Company Press Release: Fund III, L.P. and Affiliates
February 2, 2000
BOCA RATON, FL -- Bluegreen Corporation (NYSE: BXG), a leading U.S. developer and marketer of timeshare resorts,
golf communities and residential land, today announced financial results for the fiscal 2000 third quarter and
nine months ended January 2, 2000 (see attached tables). The Company also announced that Morgan Stanley Real Estate
Fund III, L.P. and its affiliated real estate funds (collectively, ``MSREF'') have agreed to fund a $15 million
purchase of Bluegreen common stock at $8.50 per share. Bluegreen's Board of Directors has also authorized the repurchase
of up to an additional one million shares of Bluegreen common stock.
George Donovan, President and Chief Executive Officer of Bluegreen, commented, ``A combination of factors contributed
to Bluegreen's third quarter loss, the first quarterly loss that the Company has reported since March 30, 1997.
It is important to stress that these results do not reflect a shift of industry trends or call into question the
validity of our business model. To the contrary, based on current pricing, Bluegreen's timeshare, residential land
and golf communities, once constructed and sold, are expected to produce total life-of-project sales of approximately
$1.2 billion over their respective anticipated sell-out periods, based on current market conditions.
``As anticipated, timeshare sales for the fiscal 2000 third quarter were impacted by decreased tour-flow due to
the effects of Hurricanes Dennis and Floyd. Slower-than-normal sales were amplified by the seasonality of our business,
as Bluegreen's fiscal third quarter is historically our weakest quarter. Lower sales of our residential land and
golf communities also impacted third quarter results, due primarily to a decrease in available inventories during
the fiscal 2000 third quarter as compared to the third quarter of fiscal 1999. This was caused by delays in the
acquisition and development of new larger scale projects currently underway, as well as by weather-related issues.
``Lower timeshare, residential land and golf community sales also produced a ripple effect within the quarter.
Interest income decreased to approximately $3.9 million from $4.1 million in the fiscal 1999 third quarter, while
the gain on the sale of notes receivable decreased by approximately $399,000 from the same period one year ago.''
Record Nine Month Revenues; Timeshare Sales Comprise 53% of Total Sales
Total revenues for the fiscal 2000 third quarter were $54.2 million as compared to $63.8 million in the third quarter
of fiscal 1999. The net loss for the fiscal 2000 third quarter was $785,000, or $.03 per share, versus net income
of $4.3 million, or $.16 per share, for the same period last year. Total revenues for the first nine months of
fiscal 2000 rose 2% to $200.4 million from $196.5 million in the first nine months of fiscal 1999. Net income for
the fiscal 2000 nine-month period was $9.5 million, or $.37 per share, versus net income of $13.8 million, or $.53
per share, for the same period last year.
Bluegreen's timeshare sales for the fiscal 2000 third quarter approximated 53% of total sales versus 45% for the
same period one year ago. For the nine months ended January 2, 2000, timeshare sales approximated 53% of total
sales as compared to 43% for the nine months ended December 27, 1998. The Company expects that its business model
going forward will continue to consist of a higher percentage of timeshare sales versus golf community and residential
land sales, as existing timeshare properties mature and additional resorts are added to Bluegreen's timeshare portfolio.
Mr. Donovan continued, ``Timeshare ownership is expected to remain one of the fastest growing segments of the hospitality
industry. Bluegreen is poised to capitalize on this market with timeshare properties that, once constructed and
sold, are expected to produce total life-of-project sales of approximately $814.5 million over anticipated 3-9
year sell-out periods, based on current pricing. As we enter the more robust spring/summer selling months, we expect
that tour-flow at our existing properties will improve dramatically. We are also deeply engaged in discussions
that would lead to the acquisition of timeshare properties in two new markets - California and Arizona.
``We also expect sales of our residential land and golf communities to regain momentum at the end of the current
fourth quarter. We have invested more dollars into this segment of our business than ever before in our history
and we are currently developing projects in proven, desirable markets in which we have enjoyed past success. These
include Brickshire, a Bluegreen Golf community located in Virginia, as well as Mystic Shores and a new phase of
our successful Lake Ridge at Joe Pool Lake, both in Texas. It is important to note the residential land and golf
community projects currently being undertaken are of a much larger scale than previous projects. While this resulted
in some delays in the third quarter, we are very optimistic about the future of this segment of our business. In
total, Bluegreen's residential land and golf communities are estimated to generate aggregate total life-of-project
sales of approximately $404.4 million over anticipated 5-7 year sell-out periods, based on current pricing.''
Initial Stock Repurchase Programs Completed; Expanded Program Announced
Bluegreen has completed the repurchase of two million shares of its common stock under programs authorized by its
Board of Directors in October 1998 and March 1999. Reflecting their continued confidence in the Company and its
future prospects, the Board of Directors has once again expanded this program. Bluegreen is now authorized to repurchase
up to an additional one million shares of its common stock, from time to time in open market transactions, depending
on price, availability, market conditions and other factors.
Balance Sheet Strengthened
The Company also announced that MSREF has agreed to fund the purchase of the remaining $15 million, or 1,764,706
shares, of Bluegreen common stock at a purchase price of $8.50 per share, pursuant to its agreement with the Company.
Bluegreen intends to use the proceeds to fund the expansion of its business, including the pursuit of acquisitions,
and for general corporate purposes. In August 1998, Bluegreen and MSREF announced an agreement under which MSREF
agreed to purchase up to $50 million in Bluegreen common stock over an 18-month period at a purchase price of $8.50
per share. With this latest acquisition, MSREF will have purchased $50 million, or approximately 5.9 million shares,
of Bluegreen common stock.
In December 1999, Heller Financial, Inc. (``Heller'') also purchased timeshare receivables with an aggregate principal
balance of approximately $16.7 million from a wholly-owned special purpose subsidiary of Bluegreen. These receivables
were purchased by Heller without recourse to Bluegreen or the subsidiary. Heller has now purchased approximately
$90.8 million of Bluegreen's timeshare receivables under the existing $100 million purchase facility, subject to
customary conditions and eligible notes. Bluegreen is currently in discussions to either expand the existing facility
to accommodate additional sales of the Company's timeshare receivables or to create a new timeshare receivables
facility.
Mr. Donovan commented, ``Our balance sheet at January 2, 2000 and capital structure are the strongest in our Company's
history. When taking into account the effect of the MSREF transaction, which will take place in the current fiscal
fourth quarter, Bluegreen's book value equates to $5.11 per share and its debt-to-equity ratio approximates 1.68:1.''
Bluegreen is one of the leading companies engaged in the acquisition, development, marketing and sale of timeshare
resorts, golf communities and residential land. The Company's timeshare resorts are located in a variety of popular
vacation destinations including Orlando, Florida; the Smoky Mountains of Tennessee; Myrtle Beach, South Carolina;
Charleston, South Carolina; Branson, Missouri; Wisconsin Dells, Wisconsin; Gordonsville, Virginia; and Aruba, while
its land operations are predominantly located in the Southeastern and Southwestern United States.
This press release contains forward-looking statements. Any statements contained herein that are not statements
of historical fact may be deemed forward-looking statements. The words ``believe,'' ``expect,'' ``intend,'' ``anticipate,''
and ``project,'' and similar expressions identify forward-looking statements, which speak only as of the date the
statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise. Forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results
could differ materially from those set forth in, contemplated by, or underlying such forward-looking statements.
The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, regulatory
changes, national or regional economic conditions that can affect the real estate market, and other risks detailed
from time to time in the Company's filings with the Securities and Exchange Commission.
BLUEGREEN CORPORATION
Consolidated Statements of Operations
(In 000's, Except Per Share Data)
(Unaudited)
Three Months Ended Nine months Ended
------------------ -----------------
Jan. 2, Dec. 27, Jan. 2, Dec. 27,
2000 1998 2000 1998
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
REVENUES:
Lot sales $ 21,203 $ 30,645 $ 81,375 $ 97,845
Timeshare sales 24,043 25,024 92,237 74,885
------- ----------- ----------- -----------
Total sales 45,246 55,669 173,612 172,730
Other resort and golf
operations revenue 4,164 2,946 12,951 8,891
Interest income 3,903 4,112 11,794 11,361
Gain on sale of notes
receivable 693 1,092 1,577 3,145
Other income (expense) 199 (39) 486 340
------- ----------- ----------- -----------
Total operating revenues 54,205 63,780 200,420 196,467
------- ----------- ----------- -----------
EXPENSES:
Cost of sales:
Lot cost of sales 11,575 14,536 38,485 44,754
Timeshare cost of
sales 5,723 6,243 21,638 18,433
------- ----------- ----------- -----------
Total cost of sales 17,298 20,779 60,123 63,187
Cost of other resort
and golf operations 3,840 3,331 11,556 8,606
Selling, general and
administrative expense 30,214 28,879 100,259 87,431
Interest expense 3,531 2,920 10,160 10,028
Provision for loan losses 1,055 623 3,380 1,515
------- ----------- ----------- -----------
Total operating expenses 55,938 56,532 185,478 170,767
------- ----------- ----------- -----------
(Loss) income before
taxes (1,733) 7,248 14,942 25,700
(Benefit) provision for
income taxes (676) 2,899 5,827 10,280
Minority interest in
(loss)income of
consolidated
subsidiary (272) 76 (387) (53)
-------- ----------- ----------- -----------
(Loss) income before
extraordinary item (785) 4,273 9,502 15,473
Extraordinary loss
on early
extinguishment of
debt, net of
income taxes - - - (1,682)
-------- ----------- ----------- -----------
Net (loss) income $ (785) $ 4,273 $ 9,502 $ 13,791
======== =========== =========== ===========
Net (loss) income per
share:
Basic:
(Loss) income before
extraordinary item $ (0.03) $ 0.18 $ 0.41 $ 0.71
Extraordinary loss
on early
extinguishment
of debt, net of
income taxes - - - (0.08)
------- ----------- ----------- -----------
Net (loss) income $ (0.03) $ 0.18 $ 0.41 $ 0.63
======= =========== =========== ===========
Diluted:
(Loss) income before
extraordinary item $ (0.03) $ 0.16 $ 0.37 $ 0.59
Extraordinary loss
on early
extinguishment of
debt, net of income
taxes - - - (0.06)
------- ----------- ----------- -----------
Net (loss) income $ (0.03) $ 0.16 $ 0.37 $ 0.53
======= =========== =========== ===========
Weighted average number
of common and common
equivalent shares:
Basic 22,924 23,297 23,188 21,853
======= =========== =========== ===========
Diluted 22,924 29,879 29,509 28,636
======= =========== =========== ===========
BLUEGREEN CORPORATION
Condensed Consolidated Balance Sheets
(in 000's)
January 2, March 28,
2000 1999
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $ 44,460 $ 55,557
Contracts receivable, net 8,630 20,167
Notes receivable, net 75,918 68,548
Inventory, net 190,676 142,628
Investment in securities 17,092 17,106
Property and equipment, net 32,954 26,052
Other assets 30,610 19,064
-------------- --------------
Total assets $ 400,340 $ 349,122
============== ==============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities
Accounts payable, accrued
liabilities and other $ 23,735 $ 31,569
Deferred income 3,577 5,792
Deferred income taxes 19,386 13,507
Lines-of-credit and notes
payable 80,278 27,499
10.50% senior secured notes
payable 110,000 110,000
8.00% convertible subordinated
notes payable 6,000 6,000
8.25% convertible subordinated
debentures 34,371 34,371
-------------- --------------
Total liabilities 277,347 228,738
Minority interest 648 1,035
Total shareholders' equity 122,345 119,349
-------------- --------------
Total liabilities and
shareholders' equity $ 400,340 $ 349,122
============== ==============
Bluegreen Corporation
John Chiste
Chief Financial Officer
(561) 912-8010
or