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| Bluegreen Corporation Reports 2006 Fourth Quarter and Year-End Results |
BOCA RATON, Fla.--(BUSINESS WIRE)--March 5, 2007--Bluegreen Corporation (NYSE: BXG), a leading provider of Colorful Places to Live and Play(R), today announced financial results for the fourth quarter and year ended December 31, 2006 (see attached tables). Total sales in the fourth quarter of 2006 rose 5.5% to $126.9 million from $120.3 million in the fourth quarter of 2005. Bluegreen Resorts sales increased 27.2% to $103.3 million from $81.2 million, due to the contribution of sales offices opened since December 31, 2005, continued same-resort sales growth, and the positive impact in the quarter of the adoption of Statement of Financial Accounting Standards No. 152, "Accounting for Real Estate Time-sharing Transactions" ("SFAS 152"). Sales at Bluegreen Communities declined to $23.6 million from $39.1 million in the same period last year. This was the result of several of the Company's more mature developments either approaching sell out or selling out during 2006, as well as the impact of the revenue recognition policies described below, partially offset by sales generated at new Bluegreen communities that commenced sales late in 2006. Net income for the fourth quarter of 2006 was $1.8 million, or $0.06 per diluted share, as compared to net income of $6.9 million, or $0.22 per diluted share, in the same period last year. The decline in net income for the fourth quarter of 2006 was the result of lower sales at Bluegreen Communities and the impact of approximately $8.2 million in pre-tax expenses, which consisted of: $3.5 million related primarily to an accrual provided in connection with the need to repair a lake amenity at a nearly sold-out Bluegreen community; $3.2 million related to a consulting agreement entered into with Bluegreen's former President and Chief Executive Officer (representing the present value of all future payments under the agreement and a charge for the accelerated vesting of options to acquire approximately 85,000 shares of Bluegreen stock by March 31, 2007); a $1.1 million write-off related to the abandonment of a software development project; and $340,000 in additional professional fees related to the previously announced adoption of the shareholder rights plan and related litigation. On an after-tax basis, these items reduced net income for the fourth quarter of fiscal 2006 by approximately $5.4 million, or $0.17 per diluted share. As previously announced, effective January 1, 2006 Bluegreen was required to adopt SFAS 152, which changed many aspects of timeshare accounting, including revenue recognition, inventory costing, and accounting for incidental operations. Bluegreen has provided in this press release pro forma, non-GAAP income statements (see tables entitled: "Pro Forma Income Statements Before SFAS 152 Adjustment") for the three- and twelve-month periods ended December 31, 2006 that reflect the impact of the adjustments required by the adoption of SFAS 152 to provide a basis for comparison with periods prior to the adoption of SFAS 152. As of December 31, 2006, $27.3 million and $15.3 million of Resorts sales and profits, respectively, were deferred under SFAS 152. These amounts are expected to be recognized in future periods. For the year ended December 31, 2006, total sales increased to $563.1 million from $550.3 million last year, due to record Bluegreen Resorts sales, partially offset by lower sales at Bluegreen Communities. Sales at Bluegreen Resorts rose 11.4% to a record $399.1 million from $358.2 million in 2005. Sales at Bluegreen Communities declined to $164.0 million from $192.1 million in 2005. Net income for 2006 was $29.8 million, or $0.96 per diluted share, as compared to net income of $46.6 million, or $1.49 per diluted share last year. Net income for 2006 included the $8.2 million in pre-tax expenses incurred during the fourth quarter of 2006 (as discussed above), a previously announced $1.8 million pre-tax charge incurred in the third quarter of 2006 associated with the adoption of a shareholder rights plan and related litigation, and a $4.5 million charge for the adoption of SFAS 152 reflected as a cumulative effect of change in accounting principle, net of tax; there were no such charges incurred during 2005. Net income for 2006 was also impacted by the performance at Bluegreen Communities. BLUEGREEN RESORTS John M. Maloney Jr., President and Chief Executive Officer of Bluegreen, commented, "We are very pleased with the continued growth at our Resorts segment. We believe that customers are increasingly recognizing the value of vacation ownership and demonstrating their satisfaction with the Bluegreen Vacation Club(TM). Construction is progressing at our new seven-story, 240-unit resort property in Las Vegas, which is expected to be available for occupancy in the second quarter of 2008, and at a new resort property located in Williamsburg, Virginia, where occupancy is expected in early 2008." Higher Resorts sales were primarily attributable to same-resort sales growth led by sales offices at The Fountains resort in Orlando, Florida, The Falls Village(TM) resort in Branson, Missouri, MountainLoft(TM) in Gatlinburg, Tennessee, and the Bluegreen Wilderness Club(TM) at Big Cedar(R) in Ridgedale, Missouri, and from the opening of new sales offices, including the Carolina Grande(TM) resort in Myrtle Beach, South Carolina. New offsite sales offices serving the Las Vegas, Atlanta and Chicago markets also contributed to the increase in Resorts sales. Sales to Bluegreen's existing and growing owner base increased by 46% during the fourth quarter of 2006. These sales comprised 38% of Resorts sales for the three months ended December 31, 2006 as compared to 32% of Resorts sales during the comparable prior year period. Resorts cost of sales in the fourth quarter 2006 declined to 22.6% of sales from 23.8% of sales in the same period last year, due to a system-wide price increase that went into effect on January 1, 2006 and the mix of specific product sold. BLUEGREEN COMMUNITIES Mr. Maloney commented, "Sales at Bluegreen Communities were down during the fourth quarter of 2006, primarily attributable to the reduction in the number of communities in active sales during this period of inventory replenishment. We are actively seeking to prudently address our inventory needs at Bluegreen Communities, remaining true to our standards of offering homesites in high quality communities to our customers while maintaining strict economic expectations for our properties. However, it is important to note that communities are absorbed at varying rates, in some cases, over periods that can last as long as eight years. Therefore, inventory transition periods, combined with revenue recognition policies, can produce temporary swings in revenues and earnings. "We are fortunate to be a leader in this growing and dynamic market. We are taking a variety of actions to further enhance our inventory position for Bluegreen Communities. During 2007, we intend to significantly increase our team of acquisition specialists and their support staff from 2006 levels. Many of these new associates are already on board and we believe they will strengthen our ability to appropriately increase our inventory levels." Mr. Maloney continued, "I am pleased to announce that Bluegreen Communities has acquired a substantial new property near St. Simons Island and the Golden Isles of Georgia, which will be called Little Satilla River Club at St. Andrews Sound(TM). This is a follow on to our Sanctuary Cove at St. Andrews Sound(TM) community, which has been one of our most successful projects. Sales at Little Satilla River Club are expected to commence in the second quarter of 2007, with estimated life-of-project sales of approximately $63.0 million over an anticipated four year sell-out period. "Several of our existing properties also performed well during the fourth quarter. Excluding the impact of percentage-of-completion accounting, Mystic Shores(TM) (Canyon Lake, Texas) and the Settlement at Patriot Ranch(TM) (near San Antonio, Texas) generated higher sales during the fourth quarter of 2006 as compared to the fourth quarter of 2005. Other communities that contributed to fourth quarter sales included Havenwood at Hunter's Crossing(TM) (near San Antonio, Texas), which commenced sales in January 2006, Bridges at Preston Crossings(TM) (a Bluegreen Golf Community located outside of Dallas, Texas), which commenced sales in September 2006, and Saddle Creek Ranch(TM) (located in Magnolia, Texas), which commenced sales in September 2006. We also commenced sales during the fourth quarter of 2006 at the following new Texas properties: Vintage Oaks at the Vineyards(TM), a 3,300- acre Bluegreen community located outside of San Antonio; and King Oaks(TM), a 953-acre Bluegreen Community in Grimes County, near College Station. While early, sales results from these newest properties have been encouraging. " Mr. Maloney concluded, "Because of high demand, we commenced sales at some of our new properties prior to finalizing the platting (subdivision) of the land. Because the platting process for these properties was not completed until 2007, based on required revenue recognition policies, Bluegreen was unable to recognize approximately $8.4 million and $3.2 million in Communities sales and profits, respectively, during the 2006 period. It is expected that the platting process for the homesites will be completed in the first quarter of 2007 and revenue from the sales will be recognized at that time, subject to the impact of percentage-of-completion accounting. In addition, as of December 31, 2006, approximately $18.6 million and $7.7 million of Bluegreen Communities sales and profits, respectively, were deferred under the percentage-of-completion method of accounting, which is an increase from the $17.2 million and $6.6 million of sales and profits deferred as of September 30, 2006. It is expected that these amounts will be recognized in future periods ratably with the development of the communities." Bluegreen Communities cost of sales in the fourth quarter of 2006 was 62.3% of sales as compared to 55.1% in the same period one year ago, primarily due to the previously discussed accruals provided in connection with the need to repair a lake amenity at a nearly sold-out Bluegreen community. OTHER FINANCIAL INFORMATION Total positive net interest spread (interest income less interest expense) was $4.7 million in the fourth quarter of 2006 as compared to $5.5 million in the fourth quarter of 2005. Interest income increased due to Bluegreen's higher average aggregate balances of notes receivable and retained interests in notes receivable sold, but interest expense also rose due to increased debt related to inventory acquisition and development activities, and an increase in the average interest rate incurred. Bluegreen's balance sheet at December 31, 2006 reflected unrestricted cash of $49.7 million, a book value of $11.44 per share, and a debt-to-equity ratio of 0.82:1. On February 26, 2007, a statutory business trust newly formed by Bluegreen consummated the offering of $20.0 million of trust preferred securities. The trust used the proceeds of this offering, along with $619,000 contributed to the trust by Bluegreen in exchange for all of the trust's common securities, to purchase $20.6 million of Bluegreen's junior subordinated debentures. The debentures and the trust preferred securities mature in April 2037, with only interest payments being payable quarterly prior to maturity. Bluegreen intends to use the proceeds of this offering for debt repayment and general corporate purposes. CONFERENCE CALL Bluegreen Corporation will host a conference call on March 5, 2007 at 9:00 am ET to discuss this news release. Interested parties may participate in the call by dialing (866) 356-3095 (Domestic) or (617) 597-5391 (International) and use the code 26499548 approximately 10 minutes before the call is scheduled to begin, and ask to be connected to the Bluegreen conference call. A recorded replay of the call will be available until April 5, 2007. Listeners may dial (888) 286-8010 (Domestic) or (617) 801-6888 (International) and use the code 52583629 for the replay. In addition, the conference call will be broadcast live over the Internet at Bluegreen's corporate web site, www.bluegreencorp.com. To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed on Bluegreen Corporation's web site for approximately 90 days. ABOUT BLUEGREEN CORPORATION Bluegreen Corporation (NYSE:BXG) is a leading provider of Colorful Places to Live and Play(R) through two principal operating divisions. With over 170,000 owners, Bluegreen Resorts markets a flexible, real estate-based vacation ownership plan that provides access to over 40 resorts and an exchange network of over 3,700 resorts and other vacation experiences such as cruises and hotel stays. Bluegreen Communities has sold over 55,000 planned residential and golf community homesites in 32 states since 1985. Founded in 1966, Bluegreen is headquartered in Boca Raton, Fla., and employs over 5,400 associates. In 2005, Bluegreen ranked No. 57 on Forbes' list of The 200 Best Small Companies and No. 48 on FORTUNE'S list of America's 100 Fastest Growing Companies. More information about Bluegreen is available at www.bluegreencorp.com. Statements in this release may constitute forward looking statements and are made pursuant to the Safe Harbor Provision of the Private Securities and Litigation Reform Act of 1995. Forward looking statements are based largely on expectations and are subject to a number of risks and uncertainties including but not limited to the risks and uncertainties associated with economic, competitive and other factors affecting the Company and its operations, markets, products and services, as well as the risk that Company-wide growth and growth at Resorts and Communities will not occur as anticipated; the Company will not be able to acquire land or identify new projects, as anticipated; sales and marketing strategies related to new Resorts and Communities properties will not be as successful as anticipated; new Resort and Communities properties will not open when expected, will cost more to develop or may not be as successful as anticipated; retail prices and homesite yields for Communities properties will be below the Company's estimates; that cost of sales will not be as expected; that sales to existing owners will not continue at current levels; that platting will not be completed to the extent or at the time anticipated; that deferred sales will not be recognized to the extent or at the time anticipated; and the risks and other factors detailed in the Company's SEC filings, including its most recent Annual Report on Form 10-K filed on March 16, 2006 and its Form 10-Q filed on November 9, 2006. Bluegreen prepares its financial statements in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that the Pro Forma Income Statements included in this release are a key measure to evaluate its operations as management believes they provide a better comparison of the Company's 2006 results of operations to 2005. However, these Pro Forma Income Statements possess material limitations and should not be considered a measure of financial condition or performance in isolation or as an alternative to the Statements of Income, as reported in accordance with GAAP, and as presented, may not be comparable to similarly titled measures of other companies.
BLUEGREEN CORPORATION
Condensed Consolidated Statements of Income
(In 000's, Except Per Share Data)
Three Months Ended Year-to-Date
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
------------------------- -------------------------
REVENUES: Unaudited Unaudited
------------------
Vacation ownership
sales $ 103,274 $ 81,201 $ 399,105 $ 358,240
Homesite sales 23,616 39,128 164,041 192,095
------------ ------------ -------------------------
Total sales 126,890 120,329 563,146 550,335
Other resort and
communities
operations
revenue 14,820 15,794 63,610 73,797
Interest income 10,073 8,891 40,765 34,798
Gain on sales of
notes receivable 1,803 9,182 5,852 25,226
------------ ------------ -------------------------
Total operating
revenues 153,586 154,196 673,373 684,156
------------ ------------ -------------------------
EXPENSES:
------------------
Cost of sales:
Vacation
ownership
cost of
sales 23,370 19,318 88,086 77,455
Homesite cost
of sales 14,713 21,547 90,968 100,345
------------ ------------ ------------ ------------
Total Cost of
sales 38,083 40,865 179,054 177,800
Cost of other
resort and
communities
operations 10,424 18,169 53,193 77,317
Selling, general
and
administrative
expenses 92,934 70,862 356,989 300,239
Interest expense 5,423 3,373 18,785 14,474
Provision for loan
losses - 6,620 - 27,587
Other expense, net 1,619 1,537 2,861 6,207
------------ ------------ -------------------------
Total operating
expenses 148,483 141,426 610,882 603,624
------------ ------------ -------------------------
Income before
minority interest
and provision for
income taxes 5,103 12,770 62,491 80,532
Minority interest
in income of
consolidated
subsidiary 2,379 1,534 7,319 4,839
------------ ------------ ------------ ------------
Income before
provision for
income taxes 2,724 11,236 55,172 75,693
Provision for
income taxes 930 4,326 20,861 29,142
Income before
cumulative effect
of change in
accounting
principle 1,794 6,910 34,311 46,551
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 $1,794 $6,910 $29,817 $46,551
============ ============ ============ ============
Income before
cumulative effect
of change in
accounting
principle per
share:
Basic $0.06 $0.23 $1.12 $1.53
Diluted $0.06 $0.22 $1.10 $1.49
Cumulative effect
of change in
accounting
principle, per
share
Basic $- $- $(0.15) $-
Diluted $- $- $(0.14) $-
Net (loss) income
per share
Basic $0.06 $0.23 $0.98 $1.53
============ ============ ============ ============
Diluted $0.06 $0.22 $0.96 $1.49
============ ============ ============ ============
Weighted Average
Number of Common
and Common
Equivalent
Shares:
Basic 30,639 30,470 30,557 30,381
============ ============ ============ ============
Diluted 31,151 31,207 31,097 31,245
============ ============ ============ ============
BLUEGREEN CORPORATION
Condensed Consolidated Balance Sheets
(Amounts in Thousands)
December 31, December 31,
2006 2005
------------ ------------
ASSETS (Unaudited)
Cash and cash equivalents (unrestricted) $49,672 $66,383
Cash and cash equivalents (restricted) 21,476 18,321
Contracts receivable, net 23,856 27,473
Notes receivable, net 144,251 127,783
Prepaid expenses 10,800 6,500
Other assets 27,465 17,227
Inventory, net 349,333 240,969
Retained interests in notes receivable sold 130,623 105,696
Property and equipment, net 92,445 79,634
Goodwill 4,291 4,257
------------ ------------
Total assets $854,212 $694,243
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable $18,465 $11,071
Accrued liabilities and other 49,458 43,801
Deferred income 40,270 29,354
Deferred income taxes 87,624 75,404
Receivable-backed notes payable 21,050 35,731
Lines-of-credit and notes payable 124,412 61,428
10.50% senior secured notes payable 55,000 55,000
Junior subordinated debentures 90,208 59,280
------------ ------------
Total liabilities 486,487 371,069
Minority interest 14,702 9,508
Total shareholders' equity 353,023 313,666
------------ ------------
Total liabilities and shareholders' equity $854,212 $694,243
============ ============
BLUEGREEN CORPORATION
Pro Forma Income Statements Before SFAS 152 Adjustment
(in thousands, except per share data)
----------------------------------------
Three Months Ended
Actual SFAS 152 Pro Forma Actual
Dec 31, Pro Forma Dec 31, Dec 31,
2006 Adjustments 2006 2005
----------------------------------------
REVENUES: Unaudited
-----------------------------
Vacation ownership sales $103,274 $(5,969) $97,305 $81,201
Homesite sales 23,616 23,616 39,128
--------- ----------- --------- --------
Total sales 126,890 (5,969) 120,921 120,329
Other resort and communities
operations revenue 14,820 2,375 17,195 15,794
Interest income 10,073 10,073 8,891
Gain on sales of notes
receivable 1,803 7,653 9,456 9,182
--------- ----------- --------- --------
Total operating revenues 153,586 4,059 157,645 154,196
--------- ----------- --------- --------
EXPENSES:
-----------------------------
Cost of sales:
Vacation ownership cost
of sales 23,370 (1,862) 21,508 19,318
Homesite cost of sales 14,713 14,713 21,547
--------- ----------- --------- --------
Total Cost of sales 38,083 (1,862) 36,221 40,865
Cost of other resort and
communities operations 10,424 4,477 14,901 18,169
Selling, general and
administrative expenses 92,934 (3,050) 89,884 70,862
Interest expense 5,423 - 5,423 3,373
Provision for loan losses - 8,270 8,270 6,620
Other expense 1,619 1,619 1,537
--------- ----------- --------- --------
Total operating expenses 148,483 7,835 156,318 141,426
--------- ----------- --------- --------
Income before minority
interest and provision for
income taxes 5,103 (3,776) 1,327 12,770
Minority interest in income
of consolidated subsidiary 2,379 (598) 1,781 1,534
--------- ----------- --------- --------
Income (loss) before
provision (benefit) for
income taxes 2,724 (3,178) (454) 11,236
Provision (benefit) for
income taxes 930 (1,085) (155) 4,326
--------- ----------- --------- --------
Net income (loss) $1,794 $(2,093) $(299) $6,910
========= =========== ========= ========
Net income (loss) per share
Basic $0.06 $(0.07) $(0.01) $0.23
========= =========== ========= ========
Diluted $0.06 $(0.07) $(0.01) $0.22
========= =========== ========= ========
Weighted Average Number of
Common and Common Equivalent
Shares:
Basic 30,639 30,639 30,639 30,470
========= =========== ========= ========
Diluted 31,151 30,639 30,639 31,207
========= =========== ========= ========
BLUEGREEN CORPORATION
Pro Forma Income Statements Before SFAS 152 Adjustment
(in thousands, except per share data)
Year-to-Date
Actual SFAS 152 Pro Forma Actual
Dec 31, Pro Forma Dec 31, Dec 31,
2006 Adjustments 2006 2005
-----------------------------------------
REVENUES: Unaudited
-----------------------------
Vacation ownership sales $399,105 $14,824 $413,929 $358,240
Homesite sales 164,041 164,041 192,095
--------- ----------- --------- ---------
Total sales 563,146 14,824 577,970 550,335
Other resort and communities
operations revenue 63,610 9,074 72,684 73,797
Interest income 40,765 40,765 34,798
Gain on sales of notes
receivable 5,852 25,640 31,492 25,226
Other income, net - - -
--------- ----------- --------- ---------
Total operating revenues 673,373 49,538 722,911 684,156
--------- ----------- --------- ---------
EXPENSES:
-----------------------------
Cost of sales:
Vacation ownership cost
of sales 88,086 749 88,835 77,455
Homesite cost of sales 90,968 90,968 100,345
--------- ----------- --------- ---------
Total Cost of sales 179,054 749 179,803 177,800
Cost of other resort and
communities operations 53,193 14,279 67,472 77,317
Selling, general and
administrative expenses 356,989 (2,457) 354,532 300,239
Interest expense 18,785 18,785 14,474
Provision for loan losses - 31,858 31,858 27,587
Other expense 2,861 2,861 6,207
--------- ----------- --------- ---------
Total operating expenses 610,882 44,429 655,311 603,624
--------- ----------- --------- ---------
Income before minority
interest and provision for
income taxes 62,491 5,109 67,600 80,532
Minority interest in income
of consolidated subsidiary 7,319 (523) 6,796 4,839
--------- ----------- --------- ---------
Income before provision for
income taxes 55,172 5,632 60,804 75,693
Provision for income taxes 20,861 2,262 23,123 29,142
--------- ----------- --------- ---------
Income before cumulative
effect of change in
accounting principle 34,311 3,370 37,681 46,551
Cumulative effect of change
in accounting principle, net
of tax (5,678) 5,678 - -
Minority interest in
cumulative effect of change
in accounting principle (1,184) 1,184 - -
--------- ----------- --------- ---------
Net income $29,817 $7,864 $37,681 $46,551
========= =========== ========= =========
Income before cumulative
effect of change in
accounting principle per
share:
Basic $1.12 $0.11 $1.23 $1.53
Diluted $1.10 $0.11 $1.21 $1.49
Cumulative effect of change
in accounting principle, per
share
Basic $(0.15) $0.15 $- $-
Diluted $(0.14) $0.14 $- $-
Net (loss) income per share
Basic $0.98 $0.26 $1.23 $1.53
========= =========== ========= =========
Diluted $0.96 $0.25 $1.21 $1.49
========= =========== ========= =========
Weighted Average Number of
Common and Common Equivalent
Shares:
Basic 30,557 30,557 30,557 30,381
========= =========== ========= =========
Diluted 31,097 31,097 31,097 31,245
========= =========== ========= =========
CONTACT: Bluegreen Corporation
Tony Puleo, 561-912-8270
Chief Financial Officer
tony.puleo@bluegreencorp.com
OR
Investor Relations:
The Equity Group Inc.
Devin Sullivan, 212-836-9608
dsullivan@equityny.com
SOURCE: Bluegreen Corporation
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