
    
    
    35,254Leasehold improvements
    
    2-14 years
    
    
    12,041
    
    
    
    16,846Aircraft
    
    5 years
        
    
    1,415
    
    
    
    1,415Vehicles and equipment
    
    3-5 years
    
    
    1,129
    
    
    
    1,044123,704
    
    
    
    147,038Accumulated depreciation and
amortization of leasehold improvements
    
    
    
    
    
    
    (44,070
    )
    
    
    (54,593
    )Total
    
    
    
    
    
    $
    79,634
    
    
    $
    92,445
 9. Receivable-Backed Notes Payable
 2006 BB&T Purchase Facility.
 21




---



##### 



The GMAC Receivables Facility
 The Foothill Facility.
 The Textron Facility.
 The Resort Finance Facility
  22




---



##### 



10. Lines-of-Credit and Notes Payable
  December 31,
    
    
    December 31,2005
    
    
    2006Lines-of-credit secured by inventory and
golf courses with a carrying value of
$155.3 million at December 31, 2006.
Interest rates range from 8.13% to 9.09% at
December 31, 2005 and 9.25% to 9.83% at
December 31, 2006. Maturities range from
October 2007 to September 2009
    
    $
    35,255
    
    
    $
    90,974Notes and mortgage notes secured by certain
inventory, property, equipment and
investments with an aggregate carrying
value of $59.3 million at December 31,
2006. Interest rates ranged from 4.75% to
8.13% at December 31, 2005 to 4.75% to
9.50% at December 31, 2006. Maturities
range from on demand to May 2026
    
    
    24,057
    
    
    
    32,736Lease obligations secured by the underlying
assets with an aggregate carrying value of
$0.7 million at December 31, 2006. Imputed
interest rates ranging from 3.29% to 14.20%
at December 31, 2005 and from 3.29% to
14.20% at December 31, 2006. Maturities
range from March 2007 to October 2010
    
    
    2,116
    
    
    
    702Total
    
    $
    61,428
    
    
    $
    124,412
  2007
    
    $
    39,5412008
    
    
    8,5832009
    
    
    72,4332010
    
    
    2782011
    
    
    231Thereafter
    
    
    3,346Total
    
    $
    124,412
  The GMAC AD&C Facility.
 23




---



##### 



The RFL A&D Facility.
 The GMAC Communities Facility.
 The Wachovia Line-of-Credit
 11. Senior Secured Notes Payable
  24




---



##### 



pari passu pari passu
  25




---



##### 



CONDENSED CONSOLIDATING BALANCE SHEETS
(dollars in thousands)
 December 31, 2005Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    55,708
    
    
    $
    15,443
    
    
    $
    13,553
    
    
    $
    
    
    
    $
    84,704Contracts receivable, net
    
    
    
    
    
    
    1,801
    
    
    
    25,672
    
    
    
    
    
    
    
    27,473Intercompany receivable
    
    
    92,641
    
    
    
    
    
    
    
    
    
    
    
    (92,641
    )
    
    
    Notes receivable, net
    
    
    
    
    
    
    48,294
    
    
    
    79,489
    
    
    
    
    
    
    
    127,783Inventory, net
    
    
    
    
    
    
    17,857
    
    
    
    223,112
    
    
    
    
    
    
    
    240,969Retained interests in notes receivable sold
    
    
    
    
    
    
    105,696
    
    
    
    
    
    
    
    
    
    
    
    105,696Property and equipment, net
    
    
    14,569
    
    
    
    1,330
    
    
    
    63,735
    
    
    
    
    
    
    
    79,634Investments in subsidiaries
    
    
    265,023
    
    
    
    
    
    
    
    3,230
    
    
    
    (268,253
    )
    
    
    Other assets
    
    
    4,028
    
    
    
    4,666
    
    
    
    19,290
    
    
    
    
    
    
    
    27,984Total assets
    
    $
    431,969
    
    
    $
    195,087
    
    
    $
    428,081
    
    
    $
    (360,894
    )
    
    $
    694,243LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Accounts payable, accrued liabilities and
other
    
    $
    20,214
    
    
    $
    15,077
    
    
    $
    48,935
    
    
    $
    
    
    
    $
    84,226Intercompany payable
    
    
    
    
    
    
    4,563
    
    
    
    88,078
    
    
    
    (92,641
    )
    
    
    Deferred income taxes
    
    
    (21,798
    )
    
    
    41,824
    
    
    
    55,378
    
    
    
    
    
    
    
    75,404Lines-of-credit and notes payable
    
    
    5,607
    
    
    
    27,064
    
    
    
    64,488
    
    
    
    
    
    
    
    97,15910.50% senior secured notes payable
    
    
    55,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,000Junior subordinated debentures
    
    
    59,280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,280Total liabilities
    
    
    118,303
    
    
    
    88,528
    
    
    
    256,879
    
    
    
    (92,641
    )
    
    
    371,069Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,508
    
    
    
    9,508Total shareholders equity
    
    
    313,666
    
    
    
    106,559
    
    
    
    171,202
    
    
    
    (277,761
    )
    
    
    313,666Total liabilities and shareholders
equity
    
    $
    431,969
    
    
    $
    195,087
    
    
    $
    428,081
    
    
    $
    (360,894
    )
    
    $
    694,243
 26




---



##### 



December 31, 2006Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    36,316
    
    
    $
    17,002
    
    
    $
    17,830
    
    
    $
    
    
    
    $
    71,148Contracts receivable, net
    
    
    
    
    
    
    1,222
    
    
    
    22,634
    
    
    
    
    
    
    
    23,856Intercompany receivable
    
    
    159,488
    
    
    
    
    
    
    
    
    
    
    
    (159,488
    )
    
    
    Notes receivable, net
    
    
    
    
    
    
    57,845
    
    
    
    86,406
    
    
    
    
    
    
    
    144,251Inventory, net
    
    
    
    
    
    
    17,967
    
    
    
    331,366
    
    
    
    
    
    
    
    349,333Retained interests in notes receivable sold
    
    
    
    
    
    
    130,623
    
    
    
    
    
    
    
    
    
    
    
    130,623Property and equipment, net
    
    
    16,110
    
    
    
    933
    
    
    
    75,402
    
    
    
    
    
    
    
    92,445Investments in subsidiaries
    
    
    296,593
    
    
    
    
    
    
    
    3,230
    
    
    
    (299,823
    )
    
    
    Other assets
    
    
    7,860
    
    
    
    4,582
    
    
    
    30,114
    
    
    
    
    
    
    
    42,556Total assets
    
    $
    516,367
    
    
    $
    230,174
    
    
    $
    566,982
    
    
    $
    (459,311
    )
    
    $
    854,212LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Accounts payable, accrued liabilities and
other
    
    $
    33,303
    
    
    $
    20,717
    
    
    $
    54,173
    
    
    $
    
    
    
    $
    108,193Intercompany payable
    
    
    
    
    
    
    2,458
    
    
    
    157,030
    
    
    
    (159,488
    )
    
    
    Deferred income taxes
    
    
    (19,813
    )
    
    
    47,864
    
    
    
    59,573
    
    
    
    
    
    
    
    87,624Lines-of-credit and notes payable
    
    
    4,646
    
    
    
    18,914
    
    
    
    121,902
    
    
    
    
    
    
    
    145,46210.50% senior secured notes payable
    
    
    55,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,000Junior subordinated debentures
    
    
    90,208
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,208Total liabilities
    
    
    163,344
    
    
    
    89,953
    
    
    
    392,678
    
    
    
    (159,488
    )
    
    
    486,487Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,702
    
    
    
    14,702Total shareholders equity
    
    
    353,023
    
    
    
    140,221
    
    
    
    174,304
    
    
    
    (314,525
    )
    
    
    353,023Total liabilities and shareholders
equity
    
    $
    516,367
    
    
    $
    230,174
    
    
    $
    566,982
    
    
    $
    (459,311
    )
    
    $
    854,212
 27




---



##### 



CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(dollars in thousands)
 Year Ended December 31, 2004Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedREVENUESSales of real estate
    
    $
    
    
    
    $
    48,572
    
    
    $
    453,836
    
    
    $
    
    
    
    $
    502,408Other resort and communities operations
revenue
    
    
    
    
    
    
    6,740
    
    
    
    59,669
    
    
    
    
    
    
    
    66,409Management fees
    
    
    53,664
    
    
    
    
    
    
    
    
    
    
    
    (53,664
    )
    
    
    Equity income from subsidiaries
    
    
    39,598
    
    
    
    
    
    
    
    
    
    
    
    (39,598
    )
    
    
    Interest income
    
    
    339
    
    
    
    23,346
    
    
    
    12,254
    
    
    
    
    
    
    
    35,939Gain on sales of notes receivable
    
    
    
    
    
    
    25,972
    
    
    
    
    
    
    
    
    
    
    
    25,97293,601
    
    
    
    104,630
    
    
    
    525,759
    
    
    
    (93,262
    )
    
    
    630,728COSTS AND EXPENSESCost of real estate sales
    
    
    
    
    
    
    13,702
    
    
    
    166,026
    
    
    
    
    
    
    
    179,728Cost of other resort and communities
operations
    
    
    
    
    
    
    4,574
    
    
    
    66,211
    
    
    
    
    
    
    
    70,785Management fees
    
    
    
    
    
    
    1,088
    
    
    
    52,576
    
    
    
    (53,664
    )
    
    
    Selling, general and administrative expenses
    
    
    40,615
    
    
    
    22,814
    
    
    
    198,995
    
    
    
    
    
    
    
    262,424Interest expense
    
    
    8,452
    
    
    
    4,994
    
    
    
    4,979
    
    
    
    
    
    
    
    18,425Provision for loan losses
    
    
    
    
    
    
    18,474
    
    
    
    5,960
    
    
    
    
    
    
    
    24,434Other expense
    
    
    121
    
    
    
    1,068
    
    
    
    477
    
    
    
    
    
    
    
    1,66649,188
    
    
    
    66,714
    
    
    
    495,224
    
    
    
    (53,664
    )
    
    
    557,462Income before minority interest and
provision
for income taxes
    
    
    44,413
    
    
    
    37,916
    
    
    
    30,535
    
    
    
    (39,598
    )
    
    
    73,226Minority interest in income of consolidated
subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,065
    
    
    
    4,065Income before provision for income taxes
    
    
    44,413
    
    
    
    37,916
    
    
    
    30,535
    
    
    
    (43,663
    )
    
    
    69,201Provision for income taxes
    
    
    1,854
    
    
    
    13,032
    
    
    
    11,756
    
    
    
    
    
    
    
    26,642Net income
    
    $
    42,559
    
    
    $
    24,884
    
    
    $
    18,779
    
    
    $
    (43,663
    )
    
    $
    42,559
 28




---



##### 



Year Ended December 31, 2005Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedREVENUESSales of real estate
    
    $
    
    
    
    $
    55,007
    
    
    $
    495,328
    
    
    $
    
    
    
    $
    550,335Other resort and communities operations
revenue
    
    
    
    
    
    
    13,236
    
    
    
    60,561
    
    
    
    
    
    
    
    73,797Management fees
    
    
    58,360
    
    
    
    
    
    
    
    
    
    
    
    (58,360
    )
    
    
    Equity income from subsidiaries
    
    
    52,045
    
    
    
    
    
    
    
    
    
    
    
    (52,045
    )
    
    
    Interest income
    
    
    1,379
    
    
    
    17,294
    
    
    
    16,125
    
    
    
    
    
    
    
    34,798Gain on sales of notes receivable
    
    
    
    
    
    
    25,226
    
    
    
    
    
    
    
    
    
    
    
    25,226111,784
    
    
    
    110,763
    
    
    
    572,014
    
    
    
    (110,405
    )
    
    
    684,156COSTS AND EXPENSESCost of real estate sales
    
    
    
    
    
    
    15,955
    
    
    
    161,845
    
    
    
    
    
    
    
    177,800Cost of other resort and communities
operations
    
    
    
    
    
    
    5,056
    
    
    
    72,261
    
    
    
    
    
    
    
    77,317Management fees
    
    
    
    
    
    
    1,158
    
    
    
    57,202
    
    
    
    (58,360
    )
    
    
    Selling, general and administrative expenses
    
    
    61,934
    
    
    
    27,297
    
    
    
    211,008
    
    
    
    
    
    
    
    300,239Interest expense
    
    
    4,446
    
    
    
    2,875
    
    
    
    7,153
    
    
    
    
    
    
    
    14,474Provision for loan losses
    
    
    
    
    
    
    1,416
    
    
    
    26,171
    
    
    
    
    
    
    
    27,587Other expense
    
    
    1,967
    
    
    
    3,117
    
    
    
    1,123
    
    
    
    
    
    
    
    6,20768,347
    
    
    
    56,874
    
    
    
    536,763
    
    
    
    (58,360
    )
    
    
    603,624Income before minority interest and
provision
for income taxes
    
    
    43,437
    
    
    
    53,889
    
    
    
    35,251
    
    
    
    (52,045
    )
    
    
    80,532Minority interest in income of consolidated
subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,839
    
    
    
    4,839Income before provision for income taxes
    
    
    43,437
    
    
    
    53,889
    
    
    
    35,251
    
    
    
    (56,884
    )
    
    
    75,693(Benefit) provision for income taxes
    
    
    (3,114
    )
    
    
    19,502
    
    
    
    12,754
    
    
    
    
    
    
    
    29,142Net income (loss)
    
    $
    46,551
    
    
    $
    34,387
    
    
    $
    22,497
    
    
    $
    (56,884
    )
    
    $
    46,551
 29




---



##### 



Year Ended December 31, 2006Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedREVENUESSales of real estate
    
    $
    
    
    
    $
    58,568
    
    
    $
    504,578
    
    
    $
    
    
    
    $
    563,146Other resort and communities operations
revenue
    
    
    
    
    
    
    14,198
    
    
    
    49,412
    
    
    
    
    
    
    
    63,610Management fees
    
    
    57,667
    
    
    
    
    
    
    
    
    
    
    
    (57,667
    )
    
    
    Equity income from subsidiaries
    
    
    26,572
    
    
    
    
    
    
    
    
    
    
    
    (26,572
    )
    
    
    Interest income
    
    
    1,768
    
    
    
    24,753
    
    
    
    14,244
    
    
    
    
    
    
    
    40,765Gain on sales of notes receivable
    
    
    
    
    
    
    5,852
    
    
    
    
    
    
    
    
    
    
    
    5,85286,007
    
    
    
    103,371
    
    
    
    568,234
    
    
    
    (84,239
    )
    
    
    673,373COSTS AND EXPENSESCost of real estate sales
    
    
    
    
    
    
    16,134
    
    
    
    162,920
    
    
    
    
    
    
    
    179,054Cost of other resort and communities
operations
    
    
    
    
    
    
    4,913
    
    
    
    48,280
    
    
    
    
    
    
    
    53,193Management fees
    
    
    
    
    
    
    844
    
    
    
    56,823
    
    
    
    (57,667
    )
    
    
    Selling, general and administrative expenses
    
    
    48,158
    
    
    
    29,953
    
    
    
    278,878
    
    
    
    
    
    
    
    356,989Interest expense
    
    
    4,853
    
    
    
    4,106
    
    
    
    9,826
    
    
    
    
    
    
    
    18,785Other expense
    
    
    1,194
    
    
    
    1,193
    
    
    
    474
    
    
    
    
    
    
    
    2,86154,205
    
    
    
    57,143
    
    
    
    557,201
    
    
    
    (57,667
    )
    
    
    610,882Income before minority interest and
provision
for income taxes
    
    
    31,802
    
    
    
    46,228
    
    
    
    11,033
    
    
    
    (26,572
    )
    
    
    62,491Minority interest in income of consolidated
subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,319
    
    
    
    7,319Income before provision for income
taxes
    
    
    31,802
    
    
    
    46,228
    
    
    
    11,033
    
    
    
    (33,891
    )
    
    
    55,172Provision for income taxes
    
    
    1,985
    
    
    
    14,681
    
    
    
    4,195
    
    
    
    
    
    
    
    20,861Income before cumulative effect of change
in accounting principle
    
    
    29,817
    
    
    
    31,547
    
    
    
    6,838
    
    
    
    (33,891
    )
    
    
    34,311Cumulative effect of change in accounting
principle, net of tax
    
    
    
    
    
    
    (1,942
    )
    
    
    (3,736
    )
    
    
    
    
    
    
    (5,678
    )Minority interest in income of cumulative
effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,184
    
    
    
    1,184Net income
    
    $
    29,817
    
    
    $
    29,605
    
    
    $
    3,102
    
    
    $
    (32,707
    )
    
    $
    29,817
 30




---



##### 



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(dollars in thousands)
 Year Ended December 31, 2004(restated)Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    ConsolidatedOperating activities:Net cash provided by operating activities
    
    $
    41,212
    
    
    $
    85,300
    
    
    $
    34,078
    
    
    $
    160,590Investing activities:Cash received from retained interests in notes receivable
sold
    
    
    
    
    
    
    8,688
    
    
    
    
    
    
    
    8,688Business acquisition
    
    
    
    
    
    
    
    
    
    
    (825
    )
    
    
    (825
    )Purchases of property and equipment
    
    
    (5,380
    )
    
    
    (643
    )
    
    
    (12,386
    )
    
    
    (18,409
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    8Net cash (used) provided by investing activities
    
    
    (5,380
    )
    
    
    8,045
    
    
    
    (13,203
    )
    
    
    (10,538
    )Financing activities:Proceeds from borrowings collateralized by notes
receivable
    
    
    
    
    
    
    88,760
    
    
    
    16,920
    
    
    
    105,680Payments on borrowings collateralized by notes receivable
    
    
    
    
    
    
    (167,694
    )
    
    
    (6,820
    )
    
    
    (174,514
    )Proceeds from borrowings under line-of-credit facilities
and
notes payable
    
    
    
    
    
    
    3,179
    
    
    
    57,478
    
    
    
    60,657Payments under line-of-credit facilities and notes payable
    
    
    (1,769
    )
    
    
    (8,525
    )
    
    
    (90,185
    )
    
    
    (100,479
    )Payment of 8.25% subordinated convertible debentures
    
    
    (273
    )
    
    
    
    
    
    
    
    
    
    
    (273
    )Payment of debt issuance costs
    
    
    
    
    
    
    (3,920
    )
    
    
    (1,811
    )
    
    
    (5,731
    )Proceeds from exercise of employee and director stock
options
    
    
    6,594
    
    
    
    
    
    
    
    
    
    
    
    6,594Net cash provided (used) by financing activities
    
    
    4,552
    
    
    
    (88,200
    )
    
    
    (24,418
    )
    
    
    (108,066
    )Net increase (decrease) in cash and cash equivalents
    
    
    40,384
    
    
    
    5,145
    
    
    
    (3,543
    )
    
    
    41,986Cash and cash equivalents at beginning of year
    
    
    29,872
    
    
    
    13,648
    
    
    
    15,059
    
    
    
    58,579Cash and cash equivalents at end of year
    
    
    70,256
    
    
    
    18,793
    
    
    
    11,516
    
    
    
    100,565Restricted cash and cash equivalents at end of year
    
    
    (173
    )
    
    
    (9,509
    )
    
    
    (11,741
    )
    
    
    (21,423
    )Unrestricted cash and cash equivalents at end of year
    
    $
    70,083
    
    
    $
    9,284
    
    
    $
    (225
    )
    
    $
    79,142
 31




---



##### 



Year Ended December 31, 2005(restated)Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    ConsolidatedOperating activities:Net cash (used) provided by operating activities
    
    $
    (10,409
    )
    
    $
    12,777
    
    
    $
    93,157
    
    
    $
    95,525Investing activities:Cash received from retained interests in notes receivable
sold
    
    
    
    
    
    
    11,016
    
    
    
    
    
    
    
    11,016Investment in statutory business trust
    
    
    (1,780
    )
    
    
    
    
    
    
    
    
    
    
    (1,780
    )Installment payments on business acquisition
    
    
    
    
    
    
    
    
    
    
    (675
    )
    
    
    (675
    )Purchases of property and equipment
    
    
    (5,112
    )
    
    
    (216
    )
    
    
    (11,396
    )
    
    
    (16,724
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    22Net cash (used) provided by investing activities
    
    
    (6,892
    )
    
    
    10,800
    
    
    
    (12,049
    )
    
    
    (8,141
    )Financing activities:Proceeds from borrowings collateralized by notes
receivable
    
    
    
    
    
    
    11,966
    
    
    
    12,806
    
    
    
    24,772Payments on borrowings collateralized by notes receivable
    
    
    
    
    
    
    (37,743
    )
    
    
    (26,971
    )
    
    
    (64,714
    )Proceeds from borrowings under line-of-credit facilities
and
notes payable
    
    
    
    
    
    
    
    
    
    
    26,382
    
    
    
    26,382Payments under line-of-credit facilities and notes payable
    
    
    (1,071
    )
    
    
    (1,113
    )
    
    
    (89,887
    )
    
    
    (92,071
    )Payments on 10.50% senior secured notes payable
    
    
    (55,000
    )
    
    
    
    
    
    
    
    
    
    
    (55,000
    )Proceeds from issuance of junior subordinated debentures
    
    
    59,280
    
    
    
    
    
    
    
    
    
    
    
    59,280Payment of debt issuance costs
    
    
    (1,862
    )
    
    
    (37
    )
    
    
    (1,401
    )
    
    
    (3,300
    )Proceeds from exercise of employee and director stock
options
    
    
    1,406
    
    
    
    
    
    
    
    
    
    
    
    1,406Net cash provided (used) by financing activities
    
    
    2,753
    
    
    
    (26,927
    )
    
    
    (79,071
    )
    
    
    (103,245
    )Net (decrease) increase in cash and cash equivalents
    
    
    (14,548
    )
    
    
    (3,350
    )
    
    
    2,037
    
    
    
    (15,861
    )Cash and cash equivalents at beginning of period
    
    
    70,256
    
    
    
    18,793
    
    
    
    11,516
    
    
    
    100,565Cash and cash equivalents at end of period
    
    
    55,708
    
    
    
    15,443
    
    
    
    13,553
    
    
    
    84,704Restricted cash and cash equivalents at end of period
    
    
    (173
    )
    
    
    (6,709
    )
    
    
    (11,439
    )
    
    
    (18,321
    )Unrestricted cash and cash equivalents at end of period
    
    $
    55,535
    
    
    $
    8,734
    
    
    $
    2,114
    
    
    $
    66,383
 32




---



##### 



Year Ended December 31, 2006(restated)Combined
    
    
    CombinedBluegreen
    
    
    Non-Guarantor
    
    
    SubsidiaryCorporation
    
    
    Subsidiaries
    
    
    Guarantors
    
    
    ConsolidatedOperating activities:Net cash (used) provided by operating activities
    
    $
    (41,538
    )
    
    $
    (13,051
    )
    
    $
    63,015
    
    
    $
    8,426Investing activities:Cash received from retained interests in notes receivable
sold
    
    
    
    
    
    
    30,032
    
    
    
    
    
    
    
    30,032Investments in statutory business trusts
    
    
    (928
    )
    
    
    
    
    
    
    
    
    
    
    (928
    )Purchases of property and equipment
    
    
    (7,181
    )
    
    
    (68
    )
    
    
    (17,488
    )
    
    
    (24,736
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    93Net cash (used) provided by investing activities
    
    
    (8,109
    )
    
    
    29,964
    
    
    
    (17,395
    )
    
    
    4,461Financing activities:Proceeds from borrowings collateralized by notes
receivable
    
    
    
    
    
    
    68,393
    
    
    
    
    
    
    
    68,393Payments on borrowings collateralized by notes receivable
    
    
    
    
    
    
    (81,303
    )
    
    
    (3,811
    )
    
    
    (85,114
    )Proceeds from borrowings under line-of-credit facilities
and notes payable
    
    
    6,500
    
    
    
    
    
    
    
    50,170
    
    
    
    56,670Payments under line-of-credit facilities and notes payable
    
    
    (7,824
    )
    
    
    (193
    )
    
    
    (86,569
    )
    
    
    (94,586
    )Proceeds from issuance of junior subordinated debentures
    
    
    30,928
    
    
    
    
    
    
    
    
    
    
    
    30,928Payment of debt issuance costs
    
    
    (1,054
    )
    
    
    (2,251
    )
    
    
    (1,133
    )
    
    
    (4,438
    )Proceeds from exercise of employee and director stock
options
    
    
    2,645
    
    
    
    
    
    
    
    
    
    
    
    2,645Distributions to minority interest
    
    
    (941
    )
    
    
    
    
    
    
    
    
    
    
    (941
    )Net cash provided (used) by financing activities
    
    
    30,254
    
    
    
    (15,354
    )
    
    
    (41,343
    )
    
    
    (26,443
    )Net (decrease) increase in cash and cash equivalents
    
    
    (19,392
    )
    
    
    1,559
    
    
    
    4,277
    
    
    
    (13,556
    )Cash and cash equivalents at beginning of period
    
    
    55,708
    
    
    
    15,443
    
    
    
    13,553
    
    
    
    84,704Cash and cash equivalents at end of period
    
    
    36,316
    
    
    
    17,002
    
    
    
    17,830
    
    
    
    71,148Restricted cash and cash equivalents at end of period
    
    
    (173
    )
    
    
    (8,478
    )
    
    
    (12,825
    )
    
    
    (21,476
    )Unrestricted cash and cash equivalents at end of period
    
    $
    36,143
    
    
    $
    8,524
    
    
    $
    5,005
    
    
    $
    49,672
 33




---



##### 



12. Junior Subordinated Debentures
 Trust Preferred Securities Offerings
   OutstandingAmount of
    
    Initial
    
    
    
    Fixed
    
    Variable
    
    BeginningJunior
    
    Equity
    
    
    
    Interest
    
    Interest
    
    OptionalSubordinated
    
    To
    
    Issue
    
    Rate
    
    Rate
    
    Redemption
    
    MaturityTrust
    
    Debentures
    
    Trust
    
    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
    
    9/30/36$
    90,208
    
    
    $
    2,708
 
 (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.  13. Fair Value of Financial Instruments
  Cash and cash equivalents:
 Contracts receivable:
 34




---



##### 



Notes receivable:
 Retained interests in notes receivable sold:
 Lines-of-credit, notes payable, receivable-backed notes payable and junior subordinated
debentures:
 10.50% senior secured notes payable and junior subordinated debentures:
 December 31, 2005
    
    December 31, 2006Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueCash and cash equivalents
    
    $
    84,704
    
    
    $
    84,704
    
    
    $
    71,148
    
    
    $
    71,148Contracts receivable, net
    
    
    27,473
    
    
    
    27,473
    
    
    
    23,856
    
    
    
    23,856Notes receivable, net
    
    
    127,783
    
    
    
    127,783
    
    
    
    144,251
    
    
    
    144,251Retained interests in notes receivable sold
    
    
    105,696
    
    
    
    105,696
    
    
    
    130,623
    
    
    
    130,623Lines-of-credit, notes payable, and receivable-
backed notes payable
    
    
    97,159
    
    
    
    97,159
    
    
    
    145,462
    
    
    
    145,46210.50% senior secured notes payable
    
    
    55,000
    
    
    
    55,000
    
    
    
    55,000
    
    
    
    55,275Junior subordinated debentures
    
    
    59,280
    
    
    
    57,309
    
    
    
    90,208
    
    
    
    82,141
 14. Common Stock and Stock Option Plans
 Shareholders Rights Plan
   Stock Option Plans
  35




---



##### 



Number
    
    
    
    
    
    
    Weightedof
    
    
    
    
    
    
    Average
    
    
    Number ofShares
    
    
    Outstanding
    
    
    Exercise Price
    
    
    SharesReserved
    
    
    Options
    
    
    Per Share
    
    
    ExercisableBalance at January 1, 2005
    
    
    2,426
    
    
    
    1,645
    
    
    $
    5.30
    
    
    
    845Approval of 2005 Stock Incentive Plan
    
    
    2,000
    
    
    
    
    
    
    
    Cancellation of 1995 Stock Incentive
Plan
    
    
    (781
    )
    
    
    
    
    
    
    Granted
    
    
    
    
    
    
    809
    
    
    $
    18.30Forfeited
    
    
    (168
    )
    
    
    (168
    )
    
    $
    4.23Exercised
    
    
    (276
    )
    
    
    (276
    )
    
    $
    5.06Balance at December 31, 2005
    
    
    3,201
    
    
    
    2,010
    
    
    $
    10.65
    
    
    
    665Granted
    
    
    
    
    
    
    582
    
    
    $
    12.02Forfeited
    
    
    (86
    )
    
    
    (216
    )
    
    $
    11.20Exercised
    
    
    (312
    )
    
    
    (312
    )
    
    $
    8.48Balance at December 31, 2006
    
    
    2,803
    
    
    
    2,064
    
    
    $
    11.31
    
    
    
    481
  36




---



##### 



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-$3.48
    
    
    542
    
    
    
    137
    
    

    5.8
    
    
    $
    3.42
    
    
    $
    3.15$3.50-$11.43
    
    
    303
    
    
    
    203
    
    

    5.4
    
    
    $
    7.45
    
    
    $
    8.18$12.07
    
    
    490
    
    
    
    
    
    

    9.6
    
    
    $
    12.07
    
    
    
    $16.03-$17.44
    
    
    41
    
    
    
    41
    
    

    8.6
    
    
    $
    17.27
    
    
    $
    17.27$18.36
    
    
    688
    
    
    
    100
    
    

    8.6
    
    
    $
    18.36
    
    
    $
    18.362,064
    
    
    
    481
    
    

    7.6
 Common Stock Reserved For Future Issuance
  Upon exercise of stock options under our employee stock option plan
(1)
    
    
    2,608Upon exercise of outside director stock options under our director
stock option plan
    
    
    652,673
 
 (1)
    
    Stock options were granted to Outside Directors under our Employee Stock Option Plan
during 2005 and 2006. 15. Commitments and Contingencies
     2007
    
    $
    9,4692008
    
    
    8,2232009
    
    
    6,4162010
    
    
    5,5912011
    
    
    3,511Thereafter
    
    
    2,414Total future minimum lease payments
    
    $
    35,624
   37




---



##### 



Lesley, et al v. Bluegreen Southwest
One, L.P. acting through its General Partner Bluegreen Southwest Land, Inc., et al, Cause No. 28006
District Court of the 266thJudicial District, Erath County, Texas
   38




---



##### 



16. Income Taxes
  Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2006Federal:Current
    
    $
    6,378
    
    
    $
    9,418
    
    
    $
    7,397Deferred
    
    
    16,967
    
    
    
    15,600
    
    
    
    11,91323,345
    
    
    
    25,018
    
    
    
    19,310State and other:Current
    
    
    1,600
    
    
    
    2,745
    
    
    
    629Deferred
    
    
    1,697
    
    
    
    1,379
    
    
    
    9223,297
    
    
    
    4,124
    
    
    
    1,551Total
    
    $
    26,642
    
    
    $
    29,142
    
    
    $
    20,861
  December 31,
    
    
    December 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2006Income tax expense at statutory rate
    
    $
    23,345
    
    
    $
    25,018
    
    
    $
    19,310Effect of state taxes, net of federal tax
benefit
    
    
    3,297
    
    
    
    4,124
    
    
    
    1,551$
    26,642
    
    
    $
    29,142
    
    
    $
    20,861
  December 31,
    
    
    December 31,2005
    
    
    2006Deferred federal and state tax liabilities (assets):Installment sales treatment of notes
    
    $
    150,146
    
    
    $
    196,687Deferred federal and state loss carryforwards/AMT
credits
    
    
    (89,035
    )
    
    
    (120,609
    )Book over tax carrying value of retained interests
in notes
receivable sold
    
    
    9,526
    
    
    
    15,565Book reserves for loan losses and inventory
    
    
    (7,613
    )
    
    
    (7,758
    )Tax over book depreciation
    
    
    6,119
    
    
    
    5,780Unrealized gains on retained interests in notes
receivable sold (see Note 6)
    
    
    5,368
    
    
    
    7,742Deferral of VOI sales under SFAS No. 152
    
    
    
    
    
    
    (7,181
    )Other
    
    
    893
    
    
    
    (2,602
    )Deferred income taxes
    
    $
    75,404
    
    
    $
    87,624Total deferred federal and state tax liabilities
    
    $
    174,055
    
    
    $
    229,085Total deferred federal and state tax assets
    
    
    (98,651
    )
    
    
    (141,461
    )Deferred income taxes
    
    $
    75,404
    
    
    $
    87,624
  39




---



##### 



17. Employee Retirement Savings Plan and Other Employee Matters
   18. Business Segments
    Bluegreen
    
    BluegreenResorts
    
    Communities
    
    TotalsAs of and for the year ended December 31, 2004:Sales of real estate
    
    $
    310,608
    
    
    $
    191,800
    
    
    $
    502,408Other resort and communities operations revenue
    
    
    59,007
    
    
    
    7,402
    
    
    
    66,409Depreciation expense
    
    
    5,138
    
    
    
    1,788
    
    
    
    6,926Field operating profit
    
    
    50,876
    
    
    
    37,722
    
    
    
    88,598Inventory
    
    
    126,377
    
    
    
    78,975
    
    
    
    205,352As of and for the year ended December 31, 2005:Sales of real estate
    
    $
    358,240
    
    
    $
    192,095
    
    
    $
    550,335Other resort and communities operations revenue
    
    
    64,276
    
    
    
    9,521
    
    
    
    73,797Depreciation expense
    
    
    7,161
    
    
    
    1,684
    
    
    
    8,845Field operating profit
    
    
    59,578
    
    
    
    47,227
    
    
    
    106,805Inventory
    
    
    173,338
    
    
    
    67,631
    
    
    
    240,969As of and for the year ended December 31, 2006:Sales of real estate
    
    $
    399,105
    
    
    $
    164,041
    
    
    $
    563,146Other resort and communities operations revenue
    
    
    51,688
    
    
    
    11,922
    
    
    
    63,610Depreciation expense
    
    
    8,322
    
    
    
    1,641
    
    
    
    9,963Field operating profit
    
    
    53,937
    
    
    
    35,824
    
    
    
    89,761Inventory
    
    
    233,290
    
    
    
    116,043
    
    
    
    349,333
 40




---



##### 



Reconciliations to Consolidated Amounts
  Year Ended December 31,2004
    
    
    2005
    
    
    2006Field operating profit for reportable segments
    
    $
    88,598
    
    
    $
    106,805
    
    
    $
    89,761Interest income
    
    
    35,939
    
    
    
    34,798
    
    
    
    40,765Gain on sales of notes receivable
    
    
    25,972
    
    
    
    25,226
    
    
    
    5,852Other expense, net
    
    
    (1,666
    )
    
    
    (6,207
    )
    
    
    (2,861
    )Corporate general and administrative expenses
    
    
    (32,718
    )
    
    
    (38,029
    )
    
    
    (52,241
    )Interest expense
    
    
    (18,425
    )
    
    
    (14,474
    )
    
    
    (18,785
    )Provision for loan losses
    
    
    (24,434
    )
    
    
    (27,587
    )
    
    
    Consolidated income before minority interest and
provision for income taxes
    
    $
    73,266
    
    
    $
    80,532
    
    
    $
    62,491
  Year Ended December 31,2004
    
    
    2005
    
    
    2006Depreciation expense for reportable segments
    
    $
    6,926
    
    
    $
    8,845
    
    
    $
    9,963Depreciation expense for corporate fixed assets
    
    
    2,843
    
    
    
    3,487
    
    
    
    4,413Consolidated depreciation expense
    
    $
    9,769
    
    
    $
    12,332
    
    
    $
    14,376
  December 31,2005
    
    
    2006Inventory for reportable segments
    
    $
    240,969
    
    
    $
    349,333Assets not allocated to reportable segments
    
    
    453,274
    
    
    
    504,879Total assets
    
    $
    694,243
    
    
    $
    854,212
 Geographic Information
  Year Ended December 31,2004
    
    
    2005
    
    
    2006United States
    
    $
    491,948
    
    
    $
    539,131
    
    
    $
    554,904Aruba
    
    
    10,460
    
    
    
    11,204
    
    
    
    8,242Consolidated totals
    
    $
    502,408
    
    
    $
    550,335
    
    
    $
    563,146
  December 31,2005
    
    
    2006United States
    
    $
    235,340
    
    
    $
    344,817Aruba
    
    
    5,619
    
    
    
    4,516Canada
    
    
    10
    
    
    
    Consolidated totals
    
    $
    240,969
    
    
    $
    349,333
 41




---



##### 



19. Quarterly Financial Information (Unaudited)
  Three Months EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2005
    
    2005
    
    2005
    
    2005Sales of real estate
    
    $
    104,021
    
    
    $
    159,328
    
    
    $
    166,657
    
    
    $
    120,329Gross profit
    
    
    71,134
    
    
    
    108,219
    
    
    
    113,718
    
    
    
    79,464Net income
    
    
    6,400
    
    
    
    14,910
    
    
    
    18,332
    
    
    
    6,910Net income per common share:Basic
    
    $
    0.21
    
    
    $
    0.49
    
    
    $
    0.60
    
    
    $
    0.23Diluted
    
    $
    0.20
    
    
    $
    0.48
    
    
    $
    0.59
    
    
    $
    0.22
 Three Months EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2006
    
    2006
    
    2006
    
    2006Sales of real estate
    
    $
    121,760
    
    
    $
    141,947
    
    
    $
    172,549
    
    
    $
    126,890Gross profit
    
    
    76,538
    
    
    
    92,925
    
    
    
    125,822
    
    
    
    88,807Income before cumulative effect of
change in accounting principle
    
    
    4,031
    
    
    
    6,580
    
    
    
    21,907
    
    
    
    1,793Cumulative effect of change in
accounting principle, net of tax
and minority interest
    
    
    (4,494
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    (463
    )
    
    $
    6,580
    
    
    $
    21,907
    
    
    $
    1,793Income before cumulative effect of
change in accounting principle per
common share:Basic
    
    $
    0.13
    
    
    $
    0.22
    
    
    $
    0.72
    
    
    $
    0.06Diluted
    
    $
    0.13
    
    
    $
    0.21
    
    
    $
    0.71
    
    
    $
    0.06Net (loss) income per common share:Basic
    
    $
    (0.02
    )
    
    $
    0.22
    
    
    $
    0.72
    
    
    $
    0.06Diluted
    
    $
    (0.01
    )
    
    $
    0.21
    
    
    $
    0.71
    
    
    $
    0.06
 20. Subsequent Events
    42




---



##### 



/S/ Ernst & Young LLP
Certified Public Accountants 
 43




---



##### 



Report of Independent Registered Public Accounting Firm
 
 We have audited managements assessment, included in the accompanying Managements Report on
Internal Control over Financial Reporting, that Bluegreen Corporation (the Company) maintained
effective internal control over financial reporting as of December 31, 2006, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Bluegreen Corporations management is
responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting. Our responsibility is
to express an opinion on managements assessment and an opinion on the effectiveness of the
companys internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating managements assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.In our opinion, managements assessment that Bluegreen Corporation maintained effective internal
control over financial reporting as of December 31, 2006, is fairly stated, in all material
respects, based on the COSO criteria. Also, in our opinion, Bluegreen Corporation maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2006,
based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Bluegreen Corporation as of December 31,
2005 and December 31, 2006, and the related consolidated statements of income, shareholders equity
and cash flows for each of the three years in the period ended December 31, 2006 of Bluegreen
Corporation and our report dated March 14, 2007, except for Note 1, as to which the date is June
29, 2007, expressed an unqualified opinion thereon.
 /S/ Ernst & Young LLP
Certified Public Accountants 
 44