Bluegreen Corporation Reports 2005 Fourth Quarter and Year-End Financial Results
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Thursday March 9, 5:05 pm ET
Acquires 1,579-Acre Property to Develop Bluegreen Golf Community in the Greater Dallas, Texas Market
BOCA RATON, Fla.--(BUSINESS WIRE)--March 9, 2006--Bluegreen Corporation (NYSE: BXG), a leading provider of leisure products and lifestyle choices, today announced financial results for the fourth quarter and year ended December 31, 2005.
George F. Donovan, President and CEO of Bluegreen Corporation, commented, "2005 was a year of great success for Bluegreen®, highlighted by record Resorts sales, record total operating revenues, and record net income. Resorts sales increased in each quarter of 2005. We commenced sales at four new Resort sales offices last year, increased our owner base by 14% to more than 153,000, and benefited from our critical mass, favorable demographic trends, and increasing acceptance of the Bluegreen Vacation Club®. We also completed a $203.8 million securitization of vacation ownership receivables, the largest such transaction in our history. We believe that the successful completion of this offering reflects the liquidity of Bluegreen's vacation ownership receivables and the quality of our operations and prospects. Sales in the Communities segment, as expected, declined during the second half 2005, negatively impacting our overall operating results for that same period. As previously announced, this decline was the result of lower available inventory due to the high level of sales generated during 2004 and the first half of 2005. We are proud, however, that Bluegreen Communities maintained a leading position in the direct-to-consumer sales of residential home sites. We commenced sales at three new residential properties during 2005, with sales at a fourth new property beginning in January 2006."
NEW BLUEGREEN GOLF COMMUNITY
Mr. Donovan continued, "In the first quarter of 2006, we acquired a 1,579-acre parcel of land in Grayson County, Texas, located in the Metroplex and within one hour of Dallas, Texas. This Bluegreen Golf Community substantially increases our land inventory and expands Bluegreen's presence in one of the nation's most vibrant major metropolitan areas. The community will offer 1/4- to 1-acre homesites. The first phase of the development is expected to begin in March 2006 with sales expected to commence in the fourth quarter of 2006. Amenities are planned to include an 18-hole, championship style golf course, owner's clubhouse, and swim and tennis center. We currently believe that this community will generate total estimated life-of-project sales of approximately $168.2 million over an anticipated 7-year sell out period, based on our assessment of current estimated retail prices and the expected number of homesites to be offered."
CONSOLIDATED RESULTS
Total sales in the fourth quarter of 2005 were $120.3 million as compared to $126.0 million in the same period last year. Higher Resorts sales during 2005 were offset by lower sales in the Communities segment. For 2005, total sales rose 9.5% to a record $550.3 million from $502.4 million in 2004, driven primarily by the higher Resorts sales.
Net income for the fourth quarter of 2005 was $6.9 million, or $0.22 per diluted share, on approximately 31.2 million weighted average common and common equivalent shares outstanding ("shares outstanding"), compared to restated net income of $6.8 million, or $0.23 per diluted share, on approximately 30.9 million shares outstanding for the fourth quarter of 2004. Net income for the fourth quarter of 2004 was restated from $6.3 million, or $0.21 per share (as reported) as a result of the previously announced correction of the accounting treatment for certain of Bluegreen's receivable sale transactions pursuant to Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS 140"). Net income for 2005 was $46.6 million, or $1.49 per diluted share, on approximately 31.2 million shares outstanding, compared to restated net income of $42.6 million, or $1.43 per diluted share, on approximately 30.7 million shares outstanding. Net income for 2004 was restated from $36.5 million, or $1.23 per share (as reported) as a result of the previously announced SFAS 140 restatement.
See Bluegreen's press release and Current Report on Form 8-K dated December 19, 2005 for additional details regarding the restatement.
BLUEGREEN RESORTS
Resorts sales in the fourth quarter of 2005 increased 8.7% to a fourth quarter record $81.2 million from $74.7 million in the same period last year. Higher sales were due primarily to same-resort sales increases at many of Bluegreen's sales offices, most notably the Bluegreen Wilderness Club at Big Cedar(TM) located in Ridgedale, Mo. Several of Bluegreen's resorts and offsite sales offices also reported significant sales increases during the fourth quarter of 2005, including The Fountains Resort (Orlando, Fla.), Harbour Lights(TM) (Myrtle Beach, S.C.), Shore Crest Vacation Villas(TM) (North Myrtle Beach, S.C.), Mountain Run at Boyne(TM) (Boyne Falls, Mich.), and the Company's Dallas, TX offsite sales office. New sales sites in Atlanta, GA, King of Prussia, Pa., and The Suites at Hershey(TM) (Hershey, Pa.) also contributed to higher sales. Resort sales for 2005 increased by 15.3% to $358.2 million from $310.6 million in 2004.
Resorts cost of sales in the fourth quarter of 2005 declined to 23.8% of sales from 24.7% in the same period last year. This decrease reflects a favorable product mix, primarily due to the additional construction of units and increased sales of vacation ownership interests in The Fountains Resort, which has a relatively low associated product cost. Although higher than the previous quarters in 2005, Resorts cost of sales during the fourth quarter of 2005 fell within the anticipated range of 23% to 25%. Bluegreen expects that, due to its product pricing strategy, Resorts cost of sales will continue to remain within that range in 2006 despite rising construction costs and the increased cost of acquisitions resulting from higher real estate prices. Resorts cost of sales for the year declined to 21.6% from 23.8% in 2004.
BLUEGREEN COMMUNITIES
Communities sales in the fourth quarter of 2005 declined to $39.1 million from $51.3 million in the fourth quarter of 2004, the result of the sell-out of four communities during or prior to the fourth quarter of 2005. The Company noted that, despite this decline, as of December 31, 2005, approximately $30.7 million and $12.4 million of Communities sales and profits, respectively, were deferred under the percentage-of-completion method of accounting. It is expected that these amounts will be recognized in future periods ratably with the development of the communities. Communities sales for the year increased slightly to $192.1 million from $191.8 million in 2004.
During 2005, Bluegreen commenced sales at three new Texas communities -- SugarTree on the Brazos (in January), Saddle Creek Ranch (in April), and The Settlement at Patriot Ranch (in August 2005) -- and commenced sales at a fourth community -- Havenwood at Hunter's Crossing -- in January 2006.
Communities cost of sales in the fourth quarter of 2005 declined to 55.1% of sales from 57.3% in the fourth quarter of 2004, due to the mix of homesites sold in each period and the Company's constant attention to homesite pricing in each of its markets. Communities cost of sales declined to 52.2% of sales in 2005 from 55.1% in 2004.
OTHER FINANCIAL INFORMATION
Total positive net interest spread (interest income less interest expense) rose to $5.5 million in the fourth quarter of 2005 as compared to $4.0 million (restated) in the fourth quarter of 2004. Total positive net interest spread for 2005 increased to $20.3 million from $17.5 million (restated) last year. Interest income increased primarily as a result of a higher average vacation ownership notes receivable balance during the 2005 quarter as compared to the 2004 quarter, while interest expense declined primarily as a result of lower average debt outstanding.
Gain on sales of receivables increased 87.2% to $9.2 million in the fourth quarter of 2005 from $4.9 million (restated) in the comparable prior year period. Bluegreen sold vacation ownership receivables with an aggregate principal balance of $81.2 million during the fourth quarter of 2005 as compared to $43.4 million in the 2004 fourth quarter. Gain on sale of notes receivable for 2005 was $25.2 million as compared to $26.0 million (restated) in 2004.
Bluegreen's balance sheet at December 30, 2005 reflected unrestricted cash of $66.4 million, a book value of $10.33 per share, and a near record low debt-to-equity ratio of 0.67:1.
Mr. Donovan stated, "Looking forward to 2006, as previously announced, the application of new accounting pronouncements and the accounting impact of anticipated changes in the structure of certain of our financing facilities will impact Bluegreen's 2006 operating results primarily by shifting revenues and earnings from early in the year to later in the year. While required by generally accepted accounting principles, these changes are not expected to impact the underlying financial strength of the Company. |
