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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 28, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 0-19292
BLUEGREEN CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 03-0300793
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4960 Blue Lake Drive, Boca Raton, Florida 33431
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 912-8000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $.01 par value New York Stock Exchange, Pacific Stock Exchange
8.25% Convertible Subordinated Debentures due 2012 New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference into Part III of this Form 10-K. [__]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: $86,732,697 based upon the closing sale price of the
Company's Common Stock on the New York Stock Exchange on June 18, 1999 ($5.56
per share). For this purpose, "affiliates" include members of the Board of
Directors of the Company, members of executive management and all persons known
to be the beneficial owners of more than 5% of the Company's outstanding Common
Stock. The market value of voting stock held by non-affiliates excludes any
shares issuable upon conversion of any 8.25% Convertible Subordinated Debentures
which are convertible at a current conversion price of $8.24 per share.
Indicate the number of shares outstanding and approximate number of holders
of each of the registrant's classes of Common Stock, as of the latest
practicable date: 23,278,677 shares of Common Stock, $.01 par value outstanding
and approximately 7,900 record holders as of June 18, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Specifically identified portions of the Company's 1999 Annual Report to
Shareholders (the "1999 Annual Report") are incorporated by reference into Part
II and IV hereof and specifically identified portions of the Company's
definitive proxy statement to be filed for its Annual Meeting of Shareholders to
be held on July 28, 1999 (the "Proxy Statement") are incorporated by reference
into Part III hereof.
BLUEGREEN CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
PART I
PAGE
----
Item 1. BUSINESS.......................................................................... 1
Item 2. PROPERTIES........................................................................ 17
Item 3. LEGAL PROCEEDINGS................................................................. 18
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................... 18
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS......................................................................... 20
Item 6. SELECTED FINANCIAL DATA........................................................... 20
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION......................................................... 20
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................ 21
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................... 21
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE............................................................ 21
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................................ 21
Item 11. EXECUTIVE COMPENSATION............................................................ 21
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................... 21
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................... 21
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K................... 21
Signatures.................................................................................. 23
Exhibit Index............................................................................... 24
PART I
Item 1. BUSINESS.
Summary
Bluegreen Corporation, (the "Company") is a leading marketer of vacation
and residential lifestyle choices through its resorts and residential land and
golf businesses. The Company's resorts business (the "Resorts Division")
acquires, develops and markets timeshare interests in resorts generally located
in popular high-volume, "drive-to" vacation destinations. Timeshare interests
typically entitle the buyer to a fully-furnished vacation residence for an
annual one-week period in perpetuity ("Timeshare Interests"), as well as access
to over 1,800 resorts worldwide through the Company's participation in timeshare
exchange networks. The Company currently develops, markets and sells Timeshare
Interests in ten resorts located in the United States and the Caribbean. The
Company also markets and sells Timeshare Interests at three off-site sales
locations. Prior to investing in new timeshare projects, the Company performs
market research and testing and, prior to completion of development, seeks to
pre-sell a significant portion of its Timeshare Interests inventory. The
Company's residential land and golf business (the "Residential Land and Golf
Division") acquires, develops and subdivides property and markets the subdivided
residential lots to retail customers seeking to build a home in a high quality
residential setting, in some cases on properties featuring a golf course and
related amenities. The Residential Land and Golf Division's strategy is to
locate its projects near major metropolitan centers outside the perimeter of
intense subdivision development or in popular retirement areas. The Company has
focused the Residential Land and Golf Division's activities in certain core
markets in which the Company has developed substantial marketing expertise and
has a strong track record of success. Prior to acquiring Residential Land and
Golf Division properties, the Company typically utilizes market research,
conducts due diligence and, in the case of new project locations, engages in
pre-marketing techniques to evaluate market response and price acceptance. Once
a parcel of property is acquired, the Company pre-sells a significant portion of
its planned residential lots on such property prior to extensive capital
investment as a result of the Company's ability to bond its projects to
completion. The Company also generates significant interest income through its
financing of individual purchasers of Timeshare Interests and, to a lesser
extent, land sold by the Residential Land and Golf Division.
For the purposes of this discussion, "estimated remaining life-of-project
sales" assumes sales of the existing, currently under construction or
development, and planned Timeshare Interests or residential lots, as the case
may be, at current retail prices.
The Resorts Division. The Company's Resorts Division was founded in 1994 to
capitalize on the growth of the timeshare industry. According to the American
Resort Development Association, ("ARDA"), a non-profit industry organization,
and other industry sources, timeshare industry sales and the number of Timeshare
Interest owners grew at compound annual rates of approximately 16% and 22%,
respectively, from 1980 to 1997. No assurances can be given that these industry
growth rates will continue. The Company currently markets and sells Timeshare
Interests in ten resorts located in the Smoky Mountains of Tennessee; Myrtle
Beach and Charleston, South Carolina; Orlando, Florida; Branson, Missouri;
Gordonsville, Virginia; Wisconsin Dells, Wisconsin and Aruba. As of March 28,
1999, the Company had 45,002 completed Timeshare Interests at its resorts,
16,845 Timeshare Interests under construction or development and plans to
develop approximately 59,000 additional Timeshare Interests at existing resorts.
Life-to-date, the Company has sold approximately 23,841 Timeshare Interests at
its resorts. Based on the foregoing, the Resorts Division's estimated remaining
life-of-project sales were approximately $888 million, based on retail prices at
March 28, 1999. The Company also manages 34 timeshare resorts (including nine of
its own resorts) with an aggregate of approximately 94,000 members, which the
Company believes makes it the second largest manager of timeshare resorts in
North America (based on the number of resorts managed).
The Resorts Division uses a variety of techniques to attract prospective
purchasers of Timeshare Interests, including targeted mailings, direct mail
mini-vacations, kiosks in retail locations, telemarketing, marketing to current
owners of Timeshare Interests and referrals. The majority of the Company's
Timeshare Interests are sold through on-site sales presentations. To support its
marketing and sales efforts, the Company has developed and continues to enhance
its database to track its timeshare marketing and sales programs. Management
believes that, as the Company's timeshare operations grow, this database will
become an increasingly significant asset, enabling it to take advantage of,
among other things, less costly marketing and referral opportunities.
1
According to ARDA, the primary reason cited by consumers for purchasing a
Timeshare Interest is the ability to exchange a Timeshare Interest for
accommodations at other resorts through worldwide exchange networks. Each of the
Company's timeshare resorts is affiliated with either Interval International
("II") or Resort Condominium International, Inc. ("RCI"), the two largest
worldwide timeshare exchange companies. Participation in an exchange network
entitles owners to exchange their annual Timeshare Interests for occupancy at
over 1,800 participating II resorts or over 3,300 participating RCI resorts
worldwide. To further enhance the ability of its Timeshare Interest owners to
customize their vacation experience, the Company has also implemented a
points-based vacation club system which permits its Timeshare Interest owners to
purchase an annual allotment of points which can be redeemed for occupancy
rights at most Company-owned and certain participating managed resorts. At March
28, 1999, the Company's approximately 14,000 vacation club members could choose
to use their points at 25 resorts in the Bluegreen system. During fiscal 1999,
the Company also introduced the Vacation Club Sampler program, which allows
Sampler package purchasers to enjoy substantially the same amenities, activities
and service offered to the Company's regular vacation club members for a
one-year trial period. The Company benefits from the Sampler program by
recapturing some of the costs incurred in initially marketing to prospective
customers through the price of the Sampler package and also benefits from having
the opportunity to remarket the Company's products to the Sampler customers when
they use their trial memberships at the Company's resorts.
Prior to acquiring property for resorts, the Resorts Division undertakes a
full property review, including an environmental assessment, which is presented
for approval to the Company's Investment Committee, which was established in
1990 and consists of certain key members of senior management. During the review
process, acquisition specialists analyze market, tourism and demographic data as
well as the quality and diversity of the location's existing amenities and
attractions to determine the potential strength of the timeshare market in such
area and the availability of a variety of recreational opportunities for
prospective Timeshare Interest purchasers.
The Company has historically provided financing to approximately 95% of its
timeshare customers, who are required to make a downpayment of at least 10% of
the Timeshare Interest sales price and who typically finance the balance of the
sales price over a period of seven to ten years. As of March 28, 1999, the
Company had a timeshare receivables portfolio totaling approximately $54.4
million in principal amount, with a weighted-average contractual yield of
approximately 15.7% per annum. The Company has obtained a timeshare warehouse
financing and separate timeshare receivables purchase facility to accelerate
cash flows from the Company's timeshare receivables (see "Management's
Discussion and Analysis of Results of Operations and Financial Condition").
The Residential Land and Golf Division. The Residential Land and Golf
Division is focused primarily on land projects located in states in which the
Company has developed marketing expertise and has a track record of success,
such as Texas, North Carolina, New Mexico, Virginia, Tennessee, Colorado and
Arizona. The aggregate carrying amount of Residential Land and Golf Division
inventory at March 28, 1999 was $49.7 million. The Residential Land and Golf
Division's estimated remaining life-of-project sales were approximately $210.0
million at March 28, 1999. The Company believes no other company in the United
States of comparable size or financial resources markets and sells residential
land directly to retail customers.
The Residential Land and Golf Division targets families seeking a quality
lifestyle improvement which is generally unavailable in traditional suburban
developments. Based on the Company's experience in marketing and selling
residential lots to its target customers, the Company has been able to develop a
marketing and sales program that generates a significant number of on-site sales
presentations to potential prospects through low-cost, high-yield newspaper
advertising. In addition, SIMS and the other Residential Land and Golf Division
databases enable the Company to compile, process and maintain information
concerning future sales prospects within each of its operating regions. Through
the Company's targeted sales and marketing program, the Company believes that it
has been able to achieve a very attractive conversion ratio of sales to
prospects receiving on-site sales presentations.
The Residential Land and Golf Division acquires and develops land in two
markets: (i) near major metropolitan centers outside the perimeter of intense
subdivision development; and (ii) popular retirement areas. Prior to acquiring
undeveloped land, the Company researches market depth and forecasts market
absorption. In new market areas, the Company typically supplements its research
with a structured classified ad test marketing system that evaluates market
response and price acceptance. The Company's sales and marketing efforts begin
as soon as practicable after the Company enters into an agreement to acquire a
parcel of land. The Company's ability to bond projects to completion allows it
to sell a significant portion of its residential land inventory on a
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pre-development basis, thereby reducing the Company's need for external capital
to complete improvements. As is the case with the Resorts Division, all
acquisitions of Residential Land and Golf Division properties are subject to
Investment Committee approval.
In fiscal 1997, the Company began construction of its first daily-fee golf
course as part of its long-term plan to participate in the growing daily-fee
golf market. The Company believes that daily-fee golf courses are an attractive
amenity that will increase the marketability of the Company's adjacent
residential lots in certain projects. The Company's first golf course, the
Carolina National Golf Club, is located near Southport, North Carolina, just 30
miles north of Myrtle Beach, South Carolina, one of the nation's most popular
golf destinations, and was designed by Masters Champion Fred Couples. The
Company opened the first 18 holes of the 27 holes planned at Carolina National
Golf Club in July 1998, with the remaining 9 holes scheduled for play in
November 1999. Also, as part of acquisition of the stock of RDI Group, Inc.
("RDI") in fiscal 1998 (the "RDI Acquisition"), the Company acquired the
Christmas Mountain Village daily-fee golf course located in Wisconsin Dells,
Wisconsin. The Company is also actively marketing residential land lots in two
projects in Tennessee and Virginia which are adjacent to daily-fee golf courses
owned by third parties.
The Company's business includes certain risks and uncertainties (see
"Management's Discussion and Analysis of Results of Operations and Financial
Condition").
The Company's executive offices are located at 4960 Blue Lake Drive, Boca
Raton, Florida 33431. The Company's telephone number at such address is (561)
912-8000.
Industry Overviews
Resorts Division
The Market. The resort component of the leisure industry is serviced
primarily by two separate alternatives for overnight accommodations: commercial
lodging establishments and timeshare resorts. Commercial lodging consists
principally of hotels and motels in which a room is rented on a nightly, weekly
or monthly basis for the duration of the visit or rentals of privately-owned
condominium units or homes. For many vacationers, particularly those with
families, a lengthy stay at a quality commercial lodging establishment can be
expensive, and the space provided to such vacationers by these establishments
relative to the cost is often not economical. In addition, room rates at
commercial lodging establishments are subject to change periodically and
availability is often uncertain. The Company believes that Timeshare Interest
ownership presents an attractive vacation alternative to commercial lodging.
First introduced in Europe in the mid-1960's, Timeshare Interest ownership
has been one of the fastest growing segments of the hospitality industry over
the past two decades. According to ARDA (including unpublished ARDA estimates
with respect to 1995, 1996 and 1997), timeshare industry sales and the number of
Timeshare Interest owners have grown at compound annual rates of approximately
16% and 22%, respectively, from 1980 to 1997. No assurances can be given that
such industry growth rates will continue.
The Company believes that, based on ARDA reports and other industry data,
the following factors have contributed to the increased acceptance of the
timeshare concept among the general public and the substantial growth of the
timeshare industry:
o Consumer awareness of the value and benefits of Timeshare Interest
ownership, including the cost savings relative to other lodging
alternatives;
o Flexibility of Timeshare Interest ownership due to the growth of
international exchange organizations such as II and RCI and
points-based vacation club systems;
o The quality of the timeshare resorts and their management;
o Consumer confidence resulting from consumer protection regulation of
the timeshare industry and an influx of brand name national lodging
companies to the timeshare industry; and
o Availability of consumer financing for purchasers of Timeshare
Interests.
3
The timeshare industry traditionally has been highly fragmented and
dominated by a large number of local and regional resort developers and
operators, each with small resort portfolios generally of differing quality. The
Company believes that one of the most significant factors contributing to the
current success of the timeshare industry is the entry into the market of some
of the world's major lodging, hospitality and entertainment companies, such as
Marriott, Disney, Hilton, Hyatt, Four Seasons and Inter-Continental. Although
timeshare operations currently comprise only a small portion of these companies'
overall operations, their involvement in the timeshare industry, together with
other publicly-traded timeshare companies, has enhanced the industry's image
with the general public.
The Consumer. According to information compiled by ARDA, customers in the
40-55 year age range represented approximately 45.1% of all Timeshare Interest
owners in 1997. Historically, the median age of a Timeshare Interest buyer at
the time of purchase was 48. The median annual household income of current
Timeshare Interest owners in the United States is approximately $71,000, with
approximately 24% of all Timeshare Interest owners having annual household
incomes greater than $100,000 and approximately 12% of such owners having annual
household incomes greater than $125,000. The Company believes that, despite the
industry's growth, Timeshare Interest ownership has achieved only an approximate
5% market penetration among United States households with incomes above $50,000
per year.
Timeshare Interest Ownership. The purchase of a Timeshare Interest
typically entitles the buyer to use a fully-furnished vacation residence,
generally for a one-week period each year in perpetuity. Typically, the buyer
acquires an ownership interest in the vacation residence, which is often held as
tenant-in-common with other buyers of interests in the property. Under a
points-based vacation club system, members purchase an annual allotment of
points which can be redeemed for occupancy rights at participating resorts.
Compared to other vacation ownership arrangements, the points-based system
offers members significant flexibility in planning their vacations. The number
of points that are required for a stay at any one resort varies, depending on a
variety of factors, including the resort location, the size of a unit, the
vacation season and the days of the week used. Under this system, members can
select vacations according to their schedules, space needs and available points.
Subject to certain restrictions, members are typically allowed to carry over for
one year any unused points and to "borrow" points from the forthcoming year. In
addition, members are required to pay annual fees for certain maintenance and
management costs associated with the operation of the resorts based on the
number of points to which they are entitled. As of March 28, 1999, all of the
Company's sales offices, with the exception of its La Cabana Beach and Racquet
Club sales office in Aruba, were selling Timeshare Interests within the
Company's vacation club system.
The owners of Timeshare Interests manage the property through a nonprofit
homeowners' association, which is governed by a board of directors or trustees
consisting of representatives of the developer and owners of Timeshare Interests
at the resort. The board hires a management company to which it delegates many
of the rights and responsibilities of the homeowners' association, including
grounds landscaping, security, housekeeping and operating supplies, garbage
collection, utilities, insurance, laundry and repairs and maintenance. As of
March 28, 1999, the Company's resort property management division managed 34
resorts (including 9 of the Company's resorts and served an owner base of
approximately 94,000.
Each Timeshare Interest owner is required to pay the homeowners'
association a share of all costs of maintaining the property. These charges can
consist of an annual maintenance fee plus applicable real estate taxes and
special assessments, assessed on an as-needed basis. If the Timeshare Interest
owner does not pay such charges, such owner's use rights may be suspended and
the homeowners' association may foreclose on the owner's Timeshare Interest.
Participation in Timeshare Interest Exchange Networks. The Company believes
that its Timeshare Interests are made more attractive by the Company's
affiliation with Timeshare Interest exchange networks operated by II and RCI,
the two largest timeshare exchange companies worldwide. Seven of the Company's
timeshare resorts are affiliated with II and have been awarded II's highest
designation (five stars), while the two resorts acquired in the RDI Acquisition
and the Timeshare Interests acquired individually from AmClub, Inc. (an
affiliate of the former shareholders of RDI) at the Shenandoah Crossing Farm &
Club resort are affiliated with RCI. A Timeshare Interest owner's participation
in the II or RCI exchange network (the fee for which is paid by the Company in
the first year of such owner's participation) allows such owner to exchange his
annual Timeshare Interest for occupancy at over 1,800 participating resorts in
the case of II and over 3,300 participating resorts in the case of RCI, based
upon availability and the payment of a variable exchange fee. A member may
exchange his
4
Timeshare Interest for an occupancy right in another participating resort by
listing his Timeshare Interest as available with the exchange organization and
by requesting occupancy at another participating resort, indicating the
particular resort or geographic area to which the member desires to travel, the
size of the unit desired and the period during which occupancy is desired. The
exchange network assigns ratings to each listed Timeshare Interest, based upon a
number of factors, including the location and size of the unit, the quality of
the resort and the period during which the Timeshare Interest is available, and
attempts to satisfy the exchange request by providing an occupancy right in
another Timeshare Interest with a similar rating. If the exchange network is
unable to meet the member's initial request, it suggests alternative resorts
based on availability. The failure of the Company to participate in qualified
exchange networks or the failure of such networks to operate effectively could
have a material adverse effect on the Company.
Residential Land and Golf Division
The Residential Land and Golf Division operates within a specialized niche
of the real estate industry which focuses on the sale of residential land to
retail customers who intend to build a home on such land at some point in the
future. The participants in this market niche are generally individual
landowners who are selling specific parcels of property and small developers who
focus primarily on projects in their region. Although no specific data is
available regarding this market niche, the Company believes that no other
company in the United States of comparable size or financial resources currently
markets and sells residential land directly to retail customers.
Unlike commercial homebuilders who focus on vertical development, the
Residential Land and Golf Division focuses primarily on horizontal development
activities, such as grading, roads and utilities. As a result, the projects
undertaken by the Company and other participants in this market niche are
significantly less capital intensive than those undertaken by the commercial
homebuilders, which reduces the Company's risk of holding a large inventory of
property. In addition, the Company believes that, through its financial and
marketing resources, it is able to acquire properties in attractive locations
throughout the United States on a cost-effective basis thereby enabling the
Company's projects to achieve desired cash flows and targeted gross margins. The
Company's market niche is also the beneficiary of a number of trends, including
the large number of people entering into the 40-55 year age bracket and the
economic and population growth in certain of its primary markets.
The Residential Land and Golf Division is also focused on the development
of golf courses and related amenities as the center-pieces of certain of the
Company's residential land properties. As of March 28, 1999, the Company was
marketing residential land lots in four projects that include golf courses
developed either by the Company or a third party. The Company intends to acquire
and develop additional golf communities, as management believes that the
demographics and marketability of such properties are consistent with the
Company's overall residential land strategy. Golf communities typically are
larger, multi-phase properties which require a greater capital commitment than
the Company's single-phase residential land projects. There can be no assurances
that the Company will be able to successfully implement its golf community
strategy.
Company Products
Timeshare Resorts
Set forth below is a description of each of the Company's timeshare resorts
and the Shenandoah Crossing Farm & Club resort ("Shenandoah Crossing"), at which
the Company does not own but at which the Company is developing Timeshare
Interests (see further discussion below). All units at most of the properties
have certain standard amenities, including a full kitchen, at least two
televisions, a VCR player and a CD player. Some units have additional amenities,
such as larger televisions and game systems. Most properties offer guests a
clubhouse (with an indoor and/or outdoor pool, a game room, exercise facilities
and a lounge) and a hotel-type staff. The Company manages all of its resorts
with the exception of the La Cabana Beach Resort & Racquet Club (the "Aruba
Resort").
MountainLoft Resort--Gatlinburg, Tennessee. The MountainLoft Resort in
Gatlinburg, Tennessee is located near the Great Smoky Mountains National Park
and is minutes from the family attractions of Pigeon Forge, Tennessee. Units are
located in individual chalets or mid-rise villa buildings. Each unit is fully
furnished with a whirlpool bath and private balconies, and certain units include
gas fireplaces.
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Laurel Crest--Pigeon Forge, Tennessee. Laurel Crest is located in proximity
to the Great Smoky Mountains National Park and the Dollywood theme park. In
addition, visitors to Pigeon Forge can enjoy over 200 factory outlet stores and
music shows featuring renowned country music stars as well as partake in a
variety of outdoor activities, such as horseback riding, trout fishing, boating,
golfing and white water rafting.
Shore Crest Vacation Villas--Myrtle Beach, South Carolina. Shore Crest
Vacation Villas is located on the beach in the Windy Hill section of North
Myrtle Beach a mile from the famous Barefoot Landing, with its restaurants,
theaters, shops and outlet stores.
Harbour Lights--Myrtle Beach, South Carolina. Harbour Lights is located in
the Fantasy Harbour Complex in the center of Myrtle Beach. Nearby are Theater
Row, shopping, golf and restaurants. The resort's Activities Center overlooks
the Intracoastal Waterway.
The Falls Village--Branson, Missouri. The Falls Village is located in the
Ozark Mountains. Fishing, boating and swimming are available at nearby Table
Rock Lake and Lake Taneycomo, and area theaters feature shows by country music
stars. Most resort customers come from areas within an eight to ten hour drive
of Branson.
Christmas Mountain Village--Wisconsin Dells, Wisconsin. The Company
acquired the Christmas Mountain Village resort as part of the RDI Acquisition.
Christmas Mountain Village offers an 18-hole golf course and seven ski trails
served by two chair lifts. Other on-site amenities include horseback riding,
tennis courts, a five-acre lake with paddleboats and rowboats and four outdoor
swimming pools. Christmas Mountain Village attracts customers primarily from the
greater Chicago area and other locations within an eight to ten hour drive of
Wisconsin Dells.
Orlando's Sunshine--Orlando, Florida. Orlando's Sunshine Resort was also
acquired as part of the RDI Acquisition. The resort is located on International
Drive, near Wet'n'Wild water park and Universal Studios. During fiscal 1999, the
Company commenced construction on Phase II of the Orlando's Sunshine Resort,
which will include 60 units, an outdoor swimming pool, hot tub and tennis
courts.
La Cabana Beach Resort & Racquet Club--Aruba. Bluegreen Properties N.V., a
50%-owned subsidiary of the Company, acquired the unsold Timeshare Interest
inventory of the Aruba Resort (approximately 8,000 Timeshare Interests) in
December 1997. Established in 1989, the Aruba Resort is a 449-suite ocean front
property which offers one-, two- and three-bedroom suites, garden suites and
penthouse accommodations. On-site amenities include tennis, racquetball, squash,
a casino, two pools and private beach cabanas, none of which are owned or
managed by the Company.
Shenandoah Crossing--Gordonsville, Virginia. Shenandoah Crossing features
an 18-hole golf course, indoor and outdoor pools, tennis courts, horseback
riding trails and a lake for swimming, fishing and boating. In 1987, AmClub,
Inc. ("AmClub"), an affiliate of the former shareholders of RDI, commenced
development of Shenandoah Crossing. In connection with the acquisition of RDI,
the Company was granted an option (the "AmClub Option") to acquire the capital
stock or assets of AmClub, which owns Shenandoah Crossing. Pursuant to the
AmClub Option, the exercise price for the purchase of AmClub's capital stock is
$10,000, while the exercise price for any assets of AmClub is equal to the fair
market value of such assets at the time of exercise. During fiscal 1999, the
Company began acquiring (from AmClub), developing and selling individual
Timeshare Interests at Shenandoah Crossing. On October 7, 1998, Leisure Capital
Corporation ("LCC"), a wholly-owned subsidiary of the Company, acquired from a
bank delinquent notes receivable issued by AmClub. During fiscal 1999, the
Company had also advanced $1.3 million to AmClub, primarily for timeshare resort
improvements at Shenandoah Crossing. As of December 14, 1998, the notes
receivable from AmClub discussed above were in default and due immediately. As
more fully described in Note 4 of Notes to Consolidated Financial Statements,
the Company intends to foreclose on the underlying collateral of the notes,
which includes Timeshare Interests, real estate and fixed assets at Shenandoah
Crossing. There can be no assurances that the foreclosure will be completed as
intended.
The Lodge Alley Inn--Charleston, South Carolina. In September 1998, the
Company acquired the Lodge Alley Inn, an 89-room hotel in Charleston's historic
district, for approximately $16.6 million. Accommodations include one- and
two-bedroom suites, many furnished with an equipped kitchen, living room with
fireplace, dining room, jacuzzi, pine wood floors, and 18th century-style
furniture reproductions. The resort, which features the on-
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site French Quarter restaurant, is within walking distance of many of
Charleston's historical sites, open air markets and art galleries.
The following table sets forth additional data with respect to each of the
Company's resorts:
Shenandoah
Laurel Shore Harbour The Christmas La Cabana Crossing The
Crest Crest Lights Falls Mountain Orlando's Beach & Farm Lodge
MountainLoft Pigeon Myrtle Myrtle Village Village Sunshine Racquet & Club (2) Alley Inn
Gatlinburg, Forge, Beach, Beach, Branson, Wisconsin, Orlando, Club(1) Gordonsville, Charleston,
Location TN TN SC SC MO Dells, WI FL Aruba VA SC
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Date sales commenced 7/94 8/95 4/96 6/97 7/97 9/97 12/98 1/98 4/98 2/99
Number of Timeshare
Interests completed
as of March 28, 1999
(3) 8,736 9,464 5,928 3,744 2,471 1,341 -- 8,118 520 4,680
Number of Timeshare
Interests under
construction as of
March 28, 1999 (3) 2,704 2,600 6,552 -- 1,040 829 3,120 -- -- --
Number of
additional
Timeshare Interests
planned (3)(4) 7,176 8,840 -- 9,984 9,724 13,402 -- -- 9,880 --
Average Timeshare
Interests selling
price-year
year ended
March 28, 1999 $9,508 $9,257 $9,255 $8,063 $9,444 $8,940 $9,543 $7,786 $7,521 $15,067
Number of Timeshare
Interests sold
through
March 28, 1999 (5) 5,668 4,487 4,473 2,275 1,581 2,405 43 2,247 656 6
(1) Bluegreen Properties N.V., in which the Company owns a 50% interest,
acquired unsold Timeshare Interests inventory at this resort in December
1997.
(2) Includes Timeshare Interests acquired individually from an affiliate of the
former shareholders of RDI Group, Inc. and sold during fiscal 1999 and
Timeshare Interests anticipated to be developed on land expected to be
obtained in a pending foreclosure (See Note 4 of Notes to Consolidated
Financial Statements). There can be no assurances that the foreclosure will
be completed as intended.
(3) The number of Timeshare Interests completed, under construction or planned
are intended to be sold in 52 weekly intervals per vacation home for the
Company's Shore Crest, Harbour Lights, Orlando's Sunshine, La Cabana, and
Lodge Alley Inn Resorts The amounts for the remaining resorts include some
vacation homes which can be subdivided and sold as two smaller vacation
homes ("lock-out units"), each of which consists of 104 weekly intervals
per vacation home.
(4) There can be no assurances that the Company will have the resources to
complete all such planned Timeshare Interests or that such Timeshare
Interests will be sold at favorable prices.
(5) Includes sales of Timeshare Interests that were sold on a biennial basis
(i.e., sale of one-week periods every other year in perpetuity) as one
Timeshare Interest sold.
Certain Residential Land and Golf Division Projects
Set forth below is a description of the five largest projects currently
marketed by the Residential Land and Golf Division, which are representative of
the types of projects that the Company has been focusing on since 1993. These
properties represented 56.7% of the Residential Land and Golf Division's
estimated remaining life-of-project sales at March 28, 1999.
Winding River Plantation--Southport, North Carolina. The Company acquired
approximately 1,300 acres located near Southport, North Carolina (and between
Myrtle Beach, South Carolina and Wilmington, North Carolina) for $3.4 million in
fiscal 1997. The property has frontage along the Lockwood Folly River, a
navigable waterway that leads to the Intracoastal Waterway and the Atlantic
Ocean. The project will include river amenities, a beach club and tennis courts.
In addition, the project is the site of the Company's first daily-fee golf
course, the Carolina National Golf Club, the first 18-holes of which opened for
play in July 1998. The course was developed by Masters Champion Fred Couples and
will include an additional 9 holes scheduled for play starting in November 1999.
The Company anticipates that the project will consist of a total of
approximately 1,000 lots, which average
7
approximately one acre. The Company began selling lots in February 1997, and
aggregate sales through March 28, 1999 were $29.9 million. Aggregate development
costs (net of costs capitalized separately in the golf course) through March 28,
1999 were $13.1 million and the Company anticipates that the aggregate capital
expenditures to complete development at the project will be $6.6 million. The
Company anticipates that the remaining lots will be sold-out over the next three
years. Estimated remaining life-of-project sales for this project are
approximately $44.7 million, based on retail selling prices as of March 28,
1999.
Lake Ridge at Joe Pool Lake--Cedar Hill, Texas. The Company acquired 1,400
acres located approximately 19 miles outside of Dallas, Texas and 30 miles
outside of Fort Worth, Texas in April 1994 for $6.1 million. The property is
located at Joe Pool Lake and is atop the highest elevation within 100 miles. The
lake has in excess of 7,500 acres of water for boating, fishing, windsurfing and
other water activities. Adjacent amenities (not owned or managed by the Company)
include a 154 acre park with baseball, football and soccer fields, a fishing
pool with a pier, camping areas and an 18-hole golf course. The project includes
252 lots, with most ranging in size from 1/4 to five acres, with 399 acres
available for future development. The Company began selling lots in April 1994
and aggregate sales through March 28, 1999 were $52.5 million. Aggregate
development costs through March 28, 1999 were $18.2 million and the Company
anticipates that the remaining capital expenditures will be $6.8 million. The
Company anticipates that unsold lots will be sold-out over the next two years.
Estimated remaining life-of-project sales for this project are approximately
$21.8 million, based on retail selling prices as of March 28, 1999.
Mountain Lakes Ranch -- Bluffdale, Texas. The Company acquired 4,100 acres
located approximately 45 miles from Fort Worth, Texas in October 1998 for $3.1
million. The property features rolling terrain with hilltop views, tree coverage
and ample area to create private lakes. The Company anticipates that the
property will yield approximately 1,390 lots ranging in size from one to five
acres, including both lakefront and waterview parcels. Sales are expected to
commence in September 1999. Aggregate development costs through March 28, 1999
were $300,000 and the Company anticipates that future capital expenditures will
be $11.8 million. Estimated life-of-project sales for Mountain Lakes Ranch are
$34.9 million, based on retail prices at March 28, 1999, with a projected
sell-out period of seven years.
Crossroads Ranch--Prescott, Arizona. The Company acquired 6,500 acres
located 20 miles north of Prescott, Arizona in July 1995 for $6.0 million. The
property has elevations ranging from 4,600 to 5,600 feet and a four-season
climate. The terrain includes pasture lands with seasonal creeks and rolling
hills. The property is 95 miles north of Phoenix and Scottsdale, approximately 2
1/2 hours south of the Grand Canyon and approximately one hour away from Sedona.
The project includes 153 lots, averaging 36 acres each, and 26 lots, averaging 5
acres each. The Company provided gravel roads and trails for hiking and
horseback riding. Electric service was installed underground so that utility
poles would not spoil the views. The Company also created deed restrictions
designed to ensure that future development on the property is compatible with
the land's ranch character. The Company began selling lots in January 1996 and
aggregate sales through March 28, 1999 were $24.2 million. Aggregate development
costs through March 28, 1999 were $8.8 million and the Company anticipates that
the remaining capital expenditures will be approximately $300,000. The Company
anticipates that the unsold lots will be sold-out over the next year. Estimated
remaining life-of-project sales for this project are approximately $3.5 million,
based on retail selling prices as of March 28, 1999.
Mogollon Ranch--Coconino County, Arizona. The Company acquired
approximately 1,200 acres located on central Arizona's high plateau, the
Mogollon Rim, in October 1998, for approximately $2.9 million. At an elevation
of 6,800 feet, the property is completely surrounded by the Coconino National
Forest. The Company anticipates that the project will consist of a total of 233
five-acre homesites. The property began selling in November 1998 and aggregate
sales through March 28, 1999 were $3.9 million. Total development costs through
March 28, 1999 were $1.1 million and the Company expects that future capital
expenditures will approximate $3.6 million. Estimated remaining life-of-project
sales for this property are approximately $14.3 million, based on retail prices
at March 28, 1999. The remaining lots are expected to be sold out over a
three-year period.
Acquisition of Timeshare and Residential Land and Golf Inventory
In order to provide centralized and uniform controls on the type, location
and amount of timeshare and residential land and golf inventory that the Company
acquires, all such inventory acquisitions have required the approval of the
Investment Committee since 1990. The Investment Committee consists of George F.
Donovan,
8
President and Chief Executive Officer; John F. Chiste, Senior Vice President,
Treasurer and Chief Financial Officer; Patrick E. Rondeau, Senior Vice
President, Director of Legal Affairs; L. Nicolas Gray, Senior Vice
President--Resorts Division; and Daniel C. Koscher, Senior Vice
President--Residential Land and Golf Division. The Investment Committee reviews
each proposed inventory acquisition to determine whether the property meets
certain criteria, including estimated cash flows and gross profit margins.
Resorts Division
The Company obtains information with respect to resort acquisition
opportunities through interaction by the Company's management team with resort
operators, lodging companies and financial institutions with which the Company
has established business relationships. Prior to acquiring property for future
resorts, the Resorts Division undertakes a full property review, including an
environmental assessment, which is presented to the Investment Committee for
approval. During the review process, acquisition specialists analyze market,
tourism and demographic data as well as the quality and diversity of the
location's existing amenities and attractions to determine the potential
strength of the timeshare market in such area and the availability of a variety
of recreational opportunities for prospective Timeshare Interest purchasers.
Specifically, the Company evaluates the following factors, among others, to
determine the viability of a potential new timeshare resort: (i) supply/demand
ratio for Timeshare Interests in the relevant market, (ii) the market's growth
as a vacation destination, (iii) competitive accommodation alternatives in the
market, (iv) uniqueness of location and (v) barriers to entry that would limit
competition. The Company anticipates that its timeshare resorts will generally
have a sell-out term of approximately seven years.
During fiscal 1999, the Company acquired the Lodge Alley Inn Resort in
Charleston, South Carolina, and commenced new development at Shenandoah Crossing
in Gordonsville, Virginia (see "Company Products--Timeshare Resorts"). As a
result of these transactions, the Company's planned Timeshare Interest
inventory, net of life-to-date sales, increased from 77,466 Timeshare Interests
as of March 29, 1998, to 97,012 Timeshare Interests as of March 28, 1999, a net
increase of 25%.
The Company intends to continue to pursue growth by expanding or
supplementing the Company's existing resorts operations through acquisitions in
destinations that will complement such existing operations. Because the
timeshare industry is highly fragmented, the Company believes that significant
opportunities exist to make selected acquisitions at attractive valuations.
Acquisitions the Company may consider include acquiring additional Timeshare
Interest inventory, operating companies, management contracts, Timeshare
Interest mortgage portfolios and properties or other timeshare-related assets
which may be integrated into the Company's operations. In addition, the Company
intends to continue to pursue timeshare resort locations in areas outside the
United States, particularly in the Caribbean, as well as Central and South
America. No assurances can be given that the Company will be successful in its
acquisition strategy.
Residential Land and Golf Division
The Residential Land and Golf Division, through the Company's regional
offices, and subject to Investment Committee review and approval, typically
acquires inventory that (i) is located near a major population center outside
the perimeter of intense subdivision development or in popular retirement areas,
(ii) is suitable for subdivision, (iii) has attractive topographical features,
(iv) in some cases could accommodate a golf course and related amenities and (v)
the Company believes will result in an acceptable profit margin and cash flow to
the Company based upon anticipated retail value. Properties are generally
subdivided for resale into parcels typically ranging in size from two to five
acres. During fiscal 1998, the Company acquired 5,133 acres in ten separate
transactions for a total purchase price of approximately $12.2 million, or
$2,386 per acre, and during fiscal 1999, the Company acquired 8,293 acres in 8
separate transactions for a total purchase price of $12.0 million, or $1,444 per
acre.
In connection with its review of potential residential land and golf
inventory, the Investment Committee considers such established criteria as the
economic conditions in the area in which the parcel is located, environmental
sensitivity, availability of financing, whether the property is consistent with
the Company's general policies and the anticipated ability of that property to
produce acceptable profit margins and cash flow. As part of its long-term
strategy for the Residential Land and Golf Division, the Company in recent years
has focused on fewer, more capital-intensive projects. The Company intends to
continue to focus the Residential Land and Golf
9
Division on those regions where the Company believes the market for its products
is strongest, such as the Southeast, Southwest, Rocky Mountain and Western
regions of the United States and to replenish its residential land inventory in
such regions as existing projects are sold-out.
The Residential Land and Golf Division has several specialists who assist
regional management in locating inventory for acquisition. The Company has
established contacts with numerous land owners and real estate brokers in many
of its market areas, and because of such contacts and its long history of
acquiring properties, the Company believes that it is generally in a favorable
position to learn of available properties, often before the availability of such
properties is publicly known. In order to ensure such access, the Company
attempts to develop and maintain strong relationships with major property owners
and brokers. Regional offices regularly contact property owners, such as timber
companies, financial institutions and real estate brokers, by a combination of
telephone, mail and personal visits. In addition, prior to acquiring property in
new areas, the Company will conduct test marketing for a prospective project
prior to entering into an acquisition agreement to determine whether sufficient
customer demand exists for the project. To date, the Company's regional offices
generally have been able to locate and acquire adequate quantities of inventory
which meet the criteria established by the Investment Committee to support their
operational activities. In certain cases, however, the Company has experienced
short-term shortages of ready-for-sale inventory due to either difficulties in
acquiring property or delays in the approval and/or development process.
Shortfalls in ready-for-sale inventory may materially adversely affect the
Company's business, operating results and financial condition (see "Management's
Discussion and Analysis of Results of Operations and Financial Condition").
Once a desirable property is identified, the Company completes its initial
due diligence procedures and enters into a purchase agreement with the seller to
acquire the property. It is generally the Company's policy to advance only a
small downpayment of 1%-3% of the purchase price upon signing the purchase
agreement and to limit the liquidated damages associated with such purchase
agreement to the amount of its downpayment and any preliminary development
costs. In most cases, the Company is not required to advance the full purchase
price or enter into a note payable obligation until regulatory approvals for the
subdivision and sale of at least the initial phase of the project have been
obtained. While local approvals are being sought, the Company typically engages
in pre-marketing techniques and, with the consent of the seller and the
knowledge of prospective purchasers, occasionally attempt to pre-sell parcels,
subject to closing its purchase of the property. When the necessary regulatory
approvals have been received, the closing on the property occurs and the Company
obtains title to the property. The time between execution of a purchase
agreement and closing on a property has generally been six to 12 months.
Although the Company generally retains the right to cancel purchase agreements
without any loss beyond forfeiture of the downpayment and preliminary
development costs, few purchase agreements have been canceled historically.
By requiring, in most cases, that regulatory approvals be obtained prior to
closing and by making small downpayments upon signing purchase agreements, the
Company is typically able to place a number of properties under contract without
expending significant amounts of cash. This strategy enables the Residential
Land and Golf Division to reduce (i) the time during which it actually owns
specific properties, (ii) the market risk associated with holding such
properties and (iii) the risk of acquiring properties that may not be suitable
for sale. It also provides the Residential Land and Golf Division an additional
source of available properties to meet customer demand. In certain
circumstances, however, the Company has acquired properties and then
strategically held such properties until their prime marketing seasons.
Prior to closing on a purchase of residential land, the Company's policy is
to complete its own environmental assessment of the property. The purpose of the
Company's assessment is to evaluate the impact the proposed subdivision will
have on such items as flora and fauna, wetlands, endangered species, open space,
scenic vistas, recreation, transportation and community growth and character. To
obtain this information, the Company's acquisition specialists typically consult
with various groups and agencies including the appropriate county and state
planning agencies, environmental groups, state heritage programs, soil
conservation agencies and forestry groups. If the Company's environmental
assessment indicates that the proposed subdivision meets environmental criteria
and complies with zoning, building, health and other laws, the Company develops
a formal land use plan, which forms a basis for determining an appropriate
acquisition price. The Company attempts, where possible, to accommodate the
existing topographical features of the land, such as streams, hills, wooded
areas, stone walls, farm buildings and roads. Prior to closing on an
acquisition, the Company will typically have the property surveyed
10
by a professional surveyor and have soil analyses conducted to determine the
suitability of the site for septic systems. At closing, the Company also obtains
title insurance on the property.
Marketing and Sale of Inventory
Resorts Division
The Resorts Division utilizes a variety of techniques to attract
prospective purchasers of Timeshare Interests, including targeted mailings,
direct mail mini-vacation invitations, kiosks in retail locations,
telemarketing, marketing to current owners and referrals. The Resorts Division
provides hotel accommodations to prospective purchasers at reduced prices in
exchange for their touring the timeshare resort. To support its marketing and
sales efforts, the Company has developed and continues to enhance its database
to track its timeshare marketing and sales programs. Management believes that,
as the Resort Division's timeshare operations grow, this database will become an
increasingly significant asset, enabling the Company to focus its marketing and
sales efforts to take advantage of, among other things, less costly marketing
and referral opportunities. Timeshare resorts are staffed with sales
representatives, sales managers and an on-site manager who oversees the
day-to-day operations, all of whom are employees of the Company. Sales personnel
are generally experienced in resort sales and undergo ongoing Company-sponsored
training. During fiscal 1998, total advertising expense for the Resorts Division
was $14.6 million or 24.1% of the division's $60.8 million in sales. During
fiscal 1999, total advertising expense for the Resorts Division was $28.1
million or approximately 27% of such division's $103.1 million in sales (see
"Management's Discussion and Analysis of Results of Operations and Financial
Condition").
The Company requires its sales staff to provide each timeshare customer
with a written disclosure statement regarding the Timeshare Interest to be sold
prior to the time the customer signs a purchase agreement. This disclosure
statement sets forth relevant information regarding timeshare ownership at the
resort and must be signed by every purchaser. The Company believes that this
information statement contains all material and relevant information a customer
requires to make an informed decision as to whether or not to purchase a
Timeshare Interest at one of its resorts.
After deciding to purchase a Timeshare Interest, a purchaser enters into a
purchase agreement and is required to pay the Company a deposit of at least 10%
of the purchase price. Purchasers are entitled to cancel purchase agreements
within specified rescission periods after execution in accordance with statutory
requirements. Substantially all timeshare purchasers visit one of the Company's
resorts or one of the Company's off-site sales offices prior to purchasing.
The attractiveness of Timeshare Interest ownership has been enhanced
significantly by the availability of exchange networks that allow Timeshare
Interest owners to exchange the occupancy right in their Timeshare Interests in
a particular year, for an occupancy right at another participating network
resort at either the same or a different time. The two resorts acquired in the
RDI Acquisition and Shenandoah Crossings are affiliated with the timeshare
exchange network operated by RCI, while the Company's seven other resorts are
affiliated with II's timeshare exchange network. In connection with the RDI
Acquisition, the Company advised each of II and RCI of the existence of its
agreement with the other timeshare interest exchange network and of the
potential conflict. Although the Company believes this conflict will be resolved
satisfactorily, no assurances can be given. If the Company's resorts cease to
qualify for the exchange networks or such networks cease to operate effectively,
the Company's sales of Timeshare Interests and the performance of its timeshare
receivables could be materially adversely affected.
For further information on sales and other financial information
attributable to the Resorts Division, see "Management's Discussion and Analysis
of Results of Operations and Financial Condition."
Residential Land and Golf Division
In general, as soon as practicable after agreeing to acquire a property and
during the time period that appropriate improvements are being completed, the
Company establishes selling prices for the individual parcels taking into
account such matters as regional economic conditions, quality as a building
site, scenic views, road frontage, golf course views (if applicable) and natural
features such as lakes, mountains, streams, ponds and wooded areas. The Company
also considers recent sales of comparable parcels in the area. Initial decisions
on
11
pricing of parcels in a given area are made by the Company's regional managers
and, in all cases, are subject to approval by the Investment Committee. Once
such selling prices are established the Company commences its marketing efforts.
The most widely used marketing technique by the Residential Land Division
is advertising in major newspapers in metropolitan areas located within a one to
three hour drive from the property and local newspapers. In addition, the
Company uses its proprietary database and inventory management system, which
enables the Company to quickly compile information on the previously identified
prospects most likely to be interested in a particular project. The Residential
Land and Golf Division also conducts direct mail campaigns to market property
through the use of brochures describing available parcels, as well as television
and radio advertising. Through this sales and marketing program, the Company
believes that it has been able to achieve a high conversion ratio of sales to
prospects receiving on-site sales presentations. The conversion ratio of sales
to prospects receiving on-site sales presentations has historically been
approximately 20%. A sales representative who is knowledgeable about the
property answers each inquiry generated by the Company's marketing efforts,
discusses the property with the prospective purchaser, attempts to ascertain the
purchaser's needs and determines whether the parcel would be suitable for that
person, and arranges an appointment for the purchaser to visit the property.
Substantially all prospective purchasers inspect a property before purchasing.
During fiscal 1998, the Residential Land and Golf Division incurred $7.6 million
in advertising expenses, or 7.2% of such division's $106.1 million in sales.
During fiscal 1999, the Residential Land and Golf Division incurred $8.9 million
in advertising expense, or approximately 7% of such division's $118.9 million in
sales.
The success of the Company's marketing efforts depends heavily on the
knowledge and experience of its sales personnel. The Company requires that,
prior to initiating the marketing effort for a property, all sales
representatives walk the property and become knowledgeable about each parcel and
applicable zoning, subdivision and building code requirements. Continued
training programs are conducted, including training with regional office sales
managers, weekly sales meetings and frequent site visits by an executive officer
of the Company. The Company enhances its sales and marketing organization
through the Bluegreen Institute, a mandatory training program, which is designed
to instill the Company's marketing and customer service philosophy in middle and
lower-level management. Additionally, the sales staff is evaluated against
performance standards established by the executive officers of the Company.
Substantially all of a sales representative's compensation is commission-based.
The Company requires its sales staff to provide each prospective purchaser
with a written disclosure statement regarding the property to be sold prior to
the time such purchaser signs a purchase agreement. This information statement,
which is either in the form of a U.S. Department of Housing and Urban
Development ("HUD") lot information statement, where required, or a Company
generated "Vital Information Statement," sets forth relevant information with
respect to, and risks associated with, the property and must be signed by each
purchaser. The Company believes that these information statements contain all
material and relevant information necessary for a prospective purchaser to make
an informed decision as to whether or not to purchase such property, including
the availability and estimated cost of utilities, restrictions regarding
property usage, status of access roads and information regarding rescission
rights.
After deciding to purchase a parcel, a purchaser enters into a purchase
agreement and is required to pay the Company a deposit of at least 10% of the
purchase price. Purchasers are entitled to cancel purchase agreements within
specified periods after execution in accordance with statutory requirements. The
closing of a residential land sale usually occurs two to eight weeks after
payment of the deposit. Upon closing of a residential land sale, the Company
typically delivers a warranty deed and a recent survey of the property to the
purchaser. Title insurance is available at the purchaser's expense.
For further information on sales and other financial information
attributable to the Residential Land and Golf Division, see "Management's
Discussion and Analysis of Results of Operations and Financial Condition."
Customer Financing
General
During fiscal 1997, 1998 and 1999, the Company financed 30%, 33% and 40%,
respectively, of the aggregate purchase price of its sales of Timeshare
Interests and residential land to customers that closed during
12
these periods and received cash for the remaining balance of the purchase price.
The increase in the percentage of sales financed by the Company since 1997 is
primarily attributable to an increase in the sales of Timeshare Interests over
the same period. Sales of Timeshare Interests accounted for 25%, 35% and 46% of
consolidated sales during fiscal 1997, 1998 and 1999, respectively.
Approximately 95% of all purchasers of Timeshare Interests finance with the
Company (compared to approximately 2% of residential land purchasers in fiscal
1999). In recent years, the percentage of residential land customers who
utilized the Company's financing has declined materially due, among other
things, to an increased willingness on the part of local banks to extend direct
lot financing to purchasers.
The Company believes that its financing is attractive to purchasers who
find it convenient to handle all facets of the purchase of residential land and
Timeshare Interests through a single source and because the downpayments
required by the Company are similar to those required by banks and mortgage
companies which offer this type of credit.
The Company offers financing of up to 90% of the purchase price of its
Timeshare Interests. The typical financing extended by the Company on a
Timeshare Interest during fiscal 1997, 1998 and 1999, provides for a term of
seven years and a fixed interest rate. Historically, at the closing, the Company
and the purchaser have executed a contract for deed agreement. After the
obligation is paid in full, the Company delivers a deed to the purchaser. In
connection with the Company's Timeshare Interest sales within its vacation club
system, the Company delivers the deed to purchasers at the closing of a sale and
secures repayment of the purchaser's obligation by obtaining a mortgage on the
purchaser's Timeshare Interest. The Company does not believe that the transfer
to a note and mortgage system will have a material adverse effect on its
servicing operations or financial results.
The Company also offers financing of up to 90% of the purchase price of all
parcels sold under the Residential Land and Golf Division to all purchasers who
qualify for such financing. The term of repayment on such financing has
historically ranged from five to 15 years although the Company, by offering
reduced interest rates, has been successful in encouraging customers during
recent years to finance their purchases over shorter terms with increased
downpayments. Management believes such strategy has improved the quality of the
notes receivable generated by its Residential Land and Golf Division in recent
years. An average note receivable underwritten by the Company during fiscal
1997, 1998 and 1999 has a term of ten years. Most notes receivable bear interest
at a fixed interest rate and are secured by a first lien on the land.
The weighted-average interest rate on the Company's notes receivable was
13.3%, 14.9% and 15.0% at March 30, 1997, March 29, 1998 and March 28, 1999,
respectively.
Loan Underwriting
Resorts Division. Consistent with industry practice, Timeshare Interest
financing is not subject to extensive loan underwriting criteria. Customer
financing on sales of Timeshare Interests requires (i) receipt of a minimum
downpayment of 10% of the purchase price and (ii) a contract for deed or note
and mortgage, as applicable and other closing documents between the Company and
the purchaser. The Company encourages purchasers to make increased downpayments
by offering a lower interest rate. In addition, purchasers who do not elect to
participate in the Company's pre-authorized payment plan are charged interest at
a rate which is one percent greater than the otherwise prevailing rate.
Historically, timeshare receivables have had a higher default rate than
residential land receivables.
Residential Land and Golf Division. The Company has established loan
underwriting criteria and procedures designed to reduce credit losses on its
residential land loan portfolio. The loan underwriting process undertaken by the
Company's credit department includes reviewing the applicant's credit history,
verifying employment and income as well as calculating certain debt-to-income
ratios. The primary focus of the Company's underwriting review is to determine
the applicant's ability to repay the loan in accordance with its terms. This
assessment is based on a number of factors, including the relationship of the
applicant's required monthly payment to disposable income. The Company also
examines the applicant's credit history through various credit reporting
agencies. In order to verify an applicant's employment status, the Company
generally contacts the applicant's employer. The Company also obtains current
pay stubs, recent tax returns and other tax forms from the applicant.
13
In order to obtain financing from the Residential Land and Golf Division, a
prospective purchaser must submit a completed and signed credit application,
purchase and sale agreement and pre-authorized checking agreement accompanied by
a voided check, if applicable, to the Company's credit department. All credit
decisions are made at the Company's corporate headquarters. Loan amounts under
$50,000 are approved by designated personnel located in the Company's corporate
headquarters, while loan amounts of $50,000 or more require approval from a
senior executive officer. In addition, rejected applications and any material
exceptions to the underwriting policy are also reviewed by senior management.
Customers are notified of the reasons for credit denial by mail.
The Company encourages customers to increase their downpayment and reduce
the loan term through the structure of its loan programs. Customers receive a
lower rate of interest as their downpayment increases and the loan term
shortens. Additionally, the Company encourages its customers to make timely
payments through a pre-authorized payment arrangement. Customers who do not
choose a pre-authorized payment plan are charged interest at a rate which is one
percent greater than the prevailing rate.
After the credit decision has been made, the credit department categorizes
the file as either approved, pending or declined. Upon receipt of a credit
approval, the regional office schedules the closing with the customer. Closings
are typically conducted at the office of the Company's local attorney or
settlement agent, although in some cases the closing may take place at the sales
site or by mail.
When the original closing documents are received from the closing agent,
the Company verifies that the loan closed under terms approved by the Company's
credit department. A quality control audit is performed to verify that required
documents have been received and that they have been prepared and executed
correctly. If any revisions are required, notification is sent to the regional
office.
A loan file typically includes a copy of the signed security instrument,
the mortgage note, a copy of the deed, Truth-in-Lending disclosure, purchase and
sale agreement, credit application, local counsel opinion, Vital Information
Statement or purchaser's acknowledgment of receipt of HUD lot information
statement, HUD settlement statement and a copy of the assignment of mortgage and
an original note endorsement from the Company's subsidiary originating the sale
and the loan to the Company (if applicable). After the initial closing documents
are received, the recorded mortgage and assignment and original title insurance
policy are obtained in order to complete the loan file.
Collection Policies
Resorts Division. The Company's timeshare receivables have been
historically documented by contracts for deed, which allows the Company to
retain title to the Timeshare Interest until the obligation is paid in full,
thereby eliminating the need to foreclose in the event of a default. Collection
efforts and delinquency information concerning the Resorts Division are managed
at the Company's corporate headquarters. Servicing of the division's receivables
is handled by a staff of experienced collectors, assisted by an on-line mortgage
collection computer system. Unless circumstances otherwise dictate, collection
efforts are generally made by mail and telephone. If a contract for deed becomes
delinquent for ten days, a reminder letter is mailed to the customer. If the
customer fails to bring the account current, a late notice is mailed when the
account is 15 days delinquent (and telephone contact commences). After an
account is 45 days delinquent, the Company typically sends a third letter
advising the customer that such customer has 15 days within which to bring the
account current. Under the terms of the contract for deed, the borrower is in
default when the account becomes 60 days delinquent. At this time a default
letter is sent advising the customer that he or she has 30 days to bring the
account current or lose his or her contractual interest in the timeshare unit.
When the account becomes 90 days delinquent, the Company forwards a final letter
informing the customer that the contract for deed has been terminated. At such
time, the Timeshare Interest can be resold to a new purchaser. In connection
with the implementation of its points-based vacation club system, the Company
has converted to a note and mortgage system. The Company believes that the
period of time for realizing a defaulted timeshare receivable under the note and
mortgage system will not be materially longer than for defaults of contracts for
deed because title to the applicable property is held by the vacation club
trust.
Residential Land and Golf Division. Collection efforts and delinquency
information concerning the Residential Land and Golf Division are also managed
at the Company's corporate headquarters. Servicing of the division's receivables
is handled by a staff of experienced collectors, assisted by an on-line mortgage
collection
14
computer system. Unless circumstances otherwise dictate, collection efforts are
generally made by mail and telephone. Collection efforts begin when an account
is ten days past due, at which time the Company mails a reminder letter.
Attempts are then made to contact the customer via telephone to determine the
reason for the delinquency and to bring the account current. The determination
of how to handle a delinquent loan is based upon many factors, including the
customer's payment history and the reason for the current inability to make
timely payments. If no agreement is made or the customer does not abide by the
agreement, collection efforts continue until the account is either brought
current or legal action is commenced. If not accelerated sooner, the Company
declares the loan in default when the loan becomes 60 days delinquent. When the
loan is 90 days past due, the accrual of interest is stopped (unless the loan is
considered an in-substance foreclosure loan, in which case all accrued interest
is reversed since the Company's means of recovery is determined through the
resale of the underlying collateral and not through collection on the note) and
the Credit/Collection Manager determines the action to be taken.
Loan Loss Reserves. The reserve for loan losses as a percentage of period
end notes receivable was 3.4%, 2.5% and 3.5% at March 30, 1997, March 29, 1998
and March 28, 1999, respectively. The adequacy of the Company's reserve for loan
losses is determined by management and reviewed on a regular basis considering,
among other factors, historical frequency of default, loss experience, present
and expected economic conditions as well as the quality of the receivables.
Sales of Receivables/Pledging of Receivables
Since 1986, the Company has sold or pledged a significant amount of its
receivables, generally retaining the right and obligation to service such
receivables. In the case of residential land and golf receivables, the Company
typically transfers the receivables to a special purpose finance subsidiary,
which in turn enters into a receivables securitization. The receivables are
typically sold by such subsidiary with limited or no recourse. In the case of
receivables pledged to a financial institution, the Company generally must
maintain a debt to eligible collateral rate (based on outstanding principal
balance of the pledged loans) of 90%. The Company is obligated to pledge
additional eligible receivables or make additional principal payments in order
to maintain this collateralization rate. Repurchases and additional principal
payments have not been material to date.
Private placement REMIC financings have provided substantial capital
resources to the Company, although the Company has not completed a REMIC
financing since December 1996, due to the decrease in land sales financed by the
Company. Under the terms of these transactions, the receivables are sold to a
REMIC trust and the Company has no obligation to repurchase the receivables due
to default by the borrowers. The Company does, however, have the obligation to
repurchase the receivables in the event that there is any material defect in the
loan documentation and related representations and warranties as of the time of
sale.
On June 26, 1998, the Company executed a timeshare receivables purchase
facility with a financial institution. Under the purchase facility (the
"Purchase Facility"), a special purpose finance subsidiary of the Company may
sell up to $100 million aggregate principal amount of timeshare receivables to
the financial institution in securitization transactions. Under the Purchase
Facility, a purchase price equal to approximately 97% (subject to adjustment in
certain circumstances) of the principal balance of the receivables sold is paid
at closing in cash, with a portion deferred until such time as the purchaser has
received a return equal to the weighted-average term treasury rate plus 1.4%,
all servicing, custodial and similar fees and expenses have been paid and a cash
reserve account has been funded. Receivables are sold without recourse to the
Company or its special purpose finance subsidiary except for breaches of
representations and warranties made at the time of sale. The Company acts as
servicer under the Purchase Facility for a fee, and is required to make advances
to the financial institution to the extent it believes such advances will be
recoverable. The Purchase Facility has a term of two years. During fiscal 1999,
the Company sold approximately $54.8 million in aggregate principal amount of
timeshare receivables under the Purchase Facility for a purchase price equal to
97% of the principal balance and recognized a $3.7 million gain. As a result of
the sales, the Company recorded a $5.2 million available-for-sale investment in
the residual cash flow of the receivable pools (i.e. the deferred payment). See
further discussion of the terms of the Purchase Facility under "Management's
Discussion and Analysis of Results of Operations and Financial Condition --
Credit Facilities for Timeshare Receivables and Inventories".
15
Receivables Servicing
Receivables servicing includes collecting payments from borrowers and
remitting such funds to the owners, lenders or investors in such receivables,
accounting for receivables principal and interest, making advances when
required, contacting delinquent borrowers, foreclosing in the event that
defaults are not remedied and performing other administrative duties. The
Company's obligation to provide receivables servicing and its rights to collect
fees are set forth in a servicing agreement. The Company has the obligation and
right to service all of the receivables it originates and retains the obligation
and right with respect to substantially all of the receivables it sells through
REMICs and all of the receivables sold under the Purchase Facility. The Company
typically receives an annual servicing fee of approximately .5% of the scheduled
principal balance, which is deducted from payments received.
Regulation
The timeshare and real estate industries are subject to extensive and
complex regulation. The Company is subject to compliance with various federal,
state and local environmental, zoning and other statutes and regulations
regarding the acquisition, subdivision and sale of real estate and Timeshare
Interests and various aspects of its financing operations. On a federal level,
the Federal Trade Commission has taken an active regulatory role through the
Federal Trade Commission Act, which prohibits unfair or deceptive acts or
competition in interstate commerce. In addition to the laws applicable to the
Company's customer financing and other operations discussed below, the Company
is or may be subject to the Fair Housing Act and various other federal statutes
and regulations. The Company is also subject to various foreign laws with
respect to the Aruba Resort. In addition, there can be no assurance that in the
future, Timeshare Interests will not be deemed to be securities subject to
regulation as such, which could have a material adverse effect on the Company.
The Company believes that it is in compliance in all material respects with
applicable regulations. However, no assurance can be given that the cost of
complying with applicable laws and regulations will not be significant or that
the Company is in fact in compliance with applicable law. Any failure to comply
with applicable laws or regulations could have a material adverse effect on the
Company.
The Company's sales and marketing of residential land are subject to
various consumer protection laws and to the Interstate Land Sales Full
Disclosure Act which establishes strict guidelines with respect to the marketing
and sale of land in interstate commerce. HUD has enforcement powers with respect
to this statute. In some instances, the Company has been exempt from HUD
registration requirements because of the size or number of the subdivided
parcels and the limited nature of its offerings. The Company, at its discretion,
may formally request an exemption advisory opinion from HUD to confirm the
exempt status of any particular offering. Several such exemption requests have
been submitted to, and approved by, HUD. In those cases where the Company and
its legal counsel determine parcels must be registered to be sold, the Company
files registration materials disclosing financial information concerning the
property, evidence of title and a description of the intended manner of offering
and advertising such property. The Company bears the cost of such registration,
which includes legal and filing fees. Many states also have statutes and
regulations governing the sale of real estate. Consequently, the Company
regularly consults with counsel for assistance in complying with federal, state
and local law. The Company must obtain the approval of numerous governmental
authorities for its acquisition and marketing activities and changes in local
circumstances or applicable laws may necessitate the application for, or the
modification of, existing approvals.
The Company's timeshare resorts are subject to various regulatory
requirements including state and local approvals. The laws of most states
require the Company to file with a designated state authority for its approval a
detailed offering statement describing the Company and all material aspects of
the project and sale of Timeshare Interests. Laws in each state where the
Company sells Timeshare Interests generally grant the purchaser of a Timeshare
Interest the right to cancel a contract of purchase at any time within a
specified period following the earlier of the date the contract was signed or
the date the purchaser has received the last of the documents required to be
provided by the Company. Most states have other laws which regulate the
Company's activities, such as real estate licensure; seller's of travel
licensure; anti-fraud laws; telemarketing laws; prize, gift and sweepstakes
laws; and labor laws. In addition, certain state and local laws may impose
liability on property developers with respect to construction defects discovered
or repairs made by future owners of such property. Pursuant to such laws, future
owners may recover from the Company amounts in connection with the repairs made
to the developed property. As required by state laws, the Company provides its
timeshare purchasers with a public disclosure statement which contains, among
other items, detailed information about the surrounding vicinity, the resort and
the purchaser's rights and obligations as a Timeshare Interests owner.
16
Under various federal, state and local laws, ordinances and regulations,
the owner of real property generally is liable for the costs of removal or
remediation of certain hazardous or toxic substances located on or in, or
emanating from, such property, as well as related costs of investigation and
property damage. Such laws often impose such liability without regard to whether
the owner knew of, or was responsible for, the presence of such hazardous or
toxic substances. The presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's ability to sell or
lease a property or to borrow using such real property as collateral. Other
federal and state laws require the removal or encapsulation of
asbestos-containing material when such material is in poor condition or in the
event of construction, demolition, remodeling or renovation. Other statutes may
require the removal of underground storage tanks. Noncompliance with these and
other environmental, health or safety requirements may result in the need to
cease or alter operations at a property.
The Company's customer financing activities are also subject to extensive
regulation, which may include, the Truth-in-Lending Act and Regulation Z, the
Fair Housing Act, the Fair Debt Collection Practices Act, the Equal Credit
Opportunity Act and Regulation B, the Electronic Funds Transfer Act and
Regulation E, the Home Mortgage Disclosure Act and Regulation C, Unfair or
Deceptive Acts or Practices and Regulation AA and the Right to Financial Privacy
Act.
Management is not aware of any pending regulatory contingencies that are
expected to have a material adverse impact on the Company.
Competition
The real estate industry is highly competitive. In each of its markets, the
Company competes against numerous developers and others in the real estate
business. The Resorts Division competes with various high profile and
well-established operators. Many of the world's most recognized lodging,
hospitality and entertainment companies have begun to develop and sell Timeshare
Interests in resort properties. Major companies that now operate or are
developing or planning to develop timeshare resorts include Marriott, Disney,
Hilton, Hyatt, Four Seasons and Inter-Continental. The Company also competes
with other publicly traded timeshare companies, including Sunterra, Vistana,
Fairfield, Silverleaf and numerous other owners and operators of timeshare
resorts. The Residential Land and Golf Division competes with builders,
developers and others for the acquisition of property and with local, regional
and national developers, housebuilders and others with respect to the sale of
residential lots. Competition may be generally smaller with respect to the
Company's residential lot sales in the more rural markets in which it operates.
The Company believes that it can compete on the basis of its reputation and the
price, location and quality of the products it offers for sale, as well as on
the basis of its experience in land acquisition, development and sale. Although,
as noted above, the Resorts Division competes with various high profile and
well-established operators, the Company believes that it can compete on the
basis of its general reputation and the price, location and quality of its
timeshare resorts. The development and operation of additional timeshare resorts
in the Company's markets could have a material adverse impact on the demand for
the Company's Timeshare Interests and its results of operations. In its customer
financing activities, the Company competes with banks, mortgage companies, other
financial institutions and government agencies offering financing of real
estate. In recent years, the Company has experienced increased competition with
respect to the financing of Residential Land and Golf Division sales as
evidenced by the low percentage of residential land sales internally financed
since 1995. The Company believes that, based on its interest rates and repayment
schedules, the financing packages it offers are convenient for customers and
competitive with those of other institutions which offer such financing.
Personnel
As of March 28, 1999, the Company had 1,988 employees. Of the 1,988
employees, 265 were located at the Company's headquarters in Boca Raton,
Florida, and 1,723 in regional offices throughout the United States and Canada
(the field personnel include 264 field employees supporting the Company's
Residential Land and Golf Division and 1,459 field employees supporting the
Company's Resorts Division). None of the Company's employees are represented by
a collective bargaining unit, and the Company believes that relations with its
employees generally are excellent.
Item 2. PROPERTIES.
The Company's principal executive office is located in Boca Raton, Florida
in approximately 55,000 square feet of leased space. On March 28, 1999, the
Company also maintained regional sales offices in the Northeastern,
Mid-Atlantic, Southeastern, Midwestern, Southwestern, Rocky Mountain and Western
regions of the
17
United States as well as the Province of Ontario, Canada and the island of
Aruba. See further description of the Company's resort and land properties under
"Item 1--Company Products".
Item 3. LEGAL PROCEEDINGS.
In the ordinary course of its business, the Company from time to time
becomes subject to claims or proceedings relating to the purchase, subdivision,
sale and/or financing of real estate. Additionally, from time to time, the
Company becomes involved in disputes with existing and former employees. The
Company believes that substantially all of the above are incidental to its
business.
In addition to its other ordinary course litigation, the Company became a
defendant in two proceedings during fiscal 1999. First, an action was filed in
Colorado state court against the Company on September 15, 1998 (the Company has
removed the action to the Federal District Court in Denver). The plaintiff has
asserted that the Company is in breach of its obligations under, and has made
certain misrepresentations in connection with, a contract under which the
Company acted as marketing agent for the sale of undeveloped property owned by
the plaintiff. The plaintiff also alleges fraud, negligence and violation by the
Company of an alleged fiduciary duty owed to plaintiff. Among other things, the
plaintiff alleges that the Company failed to meet certain minimum sales
requirements under the marketing contract and failed to commit sufficient
resources to the sale of the property. The complaint seeks damages in excess of
$18 million and certain other remedies, including punitive damages.
Second, an action (the "Action") was filed on July 10, 1998 in the District
Court for the State of Texas in the County of Montgomery against two
subsidiaries of the Company and various other defendants. The Company itself is
not named as a defendant. The Company's subsidiaries acquired certain real
property (the "Property"). The Property was acquired subject to certain alleged
oil and gas leasehold interests and rights (the "Interests") held by the
plaintiffs in the Action (the "Plaintiffs"). The Company's subsidiaries
developed the Property and have resold parcels to numerous customers. The
Plaintiffs allege, among other things, breach of contract, slander of title and
that the Company's subsidiaries and their purchasers have unlawfully trespassed
on easements and otherwise violated and prevented the Plaintiffs from exploiting
the Interests. The Plaintiffs claim damages in excess of $40 million, as well as
punitive or exemplary damages in an amount of at least $50 million and certain
other remedies.
The Company is in the early stages of evaluating these actions and their
potential impact, if any, on the Company and accordingly cannot predict the
outcomes with any degree of certainty. However, based upon all of the facts
presently under consideration of management, the Company believes that it has
substantial defenses to the allegations in each of the actions and intends to
defend each of these matters vigorously. The Company does not believe that any
likely outcome of either case will have a material adverse effect on the
Company's financial condition or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding the executive
officers of the Company as of June 22, 1999.
Name Age Position
---- --- --------
George F. Donovan 60 President and Chief Executive Officer
Daniel C. Koscher 41 Senior Vice President - Land Division
L. Nicolas Gray 52 Senior Vice President - Resorts Division
Patrick E. Rondeau 52 Senior Vice President, Director of Corporate Legal Affairs and Clerk
John F. Chiste 43 Senior Vice President, Chief Financial Officer and Treasurer
Allan J. Herz 39 Vice President and Director of Mortgage Operations
Joan A. McCormick 56 Vice President and Chief Information Officer
Susan J. Milanese 40 Vice President and Director of Human Resources
Anthony M. Puleo 31 Vice President and Chief Accounting Officer
18
George F. Donovan joined the Company as a Director in 1991 and was appointed
President and Chief Operating Officer in October 1993. He became Chief Executive
Officer in December 1993. Mr. Donovan has served as an officer of a number of
other recreational real estate corporations, including Leisure Management
International, of which he was President from 1991 to 1993, and Fairfield
Communities, Inc., of which he was President from April 1979 to December 1985.
Mr. Donovan holds a B.S. in Electrical Engineering and is a Registered Resort
Professional.
John F. Chiste joined the Company in July 1997 as Treasurer and Chief Financial
Officer. In 1998, Mr. Chiste was also named Senior Vice President. From January
1997 to June 1997, Mr. Chiste was the Chief Financial Officer of Compscript,
Inc., an entity which provides institutional pharmacy services to long-term
health care facilities. From December 1992 to January 1997, he served as the
Chief Financial Officer, Secretary and Treasurer of Computer Integration
Corporation, a publicly-held distribution company which provides information
products and services to corporations nationwide. From 1983 through 1992, Mr.
Chiste held various positions with Ernst & Young LLP, most recently serving as a
Senior Manager. Mr. Chiste holds a B.B.A. in Accounting and is a Certified
Public Accountant.
L. Nicolas Gray joined the Company in 1995 to oversee the Company's timeshare
resorts operation and was named Senior Vice President in 1997. Mr. Gray has over
25 years of experience in the hospitality, timeshare and related resort
industries. Mr. Gray served as Director of Development for Resort Condominium
International, a timeshare exchange organization, from 1993 to 1995. Prior to
that time, Mr. Gray was Executive Vice President and General Manager for the
resort developments of Thousand Trails from 1989 to 1991 and Fairfield
Communities from 1979 to 1989. Mr. Gray is a Registered Resort Professional.
Daniel C. Koscher joined the Company in 1986. During his tenure, he has served
in various financial management positions including Chief Accounting Officer,
Vice President and Director of Planning/Budgeting. In 1997, he became Senior
Vice President, Residential Land and Golf Division. Prior to his employment with
the Company, Mr. Koscher was employed by the William Carter Company, a
manufacturing company located in Needham, Massachusetts. He has also been
employed by Cipher Data Products, Inc., a computer peripheral manufacturer
located in San Diego, California, as well as the State of Nevada as an audit
agent. Mr. Koscher holds an M.B.A. along with a B.B.A. in Accounting and is a
Registered Resort Professional.
Patrick E. Rondeau joined the Company in 1990 and was elected Vice President and
Director of Corporate Legal Affairs. He became Clerk in 1993 and Senior Vice
President in 1997. For more than five years prior to his employment with the
Company, Mr. Rondeau was a senior partner of Freedman, DeRosa & Rondeau, located
in North Adams, Massachusetts, which firm serves as legal counsel to the Company
on various matters. Mr. Rondeau holds a B.A. in Political Science along with a
J.D.
Allan J. Herz joined the Company in 1992 and was named Director of Mortgage
Operations in September 1992. Mr. Herz was also elected Vice President in 1993.
From 1982 to 1992, Mr. Herz worked for AmeriFirst Federal Savings Bank based in
Miami, Florida. During his 10 year tenure with the bank, he held various lending
positions, the most recent being Division Vice President in Consumer Lending.
Mr. Herz holds a B.B.A. and a M.B.A.
Joan A. McCormick joined the Company in 1993 as its Director of Management
Information Systems and was also elected Vice President in February 1995. In
1998, Ms. McCormick was named Chief Information Officer. Ms. McCormick has over
20 years of experience in information systems management in the real estate,
hotel, banking and manufacturing fields. Prior to joining the Company, Ms.
McCormick was Assistant Vice President of MIS for Atlantic Gulf Communities
Corporation. She has also held management positions with Arvida/JMB Partners
Ltd., Southeast Banking Corporation and General Motors Corporation. She holds a
B.A. in Business Administration.
Susan J. Milanese joined the Company in 1988. During her tenure, she has held
various management positions in the Company including Assistant to the Chief
Financial Officer, Divisional Controller and Director of Accounting. In 1995,
she was elected Vice President and Director of Human Resources. From 1983 to
1988, Ms. Milanese was employed by General Electric Company in various financial
management positions including the corporate audit staff. Ms. Milanese holds her
B.B.A in Accounting.
19
Anthony M. Puleo joined the Company in October 1997 as Chief Accounting Officer.
In 1998, Mr. Puleo was also elected Vice President. From December 1990 through
October 1997, Mr. Puleo held various positions with Ernst & Young LLP, most
recently serving as a Senior Manager in the Assurance and Advisory Business
Services group. Mr. Puleo holds a B.B.A. in Accounting and is a Certified Public
Accountant.
The Company's By-Laws provide that, except as otherwise provided by law or
the charter and by-laws of the Company, the President, Treasurer and the Clerk
hold office until the first meeting of the Board of Directors following the next
annual meeting of shareholders and until their respective successors are chosen
and qualified and that all other officers hold office for the same period unless
a shorter time is specified in the vote appointing such officer or officers.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The information provided on page 30 of the 1999 Annual Report is
incorporated herein by reference.
The Company did not pay any cash or stock dividends during fiscal 1998 or
fiscal 1999. The Company does not anticipate paying any dividends in the
foreseeable future, as it currently anticipates that it will retain any future
earnings for use in its business. Restrictions contained in the Indenture
related to the Company's $110 million 10 1/2% Senior Secured Notes due 2008
issued in April 1998, and certain of the Company's credit facilities may, in
certain instances, limit the payment of cash dividends on its Common Stock.
On August 14, 1998, the Company entered into a Securities Purchase
Agreement (the "Stock Agreement") with Morgan Stanley Real Estate Investors III,
L.P., Morgan Stanley Real Estate Fund III, L.P., ("MSREF"), MSP Real Estate
Fund, L.P., and MSREF III Special Fund, L.P. (collectively, the "Funds")
pursuant to which the Funds purchased 2.9 million shares of the Company's Common
Stock for an aggregate of $25 million. On March 26, 1999, the Funds purchased an
additional 1.2 million shares of Common Stock for an aggregate of $10 million.
Aggregate legal and other stock issuance costs totaled approximately $750,000.
Pursuant to the Stock Agreement, as amended, subject to certain conditions
thereto, the Company has the right to require the Funds, during the 18-month
period commencing on August 14, 1998 (the "Commitment Period"), to purchase from
the Company up to an additional 1.8 million shares of Common Stock (the
"Remaining Shares") at a purchase price equal to $8.50 per share. If, on or
prior to the expiration of the Commitment Period, the Company has not offered to
sell to the Funds all of the Remaining Shares and the Company has achieved
certain earnings levels for the 12-month period ended January 2, 2000, or if a
Change of Control of the Company occurs (as defined in the Stock Agreement)
during the Commitment Period, the Funds will have the right to purchase any or
all of the Remaining Shares not previously sold to the Funds at a purchase price
equal to $8.50 per share.
Subject to certain exceptions, the Funds have agreed not to offer, sell,
transfer, assign, pledge or hypothecate any shares of Common Stock issued to
them, prior to the earlier of (i) August 14, 2000 or (ii) nine months following
the date on which the Funds have purchased all the shares of Common Stock to be
purchased by them under the Stock Agreement, but in no event earlier than
February 14, 2000.
Shares of Common Stock sold to the Funds were exempt from registration
under the Securities Act of 1933, by virtue of Section 4(2) and Rule 506 of
Regulation D and were issued thereunder.
Item 6. SELECTED FINANCIAL DATA.
The information provided on page 17 of the 1999 Annual Report is
incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The information provided under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 18 through
29 of the 1999 Annual Report is incorporated herein by reference.
20
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information provided on pages 29 through 30 of the 1999 Annual Report
is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of the Company and its subsidiaries
and the related Notes thereto and report of independent certified public
accountants on pages 31 through 55 of the 1999 Annual Report are incorporated
herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
For information with respect to the Company's Directors, see the
information provided under the headings "Proposal 1 - Election of Nominees for
Director" and "Certain Relationships and Other Transactions" in the Proxy
Statement, which sections are incorporated herein by reference. Information
concerning the executive officers of the Company appears immediately after Part
I of this Annual Report on Form 10-K.
Section 16 Compliance
The information provided under the heading "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Proxy Statement is incorporated herein by
reference.
Item 11. EXECUTIVE COMPENSATION.
The information provided under the headings "Proposal 1- Election of
Nominees for Director," "Board of Directors and its Committees," "Compensation
Committee Report on Executive Compensation", "Compensation of Chief Executive
Officer", "Executive Compensation" and "Certain Relationships and Other
Transactions" in the Company's Proxy Statement is incorporated herein by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information provided under the heading "Proposal 1 - Election of
Nominees for Director" in the Proxy Statement is incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information provided under the headings "Proposal 1 - Election of
Nominees for Director," "Executive Compensation" and "Certain Relationships and
Other Transactions" in the Proxy Statement is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) and (a)(2) List of Financial Statements and Schedules.
1. The following Consolidated Financial Statements and Notes thereto of the
Company and its subsidiaries and the report of independent certified public
accountants relating thereto, included in the 1999 Annual Report on pages
31 through 55 are incorporated by reference into Item 8 hereof:
21
Page
----
Consolidated Balance Sheets as of March 29, 1998 and March 28, 1999 31
Consolidated Statements of Operations for each of the three years in the period
ended March 28, 1999 32
Consolidated Statements of Shareholders' Equity for each of the three years
in the period ended March 28, 1999 33
Consolidated Statements of Cash Flows for each of the three years in the period
ended March 28, 1999 34
Notes to Consolidated Financial Statements 36
Report of Independent Certified Public Accountants 55
2. All financial statement schedules are omitted because they are not
applicable, are not present in amounts sufficient to require submission of
the schedules or the required information is presented in the Consolidated
Financial Statements or related notes.
(a)(3) List of Exhibits.
The exhibits which are filed with this Annual Report on Form 10-K or which are
incorporated herein by reference are set forth in the Exhibit Index which
appears at pages 24 through 27 hereof and is incorporated herein by reference.
(b) Reports on Form 8-K.
None.
(c) Exhibits.
See (a)(3) above.
(d) Financial Statement Schedules.
All financial statement schedules are omitted because they are not applicable,
are not present in amounts sufficient to require submission of the schedules or
the required information is presented in the Consolidated Financial Statements
or related notes.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BLUEGREEN CORPORATION
(Registrant)
Date: June 22, 1999 By: /S/ GEORGE F. DONOVAN
---------------------------------------
George F. Donovan
President and Chief Executive Officer
Date: June 22, 1999 By: /S/ JOHN F. CHISTE
---------------------------------------
John F. Chiste,
Senior Vice President, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
Date: June 22, 1999 By: /S/ ANTHONY M. PULEO
---------------------------------------
Anthony M. Puleo,
Vice President and Chief Accounting
Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 22nd day of June, 1999.
Signature Title
--------- -----
/S/ GEORGE F. DONOVAN President, Chief Executive Officer and Director
- ---------------------------
George F. Donovan
/S/ JOHN F. CHISTE Senior Vice President, Treasurer and Chief Financial Officer
- --------------------------- (Principal Financial Officer)
John F. Chiste
/S/ ANTHONY M. PULEO Vice President and Chief Accounting Officer
- --------------------------- (Principal Accounting Officer)
Anthony M. Puleo
/S/ JOSEPH C. ABELES Director
- ---------------------------
Joseph C. Abeles
/S/ RALPH A. FOOTE Director
- ---------------------------
Ralph A. Foote
/S/ MICHAEL J. FRANCO Director
- ---------------------------
Michael J. Franco
/S/ JOHN A. HENRY, IV Director
- ---------------------------
John A. Henry, IV
/S/ FREDERICK M. MYERS Director and Chairman of the Board
- ---------------------------
Frederick M. Myers
/S/ J. LARRY RUTHERFORD Director
- ---------------------------
J. Larry Rutherford
/S/ STUART A. SHIKIAR Director
- ---------------------------
Stuart A. Shikiar
/S/ BRADFORD T. WHITMORE Director
- ---------------------------
Bradford T. Whitmore
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EXHIBIT INDEX
Number Description
- ------ -----------
3.1 Restated Articles of Organization, as amended (incorporated by
reference to exhibit of same designation to Annual Report on Form 10-K
for the year ended March 31, 1996).
3.2 Restated and amended By-laws of the Registrant (incorporated by
reference to exhibit 3.3 to Current Report on Form 8-K dated August
14, 1998).
4.4 Specimen of Common Stock Certificate (incorporated by reference to
exhibit of same designation to Registration Statement on Form S-1,
File No. 33-13076).
4.6 Form of Indenture dated as of May 15, 1987 relating to the Company's
8.25% Convertible Subordinated Debentures Due 2012, including Form of
Debenture (incorporated by reference to exhibit of same designation to
Registration Statement on Form S-1, File No. 33-13753).
4.7 Indenture dated as of April 1, 1998 by and among the Registrant,
certain subsidiaries of the Registrant, and SunTrust Bank, Central
Florida, National Association, as trustee, for the 10 1/2% Senior
Secured Notes due 2008. (incorporated by reference to exhibit of same
designation to Registration Statement on Form S-4, File No. 333-50717)
4.8 First Supplemental Indenture dated as of March 15, 1999 by and among
the Registrant, certain subsidiaries of the Registrant, and SunTrust
Bank, Central Florida, National Association, as trustee, for the 10
1/2% Senior Secured Notes due 2008.
10.24 Form of Agreement dated June 27, 1989 between the Registrant and
Peoples Heritage Savings Bank relating to sale of mortgage notes
receivable (incorporated by reference to exhibit of same designation
to Annual Report on Form 10-K for the fiscal year ended April 2,
1989).
10.47 Amended and Restated Loan and Security Agreement entered into as of
January 9, 1990 by Patten Receivables Finance Corporation VI, Finova
Capital Corporation (fka Greyhound Real Estate Finance Corporation)
and the Registrant as Guarantor (incorporated by reference to exhibit
of same designation to Annual Report on Form 10-K for the fiscal year
ended April 1, 1990).
10.53 Modification dated July 16, 1990 of Amended and Restated Loan and
Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit of same designation to
Annual Report on Form 10-K for the fiscal year ended April 1, 1990).
10.58 Amendment No. 2 dated March 23, 1991 to the Amended and Restated Loan
and Security Agreement entered into as of January 9, 1990, by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and The Registrant as
Guarantor (incorporated by reference to exhibit of same designation to
Annual Report on Form 10-K for the fiscal year ended March 31, 1991).
10.59 Amendment No. 3 dated November 21, 1991 to Amended and Restated Loan
and Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.100 to Annual
Report on Form 10-K for the year ended March 31, 1996).
10.60 Amendment No. 4 dated January 30, 1992 to Amended and Restated Loan
and Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.101 to Annual
Report on Form 10-K for the year ended March 31, 1996).
10.61 Amendment No. 5 dated October, 1992 to Amended and Restated Loan and
Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.102 to Annual
Report on Form 10-K for the year ended March 31, 1996).
24
10.62 Amendment No. 6 dated May 12, 1993 to Amended and Restated Loan and
Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.88 to Annual Report
on Form 10-K for the fiscal year ended March 27, 1994).
10.63 Amendment No. 7 dated February 18, 1994 to Amended and Restated Loan
and Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.89 to Annual Report
on Form 10-K for the fiscal year ended March 27, 1994).
10.64 Amendment No. 8 dated March 25, 1994 to Amended and Restated Loan and
Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.103 to Annual
Report on Form 10-K for the year ended March 31, 1996).
10.65 Amendment No. 9 dated June 29, 1994 to Amended and Restated Loan and
Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.91 to Quarterly
Report on Form 10-Q for the period ended September 25, 1994).
10.66 Amendment No. 10 dated December 14, 1994 to Amended and Restated Loan
and Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.94 to Annual Report
on Form 10-K for the fiscal year ended April 2, 1995).
10.67 Amendment No. 11 dated October 31, 1995 to Amended and Restated Loan
and Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.104 to Annual
Report on Form 10-K for the year ended March 31, 1996).
10.68 Amendment No. 12 dated May 1, 1996 to Amended and Restated Loan and
Security Agreement entered into as of January 9, 1990 by Patten
Receivables Finance Corporation VI, Finova Capital Corporation (fka
Greyhound Real Estate Finance Corporation) and the Registrant as
Guarantor (incorporated by reference to exhibit 10.105 to Annual
Report on Form 10-K for the year ended March 31, 1996).
10.77 Registrant's Amended 1988 Outside Directors Stock Option Plan
(incorporated by reference to exhibit of same designation to Annual
Report on Form 10-K for the fiscal year ended March 29, 1992).
10.78 Registrant's 1988 Amended Outside Director's Stock Option Plan
(incorporated by reference to exhibit to Registration Statement on
Form S-8, File No. 33-61687 ).
10.79 Registrant's 1995 Stock Incentive Plan, as amended (incorporated by
reference to exhibit of same designation to Annual Report on Form 10-K
for the fiscal year ended March 29, 1998).
10.80 Registrant's Retirement Savings Plan (incorporated by reference to
Registration Statement on Form S-8, File No. 33-48075).
10.85 Loan and Security Agreement by and between the Registrant and Foothill
Capital Corporation dated as of October 29, 1993 (incorporated by
reference to exhibit of same designation to Annual Report on Form 10-K
for the fiscal year ended March 27, 1994).
10.93 Stock Purchase Agreement dated as of November 22, 1994 by and among
Harry S. Patten and the Purchasers named therein (incorporated by
reference to exhibit of same designation to Current Report on Form 8-K
dated November 22, 1994).
25
10.97 Pooling and Servicing Agreement dated as of April 15, 1994, among
Patten Receivables Finance Corporation IX, the Registrant, Patten
Corporation REMIC Trust, Series 1994-1 and First Trust National
Association, as Trustee (incorporated by reference to exhibit 10.84 to
Annual Report on Form 10-K for the fiscal year ended March 27, 1994).
10.98 Pooling and Servicing Agreement dated as of June 15, 1995, among
Patten Receivables Finance Corporation X, the Registrant, Patten
Corporation REMIC Trust, Series 1995-1 and First Trust National
Association, as Trustee (incorporated by reference to exhibit to
Current Report on Form 8-K dated July 12, 1995).
10.99 Pooling and Servicing Agreement dated as of April 15, 1996, among
Bluegreen Receivables Finance Corporation I, the Registrant, Bluegreen
Corporation REMIC Trust, Series 1996-1 and First Trust National
Association, as Trustee (incorporated by reference to exhibit to
Current Report on Form 8-K dated May 15, 1996).
10.100 Pooling and Servicing Agreement dated as of November 15, 1996, among
Bluegreen Receivables Finance Corporation II, the Registrant,
Bluegreen Corporation REMIC Trust, Series 1996-2 and First Trust
National Association, as Trustee (incorporated by reference to exhibit
to Current Report on Form 8-K dated Decenber 11, 1996).
10.101 Sale and Contribution Agreement dated as of June 26, 1998 by and among
Bluegreen Corporation, Bluegreen Receivables Finance Corporation III
and BRFC III Deed Corporation (incorporated by reference to exhibit
99.1 to Current Report on Form 8-K dated June 26, 1998).
10.102 Asset Purchase Agreement dated as of June 26, 1998 by and among
Bluegreen Corporation, Bluegreen Receivables Finance Corporation III,
BRFC III Deed Corporation, Heller Financial, Inc. and U.S. Bank
National Association, as cash administrator, including Definitions
Annex (incorporated by reference to exhibit 99.2 to Current Report on
Form 8-K dated June 26, 1998).
10.107 Loan and Security Agreement by and between Heller Financial, Inc. and
Bluegreen Resorts, Inc. (fka Patten Resorts, Inc.) dated February 28,
1996 (incorporated by reference to exhibit of same designation to
Annual Report on Form 10-K for the year ended March 31, 1996).
10.108 First Amendment dated February 27, 1997 to Loan and Security Agreement
by and between Heller Financial, Inc. and Bluegreen Resorts, Inc. (fka
Patten Resorts, Inc.) dated February 28, 1996 (incorporated by
reference to exhibit of same designation to Annual Report on Form 10-K
for the year ended March 31, 1996).
10.123 Exchange and Registration Rights Agreement dated April 1, 1998, by and
among the Registrant and the persons named therein, relating to the 10
1/2 % Senior Secured Notes due 2008 (incorporated by reference to
exhibit of same designation to Registration Statement on Form S-4,
File No. 333-50717).
10.124 Employment Agreement between George F. Donovan and the Company dated
March, 1998 (incorporated by reference to exhibit of same designation
to Registration Statement on Form S-4, File No. 333-50717).
10.125 Employment Agreement between John F. Chiste and the Company dated
March, 1998 (incorporated by reference to exhibit of same designation
to Registration Statement on Form S-4, File No. 333-50717).
10.126 Employment Agreement between L. Nicolas Gray and the Company dated
March, 1998 (incorporated by reference to exhibit of same designation
to Registration Statement on Form S-4, File No. 333-50717).
10.127 Employment Agreement between Daniel C. Koscher and the Company dated
March, 1998 (incorporated by reference to exhibit of same designation
to Registration Statement on Form S-4, File No. 333-50717).
10.128 Employment Agreement between Patrick E. Rondeau and the Company dated
March, 1998 (incorporated by reference to exhibit of same designation
to Registration Statement on Form S-4, File No. 333-50717).
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10.129 Amended and Restated Credit Facility Agreement entered into as of
April 16, 1998 between Finova Capital Corporation and the Registrant
(incorporated by reference to exhibit of same designation to
Registration Statement on Form S-4, File No. 333-50717).
10.130 Amended and Restated Loan and Security Agreement dated as of September
23, 1997 between Foothill Capital Corporation and the Registrant
(incorporated by reference to exhibit of same designation to
Registration Statement on Form S-4, File No. 333-50717).
10.131 Registrant's 1998 Non-Employee Director Stock Option Plan
(incorporated be reference to exhibit of same designation to Annual
Report on Form 10-K for the year ended March 29, 1998).
10.132 Loan Agreement and Promissory Note dated September 23, 1998, by and
among the Registrant, certain subsidiaries of the Registrant and First
Union National Bank, for the $5 million, unsecured revolving
line-of-credit due July 31, 1999 (incorporated by reference to exhibit
of same designation to Quarterly Report on Form 10-Q dated September
27, 1998).
10.133 Loan and Security Agreement dated October 20, 1998, by the Registrant
and Bluegreen Resorts, Inc. as Borrowers and Heller Financial, Inc. as
Lender (incorporated by reference to exhibit of same designation to
Quarterly Report on Form 10-Q dated December 27, 1998).
10.134 Master Bluegreen Resort Loan Facility dated October 20, 1998, by and
between the Registrant and Heller Financial, Inc. (incorporated by
reference to exhibit of same designation to Quarterly Report on Form
10-Q dated December 27, 1998).
10.135 Purchase Agreement dated as of August 14, 1998 by and among Bluegreen
Corporation, Morgan Stanley Real Estate Investors III, L.P., Morgan
Stanley Real Estate Fund III, L.P., MSP Real Estate Fund, L.P. and
MSREF III Special Fund, L.P. (incorporated by reference to exhibit
10.131 to Current Report on Form 8-K dated August 14, 1998).
10.136 Registration Rights Agreement, dated as of August 14, 1998, among
Morgan Stanley Real Estate Investors III, L.P., Morgan Stanley Real
Estate Fund III, L.P., MSP Real Estate Fund, L.P and MSREF III Special
Fund, L.P. and Bluegreen Corporation (incorporated by reference to
exhibit 10.132 to Current Report on Form 8-K dated August 14, 1998).
10.137 Voting and Cooperation Agreement, dated as of August 14, 1998, among
Morgan Stanley Real Estate Investors III, L.P., Morgan Stanley Real
Estate Fund III, L.P., MSP Real Estate Fund, L.P., MSREF III Special
Fund, L.P. and certain shareholders of Bluegreen Corporation
(incorporated by reference to exhibit 10.133 to Current Report on Form
8-K dated August 14, 1998).
13.1 Portions of the 1999 Annual Report.
21.1 List of Subsidiaries.
23.1 Consent of Ernst & Young LLP.
27.1 Financial Data Schedule.
27