UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



Washington, DC  20549



FORM 10-K



[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



For the Fiscal Year Ended December 31, 20172019



[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



Commission File Number

001-09071



BBX Capital Corporation

(Exact name of registrant as specified in its charter)





 

 

Florida

 

59‑2022148

(State or other jurisdiction of incorporation or organization)

 

(I.R.S Employer Identification No.)







 

 

401 East Las Olas Boulevard, Suite 800

 

 

Fort Lauderdale, Florida

 

33301

(Address of principal executive office)

 

(Zip Code)







 

(954) 940-4900

(Registrant's telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:

None.

Securities registered pursuant to Section 12(g) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $.01 par Valuevalue

BBX

Class B CommonNew York Stock $.01 par Value

Preferred Share Purchase Rights

(Title of Class)Exchange



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YES [  ]  NO [X]



Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES [  ]  NO [X]



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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes [X]  No [  ]



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer [  ]Accelerated filer [X]Non-accelerated filer [  ]    Smaller reporting company [  ]

Emerging growth company [  ]



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).YES [  ]  NO [X]

On June 30, 2017,2019, the aggregate market value of the registrant’s voting common equity held by non-affiliates was $389.6$298.9 million computed by reference to the closing price of the registrant’s Class A Common Stock and Class B Common Stock on such date. The registrant does not have any non-voting common equity.



The number of shares outstanding of each of the registrant’s classes of common stock as of March 5, 20182, 2020 is as follows:



Class A Common Stock of $.01 par value, 85,709,16378,106,148 shares outstanding.
Class B Common Stock of $.01 par value, 17,984,22118,466,942 shares outstanding.



Documents Incorporated by Reference



Portions of the registrant’s Definitive Proxy Statement on Schedule 14A relating to the registrant’s 20182020 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.



 


 

 





 

 



 

 

BBX Capital Corporation

Annual Report on Form 10-K for the Year Ended December 31, 20172019

 

TABLE OF CONTENTS

 

 

 



PART I

Page

Item 1.

Business

Item 1A

Risk Factors

30 

28 

Item 1B

Unresolved Staff Comments

49 

46 

Item 2

Properties

49 

46 

Item 3

Legal Proceedings

50 

47 

Item 4

Mine Safety Disclosure

52 

49 



PART II

 

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

52 

50 

Item 6

Selected Financial Data

57 

53 

Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

59 

55 

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

90 

81 

Item 8

Financial Statements and Supplementary Data

F-1 to F-71

F-55

Item 9

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

91 

82 

Item 9A

Controls and Procedures

91 

82 

Item 9B

Other Information

95 

84 



PART III

 

Item 10

Directors, Executive Officers and Corporate Governance

96 

85 

Item 11

Executive Compensation

96 

85 

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

96 

85

Item 13

Certain Relationships and Related Transactions, and Director Independence

96 

85 

Item 14

Principal Accounting Fees and Services

96 

85 



PART IV

 

Item 15

Exhibits, Financial Statement Schedules

9786 

Item 16

Form 10-K Summary

94 



SIGNATURES

10695 



   

 

 

 


 

 



PART I



Item 1.  BUSINESS



Overview



History



BBX Capital Corporation (referred to in this report together with its subsidiaries as the “Company,” “we,” “us,” or “our,” and without its subsidiaries as “BBX Capital”) is a Florida-based diversified holding company withwhose principal investments inare Bluegreen Vacations Corporation (“Bluegreen Vacations” or “Bluegreen”), real estateBBX Capital Real Estate LLC (“BBX Capital Real Estate” or “BBXRE”), BBX Sweet Holdings, LLC (“BBX Sweet Holdings”) and real estate joint ventures, and middle market operating businesses.Renin Holdings, LLC (“Renin”). 



In July 2017, the Company’sBBX Capital’s Class A Common Stock began tradingtrades on the New York Stock Exchange (“NYSE”) under the ticker symbol “BBX.“BBX,Upon commencement of trading on the NYSE, the Company’sand its Class AB Common Stock ceased tradingtrades on the OTCQX Best Market. The Company’s Class B Common Stock continues to trade on the OTCQXMarket under the ticker symbol “BBXTB.”



OnIn December 15, 2016, the CompanyBBX Capital completed the acquisition of all the outstanding shares of the former BBX Capital Corporation (“BCC”) not previously owned by the Company,it, and following the transaction, the CompanyBBX Capital changed its name from BFC Financial Corporation to BBX Capital Corporation. The acquisition was consummated by the merger of BCC into a wholly-owned subsidiary of the Company, BBX Merger Sub, LLC. As a consequence of the merger, BCC is now a wholly-owned subsidiary of BBX Capital. The merger is described in further detail in Item 8 – Note 3 of this report.

Prior to the acquisition, of all the outstanding shares of BCC, the CompanyBBX Capital had an 82% equity interest in BCC and a direct 54% equity interest in Woodbridge Holdings LLCCorporation (“Woodbridge”), the parent company of Bluegreen, and BCC held the remaining 46% interest in Woodbridge. As a result of the acquisition, of all the outstanding shares of BCC, in December 2016, Woodbridge, and Bluegreen became wholly-owned subsidiaries of the Company. On November 17,During the fourth quarter of 2017, Bluegreen completed an initial public offering (“IPO”) of its common stock by sellingin which Bluegreen sold to the public 3,736,723 shares of Bluegreen sharesits common stock and Woodbridge, selling 2,761,925 of Bluegreen shares as a  selling shareholder.shareholder, sold to the public 3,736,722 shares of Bluegreen’s common stock. In connection with the offering, Woodbridge granted the underwriters a 30-day option to purchase up to an additional 974,797addition, as of December 31, 2019, Bluegreen has repurchased and retired 371,762 shares from Woodbridge, and on December 5, 2017, the underwriters purchased all of the additional 974,797 option shares from Woodbridge.its common stock for $4.8 million. As a result of Bluegreen’s IPO and subsequent share repurchases, BBX Capital currently owns approximately 90%90.5% of BluegreenBluegreen’s common stock through Woodbridge.



BCC’s principal asset until July 31, 2012 was its ownership of BankAtlantic and its subsidiaries (“BankAtlantic”).  BankAtlantic was a federal savings bank headquartered in Fort Lauderdale, Florida.  On July 31, 2012, BCC completed the sale to BB&T Corporation (“BB&T”) of all of the issued and outstanding shares of capital stock of BankAtlantic (the stock sale and related transactions described herein are collectively referred to as the “BankAtlantic Sale”).  Prior to the closing of the BankAtlantic Sale, BankAtlantic formed two subsidiaries, BBX Capital Asset Management, LLC (“CAM”) and Florida Asset Resolution Group, LLC (“FAR”) and transferred certain non-performing commercial loans, commercial real estate and previously written-off assets to these subsidiaries. The subsidiaries were transferred to BCC prior to the closing of the BankAtlantic Sale.

Operating DivisionsPrincipal Investments



BBX Capital currently operates through the following divisions:Capital’s principal investments are as follows:



·

Bluegreen Vacations: Founded in 1966 and headquartered in Boca Raton, Florida, Bluegreen is a leading vacation ownership company that markets and sells vacation ownership interests (“VOIs”) and manages resorts in toppopular leisure and urban destinations. Bluegreen’s resort network includes 4345 Club Resorts (resorts in which owners in itsthe Bluegreen Vacation Club (the “Vacation Club”) have the right to use most of the units in connection with their VOI ownership) and 2423 Club Associate Resorts (resorts in which owners in itsBluegreen’s Vacation Club have the right to use a limited number of units in connection with their VOI ownership). Bluegreen’s Club ResortsBluegreen markets, sells, and Club Associate Resortsmanages VOIs in resorts which are primarilygenerally located in popular, high-volume, “drive-to” vacation locations,destinations, including Orlando, Las Vegas,

1


Myrtle Beach,  and Charleston, among others. Through its points-based system, the approximately 213,000220,000 owners in itsBluegreen’s Vacation Club have the flexibility to stay at units available at any of its resorts and have access to almost 11,000over 11,350 other hotels and resorts through partnerships and exchange networks. Bluegreen has a robust sales and marketing platform supported by exclusive marketing relationships with nationally-recognized consumer brands, such as Bass Pro and Choice Hotels. These marketing relationships drive sales within its core demographic. Bluegreen also offers a portfolio of fee-based resort management, financial services, andprovides third-party developers with sales and marketing on behalf of third parties.services and resorts and resort developers with other fee-based services, including resort management, mortgage servicing, title services, and construction management. In addition, Bluegreen offers financing to qualified VOI purchasers. Bluegreen had total assets of  $1.2$1.4 billion as of December 31, 2017.2019.



1


·

BBX Capital Real Estate: BBX Capital Real Estate’s activities includeBBXRE is engaged in the acquisition, development, construction, ownership, financing, and management of real estate and investments in real estate joint ventures. BBX Capital Real Estate had approximately $162 million of assets as of December 31, 2017,ventures,  including investments directlyin multifamily apartment and indirectly through joint ventures, in rental apartmenttownhome communities, single-family housingmaster-planned communities, and commercial properties located primarily in Florida.  In addition, BBXRE owns a 50% equity interest in The Altman Companies, LLC (the “Altman Companies”), a developer and manager of multifamily apartment communities,  and manages the legacy assets acquired in connection with the Company’s sale of BankAtlantic in 2012,  including portfolios of loans receivable and real estate properties. BBXRE had total assets of $145.9 million as of December 31, 2019.



·

Middle Market: BBX Sweet HoldingsThe Middle Market Division’s activities include investments:BBX Sweet Holdings is engaged in the ownership and management of operating companies and businesses in diverse industriesthe confectionery industry, including IT’SUGAR, Hoffman’s Chocolates, and Las Olas Confections and Snacks. IT’SUGAR is a specialty candy retailer which operates approximately 100 retail locations, which include a mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban locations in over 25 states and Washington D.C., and its products include bulk candy, candy in giant packaging, and novelty items. Hoffman’s Chocolates is a retailer of gourmet chocolates with revenues between $5 millionretail locations in South Florida, and $100 million. The Middle Market DivisionLas Olas Confections and Snacks is a manufacturer and wholesaler of chocolate and other confectionery products. BBX Sweet Holdings had total assets of approximately $144.6$167.3 million as of December 31, 2017. The Middle Market Division is currently comprised of the following portfolio companies:2019.

o·

Renin:Renin Holdings LLC (“Renin”) is engaged in the design, manufacture, and distribution of products for the home improvement industry, including specialtysliding doors, door systems and hardware, and home décor products and operates through its headquarters in Canada and two manufacturing and distribution facilities in the United States and Canada. In addition to its own manufacturing, Renin also sources various products and raw materials from China.  Renin had total assets of $32.3 million as of December 31, 2019.



Other Investments    

o

BBX Sweet Holdings, LLC (“BBX Sweet Holdings”) is engaged in the acquisition and management of operating businesses in the confectionery industry, including manufacturers, wholesalers, and retailers of chocolate, hard candy, and other confectionery products. These operating businesses include IT’SUGAR, LLC (“IT’SUGAR”), a specialty candy retailer with 95 retail locations in 26 states and Washington, DC, that BBX Sweet Holdings acquired in June 2017 for a purchase price of $58.4 million, net of cash acquired. BBX Sweet Holdings’ investments also include businesses that manufacture confectionery products for wholesalers, big box chains, retailers, and corporate customers. Additionally, BBX Sweet Holdings sells fine chocolates directly to consumers at eight Hoffman’s Chocolates retail locations in South Florida.



In addition to its principal investments, the Company has investments in other operating businesses, including a restaurant located in South Florida that was acquired through a loan foreclosure and an insurance agency.  

o

Food for Thought Restaurant Group, LLC (“FFTRG”), has entered into area development agreements with a subsidiary of MOD Super Fast Pizza LLC (“MOD”), one of the largest fast-casual pizza brands in the United States. Pursuant to the agreements, FFTRG has a goal of developing up to 60 MOD franchised pizza restaurant locations throughout Florida over the next six years. The Company opened two restaurant locations during the fourth quarter of 2017 and expects to open eight to twelve additional locations in 2018.  



In 2016, the Company entered into area development and franchise agreements with MOD Super Fast Pizza (“MOD Pizza”) related to the development of up to approximately 60 MOD Pizza franchised restaurant locations throughout Florida, and through 2019, the Company had opened nine MOD Pizza restaurant locations. During the third quarter of 2019, the Company terminated the agreements with MOD Pizza and transferred or closed all nine of its MOD Pizza restaurant locations. 

Our Strategies and Objectives

Our objective is to increase shareholder value through investments in diverse industries. The Company is largely focused on providing strategic support to its existing investments with a view to the improved performance of the organization as a whole. Additionally, we have and may in the future invest in operating businesses and in real estate developments and joint ventures for the development of residential and commercial real estate projects, including those in which our affiliates may participate.  The Company’s investments or acquisitions, and the business and investment strategies of the Company’s subsidiaries, may not prove to be successful or, even if successful, may not initially generate income or may generate income on an irregular basis, and may involve a long term investment. The Company expects to continue to experience losses in certain of the businesses in its Middle Market Division.  As a consequence, the Company’s results of operations may vary significantly on a quarterly basis.



The Company’s goal is to build long-term shareholder value. Since many of the Company’s assets do not generate income on a regular or predictable basis, ourthe Company’s objective continues to be long-term growth as measured by increases in book value and intrinsic value over time. In addition, the Company’s goal is to streamline its investment verticals so that the Company can be more easily analyzed and followed by the marketplace.



The Company regularly reviews the performance of its investments and, operating businesses and based upon economic, market, and other relevant factors, may considerconsiders transactions involving the sale or disposition of all or a portion of its assets, investments, or subsidiaries, including transactions involving Bluegreen or its Middle Market operating companies.subsidiaries. These include, among other alternatives, a sale or spin-off of its assets, investments, or subsidiaries or transactions involving public or private issuances of debt or equity

2


securities which decrease or dilute the Company’s ownership interest. Additionally,interest in such investments. Further, the Company is continuingmay from time to evaluatetime repurchase its outstanding securities and the operationsoutstanding securities of certain of the acquired wholesale operating businesses in BBX Sweet Holdingsits subsidiaries subject to market conditions and may decide to exit some of those businesses, which may result in the recognition of losses.

other factors.



Additional Information



The Company’s corporate website is www.bbxcapital.com. The Company’s annual reportreports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge through its website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.Securities and Exchange Commission (“SEC”). The Company’s website and the information contained on or connected to it are not incorporated into this Annual Report on Form 10-K.



Cautionary Note Regarding Forward-Looking Statements



This document contains forward-looking statements based largely on current expectations of the Company that involve a number of risks and uncertainties. All opinions, forecasts, projections, future plans or other statements, other than statements of historical fact, are forward-looking statements and can be identified by the use of words or phrases such as “plans,” “believes,” “will,” “expects,” “anticipates,” “intends,” “estimates,” “our view,” “we see,” “would” and words and phrases of similar import. The forward lookingforward-looking statements in this document are also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and involve

2


substantial risks and uncertainties. We can give no assurance that such expectations will prove to have beenbe correct. Actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained herein. Forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. When considering forward-looking statements, the reader should keep in mind the risks, uncertainties and other cautionary statements made in this report. The reader should not place undue reliance on any forward-looking statement, which speaks only as of the date made. This document also contains information regarding the past performance of the Company its subsidiaries and theirits respective investments and operations, and theoperations. The reader should note that prior or current performance is not a guarantee or indication of future performance. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, and all such information should only be viewed as historical data. Future results could differ materially as a result of a variety of risks and uncertainties.



Some factors which may affect the accuracy of the forward-looking statements apply generally to the industries in which the Company operates, including the resort development and vacation ownership industries in which Bluegreen operates, the real estate development and construction industry in which BBX Capital Real Estate operates, the home improvement industry in which Renin operates, and the confectionery industry in which BBX Sweet Holdings operates.     



These risks and uncertainties include, but are not limited to:



·

BBX Capital has limited sources of cash and is dependent upon dividends from Bluegreen to fund its operations; Bluegreen may not be in a position to pay dividends or its board of directors may determine not to pay dividends; and dividend payments may be subject to restrictions, including restrictions contained in debt instruments;  

·

Risks associated with the Company’s indebtedness, including that the Company will be required to utilize cash flow to service its indebtedness, that indebtedness may make the Company more vulnerable to economic downturns, that indebtedness may subjectsubjects the Company to covenants orand restrictions on its operations and activities orand on itsBBX Capital’s ability to pay dividends, and, with respect to the $80$80.0 million loan that BBX Capital received from a subsidiary of Bluegreen duringwhich matures in April 2015,2020,  that BBX Capital may be required to prepayrepay the loan to the extent necessary for Bluegreen or its subsidiaries to remain in compliance with covenants under theirBluegreen’s outstanding indebtedness;indebtedness and will be required to repay the loan in April 2020 if the loan is not extended;

·

Risks associated with the Company’sBBX Capital’s current business strategy, including the risk that BBX Capital will not be successful in simplifying its business structure or in pursuing the Companysale or disposal of businesses or investments, that it will not be in a position to provide strategic support to or make additional investments in its subsidiaries or in joint ventures, or that the Companyit may not achieve or maintain in the future the benefits anticipated to be realized from such support or additional investments, and the risk that the Company will not be in a position to make new investments or that any investments made will not be advantageous;

·

The risks and uncertainties affecting the Company and its subsidiaries, and their respective results, operations, markets, products, services and business strategies, and the risks and uncertainties associated with its ability to successfully implement its currently anticipated plans, and its ability to generate earnings under the current business strategy;

3


·

Risks associated with acquisitions, asset or subsidiary dispositions or debt or equity financings which the Company may consider or pursue from time to time;

·

The risk that creditors of the Company’s subsidiaries or other third-parties may seek to recover distributions or dividends made by such subsidiaries to the Company or other amounts owed by such subsidiaries to such creditors or third-parties;

·

Adverse conditions in the stock market, the public debt market and other capital markets and the impact of such conditions on the activities of the Company and its subsidiaries;investments;

·

BBX Capital’s shareholders’ interests will be diluted ifto the extent additional shares of its common stock are issued;

·

The risk that BBX Capital may not pay dividends on its Class A Common Stock or Class B Common Stock in the amount anticipated, when anticipated, or at all;

·

The impact of economic conditions on the Company, the price and liquidity of BBX Capital’s Class A Common Stock and Class B Common Stock, and the Company’sBBX Capital’s ability to obtain additional capital, including the risk that if the CompanyBBX Capital needs or otherwise believes it is advisable to issue debt or equity securities or to incur indebtedness in order to fund itsthe Company’s operations or investments, it may not be possible to issue any such securities or obtain such indebtedness on favorable terms, ifor at all;

·

The impact on liquidity of BBX Capital’s Class A Common Stock of not maintaining compliance with the listing requirements of the NYSE, which includes, among other things, a minimum average closing price, share volume, and market capitalization;

·

The risk that creditors of BBX Capital’s subsidiaries or other third-parties may seek to recover distributions or dividends made by such subsidiaries to BBX Capital or other amounts owed by such subsidiaries to such creditors or third-parties;

·

The performance of entities in which the CompanyBBX Capital has made investments may not be profitable or achieve anticipated results;

·

Risks related to potential business expansion that the Company may pursue, including that the Company may not pursue such expansion when or to the extent anticipated or at all, and any such expansion may involve significant costs and the incurrence of significant indebtedness and may not be successful;

·

Risks and uncertainties affecting the Company and its results, operations, markets, products, services and business strategies, and the risks and uncertainties associated with its ability to successfully implement its currently anticipated plans, and its ability to generate earnings under the current business strategy;

·

Risks associated with acquisitions, asset or subsidiary dispositions, or debt or equity financings which the Company may consider or pursue from time to time;

·

Adverse conditions in the stock market, the public debt market, and other capital markets and the impact of such conditions on the activities of the Company;

·

Risks of cybersecurity threats, including the potential misappropriation of assets or confidential information, corruption of data or operational disruptions;

·

Updating of, and developments with respect to, technology, including the cost involved in updating our technology and the impact that any failure to keep pace with developments in technology could have on our operations or competitive position and our information technology expenditures may not result in the expected benefits;

·

The Company’s ability to compete effectively in the highly competitive industries in which it operates;

3


·

The Company’s ability to maintain the integrity of internal or customer data, the failure of which could result in damage to our reputation and/or subject us to costs, fines or lawsuits;

·

Risks associated with legal proceedings and other regulatory proceedings, examinations or audits of the Company’s operations, including claims of noncompliance with applicable regulations or for development related defects, and the impact they may have on the Company’s financial condition and operating results, including the costs associated with regulatory compliance;

·

Audits of the Company’s federal or state tax returns, including that they may result in the imposition of additional taxes;

·

Environmental liabilities, including claims with respect to mold or hazardous or toxic substances, and their impact on the Company’s financial condition and operating results;

·

The impact on the Company’s consolidated financial statements and internal control over financial reporting of the adoption of new accounting standards, including the new standard for accounting for credit losses which the Company adopted on January 1, 2020;

·

Risks that public health issues, such as the recent coronavirus outbreak, and natural disasters including hurricanes, may adversely impact the Company’s financial condition and operating results, including, with respect to the recent coronavirus outbreak, impacts resulting from disruptions in the Company’s supply chains, potential declines in leisure travel and consumer traffic at malls and retail locations, and public health concerns related to bulk candy products;  

·

Any damage to physical assets or interruption of access to physical assets or operations resulting from public health issues, such as the recent coronavirus outbreak, or from hurricanes, earthquakes, fires, floods, windstorms or other natural disasters, which may increase in frequency or severity due to climate change or other factors; and

·

The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) involves making estimates, judgments and assumptions, and any changes in estimates, judgments and assumptions used could have a material adverse impact on the financial condition and operating results of the Company or its subsidiaries.



With respect to Bluegreen, the risks and uncertainties include, but are not limited to:



·

Bluegreen’s businessAdverse trends or disruptions in the vacation ownership, vacation rental, and operations, including its ability to market VOIs, may be adversely affected by general economic conditions and the availability of financing;travel industries;

·

Bluegreen may not be ableAdverse changes to, developexpirations or acquire VOI inventoryterminations of, or enter into and maintain fee-based service agreements or other arrangements to source VOI inventory, which may cause itsinterruptions in, business and results to be adversely impacted;strategic relationships, management contracts, exchange networks, or strategic marketing alliances.

·

Risk that Bluegreen’s business and properties are subject to extensive federal, state and local laws, regulations and policies. Changes in these laws, regulations and policies, as well asrelationship with Bass Pro under the cost of maintaining compliance with new or existing laws, regulations and policies and the imposition of additional taxes on operations, could adversely affect Bluegreen’s business.  In addition, results of auditsrevised terms of its tax returnsmarketing agreement with Bass Pro may not be as profitable as under the prior terms, or those of its subsidiariesat all, or otherwise result in the benefits anticipated, and that Bluegreen may have a material adverse impact on Bluegreen’s financial condition; not open kiosks in Cabela’s stores in the number or at the times anticipated.

·

The vacation ownership and hospitality industries are highly competitive, and Bluegreen may not be able to compete successfully;

·

Bluegreen’s business and profitability may be impacted if financing is not available or on favorable terms, or at all; 

·

Bluegreen would suffer substantial losses and Bluegreen’s liquidity position could be adversely impacted if an increasing number of customers to whom Bluegreen provides financing default on their obligations;  

·

Bluegreen's current indebtedness, or indebtedness it may incur in the future, could adversely impact its financial condition and results of operations, and the terms of Bluegreen's indebtedness may limit its activities;

·

The ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain, renew or extend credit facilities, or otherwise raise funds;

·

Bluegreen’s future success depends on its ability to market its products and services successfully and efficiently and Bluegreen’s marketing expenses have increased, and may continue to increase in the future;

·

Bluegreen may not be successful in maintaining or expanding its capital-light business relationships or capital-light activities, including fee based sales and marketing activities, and just-in-time and secondary market sales activities, and such activities may not be profitable, which would have an adverse impact on Bluegreen’s results of operations and financial condition;

·

Bluegreen’s results of operations and financial condition may be materially and adversely impacted if Bluegreen does not continue to participate in exchange networks and other strategic alliances with third parties or if Bluegreen’s customers are not satisfied with the networks in which Bluegreen participates or Bluegreen’s strategic alliances;

·

Bluegreen is subject to certain risks associated with its management of resort properties;

·

Maintenance fees at Bluegreen’s resorts and/or Vacation Club dues may be required to be increased, which could cause its product to become less attractive and could harm business;

4


·

Bluegreen’s strategic transactions may not be successful and may divert its management’s attention and consume significant resources;

·

Bluegreen is dependent on managers of its affiliated resorts to ensure that those properties meet its customers’ expectations;

·

The resale market for VOIs could adversely affect Bluegreen’s business;

·

Bluegreen is subject to the risksRisks of the real estate market and the risks associated with real estate development, including a decline in real estate values and a deterioration of other conditions relating to the real estate market and real estate development;

·

Environmental liabilities, including claims with respect to mold or hazardous or toxic substances, could have a material adverse impact on Bluegreen’s financial condition and operating results;Decreased demand from prospective purchasers of VOIs;

·

Bluegreen’s insurance policies may not cover all potential losses;ability to maintain inventory of VOIs for sale;

·

The availability of financing and Bluegreen’s ability to sell, securitize, or borrow against its VOI notes receivable;

·

Adverse events or trends in vacation destinations and regions where the resorts in Bluegreen’s network are located, including weather-related events;

·

Bluegreen’s operationsindebtedness and the terms of its indebtedness may be disrupted by a natural disaster, severe weather or terrorist activities;

·

Adverse outcomes in legal orlimit, among other regulatory proceedings, including claims of noncompliance with applicable regulations or for development related defects,things, its activities and ceaseability to pay dividends, and desist letters associatedBluegreen may not comply with the VOI note receivable collections, could adversely affect Bluegreen’s financial condition and operating results;

·

A failure to maintain the integrity of internal or customer data could result in damage to Bluegreen's reputation and/or subject Bluegreen to costs, fines, or lawsuits;

·

Bluegreen’s technology requires updating, the cost involved in updating the technology may be significant and the failure to keep pace with developments in technology could impair Bluegreen's operations or competitive position;

·

Bluegreen’s intellectual property rights, and intellectual property rightsterms of its business partners, are valuable, and the failure to protect those rights could adversely affect its business; andindebtedness;

·

The loss of the services of Bluegreen’s key management and personnel could adversely affect its business.business;

·

Bluegreen’s ability to comply with regulations applicable to the vacation ownership industry or otherwise related to its business and activities, and the costs of compliance efforts or a failure to comply;

·

Bluegreen’s ability to successfully implement its growth strategy and plans and the impact they may have on its results and financial conditions, including that any increased developed VOI sales efforts may not be successful and may impact Bluegreen’s cash flows;

·

Bluegreen’s ability to compete effectively in the highly competitive vacation ownership industry and against hotel and other hospitality and lodging alternatives;

·

Bluegreen’s ability to enhance the Vacation Club experience for its Vacation Club owners and risks related to Bluegreen’s efforts and expenses in connection therewith, including that expenses may be greater than anticipated;

·

Bluegreen’s customers’ compliance with their payment obligations under financing provided by Bluegreen,  the increased presence and efforts of “timeshare-exit” firms and the success of actions which Bluegreen may take in connection therewith, and the impact of defaults on Bluegreen’s operating results and liquidity position;

·

The ratings of third-party rating agencies, including the impact of any downgrade on Bluegreen’s ability to obtain, renew or extend credit facilities, or otherwise raise funds;

·

Changes in Bluegreen’s business model and marketing efforts, plans or strategies, may cause marketing expenses to increase or adversely impact its revenue, operating results and financial condition and such expenses as well as its investments, including investments in new and expanded sales offices, and other sales and marketing initiatives, including screening methods and data driven analysis, may not achieve the desired results;

·

Technology and other changes and factors which may impact Bluegreen’s telemarketing efforts, including new cell phone technologies that identify or block marketing vendor calls;

4


·

The impact of the resale market for VOIs on Bluegreen’s business, operating results, and financial condition;

·

Risks associated with Bluegreen’s relationships with third-party developers, including that third-party developers who provide VOIs to be sold pursuant to fee-based services or just-in-time arrangements may not provide VOIs when planned and that third-party developers may not fulfill their obligations to Bluegreen or to the homeowners associations that maintain the resorts they developed; and



With respect to BBX Capital Real Estate, the risks and uncertainties include, but are not limited to:



·

The impact of economic, competitive, and other factors affecting BBX Capital Real Estate and its assets, including the impact of a decline in real estate values on BBX Capital Real Estate’s business and the value of BBX Capital Real Estate’s assets,assets;

·

Risks that the ability of BBX Capital Real Estate’s borrowersrecent investment in the Altman Companies may not realize the anticipated benefits and will increase the Company’s exposure to service their obligationsrisks associated with the multifamily real estate development and the value of collateral securing BBX Capital Real Estate’s loans;construction industry;

·

The risk of loan losses and the risksadditional impairments of additional charge-offs, impairments and required increases in the allowance for loan losses;  

·

The risk that the assumptions and expectations and the forward looking information provided in the Project Portfolio table will not prove correct;real estate assets;

·

The risks associated with investments in real estate developments and joint ventures include:

o

exposure to downturns in the real estate and housing markets;

o

exposure to risks associated with real estate development activities, including severe weather conditions increasing costs, delaying construction, causing uninsured losses or reducing demand for homes;

o

risks associated with obtaining necessary zoning and entitlements;

o

risks that joint venture partners may not fulfill their obligations and concentration risks associated with entering into numerous joint ventures with the same joint venture partner;

o

risks relating to reliance on third-party developers or joint venture partners to complete real estate projects;

o

risk associated with increasing interest rates, as the majority of the development costs and sales of residential communities is financed;

o

risks associated with not finding tenants for multifamily apartments or buyers for single-family homes and townhomes;

o

risk associated with finding equity partners, securing financing, and selling newly built multifamily apartments;

o

risk associated with rising land and construction costs;

o risk that the projects will not be developed as anticipated or be profitable; and

o risk associated with customers or vendors not performing on their contractual obligations.   



With respect to the Company’s investment activities in middle marketBBX Sweet Holdings, Renin and other operating businesses, the risks and uncertainties include, but are not limited to:



·

Risks that the business plansCompany’s investments will not be successful and that investments in operating businesses and franchises may not achieve the returns anticipated or may not be profitable, including the risks associated with the operations and activities of Renin, BBX Sweet Holdings, and the Company’s MOD franchise operations;anticipated;

·

Risks that the integrationtheir business plans, including IT’SUGAR’s opening of BBX Sweet Holdings’ recent acquisition of IT’SUGAR, LLC maynew stores in high profile locations, will not be completed on a timely basis, or as anticipated and that the IT’SUGAR acquisition may not be advantageous and the Company may not realize the anticipated benefits of the acquisition;successful;

·

Risks that the recent reorganization of certain BBX Sweet Holdings’ business entities and operations may not achieve anticipated operating efficiencies and that the implementation of strategic alternatives, including the sale of certain subsidiaries, will result in losses;

5


·

The amount and terms of indebtedness associated with acquisitions and operations may impact the Company’s financial condition and results of operations and limit the Company’s activities;

·

Continued operating losses and the failure of the acquired businesses to meet financial covenants may result in the Company making further capital contributions or advances to the acquired businesses;market demand for their products could decline;

·

The risk of impairment losses associated with declines in the value of the Company’s investments in operating businesses or the Company’s inability to recover its investments;

·

Risks that the reorganization of certain confectionery businesses and operations may not achieve anticipated operating efficiencies and reduction in operating losses and that the implementation of strategic alternatives, including the sale or disposal of certain operations, will result in additional losses;

·

Failure of the Company’s confectionery businesses to meet financial metrics may necessitate BBX Capital making further capital contributions or advances to the businesses or a decision not to support underperforming businesses; 

·

Risks associated with increased commodity costs or a limited availability of commodities;

·

Risks associated with product recalls or product liability claims;

·

The risk of losses associated with excess and obsolete inventory and the risks of additional required reserves for lower of cost or market value losses in inventory;

·

TheFor Renin, the risk of trade receivable losses and the risks of charge-offs and required increases in the allowance for bad debts;

·

RiskRisks associated with the performance of vendors, commodity price volatility;volatility and the impact of tariffs on goods imported from Canada and Asia, particularly with respect to Renin;

·

Renin’s operations expose the CompanyFor Renin, risks associated with exposure to foreign currency exchange risk of the U.S. dollar compared to the Canadian dollar.dollar;

·

The amount and terms of indebtedness associated with the operations and capital expenditures may impact their financial condition and results of operations and limit their activities;

·

Requirements for operating and capital expenditures may require BBX Capital to make capital contributions or advances; and

·

The risk that a decline in IT’SUGAR’s profitability or cash flows may result in impairment losses associated with IT’SUGAR’s intangible and long-lived assets.

These and other risks and uncertainties disclosed in this Annual Report on Form 10-K are not necessarily all of the important factors that could cause the Company’s actual results to differ materially from those expressed in any of the forward-looking statements. Other unknown or unpredictable factors could cause the Company’s actual results to differ materially from those expressed in any of the forward-looking statements.

5


Given these uncertainties, you are cautioned not to place undue reliance on forward-looking statements, and you should read this Annual Report on Form 10-K with the understanding that actual future results, levels of activity, performance, and events and circumstances may be materially different from what the Company expects.

Forward-looking statements speak only as of the date of this Annual Report on Form 10-K, and the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report.



In addition to the risks and factors identified above, reference is also made to the other risks and factors detailed in this report and the other reports filed by the Company with the SEC. The Company qualifies all forward-looking statements and cautions that the foregoing factors are not exclusive.

Divisions

The Company currently operates through three divisions: Bluegreen, BBX Capital Real Estate and Middle Market.    

Bluegreen

Strategies

The Company’s strategy to grow Bluegreen’s profitability and long-term value is focused on:

·

Increasing vacation ownership sales by expanding existing and identifying new tour sources and sales locations;

·

Increasing sales and operating efficiencies across all customer touch-points;

·

Continuing to efficiently procure vacation ownership interests through a mix of capital light sources and strategic resort development;

·

Continuing to grow its resort management, title, loan servicing and other high profit, cash generating businesses; and

·

Providing an industry leading level of customer service.



Market and Industry Data



Market and industry data used in this Annual Report on Form 10-K have been obtained from Bluegreen’s internal surveys, industry publications, unpublished industry data and estimates, discussions with industry sources and other currently available information. The sources for this data include, without limitation, the American Resort Development Association. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such information. BluegreenThe Company has not independently verified such data. Similarly, Bluegreen’s internal surveys, while believed to be reliable, have not been verified by any independent sources. Accordingly, such data may not prove to be accurate. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements contained in this Annual Report on Form 10-K, as described above.



Trademarks, Service Marks and Trade Names



Bluegreen owns or has rights to use a number of registered and common law trademarks, trade names and service marks in connection with its business, including, but not limited to, Bluegreen, Bluegreen Resorts, Bluegreen Vacations, Bluegreen Traveler Plus, Bluegreen Vacation Club, Bluegreen Wilderness Club at Big Cedar, and the Bluegreen Logo. This Annual Report on Form 10-K also refers to trademarks, trade names, and service marks of other organizations. Without limiting the generality of the preceding sentence, World Golf Village is registered by World Golf Foundation, Inc.; Big Cedar, Cabela’s and Bass Pro Shops are registered by Bass Pro Trademarks, LP; Ascend, Ascend Hotel Collection, Ascend Resort Collection, Choice Privileges, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria, MainStay Suites, Econo Lodge, and Rodeway Inn are registered by Choice Hotels International, Inc.; and Suburban

6


Extended Stay Hotel is registered by Suburban Franchise Systems, Inc. All trademarks, service marks, or trade names referred to in this Annual Report on Form 10-K are the property of their respective holders. Solely for convenience, the trademarks, trade names, and service marks referred to in this Annual Report on Form 10-K appear without the ® and ™ symbols, but such references are not intended to indicate in any way that Bluegreen or the owner will not assert, to the fullest extent under applicable law, all rights to such trademarks, trade names and service marks.



Bluegreen’s Principal Investments

The Company’s principal investments are Bluegreen, BBX Capital Real Estate, Renin, and BBX Sweet Holdings. 

Bluegreen

Business Overview



Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in toppopular leisure and urban destinations. Bluegreen’s resort network includes 4345 Club Resorts (resorts in which owners in the Bluegreen Vacation Club (“Vacation Club”) have the right to use most of the units in connection with their VOI ownership) and 24 Club Associate Resorts (resorts in which owners in Bluegreen’sthe Vacation Club have the right to use a limited number of units in connection with their VOI ownership). Bluegreen’s Club Resorts and Club Associate Resorts are primarily located in, popular, high-volume, “drive-to” vacation locations, including Orlando, Las Vegas, Myrtle Beach and Charleston, among others. Through Bluegreen’sits points-based system, the approximately 213,000220,000 owners in Bluegreen’s Vacation Club have the flexibility to stay at units available at any of its resorts and have access to almost 11,000over 11,350 other hotels and resorts through partnerships and exchange networks. Bluegreen has a robust sales and marketing platform supported by exclusive marketing relationships with nationally-recognized consumer brands, such as Bass Pro and Choice Hotels. These marketing relationships drive sales within its core demographic, which is described below.



Prior to 2009, Bluegreen’s vacation ownership business consisted solely of the sale of VOIs in resorts that it had developed or acquired (“developed VOI sales”). While Bluegreen continues to conduct such sales and development activities, Bluegreen now also derives a significant portion of its revenue from its capital-light business model, which utilizeswith the goal of utilizing Bluegreen’s expertise and infrastructure to generate both VOI sales and recurring revenue from third parties without the significant capital investment generally associated with the development and acquisition of resorts. Bluegreen’s capital-light business activities include sales of VOIs owned by third-party developers pursuant to which Bluegreen is paid a commission (“fee-based sales”) and sales of VOIs that Bluegreen purchases under

6


just-in-time (“JIT”) arrangements with third-party developers or from secondary market sources. In addition, Bluegreen provides resorts and resort developers with other fee-based services, including resort management, mortgage servicing, title services, and construction management. Bluegreen also offers financing to qualified VOI purchasers, which generates significant interest income.



Picture 2



(1)

Excludes “Other Income, Net.”



Bluegreen’s Vacation Club has grown from approximately 170,000 owners as of December 31, 2012 to approximately 213,000220,000 owners as of December 31, 2017.2019. Bluegreen primarily serves a demographic that it considers generally underpenetrated within the vacation ownership industry, as the typical Vacation Club owner has an average annual household income of approximately $77,000$79,000 as compared to an industry average of $90,000.$86,000. According to U.S. census data, households with an annual income of $50,000 to $100,000 represent the largest percentagerepresents approximately 30% of the total population (approximately 29%).population. Bluegreen believes that its ability to effectively scale the transaction size to suit its customer, as well as its high-quality, conveniently-located, “drive-to” resorts, are attractivekey to itsattracting core target demographic.



7Strategy




Bluegreen’s core operating and growth strategies are focused on:



·

Utilizing its sales and marketing platform to achieve VOI sales growth through the maintenance and expansion of existing marketing alliances, continued development of new marketing programs, and generation of additional VOI sales to existing Vacation Club owners;

·

Continuing to enhance its Vacation Club experience by offering owners exceptional value through the addition of new destinations, the expansion of exchange programs, and the addition of new partnerships to offer increased vacation options;

·

Continuing to grow its higher-margin, cash-generating businesses, including resort management, title services, and loan servicing;

·

Increasing sales and operating efficiencies across all customer touch-points;

·

Maintaining operational flexibility and continuing to pursue growth through a balanced mix of capital-light sales vs. developed VOI sales, sales to new customers vs. sales to existing Vacation Club owners, and cash sales vs. financed sales;  and

·

Pursuing strategic transactions, including acquisitions of other VOI companies, resort assets, sales and marketing platforms, management companies and contracts, and other assets, properties and businesses.



Products and Services



Vacation Ownership Interests



Since entering the vacation ownership industry in 1994, Bluegreen has generated over 627,000711,000 VOI sales transactions, including over 124,000167,000 fee-based sales transactions. BluegreenBluegreen’s Vacation Club owners receive an annual or biennial allotment of “points” in perpetuity (supported by an underlying deeded VOI held in trust for the owner) that may be used to stay at any of Bluegreen’s 4345 Club Resorts and 2423 Club Associate Resorts. Vacation Club owners can use their points to stay in resorts for varying lengths of time, starting at a minimum of two nights. The number of points required for a stay at a resort varies dependingdepends on a variety of factors, including resort location, size of the unit, vacation season, and the days of the week. Under this system, Vacation Club owners can select vacations according to their schedules, space needs, and available points. Subject to certain restrictions and fees, Vacation Club owners are typically allowed to carry

7


over any unused points for one year and to “borrow” points from the next year. Vacation Club owners may also take advantage of various other lodging and vacation opportunities available to them as described under “Value Proposition” below.



Each of Bluegreen’s Club Resorts and Club Associate Resorts is managed by a homeowners association (“HOA”), which is governed by a board of directors or trustees. ThisThe board hires a management company to which it delegates many of the rights and responsibilities of the HOA, including landscaping, security, housekeeping, garbage collection, utilities, insurance procurement, laundry, and repairs and maintenance. Vacation Club owners pay annual maintenance fees which cover the costs of operating all of the resorts in the Vacation Club system, including fees for real estate taxes and reserves for capital improvements. If a Vacation Club owner does not pay such charges, his or her use rights may be suspended and ultimately terminated, subject to the applicable lender’s first mortgage lien, if any, on such owner’s VOI. Bluegreen provides management services to 4849 resorts and the Vacation Club through contractual arrangements with HOAs. Bluegreen has a 100% renewal rate on management contracts from Bluegreen’sits Club Resorts.



“Value Proposition”



Bluegreen Vacation Club’s points-based platform offers owners significant flexibility. As reflected in the chart below, basic Vacation Club ownership entitles owners to use their points to stay at any of Bluegreen’s 4345 Club Resorts and 2423 Club Associate Resorts, as well as to access more than 4,300 resorts available through the Resort Condominiums International, LLC (“RCI”) exchange network. For a nominal annual fee and transaction fees, Vacation Club owners can join and utilize Bluegreen’s Traveler Plus program, which enables them to use their points to access an additional 4446 direct exchange resorts forand other vacation experiences, such as cruises. Vacation Club owners can convert their Vacation Club points into Choice Privileges points. Choice Privileges points, which can be used for stays in Choice Hotels.Hotels’ properties. In addition, Traveler Plus members can directly use their Vacation Club points for stays in Choice Hotels’ Ascend Hotel Collection properties, a network of historic and boutique hotels located in the United States, Canada, ScandinaviaEurope, Australia, and Latin America. Overall, there are approximately 6,800more than 7,000 hotels in the Choice Hotels network, located in more than 44over 40 countries and territories, and Choice Hotels’ brands include the Ascend Hotel Collection, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Hotels and Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, and Rodeway Inn. Bluegreen continuously seeks new ways to addprovide value for Bluegreen’sto its Vacation Club owners, including enhanced product offerings, new resort locations, broader vacation experiences, and further technological innovation, all of which are designed to increase guest satisfaction.



8Picture 5






Approximately 65%67% of Vacation Club owners are enrolled in Traveler Plus. During the year ended December 31, 2017,2019, approximately 8%7% of Vacation Club owners utilized the RCI exchange network.



8


Vacation Club Resort Locations and Amenities



As shown in the map below, Bluegreen’s Vacation Club resorts are primarily located on the U.S. East Coast and Midwest. The 4446 direct-exchange resorts available to Traveler Plus members are concentrated along the West Coast and Hawaii. Together,Bluegreen believes that, together, this provides a broad geographic offering across the United States and the Caribbean.of resorts available to its Vacation Club owners.



Picture 6



Vacation Club resorts are primarily “drive-to” resort destinations, andas approximately 85%88% of Bluegreen’s Vacation Club owners live within a four-hour drive of at least one of Bluegreen’s resorts. BluegreenBluegreen’s resorts are generally located in popular vacation destinations, such as Florida, South Carolina, North Carolina, Tennessee, Virginia, Texas, Louisiana, and Nevada, and represent

9


a diverse mix of resort and urban destinations, allowing Vacation Club owners the ability to customize their vacation experience. In addition, Bluegreen offers its Vacation Club owners access to Caribbean locations, including Aruba.



Bluegreen’s resort network also offers a diverse mix of experiences and accommodations. Unlike some of Bluegreen’s competitors that maintain static brand design standards across resorts and geographies, Bluegreen seeks to design resorts that capture the uniqueness of a particular location. Bluegreen’s distinctive resorts are designed to create an authentic experience and connection to their unique and varied locations.



Bluegreen’s resorts typically feature condominium-style accommodations with amenities such as fully equipped kitchens, entertainment centers, and in-room laundry facilities.appliances. Many resorts feature a clubhouse (including a pool, game room, and lounge), hotel-type staff, and concierge services.



Bluegreen also owns a 51% interest in Bluegreen/Big Cedar Vacations, which develops, markets, and sells VOIs at three premier wilderness-themed resorts adjacent to Table Rock Lake near Branson, Missouri: The Bluegreen Wilderness Club at Big Cedar, The Cliffs at Long Creek, and Paradise Point. The remaining 49% interest in Bluegreen/Big Cedar Vacations is held by Big Cedar, LLC, (“BC LLC”), an affiliate of Bass Pro. As a result of Bluegreen’s controlling interest in Bluegreen/Big Cedar Vacations, ourthe Company’s consolidated financial statements include the results of operations and financial condition of Bluegreen/Big Cedar Vacations.



Located next to the luxury Big Cedar Lodge, The Bluegreen Wilderness Club is a 40-acre resort overlooking Table Rock Lake with sprawling views of the surrounding Ozarks. Vacation Club owners enjoy a variety of amenities, including a 9,000 square foot clubhouse, lazy river and rock-climbing wall, in addition to full access to the amenities and activities of Big Cedar Lodge. The Cliffs at Long Creek offers fully furnished homes that can accommodate up to 13 people and other vacation villas while providing access to a clubhouse and amenities at The Bluegreen Wilderness Club. Paradise Point offers spacious vacation villas with direct access to Table Rock Lake and the Bass Pro Long Creek Marina.

9


Vacation Club Resorts



 

 

 

 

 

 

 

 

 



 

Club Resorts

 

Location

 

Total
units (1)

Managed

by Bluegreen (2)

Fee-Based
or JIT
sales (3)

Sales
center (6)

 

Cibola Vista Resort and Spa

 

Peoria, Arizona

 

343

 

La Cabana Beach Resort & Casino(4) 

 

Oranjestad, Aruba

 

449

 

 

 

 

The Club at Big Bear Village

 

Big Bear Lake, California

 

38

 

 

 

The Innsbruck Aspen

 

Aspen, Colorado

 

17

 

 

Via Roma Beach Resort

 

Bradenton Beach, Florida 

 

28

 

 

 

Daytona SeaBreeze

 

Daytona Beach Shores, Florida

 

78

 

 

Resort Sixty-Six

 

Holmes Beach, Florida 

 

28

 

 

 

The Hammocks at Marathon

 

Marathon, Florida

 

58

 

 

 

The Fountains, Lake Eve and Oasis Lakes

 

Orlando, Florida

 

842

10 

 

Orlando’s Sunshine Resort I & II

 

Orlando, Florida

 

84

 

 

11 

 

Casa del Mar Beach Resort

 

Ormond Beach, Florida

 

118

 

 

12 

 

Grande Villas at World Golf Village &

The Resort at World Golf Village

 

St. Augustine, Florida

 

214

 

13 

 

Bluegreen at Tradewinds

 

St. Pete Beach, Florida

 

160

14 

 

Solara Surfside

 

Surfside, Florida

 

60

 

15 

 

Studio Homes at Ellis Square

 

Savannah, Georgia 

 

28

16 

 

The Hotel Blake

 

Chicago, Illinois

 

160

17 

 

Bluegreen Club La Pension

 

New Orleans, Louisiana

 

64

 

18 

 

Marquee

 

New Orleans, Louisiana

 

94

19 

 

The Soundings Seaside Resort

 

Dennis Port, Massachusetts 

 

69

 

20 

 

Mountain Run at Boyne & Hemlock

 

Boyne Falls, Michigan

 

205

 

21 

 

The Falls Village

 

Branson, Missouri

 

293

 

22 

 

Paradise Point Resort(5)

 

Hollister, Missouri

 

150

 

 

23 

 

Bluegreen Wilderness Club at Big Cedar(5)

 

Ridgedale, Missouri

 

427

 

24 

 

The Cliffs at Long Creek(5)

 

Ridgedale, Missouri

 

106

 

 

25 

 

Bluegreen Club 36

 

Las Vegas, Nevada

 

476

 

26 

 

South Mountain Resort

 

Lincoln, New Hampshire

 

116

27 

 

Blue Ridge Village I,II and III

 

Banner Elk, North Carolina

 

132

 

 

28 

 

Club Lodges at Trillium

 

Cashiers, North Carolina

 

50

 

29 

 

The Suites at Hershey

 

Hershey, Pennsylvania

 

78

 

 

30 

 

The Lodge Alley Inn

 

Charleston, South Carolina

 

90

 

31 

 

King 583

 

Charleston, South Carolina

 

50

 

32 

 

Carolina Grande 

 

Myrtle Beach, South Carolina

 

118

 

33 

 

Harbour Lights

 

Myrtle Beach, South Carolina

 

324

 

34 

 

Horizon at 77th

 

Myrtle Beach, South Carolina

 

88

 

35 

 

SeaGlass Tower  

 

Myrtle Beach, South Carolina 

 

136

 

 

36 

 

Shore Crest Vacation Villas I & II

 

North Myrtle Beach, South Carolina

 

240

 

37 

 

MountainLoft I & II

 

Gatlinburg, Tennessee

 

394

 

38 

 

Laurel Crest 

 

Pigeon Forge, Tennessee

 

298

 

39 

 

Eilan Hotel and Spa

 

San Antonio, Texas

 

163

 

40 

 

Shenandoah Crossing

 

Gordonsville, Virginia

 

136

 

41 

 

Bluegreen Wilderness Traveler at Shenandoah

 

Gordonsville, Virginia

 

146

 

 

42 

 

BG Patrick Henry Square

 

Williamsburg, Virginia

 

130

43 

 

Parkside Williamsburg Resort

 

Williamsburg, Virginia

 

107

 

44 

 

Bluegreen Odyssey Dells & Pirate's Lodge

 

Wisconsin Dells, Wisconsin

 

92

 

 

45 

 

Christmas Mountain Village 

 

Wisconsin Dells, Wisconsin

 

381

 



 

 

 

Total Units

 

7,858

 

 

 



 

 

 

 

 

 

 

 

 



10

 


 

 

Vacation Club Resorts



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



Club Resorts

 

Location

 

Total
units (1)

Managed
by Bluegreen (2)

Fee-Based
or JIT
sales (3)

Sales
center (7)

1

Cibola Vista Resort and Spa

 

Peoria, Arizona

 

288 

 

2

La Cabana Beach Resort & Casino(4) 

 

Oranjestad, Aruba

 

449 

 

 

3

The Club at Big Bear Village

 

Big Bear Lake, California

 

38 

 

4

The Innsbruck Aspen

 

Aspen, Colorado

 

17 

 

 

5

Via Roma Beach Resort

 

Bradenton Beach, Florida 

 

28 

 

 

6

Daytona SeaBreeze

 

Daytona Beach Shores, Florida

 

78 

 

7

Resort Sixty-Six

 

Holmes Beach, Florida 

 

28 

 

 

8

The Hammocks at Marathon

 

Marathon, Florida

 

58 

 

 

9

The Fountains

 

Orlando, Florida

 

745 

10

Orlando’s Sunshine Resort I & II

 

Orlando, Florida

 

84 

 

 

11

Casa del Mar Beach Resort

 

Ormond Beach, Florida

 

118 

 

 

12

Grande Villas at World Golf Village &
The Resort at World Golf Village

 

St. Augustine, Florida

 

214 

 

13

Bluegreen at Tradewinds

 

St. Pete Beach, Florida

 

162 

14

Solara Surfside

 

Surfside, Florida

 

60 

 

15

Studio Homes at Ellis Square

 

Savannah, Georgia 

 

28 

16

The Hotel Blake

 

Chicago, Illinois

 

162 

 

17

Bluegreen Club La Pension

 

New Orleans, Louisiana

 

64 

 

18

The Soundings Seaside Resort

 

Dennis Port, Massachusetts 

 

69 

 

19

Mountain Run at Boyne 

 

Boyne Falls, Michigan

 

204 

 

20

The Falls Village

 

Branson, Missouri

 

293 

 

21

Paradise Point Resort(5) 

 

Hollister, Missouri

 

150 

 

 

22

Bluegreen Wilderness Club at Big Cedar(5) 

 

Ridgedale, Missouri

 

427 

 

23

The Cliffs at Long Creek(5) 

 

Ridgedale, Missouri

 

62 

 

 

24

Bluegreen Club 36

 

Las Vegas, Nevada

 

478 

 

25

South Mountain Resort

 

Lincoln, New Hampshire

 

110 

26

Blue Ridge Village

 

Banner Elk, North Carolina

 

132 

 

 

27

Club Lodges at Trillium

 

Cashiers, North Carolina

 

30 

 

28

The Suites at Hershey

 

Hershey, Pennsylvania

 

78 

 

 

29

The Lodge Alley Inn 

 

Charleston, South Carolina

 

90 

 

30

King 583

 

Charleston, South Carolina

 

50 

 

31

Carolina Grande 

 

Myrtle Beach, South Carolina

 

118 

 

32

Harbour Lights

 

Myrtle Beach, South Carolina

 

324 

 

33

Horizon at 77th 

 

Myrtle Beach, South Carolina 

 

88 

 

34

SeaGlass Tower

 

Myrtle Beach, South Carolina

 

136 

 

 

35

Shore Crest Vacation Villas I & II

 

North Myrtle Beach, South Carolina

 

240 

 

36

MountainLoft I & II

 

Gatlinburg, Tennessee

 

394 

 

37

Laurel Crest 

 

Pigeon Forge, Tennessee

 

298 

 

38

Shenandoah Crossing

 

Gordonsville, Virginia

 

128 

 

39

Bluegreen Wilderness Traveler at Shenandoah 

 

Gordonsville, Virginia

 

145 

 

 

40

BG Patrick Henry Square

 

Williamsburg, Virginia

 

91 

41

Parkside Williamsburg Resort

 

Williamsburg, Virginia 

 

89 

 

42

Bluegreen Odyssey Dells 

 

Wisconsin Dells, Wisconsin

 

92 

 

 

43

Christmas Mountain Village 

 

Wisconsin Dells, Wisconsin

 

381 

 



 

 

Total Units

 

7,318 

 

 

 





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Club Associate Resorts

 

Location

 

Managed

by Bluegreen (2)

Fee-Based
or JIT
sales (3)

1

Paradise Isle Resort

 

Gulf Shores, Alabama

 

 

 

2

Shoreline Towers Resort

 

Gulf Shores, Alabama

 

 

 

3

Dolphin Beach Club

 

Daytona Beach Shores, Florida

 

 

4

Fantasy Island Resort II

 

Daytona Beach Shores, Florida

 

 

5

Mariner’s Boathouse and Beach Resort

 

Fort Myers Beach, Florida

 

 

 

6

Tropical Sands Resort

 

Fort Myers Beach, Florida

 

 

 

7

Windward Passage Resort

 

Fort Myers Beach, Florida

 

 

 

8

Gulfstream Manor

 

Gulfstream, Florida

 

 

9

Outrigger Beach Club

 

Ormond Beach, Florida 

 

 

 

10 

10

Landmark Holiday Beach Resort

 

Panama City Beach, Florida

 

 

 

11 

11

Ocean Towers Beach Club

 

Panama City Beach, Florida

 

 

 

12 

12

Panama City Resort & Club

 

Panama City Beach, Florida

 

 

 

13 

13

Surfrider Beach Club

 

Sanibel Island, Florida

 

 

 

14 

14

Petit Crest Villas and Golf Club Villas at Big Canoe

 

Marble Hill, Georgia

 

 

 

15 

15

Pono Kai Resort

 

Kapaa (Kauai), Hawaii

 

 

 

16 

16

The Breakers Resort

 

Dennis Port, Massachusetts

 

17 

17

Lake Condominiums at Big Sky

 

Big Sky, Montana

 

 

 

18 

18

Foxrun Townhouses

 

Lake Lure, North Carolina

 

 

 

19 

19

Sandcastle Village II

 

New Bern, North Carolina

 

 

 

20 

20

Waterwood Townhouses

 

New Bern, North Carolina

 

 

 

21 

21

Bluegreen at Atlantic Palace

 

Atlantic City, New Jersey

 

 

 

22 

22

The Manhattan Club

 

New York, New York

 

 

23 

23

Players Club

 

Hilton Head Island, South Carolina

 

 

 

24

Blue Water Resort at Cable Beach(6)

Nassau, Bahamas



(1)

Represents the total number of units at the Club Resort. Owners in the Vacation Club have the right to use most of the units at each Club Resort in connection with their VOI ownership.

(2)

This resortResorts is managed by Bluegreen Resorts Management, Inc., Bluegreen’s wholly-owned subsidiary (“Bluegreen Resorts Management”)., Bluegreen’s wholly-owned subsidiary.

(3)

This resort,These resorts, or a portion thereof, waswere developed by third-parties, and Bluegreen has sold VOIs on their behalf or have arrangements to acquire such VOIs as part of Bluegreen’s capital-light business strategy.

(4)

This resort is managed by Casa Grande Cooperative Association I, which has contracted with Bluegreen Resorts Management to provide management consulting services to the resort. The services provided by Bluegreen Resorts Management to this resort pursuant to such agreement are similar in nature to, but less extensive than, the services provided by Bluegreen or its subsidiaries to the other resorts listed in the table as “Managed by Bluegreen.”

(5)

This resort is developed, marketed, and sold by Bluegreen/Big Cedar Vacations.

(6)

This resort is currently closed for renovation in order to repair hurricane damage.

(7)

In addition to the sales centers listedidentified in the table, Bluegreen also operates additionala sales centerscenter in Myrtle Beach, South Carolina; Memphis, Tennessee and Sevierville, Tennessee, each of which is in close proximity to several of Bluegreen’s resorts.Tennessee.



Marketing and Sale of Inventory



VOI sales are typically generated by attracting prospective customers to tour a resort and attend a sales presentation. Bluegreen’s sales and marketing platform utilizes a variety of methods to generate new owner prospects,attract prospective customers, drive tour flow, and sell VOIs in its Vacation Club. Bluegreen primarily utilizes marketing alliances with nationally-recognized brands, which provide exclusive access to venues which target consumers generally matching Bluegreen’s core demographic. In addition, Bluegreen sources sales prospects through programs which generate leads at high-traffic venues and in high-density tourist locations and events, as well as from telemarketing and referrals from existing owners and exchangers and renters stayingother guests at Bluegreen’s properties.



Many of Bluegreen’s marketing programs involve the sale of a discounted vacation package that typically includes a two to three night stay in close proximity to one of Bluegreen’s resort sales offices and requires participation in a sales presentation (a sales tour). Vacation packages are typically sold either in retail establishments, such as Bass Pro stores and outlet malls, or via telemarketing. During the year ended December 31, 2017,2019, Bluegreen sold over 245,000243,000 vacation packages, and 48%44% of Bluegreen’s VOI sales were derived from vacation packages. As of December 31, 2017,2019, Bluegreen had a pipeline of over 199,000190,000 vacation packages sold, which typically converthave generally converted to tours at a rate of 54%55%.



Bluegreen Vacations Unlimited (“BVU”), Bluegreen’s wholly-owned subsidiary, has an exclusive marketing agreement with Bass Pro, a nationally-recognized retailer of fishing, marine, hunting, camping and sports gear, that provides Bluegreen with the right to market and sell vacation packages at kiosks

12


in each of Bass Pro’s retail locations. As of December 31, 2017,locations and through other means. Bluegreen sold vacation packages in 68 of Bass Pro’s stores.believes that Bass Pro has a loyal customer base that strongly matches Bluegreen’sits core demographic. Under

On May 24, 2019, Bluegreen received notice from Bass Pro and its affiliates that it was terminating the marketing agreement based on the failure to cure the alleged breaches, and Bluegreen was removed from all Bass Pro retail stores. BVU subsequently filed a counter claim against Bass Pro and Big Cedar LLC. On June 13, 2019, Bluegreen entered into a settlement agreement which resolved the litigation and reinstated and amended the marketing agreement. Pursuant to the terms of the settlement agreement, Bass Pro agreed to

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reinstate BVU’s access to Bass Pro’s marketing channels, including Bass Pro and Cabela’s retail stores. Additionally, with no admission of any wrongdoing, Bluegreen paid Bass Pro $20.0 million and agreed to pay Bass Pro $4.0 million on each January 1 from 2020 through 2024. Bluegreen also agreed that Bass Pro would retain $1.5 million of an amount prepaid to them earlier in 2019 under the marketing agreement. Additionally, the agreement was amended to pay Bass Pro a fixed annual fee of $70,000 for each Bass Pro and Cabela’s retail store that BVU accesses (excluding retail stores which are designated to provide tours to Bluegreen/Big Cedar Vacations, or “Bluegreen/Big Cedar Feeder Stores”) plus $32 per net vacation package sold (less cancellations and refunds within 45 days of sale) in lieu of Bluegreen’s previous commission based fees. Bluegreen also agreed to contribute to the Wonders of Wildlife Foundation $5.00 per net package sold (less cancellations and refunds within 45 days of sale), subject to an annual minimum of $700,000. The fixed annual fee was prorated for 2019. Subject to the terms and conditions of the agreement, Bluegreen also haswill generally be required to pay the rightfixed annual fee with respect to market VOIs inat least 59 Bass Pro catalogsretail stores and a minimum number of Cabela’s retail stores that increases over time to a total of at least 60 Cabela’s retail stores by the end of 2021. However, the minimum number of Bass Pro and Cabela’s retail stores on its website,which Bluegreen pays the fixed annual fee may be reduced under certain circumstances, including as a result of a reduction of traffic in the stores in excess of 25% year-over-year. The parties also executed mutual waivers and releases and agreed to accessthe dismissal of the litigation. 

As of December 31, 2019, Bluegreen sold vacation packages in 68 of Bass Pro’s customer database. In exchange, Bluegreen compensates Bass Pro based on VOI sales generated through the program. No compensation is paid to Bass Pro under the agreement on sales made at Bluegreen/Big Cedar Vacations’ resorts.stores and 15 Cabela’s retail stores. During the years ended December 31, 2017, 20162019, 2018, and 2015,2017, VOI sales to prospects and leads generated by the agreement with Bass Pro accounted for approximately 15%13%, 16%14%, and 20%15%, respectively, of Bluegreen’s VOI sales volume. Bluegreen’s marketing alliance with Bass Pro originated in 2000, has been renewed twice and currently runs through 2025.



Bluegreen also has an exclusive strategic relationship with Choice Hotels that coversinvolves several areas of its business, including a sales and marketing alliance that enables it to leverage Choice Hotels’ brands, customer relationships, and marketing channels to sell vacation packages. Vacation packages are sold through customer reservation calls transferred to Bluegreen from Choice and through outbound telemarketing methods utilizing Choice’s customer database. In addition, 3638 of Bluegreen’s resorts are part of Choice’s Ascend Hotel Collection, which provides Bluegreen with the opportunity to market to Choice Hotel guests staying at its resorts. Bluegreen’s strategic relationship with Choice Hotels originatedbegan in 2013 and was extended in August 2017 for a term of 15 years,year term, with an additional 15-year renewal term thereafter unless either party elects not to renew the arrangement.



In addition, Bluegreen generates leads and sells vacation packages through its relationships with various other retail operators and entertainment providers. As of December 31, 2017,2019, Bluegreen had kiosks in 1916 outlet malls, which have been strategically selected based on their proximity to major vacation destinations and strong foot traffic of consumers matching itsBluegreen’s core target demographic. Bluegreen generates vacation package sales from these kiosks. Bluegreen also generates leads at other malls and outlets and high-density locations or events where contact information for sales prospects is obtained through raffles, giveaways, and other attractions. Bluegreen then seeks to sell vacation packages to suchthose prospects, including through telemarketing efforts by Bluegreen or third-party vendors. As of December 31, 2017,2019, Bluegreen had lead generation operations in over 500452 locations.



Bluegreen believes that itsthis diverse strategic marketing alliances (including those with Bass Pro, Choice Hotels, and other retail operators and entertainment providers) deliverprovides a potential strategic advantage over certain of its competitors that rely primarily on relationships with their affiliated hotel brands to drive lead generation and new owner growth. Bluegreen has experience in identifyingBluegreen’s goal is to identify marketing partners with brands that attract Bluegreen’s targeted owner demographic and buildingto build successful marketing relationships with those partners. In addition to the programs described above, Bluegreen may also attemptsengage in other local and national marketing programs from time to structure these marketing alliancestime with respect to compensate its partners with success-based payments, rather than flat fees for the use of their brand or facilities for lead generation.attracting new customers. Bluegreen believes that the variety in its marketing relationships has historically facilitated a healthy mix of new owner sales vs. existing owner sales that compare favorably to its competitors. During the year ended December 31, 2017, 51%2019, approximately 45% of Bluegreen’s VOI sales were to new owners.



In addition to attractingsales to new customers, Bluegreen also seeks to sell additional VOI points to its existing Vacation Club owners. These sales generally have lower marketing costs and result in higher operating margins than sales generated through other marketing channels. During the years ended December 31, 2017, 20162019, 2018, and 2015,2017, sales to existing Vacation Club owners accounted for 49%55%, 46%52%, and 48%49%, respectively, of Bluegreen’s system-wide sales of VOIs, net. Bluegreen targets a balanced mix of new customer and existing Vacation Club owner sales to drive sustainable long-term growth. The number of owners in Bluegreen’s Vacation Club has increased at a 5% compound annual growth rate between 2012 and 2017,2019, from approximately 170,000 owners as of December 31, 2012 to approximately 213,000220,000 owners as of December 31, 2017.2019.



Bluegreen operates 2326 sales offices, typically located adjacent to its resorts and staffed with sales representatives and sales managers. As of December 31, 2017,2019, Bluegreen had over 3,0003,200 employees dedicated to VOI sales and marketing. Bluegreen utilizes a uniform sales process and offers ongoing training for its sales personnel and maintainswith the goal of maintaining strict quality control policies. During the year ended December 31, 2017, 91%2019, 94% of Bluegreen’s sales were generated from 1620 of its sales offices, which focus on both new customer and existing Vacation Club owner sales. Bluegreen’s remaining 76 sales offices are primarily focused on sales to existing Vacation Club owners staying at the respective resort. In addition, Bluegreen also utilizes its telesales operations to sell additional VOIs to Vacation Club owners.



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Flexible Business Model



Bluegreen’s business model is designed to give it potential flexibility to capitalize on opportunities and adapt to changing market environments. Bluegreen has the ability to adjust its targeted mix of capital-light vs. developed VOI sales, sales to new customers vs. existing Vacation Club owners, and cash vs. financed sales. While Bluegreen may pursue opportunities that impact its short-term results, Bluegreen’s long-term goal is to achieve sustained growth while maximizing earnings and cash flow.



13


Picture 9



Note: Cash sales represent the portion of Bluegreen’s system-wide sales of VOIs, net that is received from the customer in cash within 30 days of purchase.



VOI Sales Mix



Bluegreen’s VOI sales include:



·

Fee-based sales of VOIs owned by third-party developers pursuant to which Bluegreen is paid a commission;

·

JIT sales of VOIs that Bluegreen acquires from third-party developers in close proximity to when Bluegreen intends to sell such VOIs;

·

Secondary market sales of VOIs that Bluegreen acquires from HOAs or other owners; and

·

Developed VOI sales, or sales of VOIs in resorts that Bluegreen develops or acquires (excluding inventory acquired pursuant to JIT and secondary market arrangements).



13


As of December 31, 2019, sales of VOIs were comprised of the following:

Picture 11



Fee-Based Sales



Bluegreen offers sales and marketing services to third-party developers for a commission. Under these fee-based sales arrangements, which are typically entered into on a non-committed basis, Bluegreen sells the third-party developers’ VOIs as Vacation Club interests through its sales and marketing platform. Bluegreen also provides third-party developers with administrative services, periodic reporting, and analytics through its proprietary software platform. Bluegreen seeks to structure the fee for these services to cover selling and marketing costs, plus an operating profit. Historically, Bluegreen has targeted a commission rate of 65% to 75% of the VOI sales price. Fee-Based Sales comprised 50% of system-wide sales of VOIs during the year ended December 31, 2019. Notes receivable originated in connection with fee-based sales are held by the third-party developer and, in certain cases, are serviced by Bluegreen for an additional fee. In connection with fee-based sales, Bluegreen is not at risk for development financing and has no capital requirements, thereby increasing its return on invested capital. Bluegreen also typically obtainsholds the HOA management contract associated with these resorts.

14




Just-In-Time (JIT) VOI Sales



Bluegreen enters into JIT inventory acquisition agreements with third-party developers that allow Bluegreen to buy VOI inventory in close proximity to when Bluegreen intends to sell such VOIs. While Bluegreen typically enters into such arrangements on a non-committed basis, Bluegreen may engage in committed arrangements under certain circumstances. Similar to fee-based sales, JIT sales do not expose Bluegreen to risks for development financing. However, unlike fee-based sales, Bluegreen holds the consumer finance receivables originated in connection with JIT sales. While JIT sales accounted for only 4%1% of system-wide sales of VOIs net for the year ended December 31, 2017,2019, JIT arrangements are often entered into in connection with fee-based sales arrangements. Bluegreen also typically holds the HOA management contract associated with these resorts.



Secondary Market VOI Sales



Bluegreen acquires VOI inventory from HOAs and other owners generally on a non-committed basis. These VOIs are typically obtained by the applicable HOA through foreclosure or termination in connection with HOA maintenance fee defaults. Accordingly, Bluegreen generally purchases VOIs from secondary market sources at a greater discount to retail price compared to developed VOI sales and JIT sales. During the year ended December 31, 2017,2019, secondary market sales accounted for 16%20% of Bluegreen’s system-wide sales of VOIs, net.VOIs.



Developed VOI Sales



Developed VOI sales are sales of VOIs in resorts that Bluegreen has developed or acquired (excluding inventory acquired pursuant to JIT and secondary market arrangements). During the year ended December 31, 2017,2019, developed VOI sales accounted for 26%29% of Bluegreen’s system-wide sales of VOIs, net.VOIs. Bluegreen holds the notes receivable originated in connection with developed VOI sales.

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Bluegreen also typically obtainshold the HOA management contract associated with these resorts.



Future VOI Sales



CompletedThe retail value of Bluegreen’s completed VOI inventory increases or decreases from period to period due to the acquisition of inventory through JIT and secondary market arrangements, development of new VOI units, reacquisition of VOIs through notes receivable defaults, and changes to sales prices and completed sales. As of December 31, 20172019 and 2016,2018, Bluegreen owned completed VOI inventory (excluding units not currently being marketed as VOIs, includingsuch as model units) and had access to additional completed VOI inventory through fee-based and JIT arrangements having a retail sales value as follows (dollars are in thousands and represent the then-estimated retail sales value):





 

 

 

 

 

 



 

As of December 31,

Inventory Source

 

2017

 

2016

Owned completed VOI inventory

 

$

754,961 

 

$

548,076 

Inventory accessible through fee-based

 

 

 

 

 

 

and JIT arrangements

 

 

401,906 

 

 

503,820 

Total

 

$

1,156,867 

 

$

1,051,896 





 

 

 

 

 

 



 

As of December 31,

Inventory Source

 

2019

 

2018

Owned completed VOI inventory

 

$

1,115,822 

 

$

969,167 

Inventory accessible through fee-based

 

 

 

 

 

 

and JIT arrangements

 

 

312,816 

 

 

487,391 

Total

 

$

1,428,638 

 

$

1,456,558 



Based on current estimates and expectations, Bluegreen believes this inventory, combined with inventory being developed by Bluegreen or its third-party developer clients and inventory that Bluegreen may reacquire in connection with mortgage and maintenance fee defaults, can support Bluegreen’s VOI sales at its current levels for over threefour years. Bluegreen maintains relationships with numerous third-party developers and expectexpects additional fee-based and JIT relationships to continue to provide high-quality VOI inventory to support its sales efforts. In addition, Bluegreen is focused on strategically expanding its inventory through development at five of its resorts over the next several years. Bluegreen intends to continue to strategically evaluate opportunities to develop or acquire VOI inventory in key strategic markets where Bluegreen identifies growing demand and has already established marketing and sales networks.



During the years ended December 31, 20172019 and 2016,2018, the estimated retail sales value and cash purchase price of the VOIs Bluegreen acquired through secondary market arrangements were as follows (dollars in thousands):



 

 

 

 

 

 

 

 

Years Ended December 31,

 

Years Ended December 31,

 

2017

 

2016

 

2019

 

2018

Estimated retail sales value

$

243,084 

$

169,848 

 

$

228,632 

 

$

164,390 

Cash purchase price

$

12,721 

$

7,555 

 

$

15,962 

 

$

11,994 



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In addition to inventory acquired through secondary market arrangements and in connection with notes receivable defaults, Bluegreen expects to acquire inventory through six JIT arrangements during 2018, four of which provide for committed purchases for 2018, and development activities. Development activities currently consist primarily of additional VOI units being developed at The Cliffs at Long Creek and The Bluegreen Wilderness Club at Big Cedar in Ridgedale, Missouri, and at the Fountains in Orlando, Florida.Missouri.



Management and Other Fee-Based Services



Bluegreen earns recurring management fees for providing services to HOAs. These management services include oversight of housekeeping services, maintenance, and certain accounting and administrative functions. Bluegreen believes its management contracts yield highly predictable cash flows that do not have the traditional risks associated with hotel management contracts that are linked to daily rate or occupancy. Bluegreen’s management contracts are typically structured as “cost-plus” management fees, which means Bluegreen generally earns fees equal to 10% to 12% of the costs to operate the applicable resort andresort. These agreements generally have an initial term of three years with automatic one-yearone year renewals. As of December 31, 2017,2019, Bluegreen provided management services to 4849 resorts. Bluegreen also earns recurring management fees for providing services to the Vacation Club. These services include managing the reservation system and providing owner billing and collection services. Bluegreen’s management contract with the Vacation Club currently provides for reimbursement of its costs plus a fee equal to $10 per VOI owner. Bluegreen may seek to expand its management services business, including to provide hospitality management services to hotels for third parties.



In addition to HOA and club management services, which provide a recurring stream of revenue, Bluegreen also provides other fee-based services that produce revenues without the significant capital investment generally associated with the development and acquisition of resorts. These services include but are not limited to, title and escrow services for fees in connection with the closing of VOI sales, servicing notes receivable held by third parties typically(typically for a fee equal to 1.5% to 2.5% of the principal balance of the serviced portfolio,portfolio), and construction management services for third-party developers typically(typically for fees equal to 3%4% of the cost of construction of the project.project). Bluegreen also receives revenues from retail and food and beverage outletsoperations at certain resorts.



15


Customer Financing



Bluegreen generally offers qualified purchasers financing for up to 90% of the purchase price of VOIs. The typical financing provides for a term of ten years and a fixed interest rate that is determined by the FICO score of the borrower and the amount of the down payment and existing ownership.ownership, is fully amortizing in equal installments, and may be prepaid without penalty. Purchasers may receive an additional 1% discount inon the interest rate by participating in Bluegreen’s pre-authorized payment plan. As of December 31, 2017,2019, approximately 95% of Bluegreen’s serviced VOI notes receivable participated in Bluegreen’s pre-authorized payment plan. During the year ended December 31, 2017,2019, the weighted-average interest rate on Bluegreen’s VOI notes receivable was 15.3%14.9%. Bluegreen’s typical VOI note receivable has a term of ten years, has a fixed interest rate, is fully amortizing in equal installments, and may be prepaid without penalty.



VOI purchasers are generally required to make a down payment of at least 10% of the sales price. As part of Bluegreen’s continued efforts to manage operating cash flows, Bluegreen incentivizecurrently incentivizes its sales associates to encourage cash sales and higher down payments on financed sales, with a target of 40-45% of the VOI sales price collected in cash. Bluegreen also promotes a point-of-sale credit card program sponsored by a third-party financial institution. As a result of these efforts, Bluegreen has increased both the percentage of sales that are fully paid in cash and the average down payment on financed sales.sales as compared to historical levels. Including down payments received on financed sales, approximately 39%42% of Bluegreen’s system-wide sales of VOIs net during the year ended December 31, 20172019 were paid in cash within approximately 30 days from the contract date.



See “Sales/Financing of Receivables” below for additional information regarding Bluegreen’s receivable financing activities.



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Loan Underwriting



Bluegreen generally does not originate financing to customers with FICO scores below 575. However, Bluegreen may provide financing to customers with no FICO score if the customer makes a minimum required down payment of 20%. For loans made during 2017,2019, the borrowers’ weighted-average FICO score after a 30-day, “same as cash” period from the point of sale was 724.731. Further information is set forth in the following table:





 

 

FICO Score

 

Percentage of originated and
serviced VOI receivables (1)

<600

 

2.0%

600 - 699

 

33.0%28.0%

700+

 

65.0%69.0%



(1)

Excludes loans for which the obligor did not have a FICO score. For 2017,2019, approximately 1% of Bluegreen’s VOI notes receivable related to financing provided to borrowers with no FICO score.



Collection Policies



Financed VOI sales originated by Bluegreen typically utilize a note and mortgage. Collection efforts related to these VOI loans are managed by Bluegreen. Bluegreen’s collectorsCollectors are incentivized through a performance-based compensation program.



Bluegreen generally makespursues collection efforts with respect to Vacation Club owners with outstanding loans secured by their VOI by mail, telephone, and in certain cases, email (as early as 1510 days past due). Telephone contact generally commences when an account is as few as approximately ten days past due. At 30 days past due, Bluegreen mails a collection letter to the owner, if a U.S. resident, advising that if the loan is not brought current, the delinquency will be reported to a credit reporting agency. At 60 days past due, Bluegreen mails a letter to the owner advising that he or she may be prohibited from making future reservations for lodging at a resort. At 90 days past due, Bluegreen stops the accrual of, and reversereverses previously accrued but unpaid, interest on the note receivable and typically mails a notice informing the owner that unless the delinquency is cured within 30 days, Bluegreen willmay terminate the underlying VOI ownership. If an owner fails to bring the account current within the given timeframe, the loan is typically defaulted, and the owner’s VOI is terminated. In that case, Bluegreen mails a final letter, typically at approximately 120127 days past due, notifying the owner of the loan default and the termination of his or her beneficial interest in the VOI property. Thereafter, Bluegreen seeksmay seek to resell the VOI to a new purchaser. In certain cases, at Bluegreen’s discretion, Bluegreen may not default the loan and terminate the underlying VOI, in which case the loan would remain delinquent.



Allowance for CreditLoan Losses



Under vacation ownership accounting rules, Bluegreen estimates uncollectible VOI notes receivable based on historical amounts for similar VOI notes receivable and dodoes not consider the value of the underlying collateral. Bluegreen holds large pools of homogeneous VOI notes receivable and assessassesses uncollectibility based on pools of receivables. In estimating future loan losses, Bluegreen’s management does not use a single primary indicator of credit losses, Bluegreenquality but instead evaluates its VOI notes receivable based upon a combination of factors, including a static pool analysis that incorporates the aging of the respective receivables, current default trends, and prepayment rates by origination year, andas well as the borrowers’ FICO scores.scores of borrowers.



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Substantially all defaulted VOI notes receivable result in the holder of such receivable acquiring the related VOI that secured such receivable, typically soon after default and at little or no cost. The reacquired VOI is then available for resale in the normal course of business.



See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information about the performance of Bluegreen’s notes receivable portfolio.



Sales/Financing of Receivables



Bluegreen’s ability to sell or borrow against its VOI notes receivable has historically been an important factor in meeting its liquidity requirements. The vacation ownership business generally involves sales where a buyer is only required to pay 10% of the purchase price up front, while at the same time selling and marketing expenses related to such sales are primarily cash expenses that exceed the down payment amount. For the year ended December 31, 2017,2019, Bluegreen’s sales and marketing expenses totaled approximately 52%51% of system-wide sales of VOIs, net.VOIs. Accordingly, having facilities for the sale or hypothecation of VOI notes receivable along with periodic term securitization transactions hashave been a critical factor in meeting Bluegreen’s short and long-term cash needs. There are no assurances that sales, hypothecation or securitization of VOIs will be available to Bluegreen in the future at acceptable terms or at all. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information about Bluegreen’s VOI notes receivable purchase facilities and term securitizations.

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Receivables Servicing



Receivables servicing includes collecting payments from borrowers and remitting the funds to the owners, lenders, or investors in such receivables, accounting for principal and interest on such receivables, making advances when required, contacting delinquent borrowers, terminating a Vacation Club ownership in the event that defaults are not timely remedied, and performing other administrative duties.



Bluegreen receives fees for servicing its securitized notes receivable and thesereceivable. These fees are included as a component of interest income. Additionally, Bluegreen earns servicing fee income from third-party developers in connection with its servicing of their loan portfolios under certain fee-based services arrangements, which is netted against the cost of Bluegreen’s mortgage servicing operations.



Bluegreen’s Core Operating and Growth Strategies



Grow VOI sales



Bluegreen’s goal is to utilize its sales and marketing platform to continue its strong history ofachieve VOI sales growth through the expansion of existing alliances, continued development of new marketing programs, and additional VOI sales to its existing Vacation Club owners. Bluegreen believes there are a number of opportunities within its existing marketing alliances to drive future growth, including the potential expansion of its marketing efforts with Bass Pro to include programs focused on Bass Pro’s e-commerce platform.Pro. In addition, through Bluegreen’s agreement with Choice Hotels, Bluegreen plans to enhance its marketing program through further penetration of Choice Hotels’ digital and call-transfer programs. In addition to existing programs, Bluegreen planshopes to utilize its sales and marketing expertise to continue to identify unique marketing relationships with nationally-recognized brands that resonate with its core demographic. In addition, Bluegreen will also continue to actively seeksseek to sell additional VOI points to its existing Vacation Club owners, which typically involve significantly lower marketing costs and have higher conversion rates compared to sales to new customers. Bluegreen is also committedBluegreen’s goal continues to continually expandingbe to expand and updatingupdate its sales offices to more effectively convert tours generated fromby its marketing programs into sales. In addition,To this end, Bluegreen seeks to identifyis focused on identifying high traffic resorts where it believes increased investment in sales office infrastructure will yield strong sales results.



Continue to enhance Bluegreen’s Vacation Club experience



Bluegreen believes its Vacation Club offers owners exceptional value. Bluegreen’s Vacation Club offers owners access to its 4345 Club Resorts and 2423 Club Associate Resorts in premier vacation destinations, as well as access to approximately 11,000over 11,350 other hotels and resorts and other vacation experiences, such as cruises, through partnerships and exchange networks. Bluegreen continuously seeks new wayscontinues to seek to add value and flexibility to its Vacation Club membership and enhance the vacation experience of its Vacation Club owners, including through the addition of new destinations, the expansion of its exchange programs, and the addition of new partnerships to offeroffering increased vacation options. Bluegreen also continuously seeks to improve its technology, including websites and applications, to enhance its Vacation Club owners’ experiences. Bluegreen believes thisits focus, combined with its high-quality customer service, will continue to enhance the Vacation Club experience, driving sales to new owners and additional sales to existing Vacation Club owners.



Grow high-margin,higher-margin, cash generating businesses



Bluegreen seeks to continue to grow its ancillary businesses, including resort management, title services, and loan servicing. Bluegreen believes these businesses can grow with little additional investment in infrastructure and potentially produce high-marginhigher-margin revenues.



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Increase sales and operating efficiencies across all customer touch-points



Bluegreen actively seeks to improve its operational execution across all aspects of its business. In Bluegreen’s sales and marketing platform, Bluegreenit utilizes a variety of screening methods and data-driven analyses intended to identify and attract high-quality prospects to its sales offices in an effort to increase Volume Per Guest (“VPG”), an important measure of sales efficiency. Bluegreen also continues to test new and innovative methods to generate sales prospects with a focus on increasing cost efficiency. In connection with its management services and consumer financing activities, Bluegreen will continue to seek to leverage its size, infrastructure, and expertise to increase operating efficiency and profitability. In addition, as Bluegreenit expands, Bluegreen expectexpects to gain further operational efficiencies by streamlining its support operations, such as call centers, customer service, administration, and information technology.



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Maintain operational flexibility while growing the business



Bluegreen believes it has built a flexible business model that allows it to capitalize on opportunities and quickly adapt to changing market environments. Bluegreen intends to continue to pursue growth through a balancedwhat it believes to be an appropriate mix of capital-light sales vs. developed VOI sales, sales to new customers vs. sales to existing Vacation Club owners, and cash sales vs. financed sales.sales, all based on market factors, its financial condition and operating needs, and other factors that Bluegreen’s management may deem relevant. While Bluegreen may from time to time pursue opportunities that impact its short-term results, Bluegreen’s long-term goal is to achieve sustained growth while maximizing earnings and cash flow.growth.



Pursue strategic transactions



As part of aits growth strategy, Bluegreen may seek acquisitions of other VOI companies, resort assets, sales and marketing platforms, management companies and contracts, and other assets, properties and businesses, including where Bluegreen believes significant synergies and cost savings may be available. Bluegreen may choose to pursue these acquisitions directly or in partnership with third-party developers or others, including pursuant to arrangements wherein which third-party developers purchase the resort assets and Bluegreen sellsells the VOIs in the acquired resort on a commission basis. Bluegreen has a long history of successfully identifying, acquiring, and integrating complementary businesses and believes its flexible sales and marketing platform enables Bluegreenit to complete these transactions in a variety of economic conditions.



Industry Overview



The vacation ownership, or timeshare, industry is one of the fastesta fast growing segmentssegment of the global travel and tourism sector. By purchasing a VOI, the purchaser typically acquires either (i) a fee simple interest in a property (or collection of properties) providing annual usage rights at the owner’s home resort (where the owner’s VOI is deeded), or (ii) an annual or biennial allotment of points that can be redeemed for stays at properties included in the vacation ownership company’s resort network or for other vacation options available through exchange programs. Compared to hotel rooms, vacation ownership units typically offer more spacious floor plans and residential features, such as living rooms, fully equipped kitchens, laundry appliances, and dining areas. Compared to owning a vacation home in its entirety, the key advantages of vacation ownership products typically include a lower up-front acquisition cost and annual expenses, resort-style features and services, and, often, an established infrastructure to exchange usage rights for stays across multiple locations.



The vacation ownership industry was historically highly fragmented, with a large number of local and regional resort developers and operators having small resort portfolios of varying quality. Bluegreen believes that growth in the vacation ownership industry has been driven by increased interest from resort developers and globally-recognized lodging and entertainment brands, increased interest from consumers seeking flexible vacation options, continued product evolution, and geographic expansion. In 2016, more than 9.2Approximately 9.6 million families (approximately 6.9%7.1% of U.S. households) ownedown at least one VOI and VOI sales have grown 800% over the last 30 years.VOI.



While the majority ofThe average VOI owners are over the age of 45, new owners are, on average, approximately 5owner is 40 years younger.old, married, and 79% have either graduated from college or have attended some college. VOI owners have an average annual household income of $81,000 and 84% of VOI owners own their own home.over $86,000.



BBX Capital Real Estate

Business Overview



BBX Capital Real Estate

Overview

BBX Capital Real Estate’s primary activities include is engaged in the acquisition, development, construction, ownership, financing, and management of real estate and investments in real estate joint ventures. BBX Capital Real Estate alsoventures, including investments in multifamily apartment and townhome communities, single-family master-planned communities, and commercial properties located primarily in Florida. In addition, it owns a 50% equity interest in the Altman Companies, a developer and manager of multifamily apartment communities, and manages the legacy assets acquired by BCC in connection with the Company’s sale of BankAtlantic Sale. The legacy assets includein 2012, including portfolios of loans receivable and real estate properties, and loans previously charged-off by BankAtlantic.properties.



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Strategy



BBX Capital Real Estate’s strategy is focused on:



·

Identifying and acquiring or developing real estate, including rentalmultifamily apartment and townhome communities, housingsingle-family master-planned communities, and commercial properties; and

·

Identifying and investing in opportunistic real estate joint ventures with third party developers;developers.

Although BBXRE has historically focused on the monetization of the legacy asset portfolio through the collection or sale of loans receivable and the development or sale of foreclosed real estate properties, it largely completed the monetization of the portfolio following the sale of several significant real estate properties during 2019. As a result, BBXRE is currently focused on leveraging the Altman Companies, as well as BBXRE’s relationships with third party developers, to source investments in new development opportunities with the goal of building a diversified portfolio of real estate investments that generate profits. In addition to the development and sale of multifamily apartment communities, these investment opportunities may also include the development of multifamily apartment communities that will be owned over a long-term hold period and the acquisition of existing multifamily apartment communities which can be renovated and re-leased pursuant to a “value add” strategy, as well as the pursuit of investment opportunities in additional geographic locations. Furthermore, while BBXRE’s investments in multifamily apartment communities sponsored by the Altman Companies primarily involve investing in the managing member in the joint ventures that are formed to invest in such projects, BBXRE may also consider opportunistically making increased debt or equity investments in one or more of such projects in lieu of seeking such funding from unaffiliated third parties.

Investment Portfolio

BBXRE has invested in a diverse portfolio of real estate developments, including multifamily apartment communities, single-family master-planned communities, retail and mixed-used properties, operating properties, and other legacy assets. The following is a description of BBXRE’s current principal investments and certain material investments that were recently monetized during the year ended December 31, 2019.

Multifamily Apartment Developments – The Altman Companies

The Altman Companies

In November 2018, BBX Capital Real Estate acquired a 50% equity interest in the Altman Companies, a joint venture between BBXRE and Joel Altman (“JA”) engaged in the development, construction, and management of multifamily apartment communities, for cash consideration of $14.6 million, including $2.3 million in transaction costs. 

The Altman Companies is a fully integrated platform engaged in all aspects of the development process through its ownership of various operating companies that were previously owned and operated by JA. These companies and their predecessors have operated since 1968 and have developed and managed more than 25,000 multifamily units throughout the United States, including communities in Florida, Michigan, Illinois, Tennessee, Georgia, Texas, and North Carolina. The Altman Companies currently operates through the following companies: 

·

Altman Development Company (“ADC”) – The Altman Companies owns 100% of ADC, which performs site selection and other predevelopment activities (including project underwriting and design), identifies development financing (which is typically comprised of a combination of internal and external equity and institutional debt), provides oversight of the construction process, and arranges for the ultimate sale of the projects upon stabilization. ADC enters into a development agreement with each joint venture that is formed to invest in development projects originated by the platform and earns a development fee for its services.

·

ContinuingAltman Management Company (“AMC”) – The Altman Companies owns 100% of AMC, which performs leasing and property management services for the multifamily apartment communities developed by the Altman Companies prior to monetize the remaining legacy asset portfolio through loan repayments, collections, sales, development, orultimate sale of such projects. In certain cases, AMC also provides such services to apartment communities owned by third parties and certain affiliated entities. AMC enters into a leasing and property management agreement with each joint venture projects.that is formed to invest in projects originated by the platform and earns a management fee for its services.

·

Altman-Glenewenkel Construction (“AGC”) – The Altman Companies owns 60% of AGC, which performs general contractor services for the multifamily apartment communities developed by the Altman Companies. AGC enters into a general contractor agreement with each joint venture that is formed to invest in projects originated by the platform and earns a general contractor fee for its services.



In addition to the fees earned by these companies, BBXRE and JA invest in the managing member of the joint ventures that are formed to invest in projects originated by the platform based on their relative ownership percentages in the Altman Companies. Such equity interests are typically entitled to a promoted equity interest in the projects to the extent that the external equity investors in such ventures receive agreed-upon returns on their investments.

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Project Portfolio

The Altman Companies has historically incurred operating costs in excess of the fees earned from the projects, and as a result, earnings generated by the platform generally arise as a result of the ability to invest as the managing member and receive promoted equity interests in the projects.



BBX Capital Real Estate’s portfolio currently includes investmentsPursuant to the operating agreement of the Altman Companies, BBXRE will acquire an additional 40% equity interest in the following real estateAltman Companies from JA for a purchase price of $9.4 million in January 2023, and JA can also, at his option or in other predefined circumstances, require the Company to purchase his remaining 10% equity interest in the Altman Companies for $2.4 million. However, JA will retain his membership interests, including his decision making rights, in the managing member of any development projects and operating properties either through joint ventures or wholly-owned developments.  A more detailed descriptionthat are originated prior to the Company’s acquisition of each investment follows this table:



 

 

 

 

 

 

 

Asset Name

Project Size

Status

Start Date

Expected Exit/Sales Date(3)

Carrying Amount of Investment(2) (in millions)

Remaining Investment(3) (in millions)

Estimated Future Proceeds(3) (in millions)

Multifamily Apartment Developments

 

 

 

 

 

Altis at Kendall Square (1)

Retail Parcel

Pending sale of retail parcel (Completed – 321 Apartments sold in 2016)

2013

2018

$0.1 

 -

$1.4 - $1.6

Addison on Millenia (1)

292 Apartments

Completed – Pending rent stabilization

2015

2018

$5.5 

 -

$10.7 - $11.9

Altis at Lakeline (1)

354 Apartments

Completed – Pending rent stabilization

2014

2018

$4.2 

 -

$6.7 - $7.4

Altis at Bonterra (1)

314 Apartments

Completed – Pending rent stabilization

2015

2019

$16.9 

 -

$33.7 - $37.3

Altis at Shingle (1)

356 Apartments

Under Development

2016

2019

$0.4 

 -

$1.2 - $1.4

Altis at Grand Central (1)

314 Apartments

Under Development

2017

2021

$1.9 

 -

$2.8 - $3.1

Altis at Promenade (1)

338 Apartments

Under Development

2017

2021

$1.0 

 -

$1.9 - $2.1

Single Family Developments

 

 

 

 

 

Bonterra  CC Homes (1)

394 Homes

Completed

2014

2018

$0.5 

 -

$0.5 - $0.6

Village at Victoria Park (1)

30 Homes

Under Development – 11 units under contract

2013

2018

$1.6 

 -

$3.1 - $3.4

Centra Falls (1)

89 Townhomes

Under Development – 6 units under contract

2015

2018

$0.2 

 -

$0.2 - $0.3

Centra Falls West (1)

61 Townhomes

Under Development – 48 units under contract

2016

2018 - 2019

$0.6 

 -

$0.7 -   $0.8

Chapel Grove Townhomes (1)

125 Townhomes

Under Development

2017

2018 - 2019

$4.9 

 -

$6.2 - $6.5

Beacon Lake (1)(5)

1,476 Lots

Under Development

2016

2018 - 2025

$26.8 

TBD

TBD

Miramar  CC Homes (1)

193 Homes

Predevelopment

2015

TBD

$1.2 

TBD

TBD

Retail Developments

 

 

 

 

 

Gardens on Millenia Retail JV (1)

142,000 SF

Completed – Anchor space sold in 2017 / Pending sale of additional retail space

2015

2018

$5.2 

 -

$5.2 - $5.5

Gardens on Millenia Land

2 Outparcels

Completed – Pending sale of final outparcel

2013

TBD

$1.2 

 -

$2.4 - $2.6

Mixed Use Developments

 

 

 

 

 

PGA Pod B (1)

145,000 SF

Completed – two office buildings available for sale - one office building under contract

2013

2018

$1.9 

 -

$5.6 - $6.2

PGA Pods A&C

18 Acres

Under Development – Pending sale of developed land

2014

2020

$5.7 

$1.8 - $2.2

$7.1 - $7.9

Bayview Site (1)

3 Acres

Predevelopment

2014

TBD

$1.5 

      TBD

TBD

Operating Properties

 

 

 

 

 

Villa San Michele

272 Beds (82 Units)

Sold January 2018

2014

2018

$6.2 

 -

9.3

RoboVault (4)

90,000 SF Storage Facility

Completed – Pending rent stabilization

2013

2021

$7.0 

 -

$13.4 - $14.8

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(1)

These assets represent investments in real estate ventures that are not consolidated into our financial statements.  See Note 10 – Investments in Unconsolidated Real Estate Joint Ventures under Item 8 included in this report for additional information regarding these investments.

(2)

For our consolidated investments, the carrying amount of our investment represents the carrying amount of the real asset associated with the applicable project and for our other investments, which are unconsolidated real estate joint ventures, the carrying amount of our investment represents our investment in the applicable joint venture recognized under the equity method of accounting.

(3)

The above information under the headings “Expected Sales Date,” “Remaining Investment,” and “Estimated Future Proceeds” is forward looking and inherently uncertain. The information is based on our current assumptions and expectations which are largely based on factors not within our control. These factors include, but are not limited to, economic conditions generally and conditions that affect the project in particular, the performance of our joint venture partners in managing the projects, potential overruns in development and operating costs, tenant demand for retail, storage and multifamily rental units, buyer demand for single family housing, and the values of the underlying real estate upon sale or exit.  Accordingly, there is no assurance that we will achieve results consistent with this forward looking information, and our actual results could differ materially from the information provided.  For a discussion of other factors that may impact our actual results, and additional risks and uncertainty related to BBX Capital Real Estate’s projects, see the risks, uncertainties and cautionary factors discussed elsewhere in this Annual Report on Form 10-K.

(4)

RoboVault generated revenue of $1.2 million during the year ended December 31, 2017.

(5)

A portion of the carrying amount of the Beacon Lake investment was funded by Community Development Bonds.  A pro rata portion of the Community Development Bond obligations attaches to each parcel in the development and BBX Capital will be responsible for making payments from time to time subject to future sale of the parcels.

Multifamily Apartment Developments

Altis at Kendall Square, LLC (“Altis at Kendall Square”)additional equity interests in the Altman Companies. In addition, in certain circumstances, BBXRE may acquire the 40% membership interests in AGC that are not owned by the Altman Companies for a purchase price based on prescribed formulas in the operating agreement of AGC.



In March 2013,connection with its investment in the Company invested $1.3 million as one of a number of investors in a joint venture with The Altman Companies, (“Altman”) to develop Altis at Kendall Square, a 321 unitBBXRE acquired interests in the managing member of seven multifamily apartment development compriseddevelopments, including four developments in which BBXRE had previously invested as a non-managing member, for aggregate cash consideration of twelve three-story apartment buildings, a retail parcel, and a clubhouse located in Kendall, Florida. During the year ended December 31, 2016, the joint venture sold the apartment buildings and clubhouse, and the Company recognized $3.1 million of equity earnings and received $3.7 million of distributions from the joint venture. The Company anticipates that the retail land will be sold in 2018.

The Addison on Millenia Investment, LLC (“The Addison on Millenia”)$8.8 million.



In December 2015, the Company invested as one of a number of investors in a joint venture with ContraVest to develop The Addison on Millenia, a 292 unit multifamily apartment development comprised of nine apartment buildings located in Orlando, Florida. At the inception of the venture, the Company transferred land with an agreed upon value of $5.8 million and cash of $0.3 million to the joint venture in return for its membership interest. The Company is entitled to receive 48% of the joint venture distributions until it receives its aggregate capital contributions plus a specified return on its capital. After all investors receive a specified return and the return of their contributed capital, any distributions thereafter are shared based on earnings, with the managing member receiving an increasing percentage of distributions. Construction commenced in the first quarter of 2016 and was completed during 2017. The 292 apartment units were 96% leasedaddition, as of December 31, 2017. 2019, BBXRE and JA have each contributed $3.75 million to ABBX Guaranty, LLC, a joint venture established to provide guarantees on the indebtedness and construction cost overruns of new real estate joint ventures formed by the Altman Companies.

The following provides a description of BBXRE’s various investments in multifamily apartment communities, many of which are investments in joint ventures with JA that were originated prior to BBXRE’S investment in the Altman Companies.



Altis at Lakeline – Austin Investor, LLC (“Altis at Lakeline”)



In December 2014, the CompanyBBXRE invested $5.0 million as one of a number of investors in a joint venture with AltmanJA to develop Altis at Lakeline, a 354 unit multifamily apartment development comprised of nineteen two- and three-story apartment buildings, 38 enclosed garages, and a private resort-style 5,500 square foot clubhouse locatedcommunity in Cedar Park, Texas. The Company is entitled to receive 34%In November 2018, BBXRE also acquired approximately 50% of JA’s membership interest in the joint venture distributions until it receives its aggregate capital contributions plus a specified return on its capital. After all investors receive a specified return and the return of their contributed capital, any distributions thereafter are shared based on earnings, with the managing member receiving an increasing percentage of distributions.for $0.5 million. Construction commenced in the first quarter of 2015 and was completed during 2017. The 354 apartment units were 87% leased as ofDuring the year ended December 31, 2017.2019, the joint venture sold the project, and BBXRE recognized $5.0 million of equity earnings and received $9.3 million of distributions from the venture. 





Altis at Bonterra – Hialeah, LLC (“Altis at Bonterra”)



In December 2015, the CompanyBBXRE invested in a joint venture with AltmanJA to develop Altis at Bonterra, a 314 unit multifamily apartment development locatedcommunity in Hialeah, Florida. At the inception of the venture, the CompanyBBXRE transferred propertyland with an agreed upon value of $9.4 million and cash of $7.5 million to the joint venture in return for its membership interest. The Company is entitled to receive 95%In November 2018, BBXRE also acquired approximately 50% of the joint venture distributions until it receives its aggregate capital contributions plus a specified return on its capital, and any distributions thereafter are shared based on earnings, with the managing member receiving an increased percentage of the distributions. Construction commenced

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JA’s membership interest in the first quarter ofjoint venture for $1.4 million. Construction commenced in 2016 and was completed during 2017. The 314 apartment units were 87% leased as ofDuring the year ended December 31, 2017.2019, the joint venture sold the project, and BBXRE recognized $29.2 million of equity earnings and received approximately $46.0 million of distributions from the venture.  Prior to the sale, BBXRE received approximately $4.3 million of distributions from the venture during the year ended December  31, 2019 related to the operating profits of the joint venture. 



Altis at Shingle Creek Manager, LLC (“Altis at Shingle Creek”)



In April 2016, the CompanyBBXRE invested $332,000$0.3 million as one of a number of investors in a joint venture with AltmanJA to develop Altis at Shingle Creek, a 356 unit multifamily apartment development locatedcommunity in Orlando, Florida.  The Company is entitled to receive 2.5% ofDuring the year ended December 31, 2018, the joint venture sold the project, and BBXRE recognized $3.4 million of equity earnings and received $3.7 million of distributions until it receives its aggregate capital contribution plus a specified return on its capital. After all investors receive a specified return andfrom the return of their contributed capital, any distributions thereafter are shared based on earnings, with the managing member receiving an increasing percentage of distributions.  Construction commenced during the fourth quarter of 2016 and is anticipated to be substantially venture.complete in the third quarter of 2018. The leasing of apartment units began during the third quarter of 2017.



Altis at Grand Central LLC (“Altis at Grand Central”)



In September 2017, the CompanyBBXRE invested $1.9 million as one of a number of investors in a joint venture with AltmanJA to develop Altis at Grand Central, a 314 unit multifamily apartment development locatedcommunity in Tampa, Florida.  The Company is entitled to receive 11%In November 2018, BBXRE also acquired approximately 50% of JA’s membership interest in the joint venture distributions until it receives its aggregate capital contribution plus a specified return on its capital. After all investors receive a specified return and the return of their contributed capital, any distributions thereafter are shared based on earnings, with the managing member receiving an increasing percentage of distributions.for $0.6 million. Construction commenced during the fourth quarter ofin 2017 and is anticipatedexpected to be substantially completed during the second quarter of 2019.2020. 



Atlis

Altis at Promenade LLC (“Altis at Promenade”)



In December 2017, the CompanyBBXRE invested $962,000$1.0 million as one of a number of investors in a joint venture with AltmanJA to develop Altis at Promenade, a 338 unit multifamily apartment development locatedcommunity in Tampa, Florida.  In November 2018, BBXRE also acquired approximately 50% of JA’s membership interest in the joint venture for $1.2 million. Construction commenced in 2018 and was substantially completed during 2019. The Company is entitled338 apartment units were approximately 40% leased as of December 31, 2019.

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Altis at Ludlam 

During 2018, BBXRE invested $0.7 million with JA and another investor in a joint venture to acquire land, obtain entitlements, and fund predevelopment costs for a potential multifamily apartment development in Miami, Florida. During 2019, BBXRE invested an additional $0.4 million in the joint venture to fund predevelopment costs. The joint venture expects to receive 5%entitlements, close on permanent development financing, and commence construction during the first quarter of 2020.

Altis at Preserve (Suncoast)

During 2018, BBXRE invested $1.9 million with JA in a joint venture to acquire land, obtain entitlements, and fund predevelopment costs for the development of Altis at Preserve (Suncoast), a 350 unit multifamily apartment community in Tampa, Florida.  In 2019, the joint venture closed on its development financing and commenced construction, which is expected to be substantially completed in 2020. In connection with the closing, BBXRE and JA retained membership interests in the managing member of the joint venture and received distributions of a portion of their previous capital contributions based on the final development financing structure.

Altis at Pembroke Gardens

In November 2018, BBXRE acquired approximately 50% of JA’s membership interest in a joint venture invested in Altis at Pembroke Gardens for $1.3 million. Altis at Pembroke Gardens is a 280 unit multifamily apartment community in Pembroke Pines, Florida. Construction of the community was completed during 2017, and the 280 apartment units were approximately 95% leased as of December 31, 2019. The joint venture intends to seek to sell the project in 2020.

Altis at Boca Raton

In November 2018, BBXRE acquired approximately 50% of JA’s membership interest in a joint venture invested in Altis at Boca Raton for $1.9 million. Altis at Boca Raton is a 398 unit multifamily apartment community in Boca Raton, Florida. Construction of the community was completed during 2017, and the 398 apartment units were approximately 96% leased as of December 31, 2019.  The joint venture intends to seek to sell the project in 2020.

Altis at Wiregrass

In November 2018, BBXRE acquired approximately 50% of JA’s membership interest in a joint venture invested in Altis at Wiregrass for $1.9 million. Altis at Wiregrass is a 392 unit multifamily apartment community in Tampa, Florida. Construction of the community was completed during 2018, and the 392 apartment units were approximately 91% leased as of December 31, 2019. The joint venture intends to seek to sell the project in 2020.

Altis at Little Havana

In June 2019, BBXRE invested $0.8 million in a joint venture sponsored by the Altman Companies to develop Altis at Little Havana, a 224 unit multifamily apartment community in Miami, Florida. Construction commenced in 2019 and is expected to be substantially completed in 2021.

Altis at Lake Willis (Vineland Point)

In August 2019, BBXRE invested $4.5 million in a joint venture sponsored by the Altman Companies to acquire land, obtain entitlements, and fund predevelopment costs for the development of a potential multifamily apartment community in Orlando, Florida.  The joint venture expects to receive entitlements for the project, close on the capital to construct the project, and commence construction in 2020.

Altis at Miramar East/West

In October 2019, BBXRE invested $2.5 million in a joint venture sponsored by the Altman Companies to develop Altis Miramar West, a 320 unit multifamily apartment community, and Altis Miramar East, a 330 unit multifamily apartment community, on two adjacent sites in Miramar, Florida. Construction commenced in 2019 and is expected to be substantially completed in 2021.

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Rights to Joint Venture Distributions

The operating agreements governing the joint ventures generally provide that the holders of the non-managing membership interests are entitled to distributions based on their pro-rata share of the capital contributions to the ventures until it receives itssuch members receive their aggregate capital contributioncontributions plus a specified return on itstheir capital. After all investorssuch members receive a specified return and the return of their contributed capital anyand the specified returns, distributions thereafter are shared based on earnings,an agreed-upon allocation of the remaining cash flows available for distribution, with the holders of the managing membermembership interests receiving an increasing percentage of the distributions.Construction As BBXRE’s investments in the above joint ventures include investments as both a non-managing member and a managing member, the Company’s economic interest in the expected distributions from such ventures in many cases is anticipated to be substantially complete duringnot the third quartersame as its pro-rata share of 2019.its contributed capital in such ventures.



Single Family Developments



Beacon Lake Master Planned Development

Hialeah Communities, LLC (“Bonterra – CC Homes”)BBXRE has obtained entitlements to develop raw land in St. Johns County, Florida into 1,476 finished lots which will comprise the Beacon Lake Community. As part of the development, BBXRE is developing the land and common areas and selling the finished lots to third-party homebuilders who will construct single-family homes and townhomes that are planned to range from 1,800 square feet to 4,000 square feet and priced from the high $200,000’s to the $500,000’s.



In July 2014,2017, BBXRE commenced land development and entered into purchase agreements with homebuilders for the Company invested in a joint venture with CC Homes to develop Bonterra – CC Homes, a residential community comprised of 394 homes located in Hialeah, Florida. At the inception302 finished lots comprising Phase I of the venture, the Company transferred property at an agreed upon value of $15.6 million to the joint venture in exchange for cash of $2.2 million, membership interests with an agreed upon value of $4.9 million, and the venture’s assumption of an $8.3 million mortgage loan on the property. The Company is entitled to receive 57% of the joint venture distributions until it receives its aggregate capital contributions plus a specified return on capital, and any distributions thereafter are shared, with the managing member receiving an increased percentage of distributions.project. During the yearyears ended December 31, 2017, the joint venture2019 and 2018, BBXRE closed on the sale of 192all of the finished lots comprising Phase I to homebuilders (51 in 2019 and 251 in 2018) and recognized pre-tax profits of $10.1 million in connection with such sales ($2.4 million in 2019 and $7.7 million in 2018).

BBXRE has commenced land development on the lots comprising Phase II of the project, which is expected to include approximately 400 single-family homes and 196 townhomes, and an additional 79 lots for single-family homes as part of Phase III of the Company recognized $12.1 millionproject. BBXRE has entered into purchase agreements with homebuilders to sell developed lots for 422 single-family homes and all of equity earningsthe 196 townhomes, and received $14.4 million of cash distributions from the joint venture.  During the year ended December 31, 2016, the joint venture closedclosings on the sale of 201 homes, anddeveloped lots in Phase II to homebuilders commenced in January 2020.

BBXRE has financed a portion of the Company recognized $9.5 milliondevelopment costs for the project through the issuance of equity earnings and received $11.5 millionCommunity Development District Bonds. Under the terms of cash distributions from the joint venture.  As of December 31, 2017,purchase agreements with the joint venture had closed onhomebuilders, in connection with the sale of 393 homes,the finished lots, BBXRE is required to repay a portion of the bonds with proceeds from such sales, while a portion of the final home closing in January 2018.bonds are required to be assumed by the homebuilders.



New Urban/BBX Development, LLC (“Village at Victoria Park”)Chapel Grove



In December 2013, the CompanyOctober 2017, BBXRE invested $750,000 in a joint venture with New Urban Communities to develop Village at Victoria Park, a residential community comprised of 30 single-family homes located in Fort Lauderdale, Florida.  The Company is entitled to receive 50% of the joint venture distributions. The project commenced construction and sales during the third quarter of 2014. During the year ended December 31, 2017, the joint venture closed on 9 homes, and the Company recognized $940,000 of equity earnings from the joint venture. As of December 31, 2017, the joint venture had closed on the sale of 18 single-family homes and has sales contracts on eleven additional homes.  

Centra Falls, LLC (“Centra Falls”)

In August 2015, the Company invested $750,000$4.9 million as one of a number of investors in a joint venture with Label & Co. to develop Centra Falls,Chapel Grove, a residential community comprised of 89125 townhomes located in Pembroke Pines, Florida. The

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CompanyBBXRE is entitled to receive 7.143%46.75% of the joint venture distributions until it receives its aggregate capital contributions plus a specified return on its capital. After all investors receive a specified return and the return of their contributed capital, any distributions thereafter are shared based on earnings, with the managing member receiving an increasing percentage of distributions. During the year ended December 31, 2017,2019, the joint venture closed on 61114 townhomes, and the CompanyBBXRE recognized $286,000$3.0 million of equity earnings and received $6.4 million of distributions from the joint venture. The project commenced construction during the third quarter of 2015, and asAs of December 31, 2017,2019, the joint venture had closed on 79 townhomes and had executed contracts on an additional 9to sell the remaining eleven townhomes.



Centra Falls II, LLC (“Centra Falls West”)Sky Cove



In November 2016, the CompanyJune 2019, BBXRE invested $571,000$4.2 million as one of a number of investors in a joint venture with Label & Co. to develop Centra Falls West,Sky Cove at Westlake, a residential community comprised of 61 townhomes located204 single family homes in Pembroke Pines,Loxahatchee, Florida. The CompanyBBXRE is entitled to receive 7.143%26.25% of the joint venture distributions until it receives its aggregate capital contributions plus a specified return on its capital. After all investors receive a specified return and the return of their contributed capital, any distributions thereafter are shared based on earnings, with Label & Co., as the managing member, receiving an increasing percentage of distributions. The project commenced construction during the first quarter of 2017,in 2019, and ashome closings are expected to commence in 2020.

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Marbella

As of December 31, 2017, the joint venture2019, BBXRE had sold 48 townhomes and closings are anticipated to begin in April  2018.

Chapel Grove Townhomes (“Chapel Grove”)

In October 2017, the Company invested $4.9$6.0 million as one of a number of investors in a joint venture with Label & Co.CC Homes to develop Chapel Grove, Marbella, a residential community comprised of 125 town158 single family homes located in Pembroke Pines, Florida. The CompanyMiramar, Florida, and expects to invest an additional $2.5 million in the venture in 2020. BBXRE is entitled to receive 46.75%70.00% of the joint venture distributions until it receives its aggregate capital contributioncontributions plus a specified return on its capital. After all investors receive a specified return and the return of their contributed capital, any distributions thereafter are shared based on earnings, with CC Homes, as the managing member, receiving an increasing percentage of distributions. The project commenced construction duringjoint venture acquired the fourth quarter of 2017, and townhome closings are anticipated to commence during the fourth quarter of 2018.  

Beacon Lake Master Planned Development

The Company has obtained entitlements to develop rawdevelopment land in St. Johns County, Florida into 1,476 finished lots which will comprise the Beacon Lake Community. As part of the2019 and commenced site development the Company is developing the land and common areas and expects to sell the finished lots to third-party homebuilders that will construct single-family homes and townhomes that are planned to range from 1,800 square feet to 4,000 square feet and priced from the high $200,000’s to the $500,000’s. Land development began in January 2017. The Company has entered into purchase agreements with homebuilders for approximately 302 finished lots in which 240 finished lots are anticipated to close during 2018, with the first finished lots closing in January 2018. The remaining 62 lots are anticipated to close during 2019.   Pursuant to the asset purchase agreements with the homebuilders, upon closing of the lots by the homebuilders. a portion of the Community Development Bond is required to be repaid through lot sales proceeds and a portion of the Community Development Bond is transferred to the homebuilder.

CCB Miramar, LLC (“Miramar – CC Homes”)

In May 2015, the Company invested in a joint venture with two separate developers relating to the acquisition of real estate in Miramar, Florida for the construction of single-family homes. The Company contributed $875,000 for an approximate 35% interest in the joint venture, and one of the developers contributed to the joint venture a contract to purchase the real estate. The City of Miramar approved the site plan in June 2017, and the Company contributed an additional $350,000 to the joint venture. The joint venture is seeking to obtain entitlements for the project and anticipates closing on the acquisition of the real estate in March 2019. However, the entitlements are subject to government approval, and these approvals may not be obtained.2020.



Retail Developments

BBX/S Millenia Blvd Investments, LLC (“Gardens on Millenia Retail JV”)

In October 2015, the Company invested in a joint venture with Stiles Development to develop a retail center on the Gardens of Millenia site in Orlando, Florida.  At the inception of the venture, the Company transferred property with an agreed upon value of $7.0 million to the joint venture in return for $0.7 million in cash and its membership interest. The Company is entitled to receive 90% of the joint venture distributions until it receives its aggregate capital contributions plus a specified return on its capital, and any distributions thereafter are shared based on earnings, with the managing member receiving an increased percentage of the distributions. During the year ended December 31, 2017, the joint venture closed on a portion of the retail center, and the Company recognized $3.5 million of equity earnings and received

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$3.4 million of distributions from the joint venture.  The Company anticipates that the remaining retail space will be sold in March 2018.

Gardens on Millenia – Land

Gardens on Millenia consisted of 37 acres of land acquired through foreclosure located near the Mall at Millenia in a commercial center of Orlando, Florida.  During 2015, the Company obtained governmental approvals for a 300,000 square foot retail shopping center designed for multiple big-box and in-line tenants as well as two outparcel retail pads and nine rental apartment buildings totaling approximately 292 units. The Company contributed the portion of the land entitled for rental apartments to the Addison on Millenia Investment, LLC joint venture and contributed the portion of the land entitled for the retail center to the BBX/S Millenia Blvd Investments, LLC joint venture as initial capital contributions to the joint ventures. The Company developed the two outparcel retail pads and has sold one of the pads to a retailer and executed a long-term land lease on the other pad. 

Mixed Use Developments



PGA Design Center Holdings, LLC (“PGA Pod B”)B



In December 2013, the CompanyBBXRE purchased for $6.1 million PGA Design Center, a commercial property located in PGA Station in Palm Beach Gardens, Florida, with three existing buildings consistingcomprised of approximately 145,000 square feet of mainly furniture retail space. Subsequent to the acquisition of the property, the Company entered into the PGA Design Center Holdings, LLCBBXRE invested in a joint venture with Stiles Development which acquired a 60% interest into redevelop the jointproperty. At the inception of the venture, for $2.9 million in cash. The CompanyBBXRE contributed the property (excluding certain residential development entitlements having an estimated value of $1.2 million)entitlements) to the joint venture in exchange for cash of $2.9 million in cash and the remaininga 40% interest in the joint venture. The CompanyBBXRE transferred the retained residential development entitlements to PGA Pods A&C, which are adjacent parcels owned by it in PGA StationBBXRE (see below for afurther discussion of PGA PODS A&C, the other parcels owned by the Company in PGA Station)regarding these parcels).

During the year ended December 31, 2016, governmental approvals were obtained to change the use of a portion of the property from retail to office. TheDuring the year ended December 31, 2018, the joint venture soldclosed on the sale of one of the buildings, in February 2018 and intends to sell or leaseBBXRE recognized $1.5 million of equity earnings from the venture. During the year ended December 31, 2019, the joint venture closed on the sale of the remaining two buildings.buildings and provided seller financing to the buyer for a portion of the sales price. As a result of the sale, BBXRE recognized $2.8 million of equity earnings and received $2.3 million of distributions from the venture.





PGA Pods A&C



The CompanyIn 2014, BBXRE acquired land through foreclosure located in PGA Station in the city of Palm Beach Gardens, Florida through foreclosure on a loan receivable in 2014. During the year ended December 31, 2016, the Companylegacy asset portfolio. BBXRE subsequently obtained governmental approvals to construct a 122 room limited-service suite hotel, a medical office building, and three 60,000 square foot office buildings on vacant tractsthe land and commenced land development with the intent of land in PGA Station. The Company is the master developer of PGA station and intends to sellselling the developed land to third party developers.

During the year ended December 31, 2017, the CompanyBBXRE closed on the sale of the land on which the hotel and medical office buildings willwere approved to be constructed byto third party developers. During the year ended December 31, 2019, BBXRE closed on the sale of the remaining parcels, which were sold to the buyer of the commercial buildings sold by the PGA Design Center joint venture, as described above. BBXRE reinvested $2.1 million of the proceeds in the PGA Lender joint venture, a joint venture formed with the PGA Design Center joint venture to invest in the seller financing provided to the buyer by the PGA Design Center joint venture.  



Bayview (Sunrise and Bayview Partners, LLC)



In June 2014, the CompanyBBXRE invested in a joint venture with an affiliate of Procacci Development Corporation (“PDC”) with. At the Companyinception of the venture, BBXRE and PDC each contributingcontributed $1.8 million to the Sunrise and Bayview Partners joint venture.venture in exchange for a 50% interest. The joint venture acquired for $8.0 million approximately three acres of real estate located in Fort Lauderdale, Florida. The Company and PDC each have a 50% interest in the joint venture. There is currently an approximate 84,000 square foot office building, along with a convenience store and gas station, on the property. The office building has low occupancy with short term leases. Theleases, while the lease for the convenience store's leasestore ends in March 2022. The CompanyBBXRE anticipates that the property will be redeveloped into a mixed-use project in the future.



L03/212 Partners

In 2019, BBXRE invested $2.0 million as one of a number of investors in The Main Las Olas joint venture, which was formed to invest in the development of The Main Las Olas, a mixed-used project in downtown Fort Lauderdale, Florida that is planned to be comprised of an office tower with approximately 365,000 square feet of leasable area, a residential tower with approximately 341 units, and approximately 45,000 square feet of ground floor retail. As of December 31, 2019, BBXRE expects to invest an additional $2.0 million in the venture as development progresses. The project is currently under construction and is anticipated to be substantially completed during the fourth quarter of 2020.  BBX has executed an agreement with the joint venture to lease space in the office tower for its corporate headquarters (See Item 2 – Properties of this Annual Report for additional information).

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Operating Properties



Villa San Michele

In January 2014, the Company acquired an 82-unit, 272 bed student housing project located in Tallahassee, Florida, through a contractual settlement with the borrower.  Built in 2008, Villa San Michele is located in southwest Tallahassee near Tallahassee Community College. The project includes a mix of 3 bedroom and 4 bedroom 2-story townhomes, as well as a 10.6 acre parcel of vacant land. Villa San Michele met the criteria to be classified as held-for-sale as of December 31, 2017 and was ultimately sold in January 2018 for $9.5 million.

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RoboVault



In April 2013, the Company acquired through foreclosure, RoboVault, a 155,000 square foot high-tech, robotic self-storage facility featuring climate controlled, and high security storage. Located in Fort Lauderdale, Florida, RoboVault offers its clients museum quality storage for business, forensic property, and personal prized possessions, including art, wine collections, cars, gems, antiques, important documents and files, and other collectibles. Builtthrough foreclosure on a loan receivable in 2009,the legacy asset portfolio. During the year ended December 31, 2019, BBXRE sold the facility is wind resistant up to 200 mph (a category 5 hurricane), stores items 30 feet above sea level, usesfor net proceeds of $11.7 million and recognized a biometric robotic transfer system, and offers 24 hour - 7 day access.gain on the sale of real estate of $4.8 million. 



Legacy Assets



LegacyIn addition to the above projects, BBXRE holds various legacy assets acquired in connection with the Company’s Consolidated Statementsale of Financial ConditionBankAtlantic in 2012,  including loans receivable and real estate with an aggregate carrying amount of approximately $22.3 million as of December 31, 2017 consisted primarily of $19.5 million of loans receivable, $13.9 million of real estate held-for-investment, $27.8 million of real estate held-for-sale, and $7.0 million in property and equipment. PGA Pods A&C, Villa San Michele, Gardens on Millenia land, and RoboVault discussed above are included in real estate held-for-sale, real estate held-for-investment and property and equipment with a carrying value of $11.9 million, $1.2 million, and $7.0 million, respectively, as of December 31, 2017. 

2019. The majority of the legacy assets do not generate incomecash flows on a regular or predictable basis. As a consequence, BBX Capital Real Estate doesbasis and are not expectexpected to generate significant revenue from the legacy assetsdo so until the assets are monetized through loan repayments or transactions involving the sale, joint venture, or development of the underlying real estate. The cash flow

In recent years, BBXRE has generated substantial profits from the monetizationlegacy asset portfolio, as the majority of legacy assets are generally invested in income producingthe loans receivable and foreclosed real estate real estate developments and real estate joint ventures, as well asassets within the portfolio were impaired in the Company’s middle market operating businesses. As a result of the substantial decline in real estateprior periods to their estimated fair values during the recession whichthat began in 2007 -and 2008 but were ultimately monetized by BBXRE following the majority of legacy non-performing commercial real estate loans and foreclosed real estate were written down in prior periods to the then prevailing estimated fair values of the collateral less costs to sell. The Company believes there has been continued improvements generally in real estate markets over the prior 3 to 4 years and believes that the prior estimated fair values of the underlying collateral securing certain of its commercial real estate loans and its real estate carrying values may be below current market values. Additionally, thissubsequent recovery in the real estate market over the past several years. Although BBXRE is continuing its efforts to monetize the remaining assets within the portfolio, BBXRE has favorably affectedsubstantially completed the financial conditionmonetization of borrowers,the portfolio and does not expect to generate substantial profits from the remaining assets in future periods.

BBX Sweet Holdings

Business Overview

BBX Sweet Holdings is engaged in the ownership and management of operating businesses in the confectionery industry, including IT’SUGAR, Hoffman’s Chocolates, and Las Olas Confections and Snacks.

IT’SUGAR is a specialty candy retailer which operates approximately 100 retail locations, which include a mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban locations in over 25 states and Washington D.C., and its products include bulk candy, candy in giant packaging, and licensed and novelty items. IT’SUGAR has historically utilized a store model for its retail locations that requires a relatively low initial investment, with a goal of shorter payback periods and increased investment returns. However, as a result of trends in retail consumer traffic, IT’SUGAR is currently focused on opening and operating larger stores in select resort and entertainment locations which generally experience higher traffic and sales volume but require a higher initial investment. During 2019, IT’SUGAR continued to invest capital in these types of locations, including Grand Bazaar, a 6,000 square foot location in Las Vegas, Nevada that was opened in June 2019, and a 22,000 square foot, three story candy department store at American Dream, a 3 million square foot shopping and entertainment complex in New Jersey, that was opened in December 2019. In addition, IT’SUGAR is also continuing to evaluate its current retail locations where sales volumes may give rise to early lease termination rights and the Companypotential opportunity to renegotiate lease terms and occupancy costs. For certain underperforming locations where IT’SUGAR does not have early lease termination rights, IT’SUGAR is aggressively pursuingevaluating potential opportunities to close or sublease such locations. In certain circumstances, IT’SUGAR may determine that it is in its borrowers and/or guarantors in orderbest interest to maximize recoveries through cash settlements, loan workout arrangements or participation interests in the development or performance of the collateral. Ifincur costs to exit a location if the Company is successful in its efforts, the Company expects to recognize gains to the extentbelieves that the amounts it collects exceedclosure of such locations will improve IT’SUGAR’s overall operating efficiencies and profitability over the carrying value of its commercial loans and foreclosed real estate as well as recoveries from the portfolio of BankAtlantic charged-off loans.long term.



Middle Market DivisionBBX Sweet Holdings’ other operations include Hoffman’s Chocolates, a retailer of gourmet chocolates with retail locations in South Florida, and Las Olas Confections and Snacks,  a manufacturer and wholesaler of chocolate and other confectionery products.



Overview 

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The Middle Market Division invests in operating companies and businesses in diverse industries with revenues between $5 million and $100 million, currently including companies in the home improvement, confectionery, and retail restaurant industries.


 

Strategy



TheBBX Sweet Holdings’ business and operating strategy for the portfolio of companies in the Middle Market Division focusesis focused on:



·

Perfecting store model for larger store locations and optimizing existing store portfolio at IT’SUGAR;

·

Developing creative and humorous product content at IT’SUGAR;  

·

Increasing customer engagement;

·

Recruiting and retaining talented managers to operate its businesses;associates;

·

Monitoring financialImproving gross margin and operational performance, while supporting managementprofitability through process improvements and efficiencies and reductions in implementation of their strategic plansproduct and goals;operating costs; and

·

Making opportunistic acquisitions in diverse industries.Maximizing industry partnerships.



Portfolio CompaniesRenin



ReninBusiness Overview



Renin is engaged in the design, manufacture, and distribution of products for the home improvement industry, including specialtysliding doors, door systems and hardware, and home décor products and operates through its headquarters in Canada and two manufacturing and distribution facilities in the United States and Canada. In addition to its own manufacturing, Renin also sources various products and materials from China. Following the Company’sBBX Capital’s acquisition of

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Renin in 2013, Renin, which historically generated operating losses, has become profitable, generating trade sales of $69.6$67.5 million and income before taxes of $2.2$1.8 million for the year ended December 31, 2017.2019.



Renin’s products include sliding bipass and bifold closet doors, room dividers, including barn-style doors and hardware, fabricated glass and home décor products. While the majority of Renin’s products are manufactured at its facilities located in the United States and Canada, a portion of its products are sourced from suppliers in China. Renin products are sold through three distinct channels in North America: retail, commercial, and direct installation in the metropolitangreater Toronto area (the “Toronto Area”). Retailarea. Renin’s retail channel currently comprises over 60%approximately 63% of Renin’sits gross sales and includes big box retail customers such as Lowes, Home Depot, and Home Depot. Commercial, whichCostco, while its commercial channel currently comprises approximately 26% of its gross sales and includes original equipment manufacturers and fabricators across North America, comprises approximately 25% ofAmerica. Renin’s sales, while the Toronto Area, where Renin operates andirect installation business,channel generates the remaining sales. 



BBX Sweet HoldingsStrategy



BBX Sweet HoldingsRenin’s business and operating strategy is engaged in the acquisition and management of operating businesses in the confectionery industry, including manufacturers, wholesalers, and retailers of chocolate, hard candy, and other confectionery products. Many of these operating businesses are in early development stages and currently generate operating losses.focused on:

·

Growing sales across all channels by delivering outstanding customer service and consistently developing innovative products;

·

Improving gross margin by lowering manufacturing costs through productivity improvement;

·

Reducing customer lead-times through better inventory planning and repatriation of domestic manufacturing balanced with global sourcing of finished goods; and

·

Seeking to potentially acquire companies in complementary businesses.

Employees



In June 2017, BBX Sweet Holdings acquired IT’SUGAR, a specialty candy retailer with 95 retail locations in 26 states and Washington, DC, for a purchase priceAs of $58.4 million, net of cash acquired. IT’SUGAR’s products include bulk candy, giant candy packaging, and novelty items that are purchased and sold at its retail locations, which include a mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban locations across the United States. As a result of BBX Sweet Holdings’ plans to further expand IT’SUGAR by opening new retail locations, including six to seven locations during 2018. IT’SUGAR is not expected to generate net income in 2018 due to the expected costs of opening new stores and related ongoing depreciation expenses. However, the acquisition of IT’SUGAR is expected to be cash flow accretive toDecember 31, 2019, the Company and has significantly expanded BBX Sweet Holdings’ retail footprint in the confectionery industry.

BBX Sweet Holdings’ other existing operations include businesses that manufacture confectionery products for wholesalers, big box chains, retailers, and corporate customers. These confectionery products include fine chocolates, chocolate drenched candies, tropical snacks, and hard candies, all of which are madeits subsidiaries had approximately 7,185 employees,  including 5,873 employees at facilities located in Utah and Florida. While a majority of BBX Sweet Holdings’ products are sold to retailers or distributors, its fine chocolates are also sold directly to consumers at its eight Hoffman’s Chocolates retail locations in South Florida.

Subsequent to December 31, 2017, the Company commenced the process of exiting its manufacturing facility in Utah, and it is anticipated that BBX Sweet Holdings will incur various costs in connection with this initiative, including severance costs for various employees and the recognition of lease obligations. The Company is continuing to evaluate the operations of certain other acquired operating businesses in the BBX Sweet Holdings segment, and to the extent that it decides to exit these operations, BBX Sweet Holdings may recognize impairment charges and incur additional costs in future periods. 

MOD Franchise Operations

In 2016, the Company entered into an exclusive Florida area development agreement with a subsidiary of MOD with a goal of developing up to 60 MOD franchised pizza restaurant locations throughout Florida over the next six years. The Company opened two restaurant locations during the fourth quarter of 2017 and expects to open eight to twelve additional locations in 2018. The Company’s MOD franchised pizza restaurants operate in the fast casual dining industry and sell custom artisan style pizzas, salads and beverages. These restaurants charge a set price per pizza or salad, which allows customers to choose any toppings for their pizza or salad, and the product is made-to-order through an assembly-line process in the restaurant.

EmployeesBluegreen.  



Management believes that its relations with its employees are satisfactory. The Company currently maintains employee benefit programs that are considered by management to be generally competitive with programs provided by other major employers in its markets.



As of December 31, 2017,2019,  approximately 2927 employees of Bluegreen Vacations employees were covered by two collective bargaining agreements which address the terms and conditions of their employment, including pay rates, working hours, certain employee benefits, and procedures for settlement of labor disputes. Further,In addition, approximately 36 installersten employees of a Canadian

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division of Renin are unionized and are currently negotiatingwith a collective bargaining agreement.agreement in place. Employees at Renin’s Brampton Plantmanufacturing facility in Canada voted against unionization; however, the union filed an Unfair Labour Practice with the Ontario Labour Board which remains pending.

As of December 31, 2017, the Company and its subsidiaries had approximately 6,914 employees, including 5,412 employees at Bluegreen.  

unionization. 



Competition



The industries in which the Company conductsCompany’s investments conduct business are very competitive, and wethe Company also facefaces substantial competition with respect to our investment activities from real estate developersinvestors and building construction companies, and fromdevelopers, private equity funds, hedge funds, and other institutional investors. The Company competes with institutions and entities that are larger and have greater resources than the resources available to the Company.  Four unaffiliated companies in the candy and confectionery industry currently account for approximately 70% of the industry’s revenues reflecting significant concentration in the industry in which Sweet Holdings operates. Renin’s products are sold mainly to large retailers as well as to housing and building construction companies. The industry in which Renin operates experiences intense competition from foreign importers and producers.  MOD competes with established pizza brands, new entrants into the fast casual pizza category, especially in Florida, and for prime locations, with other operators.



Bluegreen competes with various high profile and well-established firms,companies, many of which have greater liquidity and financial resources than Bluegreen. Many of the world’s most recognized lodging, hospitality, and entertainment companies develop and sell VOIs in resort properties. Major companies that now operate or are developing or planning to develop, vacation ownership resorts directly,  through subsidiaries or through subsidiariesstrategic

25


relationships, include Marriott Vacations Worldwide Corporation, the Walt Disney Company, Hilton Grand Vacations, Wyndham Vacation Ownership, ILGDestinations, and Diamond Resorts International. Bluegreen also competes with numerous smaller owners and operators of vacation ownership resorts.resorts and alternative lodging options available to consumers through both traditional methods of delivery and new web portals and applications, including private rentals of homes, apartments or condominium units, which have increased in popularity in recent years. Bluegreen’s ability to remain competitive and to attract and retain customers depends on its customers’ satisfaction with Bluegreen’s products and services as well as on distinguishing the quality, value, and efficiency of its products and services from those offered by its competitors. In Bluegreen’s fee-based services business, Bluegreen typically competes with Hilton Grand Vacations and Wyndham Vacation Ownership.Destinations. In addition to competing for sales leads, prospects, and fee-based service clients, Bluegreen competes with other VOI developers for marketing, sales and resort management personnel.



BBXRE invests in the development of multifamily apartment communities. Due to the historically strong performance of this class of asset within the real estate market, BBXRE is experiencing increased competition from other real estate investors and developers, which is increasing the cost of land and resulting in increased inventories of multifamily apartment communities in the markets in which BBXRE invests and operates, which can decrease market rental rates and increase the time required to lease and stabilize its developments.

Renin’s products are primarily sold to large retailers and wholesalers, and it experiences intense competition from importers of foreign products. 

Four unaffiliated companies in the confectionery industry currently account for the majority of the industry’s revenues, reflecting significant concentration and competition in the industry in which BBX Sweet Holdings operates.



Regulation



As a public company, we arethe Company is subject to federal securities laws, including the Securities Exchange Act of 1934.  In addition, the companies in which we hold investments are subject to federal, state and local laws and regulations generally applicable to their respective businesses. 



Bluegreen



The vacation ownership and real estate industries are subject to extensive and complex governmental regulation. Bluegreen is subject to various federal, state, local, and foreign environmental, zoning, consumer protection and other laws, rules and regulations, including those regarding the acquisition, marketing, and sale of real estate and VOIs, as well as various aspects of ourBluegreen’s financing operations. At the 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 unfair competition in interstate commerce. In addition, many states have what are known as “Little FTC Acts” that apply to intrastate activity.



In addition to the laws applicable to Bluegreen’s customer financing and other operations discussed below, Bluegreen is or may be subject to the Fair Housing Act and various other federal laws, rules and regulations. Bluegreen is also subject to various foreign laws with respect to La Cabana Beach Resort and Casino in Oranjestad, Aruba and Blue Water Resort at Cable Beach in Nassau, Bahamas. Additionally, in the future, VOIs may be deemed to be securities subject to regulation as such, which could have a material adverse effect on its business. The cost of complying with applicable laws and regulations may be significant, and while Bluegreen strives to be in compliance, Bluegreen may not maintain compliance at all times with all applicable laws, including those discussed below.be successful. Any failure to comply with current or future applicable laws or regulations could have a material adverse effect on Bluegreen.Bluegreen’s results and operations.



Bluegreen’s vacation ownership resorts areproduct is subject to various regulatory requirements, including state and local approvals. The laws ofIn most states, require Bluegreen is required to file with the jurisdictions a detailed offering statement describing its business and all material aspects of the project and sale of VOIs with athe designated state authority. In addition, when required by state law, Bluegreen provides its VOI purchasers with a public offering disclosure statement that contains, among other items, detailed information about the applicable resort, the surrounding vicinityVOI product and the purchaser’s rights and obligations as a VOI

27


owner. Laws in each state where Bluegreen sells VOIs generally grant the purchaser of a VOI the right to cancel a purchase contract at any time within a specified rescission period following the earlier of the date the contract was signed or the date the purchaser received the last of the documents required to be provided by Bluegreen. Most states have other laws that regulate Bluegreen’s activities, includingwhich may include real estate licensure requirements, sellers of travel licensure requirements, anti-fraud laws, telemarketing laws, prize, gift and sweepstakes laws, and labor laws.



Under various federal, state and local laws, ordinances and regulations, the owner of real property is generally liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, the property, as well as related costs of investigation and property damage. These laws often impose liability without regard to whether the property owner knew of the presence of such hazardous or toxic substances. The presence of these substances, or the failure to properly remediate these substances, may adversely affect a property owner’s ability to sell or lease a property or to borrow using the 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 any of these and other environmental, health or safety requirements may result in the need to cease or alter

26


operations or development at a property. In addition, certain state and local laws may impose liability on property developers with respect to construction defects discovered on the property or repairs made by future owners of such property. Under these laws, Bluegreen may be required to pay for repairs to the developed property. The development, management and operation of its resorts are also subject to the Americans with Disabilities Act.



Bluegreen’s marketing, sales, and customer financing activities are also subject to extensive regulation, which can include, but is not limited to: 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; the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the Dodd-Frank(the “Dodd-Frank Act”); Unfair or Deceptive Acts or Practices and Regulation AA; the Patriot Act; the Right to Financial Privacy Act; the Gramm-Leach-Bliley Act; the Fair and Accurate Credit Transactions Act; and anti-money laundering laws. The Dodd-Frank Act contains significant changes to the regulation of financial institutions and related entities, including the creation of new federal regulatory agencies, and the granting of additional authorities and responsibilities to existing regulatory agencies to identify and address emerging systemic risks posed by the activities of financial services firms. The Consumer Financial Protection Bureau (the “CFPB”) is one such regulatory agency created pursuant to the Dodd-Frank Act. The CFPB’s mandate is to protect consumers by carrying out federal consumer financial laws and to publish rules and forms that facilitate understanding of the financial implications of the transactions consumers enter into. Consistent with this mission, the CFPB amended Regulations X and Z to establish new disclosure requirements and forms pursuant to Regulation Z for most closed-end consumer credit transactions secured by real property. The practical impact upon Bluegreen is the requirement to use a new Integrated Mortgage Disclosure Statement in lieu of the separate Good Faith Estimate and Closing Statement. No assurance can be given that Bluegreen will be in compliance with the Dodd-Frank Act or other applicable laws or that compliance with these rules or the promulgation of additional standards by the CFPB will not have an adverse impact on its business. In addition, Bluegreen’s term securitization transactions must comply with certain requirements of the Dodd-Frank Act, including risk retention rules.



Bluegreen’s management of, and dealings with, HOAs, including the purchase of defaulted inventory from HOAs in connection with secondary market arrangements, is subject to state laws and resort rules and regulations, including those with respect to the establishment of budgets and expenditures, rule-making and the imposition of maintenance assessments.



During the year ended December 31, 2017,2019, approximately 6%7% of Bluegreen’s VOI sales were generated by marketing to prospective purchasers obtained through internal and third-party vendors’ outbound telemarketing efforts. Bluegreen attempts to monitor the actions and legal and regulatory compliance of these third parties, but there are risks associated with Bluegreen’s and such third parties’ telemarketing efforts. In recent years, state and federal regulators have increased regulations and enforcement actions related to telemarketing operations, including requiring the adherence to state “do not call” laws. In addition, the Federal Trade Commission and Federal Communications Commission have implemented national “do not call” legislation. These measures have significantly increased the costs associated with telemarketing. While Bluegreen continues to be subject to telemarketing risks and potential liability, Bluegreen believes its exposure to adverse impacts from this heightened telemarketing legislation and enforcement may be partially mitigated by the use of “permission based marketing,” whereby Bluegreen obtains the permission of prospective purchasers to contact them in the future, thereby exempting such calls from the various “do not call” laws. Bluegreen has also implemented policies and procedures that it believes will help reduce the possibility that individuals who have requested to be placed on a “do not call” list are not contacted but, such policies and procedures may not be effective in ensuring strict regulatory compliance.



To date, no material fines or penalties have been imposed on Bluegreen as a result of telemarketing operations. However, from time to time, Bluegreen has been the subject of proceedings for violation of the “do not call”telemarketing laws and other state

28


laws applicable to the marketing and sale of VOIs. Bluegreen may not successfully be able to effectively market to prospective purchasers through telemarketing operations or to successfully develop alternative sources of identifying and marketing to prospective purchasers of its VOI products at acceptable costs. In addition, Bluegreen may increasingly face non-compliance issues or additional costs of compliance, which may adversely impact its results and operations in the future.See “Item 3 - Legal Proceedings.”  



See also “Item 1A – Risk Factors for a description of additional risks with respect to regulatory compliance.

See also “Item 3 - Legal Proceedings” for a description of litigation that was brought against Bluegreen and Choice Hotels in January 2018 relating to telemarketing sales activities and a description of cease and desist letters received by Bluegreen from attorney’s purporting to represent certain VOI owners.



Seasonality



Bluegreen has historically experienced, and expectexpects to continue to experience, seasonal fluctuations in its revenues and results of operations. This seasonality has resulted, and may continue to result, in fluctuations in Bluegreen’s quarterly operating results. AlthoughDue to consumer travel patterns, Bluegreen typically sees more potential customers typically visit Bluegreen’stours and experiences higher VOI sales offices during the quarters ending in Junesecond and September, Bluegreen’s ultimate recognition of the resulting sales during these periods may be delayed due to down payment requirements for recognition of real estate sales under GAAP or due to the timing of development and required use of the percentage-of-completion method of accounting.third quarters.



BBX Sweet Holdings isHoldings’ businesses are subject to seasonal fluctuations in trade sales, which cause fluctuations in BBX Sweet Holdings’ quarterly results of operations. Historically, theIT’SUGAR has generated its strongest wholesale and retail trade sales have occurredduring the months from June through August, as well as during the month of December, when families are on vacation. BBX Sweet Holdings other operating businesses generate their strongest trade sales during the fourth quarter which includesin connection with various holidays in the Christmas holiday, and during the third quarter when families travel on vacation. 

United States.



 

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ITEM 1A. RISK FACTORS



We are subject to various risks and uncertainties relating to or arising out of the nature of our businesses, operations and investments, and general business, economic, financing, legal, regulatory, and other factors and conditions. New risk factors emerge from time to time, and it is not possible for management to either predict all risk factors or assess all potential impacts of any factor, or combination of factors, on BBX Capital Corporation or its subsidiaries, including with respect to their operations, results and financial condition. 



BBX Capital

BBX Capital relies on dividends from Bluegreen to fund operations.



BBX Capital has relied and continues to rely primarily on dividends from Bluegreen in order to fund its operations and investments. Dividends from Bluegreen may not be paid to BBX Capital in the amounts previously paid or when anticipated or at all. Bluegreen paid dividends totaling $40.0$43.0 million during 20172019 and $70.0$40.4 million during 2016.2018. During the fourth quarter of 2019, Bluegreen reduced its quarterly dividend from $0.17 per share to $0.13 per share. The payment of dividends by Bluegreen is subject to compliance with financial covenants under its credit facilities and certain of Bluegreen's credit facilities contain terms which may limit the payment of cash dividends without the lender's consent or waiver. Additionally, the payment of dividends by Bluegreen will be at the discretion of Bluegreen’s board of directors. Decisions with respect to dividends by Bluegreen are generally based on, among other things, Bluegreen's operating results, financial condition, cash flow, and liquidity needs. Dividend payments to BBX Capital by any of its subsidiaries, including Bluegreen, could, in certain circumstances, be subject to claims made by creditors of such subsidiary.



If cash flow is not sufficient to fund BBX Capital's liquidity needs or BBX Capital otherwise determines it is advisable to do so, BBX Capital might seek to liquidate some of its investments or seek to fund its operations with the proceeds of additional equity or debt financing. Such financing may not be available on commercially reasonable terms, if at all, and if BBX Capital chooses to liquidate its investments, it may be forced to do so at depressed prices.



BBX Capital’s acquisitions and investments may reduce earnings, require it to obtain additional financing and expose it to additional risks.



BBX Capital’s business strategy includeshas included investments in or acquisitions of operating companies, such as its acquisition50% equity interest investment in the Altman Companies and its acquisitions of Renin, IT’SUGAR, and the acquisitions ofother businesses by BBX Sweet Holdings in the confectionery industry. BBX Capital may also seek to make opportunistic investments outside of its existing portfolio. Some of these investments and acquisitions may be material. While BBX Capital is seekingseeks to make investments and acquisitions primarily in companies that provide opportunities for growth, it may not be successful in identifying these opportunities. Investmentsits investments or acquisitions that it completes may not prove to be successful or, even if successful, may not initially generate income, or may generate income on an irregular basis or over a long time period. Accordingly, our results of operations may vary significantly on a quarterly basis and from year to year as a result of acquisitions.acquisitions and investments. Acquisitions andor investments will also expose BBX Capital or increase BBX Capital’s exposure in the case of acquisitions of or additional investments in its portfolio companies, to the risks of any businessthe businesses acquired or invested in. Acquisitions and investments entail numerous risks, including:



·

Risks associated with achieving profitability;

·

Difficulties in integrating and assimilating acquired management, acquired company founders, and operations;

· Losses and unforeseen expenses or liabilities;

·Risks associated with achieving profitability;entering new markets in which we have no or limited prior experience;

·The potential loss of key employees or founders of acquired organizations;

·Risks associated with transferred assets and liabilities; and

·

The incurrence of significant due diligence expenses relating to acquisitions, including with respect to those that are not completed;

·Unforeseen expenses and losses;

·Risks associated with entering new markets in which it has no or limited prior experience;

·The potential loss of key employees or founders of acquired organizations; and

·Risks associated with transferred assets and liabilities.



BBX Capital may not be able to acquireintegrate or profitably manage additional businesses, or to integrate successfully any acquired businesses, including Renin, MOD restaurantsIT’SUGAR, and the BBX Sweet Holdings’its other operating businesses or its investment in the Altman Companies, without substantial costs, delays, or other operational or financial difficulties, including difficulties in integrating information systems and personnel and establishing control environment processes across acquired businesses. TheFurther, BBX Capital may not be able to monitor the day to day activities of its investments in joint ventures, and failure to do so could have a material adverse effect on its business, financial condition and results of operations. In addition, to

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the extent that operating businesses are acquired outside the United States or the State of Florida, there will be additional risks related to compliance with foreign regulations and laws including tax laws, labor laws, currency fluctuations and geographic economic conditions.



In addition, there ismay be significant competition for investments and acquisitions, which could increase the costs associated with the investment or acquisition. Substantial costs are incurred in connection with the evaluation of potential acquisition and investment opportunities whether or not the acquisition or investment is ultimately consummated. Further, funding of such investments or acquisitions may rely onrequire additional debt or equity financing, which will subject BBX Capital to the risks and uncertainties described in these risk factors with respect to those activities in the immediately following risk factors. If BBX Capital requires additional financing

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in the future, the financing may not be available when needed or on favorable terms, if at all. Additionally, BBX Capital does not intend to seek shareholder approval of any investments or acquisitions unless required by law or regulation, or by BBX Capital’s Amended and Restated Articles of Incorporation or Bylaws.



In addition, BBX Capital from time to time may consideralso pursues transactions involving the sale of its subsidiaries or investments or other transactions which would result in a decrease in BBX Capital’s ownership interest in its subsidiaries, and theresubsidiaries. There is no assurance that any such transactions, if pursued and consummated, will generate a profit or otherwise be advantageous to BBX Capital. 



WeBBX Capital may issue additional securities and incur additional indebtedness at BBX Capital or its subsidiaries.



BBX Capital may in the future seek to raise funds through the issuance of debt or equity securities. There is generally no restriction on BBX Capital’s ability to issue debt or equity securities which are pari passu or have a preference over its Class A Common Stock and Class B Common Stock. Authorized but unissued shares of BBX Capital’s capital stock are available for issuance from time to time at the discretion of BBX Capital’s board of directors, and any such issuance may be dilutive to BBX Capital’s shareholders.



Further,Substantial sales of BBX CapitalCapital’s Class A Common Stock or Class B Common Stock could adversely affect the market prices of such securities.

Substantial sales of BBX Capital’s Class A Common Stock or Class B Common Stock, including sales of shares by controlling shareholders and its subsidiaries havemanagement, could adversely affect the market prices of such securities. Management has in the past and may in the future incurenter into Rule 10b5-1 plans pursuant to which a significant amountsnumber of debt, including at Bluegreen. Any indebtedness, including indebtedness incurredshares are sold into the open market.

Alan B. Levan and John E. Abdo's control position may adversely affect the market price of BBX Capital's Class A Common Stock and Class B Common Stock.

Alan B. Levan, the Chairman and Chief Executive Officer of BBX Capital, and John E. Abdo, the Vice Chairman of BBX Capital, collectively beneficially own shares of BBX Capital’s Class A Common Stock and Class B Common Stock representing approximately 78% of the general voting power of BBX Capital. In addition, each of Mr. Alan Levan and Mr. Abdo has been granted restricted securities of BBX Capital which are scheduled to vest over time. Further, Mr. Alan Levan and Mr. Abdo are parties to an agreement pursuant to which Mr. Alan Levan has agreed to vote his shares of BBX Capital’s Class B Common Stock in favor of the futureelection of Mr. Abdo to BBX Capital’s board of directors for so long as he is willing and able to serve as a director of BBX Capital, and Mr. Abdo has granted to Mr. Alan Levan the right to vote his shares of Class B Common Stock so long as such Class B shares are beneficially owned by Mr. Abdo or his heirs, successors or assigns. Upon Mr. Alan Levan’s death or disability, Jarett Levan, President of the Company, will succeed to Mr. Alan Levan’s rights and obligations under the agreement with Mr. Abdo.  Because BBX Capital’s Class A Common Stock and Class B Common Stock vote as a single class on most matters, Mr. Alan Levan and Mr. Abdo effectively have the voting power to elect the members of BBX Capital’s board of directors and to control the outcome of any other vote of BBX Capital’s shareholders, except in those limited circumstances where Florida law mandates that the holders of BBX Capital’s Class A Common Stock vote as a separate class. Mr. Alan Levan’s and Mr. Abdo’s control position may have an adverse effect on the market price of BBX Capital’s Class A Common Stock and Class B Common Stock. In addition, their interests may conflict with the interests of BBX Capital’s other shareholders.

Provisions in BBX Capital's Amended and Restated Articles of Incorporation and Bylaws, may make it difficult for a third party to acquire BBX Capital and could have several important effects onimpact the price of BBX Capital's Class A Common Stock and Class B Common Stock.

BBX Capital's Amended and Restated Articles of Incorporation and Bylaws contain provisions that could delay, defer or prevent a change of control of BBX Capital or its subsidiaries,management. These provisions could make it more difficult for shareholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of BBX Capital's Class A Common Stock or Class B Common Stock. These provisions include:

·

The provisions in BBX Capital's Amended and Restated Articles of Incorporation regarding the special voting rights of BBX Capital 's Class B Common Stock;

·

Subject to the special class voting rights of holders of BBX Capital’s Class B Common Stock under certain circumstances, the authority of BBX Capital's board of directors to issue additional shares of common or preferred stock and to fix the relative rights and preferences of the preferred stock without additional shareholder approval; and

·

Advance notice procedures to be complied with by shareholders in order to make shareholder proposals or nominate directors.

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Holders of BBX Capital’s Class A Common Stock and Class B Common Stock may not receive dividends in the amounts anticipated, when anticipated, or at all.

BBX Capital’s board of directors have declared regular quarterly cash dividends since June 2016 and has indicated its intention to declare regular quarterly dividends on BBX Capital’s Class A Common Stock and Class B Common Stock. However, future dividends are subject to approval and declaration by BBX Capital’s board of directors and, accordingly, BBX Capital may not make dividend payments in the future, whether in the amount anticipated, on a regular basis, or at all. The payment of dividends, if any, by BBX Capital will depend on many factors considered by its board of directors, including, without limitation, thatour financial condition and results of operations, liquidity requirements, market opportunities, and contractual constraints. Further, over time, the Company’s cash needs may change significantly from its current needs, which could affect whether BBX Capital or its subsidiariespays dividends and the amount of any dividends it may be required to use availablepay in the future. The terms of BBX Capital’s indebtedness may also restrict it from paying cash for the payment of principal and interest duedividends on its debt and that the outstanding indebtedness and leverage at BBX Capital or its subsidiaries will impact liquidity, and any negative changes in general economic and industry conditions will increase such impact.stock under certain circumstances.

Bluegreen



Bluegreen is subject to the business, financial and operating risks inherent to the vacation ownership industry, any of which could adversely impact its business, prospects and results.



Bluegreen is subject to a number of business, financial and operating risks inherent to the vacation ownership industry, including, without limitation:



·

Significant competition from other vacation ownership businesses and hospitality and alternative lodging providers;

·

Market and/or consumer perception of vacation ownership companies and the industry in general;

·

Increases in operating and other costs (as a result of inflation or otherwise), including marketing costs, employee compensation and benefits, interest expense and insurance, which may not be offset by price or fee increases in our business;

·

Bluegreen’s business;ability to maintain, enhance, expand or achieve the benefits from its marketing arrangements and relationships;

·

Changes in taxes and governmental regulations, including those that influence or set wages, prices, interest rates or construction and maintenance procedures and costs;

·

The costsCosts and efforts associated with complying with applicable laws and regulations;regulations, and the costs and consequences of non-compliance;

·

Risks related to the development or acquisition of resorts and inventory, including delays in, or cancellations of, planned or future resort development or inventory acquisition activities;

·

Shortages of labor or labor disruptions;

·

The availabilityAvailability and cost of capital necessary for Bluegreen and third-party developers with whom Bluegreen does business to fund investments, capital expenditures and service debt obligations;

·

Bluegreen’s ability to securitize the receivables that it originates in connection with VOI sales;

·

TheRelationships with and the performance and financial condition of the third-party developers with whom Bluegreen does business;

·

Relationships with third-party developers, Bluegreen’s Vacation Club membersowners and HOAs;

·

Changes in the supply and demand for Bluegreen’s products and services;

·

Lack of security over, or unauthorized access to, customer or Bluegreen’s records;

·

The increased presence and effort of “timeshare-exit” firms and their impact on borrower default rates;

·

Private resales of VOIs and the sale of VOIs in the secondary market; and

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·

Unlawful or deceptive third-party VOI resale, cease and desist, or vacation package sales schemes, and reputational risk associated therewith.



Any of these factors could increase costs, limit or reduce the prices Bluegreen is able to charge for its products and services or adversely affect Bluegreen’s ability to develop or acquire new resorts, or source VOI supply from third parties, or otherwise adversely impact Bluegreen’s business, prospects or results.



Bluegreen’s business and operations, including its ability to market VOIs, may be adversely affected by general economic conditions and, conditions affecting the vacation ownership industry and the availability of financing.



Bluegreen’s business is subject to risks related to general economic and industry conditions and trends. Bluegreen’s results, operations and financial condition may be adversely affected by unfavorable general economic and industry conditions, such as high unemployment rates and job insecurity, declines in discretionary spending, declines in real estate values and the occurrence of adverse weather or geopolitical conflicts, including if these or other factors adversely impact the availability of financing for Bluegreen or Bluegreen’sits customers or the ability of Bluegreen’s customers’ to otherwise pay amounts owed under notes receivable. Further, adverse changes affecting the vacation ownership industry, such as an oversupply of vacation ownership units, a reduction in demand for such units, changes in travel and other consumer preferences, demographic and vacation patterns, changes in governmental regulation of the industry, imposition of increased taxes by governmental authorities, the declaration of bankruptcy and/or credit defaults by other vacation ownership companies

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and negative publicity for the industry, could also have a material adverse effect on Bluegreen’s business. In addition, Bluegreen'sThis includes risks relating to conditions that negatively shape public perception of Bluegreen resorts or of travel or the vacation ownership or hospitality industry generally, including travel-related accidents, disease outbreaks, whether in regions generally, at third party properties or at Bluegreen resorts (including reputational damage, remediation costs and other potential liability and adverse impact of any such outbreak at Bluegreen resorts). Bluegreen’s operations and results may be negatively impacted if Bluegreen is unable to update its business strategy over time and from time to time in response to changing economic and industry conditions.

Bluegreen may not be able to develop or acquire VOI inventory or enter into and maintain fee-based service agreements or other arrangements to source VOI inventory, which may cause its business and results to be adversely impacted.

In addition to developed VOI sales, Bluegreen sources VOIs as part of its capital-light business strategy through fee-based service agreements with third-party developers and through JIT and secondary market arrangements. If Bluegreen is unable to develop or acquire resorts at the levels or in the time frame anticipated, or is unsuccessful in entering into agreements with third-party developers or others to source VOI inventory in connection with its capital-light business strategy, Bluegreen may experience a decline in VOI supply, which could result in a decrease in its revenues. In addition, a decline in VOI supply could result in a decrease of financing revenues that are generated when VOIs are sold and fee and rental revenues that are generated by Bluegreen’s management services.



Bluegreen’s business and properties are subject to extensive federal, state and local laws, regulations and policies. Changes in these laws, regulations and policies, as well as the cost of maintaining compliance with new or existing laws, regulations and policies and the imposition of additional taxes on operations, as well as new cell phone technologies that automatically identify or block marketing vendor calls, could adversely affect Bluegreen’s business. In addition,Further, jurisdictions are increasingly seeking to identify additional sources of tax revenue and results of audits of its tax returns or those of its subsidiaries may also have a material adverse impact on Bluegreen’s financial condition.



The federal government and the state and local jurisdictions in which Bluegreen operates have enacted extensive regulations that affect the manner in which Bluegreen markets and sells VOIs and conductsconduct its other business operations. In addition, manyfederal, state and local regulators may enact new laws and regulations that may adversely affect Bluegreen’s results or require Bluegreen to substantially modify its business practices. Many states have adopted specific laws and regulations regarding the sale of VOIs. Many states, including Florida and South Carolina, where certain of Bluegreen’sBluegreen resorts are located, extensively regulate VOI and timeshare related activities, including the creation and management of timeshare resorts, the marketing and sale of timeshare properties, the escrow of purchaser funds prior to the completion of construction and closing, the content and use of advertising materials and promotional offers, the delivery of an offering memorandum and the creation and operation of exchange programs and multi-site timeshare plan reservation systems. Moreover, with regard to sales conducted in South Carolina, the closing of real estate and mortgage loan transactions must be conducted under the supervision of an attorney licensed in South Carolina and otherwise in accordance with South Carolina’s Time SharingTimesharing Transaction Procedures Act. Most states also have other laws that are applicable to Bluegreen’s activities, such as timeshare project registration laws, real estate licensure laws, mortgage licensure laws, sellers of travel licensure laws, anti-fraud laws, consumer protection laws, telemarketing laws, prize, gift and sweepstakes laws, and consumer credit laws. Bluegreen'sBluegreen’s management of, and dealings with, HOAs, including Bluegreen'sBluegreen’s purchase of defaulted inventory from HOAs in connection with its secondary market sales, isare also subject to state laws and resort rules and regulations, including those with respect to the establishment of budgets and expenditures, rule-making, and the imposition of maintenance assessments.

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Bluegreen currently is authorized to market and sell VOIs in all locations at which itsBluegreen marketing and sales activities are conducted. If Bluegreen’s agents or employees violate applicable regulations or licensing requirements, their acts or omissions could cause the states where the violations occurred to revoke or refuse to renew Bluegreen’s licenses, render Bluegreen’s sales contracts void or voidable, or impose fines on Bluegreen based on past activities.



In addition, the federal government and the state and local jurisdictions in which Bluegreen conducts business have generally enacted extensive regulations relating to direct marketing and telemarketing, including the federal government’s national “do not call” list, the making of marketing and related calls to cell phone users, a significant development in light of cell phone usage rapidly becoming the primary method of communication, the Telemarketing Sales Rule, the Telephone Consumer Protection Act and the CAN-SPAM Act of 2003. These regulations, as well as international data protection laws, have impacted Bluegreen’s marketing of VOIs. While Bluegreen has taken steps designed to ensure compliance with these new applicable regulations, these steps have increased and are expected to continue to increase Bluegreen’s marketing costs and may not prevent failures in compliance. Additionally, adoption of new state or federal laws regulating marketing and solicitation, and changes to existing laws, could adversely affect current or planned marketing activities and cause Bluegreen to change its marketing strategy. If this occurs, Bluegreen may not be able to develop adequate alternative marketing strategies, which could affect the amount and timing of its VOI sales. Bluegreen cannot predict the impact that these legislative initiatives or any other legislative measures that may be proposed or enacted in the future may have on Bluegreen’sits marketing strategies and results. Further, from time to time, complaints are filed against Bluegreen by individuals claiming that they received calls in violation of applicable regulations. See “Item 3 –3. Legal Proceedings” for a description of litigation brought against Bluegreen and Choice Hotels in January 2018 related toProceedings.” Technology advances, including new cellphone technologies that automatically identify

or block marketing vendor calls, may also adversely impact Bluegreen’s telemarketing sales activities.efforts or otherwise cause Bluegreen to change its marketing strategy.



Most states have taxed VOIs as real estate, imposing property taxes that are billed to the respective HOAs that maintain the related resorts, and have not sought to impose sales tax upon the sale of the VOI or accommodations tax upon the use of the VOI. From time to time, however, various states have attempted to promulgate new laws or apply existing laws impacting the taxation of VOIs to require that sales or accommodations taxes be collected. Should new state or local laws be implemented or interpreted to impose sales or accommodations taxes on VOIs, Bluegreen’s business could be materially adversely affected.



From time to time, consumers file complaints against Bluegreen in the ordinary course of Bluegreen’s business.its business, consumers file complaints against Bluegreen.  Bluegreen couldmay be required to incur significant costs to resolve these complaints or enter into consents with regulators regarding its activities, including that it may be required torequiring the refund of all or a portion of the purchase price paid by the customer for the VOI. If Bluegreen mayis found to have not remain in compliancecomplied with all

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applicable federal, state and local laws and regulations, andsuch violations of applicable laws may have adverse implications on Bluegreen, including rendering Bluegreen’s VOI sales contracts void or voidable, negative publicity, potential litigation, and regulatory fines or other sanctions. The expense, negative publicity and potential sanctions associated with any failure to comply with applicable laws or regulations could have a material adverse effect on Bluegreen’s business, results of operations or financial position.



Under the Americans with Disabilities Act of 1990 and the Accessibility Guidelines promulgated thereunder (collectively, the “ADA”), all public accommodations, including Bluegreen’s properties, must meet various federal requirements related to access and use by disabled persons. Compliance with the ADA’s requirements could require removal of access barriers or other renovations, and non-compliance could result in the imposition of fines or penalties, or awards of damages, against Bluegreen.  Bluegreen’s properties are also subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. Further, various laws govern Bluegreen’s resort management activities, including laws and regulations regarding community association management, public lodging, food and beverage services, liquor licensing, labor, employment, health care, health and safety, accessibility, discrimination, immigration, and the environment (including climate change).



Bluegreen’s lending activities are also subject to a number of laws and regulations, including laws and regulations related to consumer loans, retail installment contracts, mortgage lending, fair debt collection and credit reporting practices, consumer collection practices, contacting debtors by telephone, mortgage disclosure, lender licenses and money laundering. The Consumer Finance Protection Bureau, created under the Dodd-Frank Act, has emphasized new regulatory focus on areas of Bluegreen’s business such as consumer mortgage servicing and debt collection, credit reporting and consumer financial disclosures, all of which affect the manner in which Bluegreen may provide financing to the purchasers of VOIs and conduct its lending and loan servicing operations.

In addition, VOIs may in the future be deemed to be securities under federal or state law and therefore subject to applicable securities regulation, which could have a material adverse effect on Bluegreen due to, among other things, the cost of compliance with such regulations.

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The vacation ownership and hospitality industries are highly competitive, and Bluegreen may not be able to compete successfully.



Bluegreen competes with various high profile and well-established operators, many of which have greater liquidity and financial resources than Bluegreen. Many of the world’s most recognized lodging, hospitality and entertainment companies develop and sell timeshare units or VOIs in resort properties. Bluegreen also competes with numerous smaller owners and operators of vacation ownership resorts and also faces competition from alternative lodging options available to consumers through both traditional methods of delivery as well as new web portals and applications, including private rentals of homes or apartments or condominium units, which have increased in popularity in recent years. Bluegreen's ability to remain competitive and to attract and retain customers depends on its customers' satisfaction with its products and services as well as on distinguishing the quality, value, and efficiency of its products and services from those offered by its competitors.  Customer dissatisfaction with experiences at its resorts or otherwise as a member of the Bluegreen Vacation Club owner, including due to an inability to use points for desired stays, could result in negative publicity and/or a decrease in sales, or otherwise adversely impact Bluegreen's ability to successfully compete in the vacation ownership and hospitality industries. Bluegreen may not be able to timely and sufficiently identify and remediate the cause of customer dissatisfaction. Any of these events could materially and adversely impact Bluegreen's operating results and financial condition.



Bluegreen’s business and profitability may be impacted if financing is not available on favorable terms, or at all. 



In connection with VOI sales, of VOIs, Bluegreen generally offers financing to the purchaser of up to 90% of the purchase price of the VOI. However, Bluegreen incurs selling, marketing and administrative cash expenses prior to and concurrent with the sale. These costs, along with the cost of the underlying VOI, generally exceed the down payment Bluegreen receives at the time of the sale. Accordingly, Bluegreen’s ability to borrow against or sell its notes receivable has historically been a critical factor in Bluegreen’s continued liquidity, and Bluegreen therefore has depended on funds from its credit facilities and securitization transactions to finance its operations. If Bluegreen’s pledged receivables facilities terminate or expire and Bluegreen is unable to extend them or replace them with comparable facilities, or if Bluegreen is unable to continue to participate in securitization-type transactions and “warehouse” facilities on acceptable terms, Bluegreen’s liquidity, cash flow and profitability would be materially and adversely affected. Credit market disruptions have in the past adversely impacted the willingness of banks and other finance companies to provide “warehouse” lines of credit for VOI notes receivable and resulted from time to time in the term securitization market being unavailable. Future credit market disruptions, including those associated with the coronavirus outbreak in the United States, may have similar effects or otherwise make obtaining additional and replacement external sources of liquidity more difficult and costly.more costly, if available at all.



In addition, financing for real estate acquisition and development and the capital markets for corporate debt is cyclical. While Bluegreen has increased its focus on expanding its fee-based service business and encouraging higher down payments in connection with sales, there is no assurance that these initiatives will enhance Bluegreen’s financial position or otherwise be successful in the long term. 



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Bluegreen anticipates that it will continue to seek and use external sources of liquidity, including funds that Bluegreen obtains pursuant to additional borrowings under its existing credit facilities, under credit facilities that Bluegreen may obtain in the future, under securitizations in which Bluegreen may participate in the future or pursuant to other borrowing arrangements, to:



·

Support Bluegreen’s operations and, subject to declaration by its board of directors and contractual limitations, including limitations contained in its credit facilities, pay dividends;

·

Finance the acquisition and development of VOI inventory or property and equipment;

·

Finance a substantial percentage of Bluegreen’s sales; and

·

Satisfy Bluegreen’s debt and other obligations.



Bluegreen’s ability to service or refinance its indebtedness or to obtain additional financing (including its ability to consummate future term securitizations) depends on the credit markets and on Bluegreen’s future performance, which is subject to a number of factors, including the success of Bluegreen’s business, results of operations, leverage, financial condition and business prospects, prevailing interest rates, general economic conditions, the performance of Bluegreen’s receivables portfolio, and perceptions about the vacation ownership and real estate industries.



As of December 31, 2017,2019, Bluegreen had $19.9$10.3 million of indebtedness scheduled to become due during 2018.2020. Historically, much of Bluegreen’s debt has been renewed or refinanced in the ordinary course of business. However, there is no assurance that Bluegreen will in the future be able to obtain sufficient external sources of liquidity on

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attractive terms, or at all, or otherwise renew, extend or refinance all or any portion of its outstanding debt.  Anydebt or otherwise obtain sufficient external sources of these occurrences may have a material adverse impactliquidity, in each case, on attractive terms, or at all. If Bluegreen is unable to do so, Bluegreen’s liquidity and financial condition.condition may be materially, adversely impacted.



In addition, Bluegreen has and intends to continue to enter into arrangements with third-party developers pursuant to which it will sell their VOI inventory for a fee. These arrangements enable Bluegreen to generate fees from the marketing and sales services provided, and in certain cases from provisions of management services, without requiring it to fund development and acquisition costs. If these third-party developers are not able to obtain or maintain financing necessary for their development activities or other operations, Bluegreen may not be able to enter into these fee-based arrangements or have access to their VOI inventory when anticipated, which would adversely impact results.



Bluegreen would suffer substantial losses and its liquidity position could be adversely impacted if an increasing number of customers to whom Bluegreen provides financing default on their obligations.



Adverse conditions in the mortgage industry, including credit availability, borrowers’ financial profiles, prepayment rates and other factors, including those outside of Bluegreen’s control, may increase the default rates Bluegreen experiences or otherwise negatively impact the performance of its notes receivable. In addition, in recent years, externalthird parties have been discouraging certain borrowers from staying current on their note payments. Although in many cases Bluegreen may have recourse against a buyer for the unpaid purchase price, certain states have laws that limit Bluegreen’s ability to recover personal judgments against customers who have defaulted on their loans or Bluegreen may determine that the cost of doing so may not be justified. Historically, Bluegreen has generally not pursued such recourse against its customers. In the case of Bluegreen’s notes receivable secured by VOIs, if Bluegreen is unable to collect the defaulted amount due, Bluegreen traditionally has terminated the customer’s interest in the Bluegreen Vacation Club and then remarketed the recovered VOI. Irrespective of Bluegreen’s remedy in the event of a default, Bluegreen cannot recover the marketing, selling and administrative costs associated with the original sale, and such costs generally exceed the cash received by Bluegreen from the buyer at the time of the sale. In addition, Bluegreen will need to incur such costs again in order to resell the VOI. Bluegreen updates its estimate of such future losses each quarter, and consequently, the charge against sales in a particular period may be impacted, favorably or unfavorably, by a change in expected losses related to notes originated in prior periods. In addition, defaults may cause buyers of, or lenders whose loans are secured by, Bluegreen’s VOI notes receivable to reduce the amount of availability or advance rates under receivables purchase and credit facilities, or to result in an increase in the interest costs associated with such facilities. In such an event, the cost of financing may increase, and Bluegreen may not be able to secure replacement or alternative financing on terms acceptable to Bluegreen, if at all, which would adversely affect Bluegreen’s earnings, financial position and liquidity.



As described above, Bluegreen’s VOI notes receivable financing facilities could be adversely affected if a particular VOI note receivable pool fails to meet certain performance ratios, which could occur if the default rate or other credit metrics of the underlying VOI notes receivable deteriorate. In addition, if Bluegreen offers financing to purchasers of VOIs with terms longer than those generally offered in the industry, Bluegreen may not be able to securitize those VOI financing receivables. Bluegreen’s ability to sell securities backed by Bluegreen’s VOI notes receivable depends on the continued ability and willingness of capital market participants to invest in such securities. Asset-backed securities issued in Bluegreen’s term securitization transactions could be downgraded by credit agencies in the future. If a downgrade occurs, Bluegreen’s ability to complete other securitization transactions on acceptable terms or at all could be jeopardized, and Bluegreen could be forced to rely on other potentially more expensive and less attractive funding sources, to the extent available. Similarly, if other operators of vacation ownership products were to experience significant financial difficulties, or if the

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vacation ownership industry as a whole were to contract, Bluegreen could experience difficulty in securing funding on acceptable terms. The occurrence of any of the foregoing could adversely impact Bluegreen’s business and results, including, without limitation, by reducing the amount of financing Bluegreen is able to provide to VOI purchasers, which in turn may result in a reduction in VOI sales.



In addition, under the terms of Bluegreen’s pledge and receivable sale facilities, Bluegreen may be required, under certain circumstances, to replace receivables or to pay down the loan to within permitted loan-to-value ratios. Additionally, the terms of Bluegreen’s securitization transactions require Bluegreen to repurchase or replace loans if Bluegreen breachedbreaches any of the representations and warranties Bluegreen made at the time Bluegreen sold the receivables. These agreements also often include terms providing that,for substantially all of Bluegreen’s cash flow from its retained interest in the receivable portfolios sold to be paid to the parties who purchased the receivables from Bluegreen in the event of defaults or delinquencies by customers in excess of stated thresholds, or if other performance thresholds are not met, substantially all of Bluegreen’s cash flow from its retained interest in the receivable portfolios sold will be required to be paid to the parties who purchased the receivables from Bluegreen.met. 



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Bluegreen's existing indebtedness, or indebtedness that it may incur in the future, could adversely impact its financial condition and results of operations, and the terms of Bluegreen's indebtedness may limit its activities.



Bluegreen's level of debt and debt service requirements have several important effects on Bluegreen's operations. Significant debt service cash requirements reduce the funds available for operations and future business opportunities and increase Bluegreen's vulnerability to adverse economic and industry conditions, as well as conditions in the credit markets generally. In addition, Bluegreen's leverage position increases its vulnerability to economic and competitive pressures and may limit funds available for acquisitions, working capital, capital expenditures, dividends, and other general corporate purposes. Further, the financial covenants and other restrictions contained in indentures, credit agreements and other agreements relating to Bluegreen's indebtedness require Bluegreen to meet certain financial tests and restrictmay limit its ability to, among other things, pay dividends, borrow additional funds, dispose of assets or make investments. If Bluegreen fails to comply with the terms of its debt instruments, such debt may become due and payable immediately, which would have a material adverse impact on Bluegreen's cash position and financial condition. Significant resources may be required to monitor Bluegreen's compliance with its debt instruments (from a quantitative and qualitative perspective), and such monitoring efforts may not be effective in all cases. Bluegreen may also incur substantial additional indebtedness in the future. If new debt or other liabilities are added to its current debt levels, the related risks that it nowBluegreen faces as described above, could intensify.



To the extent inflationary trends, tightened credit markets or other factors affect interest rates, Bluegreen’s debt service costs may increase. If interest rates increased one percentage point, the effect on interest expense related to Bluegreen’s variable-rate debt would be an annual increase of $2.1$3.4 million, based on balances as of December 31, 2017.2019.    



The ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain, renew or extend credit facilities, or otherwise raise funds.



Rating agencies from time to time review prior corporate and specific transaction ratings in light of tightened ratings criteria. In December 2017,Bluegreen suspended its corporate credit rating with Standard & Poor’s Rating Services affirmed Bluegreen’s ‘B+’ credit rating.  Bluegreen’srating services during 2019 as Bluegreen no longer used the corporate credit rating is also based, in part, onfor any financings. However, specific securitization transactions continue to be reviewed by third- party rating agencies’ speculation about Bluegreen’s potential future debt and dividend levels.agencies. If rating agencies were to downgrade Bluegreen’s corporate credit ratings, Bluegreen’s ability to raise funds on favorable terms, or at all, and Bluegreen’s liquidity, financial condition and results of operations could be adversely impacted. See “Bluegreen would suffer substantial losses and Bluegreen’s liquidity position could be adversely impacted if an increasing number of customers to whom Bluegreen provides financing default on their obligations” above. In addition, if rating agencies downgraded their original ratings on certain bond classes in Bluegreen’s securitizations, holders of such bonds may be required to sell bonds in the marketplace, and such sales could occur at a discount, which could impact the perceived value of the bonds and Bluegreen’s ability to sell future bonds on favorable terms or at all. While Bluegreen is not aware of any reasonably likely downgrades to its corporate credit rating or the ratings of bond classes in its securitizations, such ratings changes can occur without advance notice.notice.

There are risks associated with Bluegreen’s strategic partnerships and arrangements.

Bluegreen generates a significant portion of its new sales prospects and leads through its arrangements with various third parties, including Bass Pro and Choice Hotels, and is dependent upon these relationships in order to acquire new customers. VOI sales to prospects and leads generated by Bluegreen’s marketing arrangement with Bass Pro accounted for approximately 13% and 14% of Bluegreen’s VOI sales volume during the years ended December 31, 2019 and 2018, respectively. If Bluegreen’s agreement with Bass Pro, or any other significant marketing arrangement, does not generate a sufficient number of prospects and leads or is terminated or limited and not replaced by another source of sales prospects and leads, Bluegreen may not be able to successfully market and sell its products and services at current sales levels, at anticipated levels or at levels required in order to offset the costs associated with Bluegreen’s marketing efforts. In addition, our business relationship with Bass Pro under the revised terms of our marketing agreement may not be as profitable as under the prior terms, or at all, or otherwise result in the benefits anticipated.



Bluegreen’s future success depends on its ability to market its products and services successfully and efficiently, and Bluegreen’s marketing expenses have increased and may continue to increase in the future.



As previously described, Bluegreen competes for customers with hotel and resort properties, other vacation ownership resorts and alternative lodging options, including private rentals of homes, and apartments or condominium units. The identification of sales prospects and leads and the marketing of Bluegreen’s products and services to them are essential to Bluegreen’s success. Bluegreen incurs

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expenses associated with marketing programs in advance of the closing of sales. If Bluegreen’s lead identification and marketing efforts do not yield enough leads or Bluegreen is unable to successfully convert sales leads to sales, Bluegreen may be unable to recover the expense of its marketing programs and systems and its business, operating results and financial condition would be adversely affected. In addition, while sales to existing owners have increased recently, Bluegreen is currently focusing and has increasedalso continues to focus its marketing efforts on selling to new customers, which typically involves a relatively higher marketing cost compared to sales to existing owners and therefore has increased and is expected to continue to increaseowners. These efforts may result in increases in Bluegreen’s sales and marketing expenses. If Bluegreen is not successful in offsetting the cost increase with greater sales revenue, Bluegreen’s operating results and financial condition would be adversely impacted. In addition, Bluegreen's marketing efforts are subject to the risk of changing consumer behavior. Changes in consumer behavior may adversely impact the effectiveness of marketing efforts and strategies which Bluegreen has in place, and Bluegreen may not be able to timely and effectively respond to such changes.

Bluegreen generates a significant portion of its new sales prospects and leads through its arrangements with various third parties, including Bass Pro and Choice Hotels. VOI sales to prospects and leads generated by Bluegreen’s marketing arrangement with Bass Pro accounted for approximately 15% and 16% of its VOI sales volume during the years ended December 31, 2017 and 2016, respectively. If this arrangement with BassPro, or any other significant

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marketing arrangement, does not generate a sufficient number of prospects and leads or is terminated or limited and not replaced by another source of sales prospects and leads, In addition, Bluegreen may not be able to successfullycontinue to increase or maintain its level of sales to existing owners.

Bluegreen may not be able to develop or acquire VOI inventory or enter into and maintain fee-based service agreements or other arrangements to source VOI inventory, which may cause its business and results to be adversely impacted.

In addition to developed VOI sales, Bluegreen sources VOIs as part of its capital-light business strategy through fee-based service agreements with third-party developers and through JIT and secondary market and sell its products and servicesarrangements. If Bluegreen is unable to develop or acquire resorts at current sales levels, at anticipatedthe levels or at levels required in orderthe time frames anticipated, or is unsuccessful in entering into agreements with third-party developers or others to offset the costs associatedsource VOI inventory in connection with its marketing efforts. On October 9, 2017, Bass Pro raised an issue regarding the computation of the sales commissions paid to it on the sale of VOIs. Whilecapital-light business strategy, Bluegreen believes that the amount paid was consistent with the terms and intent of the parties’ agreements, the resolution of that issue couldmay experience a decline in the future result inVOI supply or an increase in its marketing costsVOI cost, which could have a negative impact on Bluegreen’s sales and adversely impact the Company’s operating results of operations. In addition, a decline in VOI supply and financial condition. The Company recognized approximately $4.8 millionsales could result in selling, generala decrease in financing revenues that are generated by VOI sales and administrative expense related to this matter during the fourth quarter of 2017.  fee and rental revenues that are generated by Bluegreen’s management services.



Bluegreen may not be successful in maintaining or expanding its capital-light business relationships, or its capital-light activities, including fee-based sales and marketing arrangements, and JIT and secondary market sales activities, and such activities may not be successful or profitable, which maywould have an adverse impact on Bluegreen’s results of operations and financial condition.



Bluegreen offers fee-based marketing, sales, resort management and other services to third-party developers.  Bluegreen has over the last several years continued to expand its capital-light business strategy, which Bluegreen believes enables it to leverage its expertise in sales and marketing, resort management, mortgage servicing, construction management and title services. Bluegreen currently intends to continue its focus on its capital-light business activities as such activities generally produce positive cash flow and typically require less capital investment than Bluegreen’s traditional vacation ownership business.business while Bluegreen is considering increasing its development activities with the objective of increasing its margins and holding the notes receivable generated by those sales of VOIs. Bluegreen has attempted to structure these activities to cover its costs and generate a profit. Sales of third party developers’ VOIs must generate sufficient cash to comply with the terms of their financing obligations as well as to pay the fees or commissions due to Bluegreen. The third party developers may not be able to obtain or maintain financing necessary to meet the developer’s requirements, which could impact Bluegreen's ability to sell the developers’ inventory. While Bluegreen could attempt to utilize other arrangements, including JIT arrangements, where Bluegreen would utilize its receivable credit facilities in order to provide fee-based marketing and sales services, this would reduce the credit otherwise available to Bluegreen and impact profitability. Bluegreen commenced its capital-light activities largely during the recession“Great Recession” in response to poor economic conditions, and Bluegreen’s fee-based and other capital-light business activities in the future may be adversely impacted by changes in economic conditions. WhileWhen Bluegreen performs fee-based sales and marketing services, Bluegreen sells VOIs in a resortresorts developed by a third partyparties as an interest in the Bluegreen Vacation Club. This subjects Bluegreen to a number of risks typically associated with selling products developed by others under its own brand name, including litigation risks. Further, these arrangements may expose Bluegreen to additional risk as it will not control development activities or timing of development completion. If third parties with whom Bluegreen enters into agreements are not able to fulfill their obligations to Bluegreen, the inventory expected to be acquired or marketed and sold on their behalf may not be available when expected or at all, or may not otherwise be withinmeet agreed-upon specifications. Further, if these third parties do not perform as expected and Bluegreen does not have access to the expected inventory or ability to obtain access to inventory from alternative sources on a timely basis, its ability to maintain or increase sales levels would be adversely impacted.



Bluegreen also sells VOI inventory through secondary market arrangements which require low levels of capital deployment. In connection with secondary market sales, Bluegreen acquires VOI inventory from its resorts’ HOAs, generally on a non-committed basis in close proximity to the timing of when Bluegreen intends to sell such VOIs. VOIs purchased from HOAs are typically obtained by the HOAs through foreclosure in connection with maintenance fee defaults and are generally acquired by Bluegreen at a discount. While Bluegreen intends to increase its secondary market sales efforts in the future, Bluegreen may not be successful in doing so, and these efforts may not result in Bluegreen achieving anticipated results. Further, Bluegreen’s secondary market sale activities may subject Bluegreen to negative publicity, which could adversely impact its reputation and business. 



Bluegreen’s results of operations and financial condition may be materially and adversely impacted if Bluegreen does not continue to participate in exchange networks and other strategic alliances with third parties or if Bluegreen’s customers are not satisfied with the networks in which Bluegreen participates or Bluegreen’s strategic alliances.

Bluegreen believes that its participation in exchange networks and other strategic alliances and its Traveler Plus™ program make ownership of Bluegreen VOIs more attractive by providing owners with the ability to take advantage of vacation experiences in addition to stays at Bluegreen’s resorts. A VOI owner’s participation in the RCI exchange network allows Vacation Club owners to use their points to stay at over 4,300 participating resorts, based upon availability and the payment of a variable exchange fee.  During the year ended December 31, 2017, approximately 8% of Vacation Club owners utilized the RCI exchange network for a stay of two or more nights.  Bluegreen also has

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an exclusive strategic arrangement with Choice Hotels pursuant to which, subject to payments and conditions, certain of Bluegreen’s resorts have been branded as part of Choice Hotels’ Ascend Hotel Collection. For a nominal annual fee and transactional fee, Vacation Club owners may also participate in Bluegreen’s Traveler Plus program, which enables them to use their points to access an additional 44 direct exchange resorts, for other vacation experiences such as cruises. Vacation Club owners can convert their Vacation Club points into Choice Privileges points. Choice Privileges points can be used for stays at Choice Hotels. In addition, Traveler Plus members can directly use their Vacation Club points for stays at Choice Hotels’ Ascend Hotel Collection properties, a network of historic and boutique hotels in the United States, Canada, Scandinavia and Latin America. Bluegreen may not be able to or desire to continue to participate in the RCI or direct exchange networks in the future or maintain or extend its other marketing and strategic networks, alliances and relationships. In addition, these networks, alliances and relationships, and Bluegreen’s Traveler Plus program, may not continue to operate effectively, and its customers may not be satisfied with them. In addition, Bluegreen may not be successful in identifying or entering into new strategic relationships in the future. If any of these events should occur, Bluegreen’s results of operations and financial condition may be materially and adversely impacted.

Bluegreen is subject to certain risks associated with its management of resort properties.



Through management of resorts and ownership of VOIs, Bluegreen is subject to certain risks related to the physical condition and operation of the managed resort properties in its network, including:



·

The presence of construction or repair defects or other structural or building damage at any of these resorts, includingor resorts Bluegreen may develop in the future;

·

Any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements or building permit requirements relating to these resorts;

·

Any costs or damage to physical assets or interruption of access to physical assets or operations resulting from an outbreak of contagious diseases, such as the recent coronavirus outbreak, or from natural disasters, such as hurricanes, earthquakes, fires, floods and windstorms, which may increase in frequency or severity due to climate change or other factors; and

·

Claims by employees, members and their guests for injuries sustained on these resort properties.



Some of these risks may be more significant in connection with the properties for which Bluegreen recently acquired management agreements, particularly thoseany management agreements which were acquired from operators in financial distress. If an uninsured loss or a loss in excess of insured limits occurs as a result of any of the foregoing, Bluegreen may be subjectforced to incur significant costs.



Additionally, a number of U.S. federal, state and local laws, including the Fair Housing Amendments Act of 1988 and the ADA, impose requirements related to access to and use by disabled persons of a variety of public accommodations and facilities. A determination that managed resorts are subject to, and that they are not in compliance with, these accessibility laws could result in a judicial order requiring compliance, imposition of fines or an award of damages to private litigants. If one of Bluegreen’s managed resorts was required to make significant improvements as a result of non-compliance with these accessibility laws, assessments might be needed to fund such improvements, which additional costs may cause its VOI owners to default on their consumer loans from Bluegreen or cease making required maintenance fee or assessment payments. Also, to the extent that Bluegreen holds interests in a particular resort, it would be responsible for the pro rata share of the costs of such improvements. In addition, any new legislation may impose further burdens or restrictions on property owners with respect to access by disabled persons.



The resort properties that Bluegreen manages are subject to federal, state and local laws and regulations relating to the protection of the environment, natural resources and worker health and safety, including laws and regulations governing and creating liability relating to the management, storage and disposal of hazardous substances and other regulated materials and the cleanup of contaminated sites. The resorts are also subject to various environmental laws and regulations that govern certain aspects of their ongoing operations. These laws and regulations control such things as the nature and volume of wastewater discharges, quality of water supply and waste management practices. To the extent that Bluegreen holds interests in a particular resort, it would be responsible for the pro rata share of losses sustained by such resort as a result of a violation of any such laws and regulations.



In addition, Bluegreen may from time to time have disagreements with VOI owners and HOAs resulting from its provision ofrelating to the management services.services it provides. Failure to resolve such disagreements may result in litigation.litigation and additional costs. Further, disagreements with HOAs could also result in the loss of management contracts, which would negatively affect Bluegreen’s revenues and results and may also have an adverse impact on its ability to generate sales from existing VOI owners.



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Bluegreen’s management contracts are typically structured as “cost-plus,” with an initial term of three years and automatic one-yearone year renewals. If a management contract is terminated or not renewed on favorable terms or is renegotiated in a manner adverse to Bluegreen, its revenues and cash flows would be adversely affectedaffected.

Bluegreen’s results of operations and financial condition may be materially and adversely impacted if Bluegreen does not continue to participate in exchange networks and other strategic alliances with third parties or if Bluegreen customers are not satisfied with the networks in which Bluegreen participate or our strategic alliances.

Bluegreen believes that its participation in exchange networks and other strategic alliances and its Traveler Plus program make ownership of its VOIs more attractive by providing owners with the ability to take advantage of vacation experiences in addition to stays at Bluegreen resorts. Bluegreen’s participation in the RCI exchange network allows Vacation Club owners to use their points to stay at over 4,300 participating resorts, based upon availability and the payment of a variable exchange fee. During the year ended December 31, 2019, approximately 7% of Vacation Club owners utilized the RCI exchange network for a stay of two or more nights. Bluegreen also has an exclusive strategic arrangement with Choice Hotels pursuant to which, subject to payments and conditions, certain of Bluegreen resorts have been branded as part of Choice Hotels’ Ascend Hotel Collection. Vacation Club owners can convert their Vacation Club points into Choice Privileges points. Choice Privileges points can be used for stays at Choice Hotels’ properties. For a nominal annual fee and transactional fees, Vacation Club owners may also participate in Bluegreen’s Traveler Plus program, which enables them to use points to access an additional 46 direct exchange resorts and for other vacation experiences such as cruises. In addition, Traveler Plus members can directly use their Vacation Club points for stays at Choice Hotels’ Ascend Hotel Collection properties, a network of

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Maintenance

historic and boutique hotels in the United States, Canada, Scandinavia and Latin America. Bluegreen may not be able to or desire to continue to participate in the RCI or direct exchange networks in the future or maintain or extend its other marketing and strategic networks, alliances and relationships. In addition, these networks, alliances and relationships, and Bluegreen’s Traveler Plus program, may not continue to operate effectively, and Bluegreen customers may not be satisfied with them. In addition, Bluegreen may not be successful in identifying or entering into new strategic relationships in the future. If any of these events should occur, Bluegreen’s results of operations and financial condition may be materially and adversely impacted.

If maintenance fees at Bluegreen’s resorts and/or Vacation Club dues may beare required to be increased, whichBluegreen’s products could cause its product to become less attractive, defaults could increase and Bluegreen’s business could harm business.be harmed. 



The maintenance fees, special assessments and Vacation Club dues that are levied by HOAs and the Vacation Club on VOI owners may increase as the costs to maintain and refurbish properties, and to keep properties in compliance with Bluegreen’s standards and applicable regulations, increase. Increases in such fees, assessments or dues could negatively affect customer satisfaction with Bluegreen’s Vacation Club or otherwise adversely impact VOI sales to both new customers and existing VOI owners or could contribute to additional defaults.



Bluegreen’s strategic transactions and relationships may not be successful and may divert its management’s attention and consume significant resources.



Bluegreen intends to continue its strategy of selectively pursuing complementary strategic transactions.transactions and relationships. Bluegreen may also purchase management contracts, including from resort operators facing financial distress, and purchase VOI inventory at resorts that it does not manage, with the goal of acquiring sufficient VOI ownership at such a resort to become the manager of that resort. The successful execution of this strategy will depend on Bluegreen’s ability to identify and enter into the agreements necessary to take advantage of these potential opportunities, and to obtain any necessary financing. Bluegreen may not be able to do so successfully. In addition, Bluegreen’s management may be required to devote substantial time and resources to pursue these opportunities, which may impact their ability to manage itsother operations effectively.



Acquisitions and new strategic relationships involve numerous additional risks, including: (i) difficulty in integrating the operations and personnel of the acquired business or assets; (ii) potential disruption of ongoing business and the distraction of management from day-to-day operations; (iii) difficulty entering markets and relationships in which Bluegreen has limited or no prior experience and in which competitors have a stronger market position; (iv) difficulty maintaining the quality of services that Bluegreen has historically provided across new acquisitions; (v) potential legal and financial responsibility for liabilities of the acquired business or assets; (vi) potential overpayment for the acquired business or assets;in connection with transactions; (vii) increased expenses associated with completingtransactions or an acquisition and amortizing any acquired intangible assets; (viii) risks associated with any debt incurred in connection with the financing of the transaction;transactions; and (ix) challenges in implementing uniform standards, controls, procedures and policies throughout an acquired business.



Bluegreen is dependent on the managers of its affiliated resorts not managed, owned or operated by Bluegreen to ensure that those properties meet its customers’ expectations.



In addition to stays at Bluegreen resorts, Vacation Club owners have access to other resorts and hotels as a result of participation in exchange programs and other strategic alliances. Accordingly, Vacation Club owners have access to resorts that Bluegreen does not manage, own or operate. If the managers of a significant number of those properties were to fail to maintain themresorts are not maintained in a manner consistent with Bluegreen’s standards of quality, or Bluegreen’s Vacation Club owners are otherwise dissatisfied with those resorts, Bluegreen may be subject to customer complaints and its reputation and brand could be damaged. In addition, Bluegreen’s agreements with these resorts or their owners may expire, be terminated or not be renewed, or may be renegotiated in a manner adverse to Bluegreen, and Bluegreen may be unable to enter into new agreements that provide Vacation Club owners with equivalent access to additional resorts, any or all of which could materially adversely impact Bluegreen’s business, operating results and financial condition.



The resale market for VOIs could adversely affect Bluegreen’s business.



Based on Bluegreen’s experience at its resorts and at resorts owned by third parties, Bluegreen believes that resales of VOIs in the secondary market generally are made at net sales prices below the original customer purchase prices. The relatively lower sales prices are partly attributable to the high marketing and sales costs associated with the initial sales of such VOIs. Accordingly, the initial purchase price of a VOI may be less attractive to prospective buyers, and Bluegreen competesmay compete with buyers who seek to resell their VOIs. While VOI resale clearing houses or brokers currently do not have a material impact on Bluegreen’s business, the availability of resale VOIs at lower prices, particularly if an organized and liquid secondary market develops, could adversely affect Bluegreen’s level of sales and sales prices, which in turn would adversely affect Bluegreen’s business, financial condition and results of operations.



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Bluegreen is subject to the risks of the real estate market and the risks associated with real estate development, including a decline in real estate values and a deterioration of other conditions relating to the real estate market and real estate development.



Real estate markets are cyclical in nature and highly sensitive to changes in national and regional economic conditions, including:



·

Levels of unemployment;

·

Levels of discretionary disposable income;

·

Levels of consumer confidence;

·

The availability of financing;

·

Overbuilding or decreases in demand;

·

Interest rates; and

·

Federal, state and local taxation methods.



A deterioration in general economic conditions or in the real estate market would have a material adverse effect on Bluegreen’s business.



Bluegreen expects to seek to acquire more real estate inventory in the future, and the availability of land for development of resort properties at favorable prices will be critical to Bluegreen’s profitability and the ability to cover its significant selling, general and administrative expenses, cost of capital and other expenses. If Bluegreen is unable to acquire such land or resort properties at a favorable cost, Bluegreen’s results of operations may be materially, adversely impacted. The profitability of Bluegreen’s real estate development activities is also impacted by the cost of construction, including the costs of materials and labor and other services. Should the cost of construction materials and services rise, the ultimate cost of Bluegreen’s future resorts inventory when developed could increase and have a material, adverse impact on Bluegreen’s results of operations. Bluegreen is also exposed to other risks associated with development activities, including, without limitation:



·

Adverse conditions in the capital markets may limit Bluegreen’s ability to raise capital for completion of projects or for development of future properties;

·

Construction delays, zoning and other local, state or federal governmental approvals, cost overruns, lender financial defaults, or natural disasters, such as earthquakes, hurricanes, floods, fires, volcanic eruptions and oil spills, increasing overall construction costs, affecting timing of project completion or resulting in project cancellations;

·

Any liability or alleged liability or resulting delays associated with latent defects in design or construction of projects Bluegreen has developed or that Bluegreen constructs in the future adversely affecting Bluegreen’s business, financial condition and reputation;

·

Failure by third-party contractors to perform for any reason, exposing Bluegreen to operational, reputational and financial harm; and

·

The existence of any title defects in properties Bluegreen acquires.



In addition, the third-party developers from whom Bluegreen sources VOI inventory as part of its capital-light business strategy are exposed to such development-related risks and, therefore, the occurrence of such risks may adversely impact its ability to acquire VOI inventory from them when expected or at all.



Environmental liabilities, including claims with respect to mold or hazardous or toxic substances, could have a material adverse impact on Bluegreen’s financial condition and operating results.

Under various federal, state and local laws, ordinances and regulations, as well as common law, Bluegreen may be liable for the costs of removal or remediation of certain hazardous or toxic substances, including mold, located on, in or emanating from property that Bluegreen owns, leases or operates, as well as related costs of investigation and property damage at such property.  These laws often impose liability without regard to whether Bluegreen knew of, or was responsible for, the presence of the hazardous or toxic substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect Bluegreen’s ability to sell or lease its property or to borrow money using such property or receivables generated from the sale of such property as collateral.  Noncompliance with environmental, health or safety requirements may require Bluegreen to cease or alter operations at one or more of its properties.  Further, Bluegreen may be subject to common law claims by third parties based on damages and costs resulting from violations of environmental regulations or from contamination associated with one or more of Bluegreen’s properties.

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Bluegreen’s insurance policies may not cover all potential losses.

Bluegreen maintains insurance coverage for liability, property and other risks with respect to its operations and activities. While Bluegreen has comprehensive property and liability insurance policies with coverage features and insured limits that it believes are customary, market forces beyond Bluegreen’s control may limit the scope of the insurance coverage it can obtain or ability to obtain coverage at reasonable rates. The cost of insurance may increase and coverage levels may decrease, which may affect Bluegreen’s ability to maintain customary insurance coverage and deductibles at acceptable costs. There is a limit as well as various sub-limits on the amount of insurance proceeds Bluegreen will receive in excess of applicable deductibles. If an insurable event occurs that affects more than one of its properties, the claims from each affected property may be considered together per policy provisions to determine whether the per occurrence limit, annual aggregate limit or sub-limits, depending on the type of claim, have been reached. If the limits or sub-limits are exceeded, each affected property may only receive a proportional share of the amount of insurance proceeds provided for under the policy. Further, certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, terrorist acts, and certain environmental matters, may be outside the general coverage limits of Bluegreen’s policies, subject to large deductibles, deemed uninsurable or too cost-prohibitive to justify insuring against. In addition, in the event of a substantial loss, the insurance coverage Bluegreen carries may not be sufficient to pay the full market value or replacement cost of the affected resort or in some cases may not provide a recovery for any part of a loss. As a result, Bluegreen could lose some or all of the capital it has invested in a property, as well as the anticipated future marketing, sales or revenue opportunities from the property. Further, Bluegreen could remain obligated under guarantees or other financial obligations related to the property despite the loss of product inventory, and its VOI owners could be required to contribute toward deductibles to help cover losses.

Adverse outcomes in legal or other regulatory proceedings, including claims of non-compliance with applicable regulations or development-related defects could adversely affect Bluegreen’s financial condition and operating results.

In the ordinary course of business, Bluegreen is subject to litigation and other legal and regulatory proceedings, which result in significant expenses and devotion of time. In addition, litigation is inherently uncertain, and adverse outcomes in the litigation and other proceedings to which Bluegreen is or may be subject could adversely affect its financial condition and operating results. In addition, liabilities related to Bluegreen’s former Bluegreen Communities business that were not assumed by Southstar Development Partners, Inc. (“Southstar”) in connection with Southstar’s purchase of substantially all of the assets which comprised Bluegreen Communities during May 2012, including those relating to Bluegreen Communities’ operations prior to the closing of the transaction, remain Bluegreen’s responsibility.

Bluegreen engages third-party contractors to construct its resorts. Bluegreen also historically engaged third-party contractors to develop the communities within its former Bluegreen Communities business.  However, Bluegreen’s customers may assert claims against Bluegreen for construction defects or other perceived development defects, including, without limitation, structural integrity, the presence of mold as a result of leaks or other defects, water intrusion, asbestos, electrical issues, plumbing issues, road construction, water and sewer defects and defects in the engineering of amenities. In addition, certain state and local laws may impose liability on property developers with respect to development defects discovered in the future.  Bluegreen could have to accrue a significant portion of the cost to repair such defects in the quarter when such defects arise or when the repair costs are reasonably estimable.   

Costs associated with litigation, including claims for development-related defects, and the outcomes thereof could adversely affect Bluegreen’s liquidity, financial condition and operating results.

Failure to maintain the integrity of Bluegreen’s internal or customer data could result in faulty business decisions or operational inefficiencies, damage Bluegreen's reputation and/or subject Bluegreen to costs, fines, or lawsuits.

Bluegreen collects and retains large volumes of internal and customer data, including social security numbers, credit card numbers and other personally identifiable information of its customers in various internal information systems and information systems of its service providers. Bluegreen also maintains personally identifiable information about its employees. The integrity and protection of that customer, employee and company data is critical to Bluegreen and faulty decisions could be made if that data is inaccurate or incomplete. Bluegreen’s customers and employees also have a high expectation that Bluegreen and its service providers will adequately protect their personal information. The regulatory environment as well as the requirements imposed on Bluegreen by the payment card industry surrounding information, security and privacy is also increasingly demanding, in both the United States and other jurisdictions in which Bluegreen operates. Bluegreen’s systems may be unable to satisfy changing regulatory and

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payment card industry requirements and employee and customer expectations, or may require significant additional investments or time in order to do so.

Bluegreen’s information systems and records, including those it maintains with its service providers, may be subject to security breaches, cyber attacks, system failures, viruses, operator error or inadvertent releases of data. A significant theft, loss, or fraudulent use of customer, employee or company data maintained by Bluegreen or by a service provider could adversely impact Bluegreen’s reputation and could result in remedial and other expenses, fines or litigation. A breach in the security of Bluegreen’s information systems or those of its service providers could lead to an interruption in the operation of Bluegreen’s systems, resulting in operational inefficiencies and a loss of profits.

The proliferation and global reach of social media continues to expand rapidly and could cause Bluegreen to suffer reputational harm. The continuing evolution of social media presents new challenges and requires it to keep pace with new developments, technology and trends. Negative posts or comments about Bluegreen, the properties it manages or its brands on any social networking or user-generated review website, including travel and vacation property websites, could affect consumer opinions of Bluegreen and its products, and Bluegreen cannot guarantee that it will timely or adequately redress such instances. Inadequate or failed technologies could lead to interruptions in Bluegreen’s operations, which may materially adversely affect its business, financial position, results of operations or cash flows.

In addition, conversions to new information technology systems require effective change management processes and may result in cost overruns, delays or business interruptions. If Bluegreen’s information technology systems are disrupted, become obsolete or do not adequately support its strategic, operational or compliance needs, its business, financial position, results of operations or cash flows may be adversely affected.

Bluegreen’s technology requires updating, the cost involved in updating the technology may be significant, and the failure to keep pace with developments in technology could impair Bluegreen's operations or competitive position.

The vacation ownership and hospitality industries require the utilization of technology and systems, including technology utilized for sales and marketing, mortgage servicing, property management, brand assurance and compliance, and reservation systems. This technology requires continuous updating and refinements, including technology required to remain competitive and to comply with the legal requirements such as privacy regulations and requirements established by third parties. Bluegreen is taking steps to update its information technology platform, which has required, and is likely to continue to require, significant capital expenditures. Older systems which have not yet been updated may increase the risk of operational inefficiencies, financial loss and non-compliance with applicable legal and regulatory requirements, and Bluegreen may not be successful in updating such systems in the time frame or at the cost anticipated. Further, as a result of the rapidly changing technological environment, systems which Bluegreen has put in place or expects to put in place in the near term may become outdated, requiring new technology, and Bluegreen may not be able to replace those systems as quickly as its competition or within budgeted costs and time frames.  Further, Bluegreen may not achieve the benefits that may have been anticipated from any new technology or system.

Bluegreen’s intellectual property rights, and the intellectual property rights of its business partners, are valuable, and the failure to protect those rights could adversely affect its business.



Bluegreen’s intellectual property rights, including existing and future trademarks, trade secrets and copyrights, are and will continue to be valuable and important assets of its business. Bluegreen believes that its proprietary technology, as well as its other technologies and business practices, are competitive advantages and that any duplication by competitors would harm Bluegreen’s business. Measures taken to protect Bluegreen’s intellectual property may not be sufficient or effective. Additionally, intellectual property laws and contractual restrictions may not prevent misappropriation of Bluegreen’s intellectual property. Finally, even if Bluegreen is able to successfully protect its intellectual property, others may develop technologies that are similar or superior to Bluegreen’s technology. Bluegreen also generates a significant portion of new sales prospects and leads through arrangements with third parties, including Bass Pro. The failure by these third parties to protect their intellectual property rights could also harm Bluegreen’s business.



The loss of the services of Bluegreen’s key management and personnel could adversely affect its business.

Bluegreen’s ability to successfully implement its business strategy will depend on its ability to attract and retain experienced and knowledgeable management and other professional staff, and Bluegreen may not be successful in doing so. If efforts to retain and attract key management and other personnel are unsuccessful, Bluegreen’s business, prospects, results of operations and financial condition may be materially and adversely impacted.

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BBX Capital and its subsidiaries are subject to environmental laws related to their real estate activities and the cost of compliance could adversely affect our businesses.

As current or previous owners or operators of real property, BBX Capital and its subsidiaries, including Bluegreen, may be liable under federal, state and local environmental laws, ordinances and regulations for the costs of removal or remediation of hazardous or toxic substances on, under or in the property. These laws often impose liability whether or not we knew of, or were responsible for, the presence of such hazardous or toxic substances. The cost of investigating, remediating or removing such hazardous or toxic substances may be substantial.

In connection with the sale of BankAtlantic to BB&T during July 2012, we acquired nonperforming loans and foreclosed real estate, and our results of operations and financial condition may be adversely affected if these criticized assets are monetized below their current book values.

As a result of the BankAtlantic Sale, we maintain and manage a portfolio of foreclosed real estate and non-performing loans. As a consequence, our financial condition and results of operations will be dependent on our ability to successfully manage and monetize these legacy assets. Further, our loan portfolio and real estate may not be easily salable in the event we decide to liquidate an asset through a sale transaction. If the legacy assets are not monetized at or near the current book values ascribed to them, or if these assets are liquidated for amounts less than book value, our financial condition and results of operations would be adversely affected.  Because a majority of these legacy assets do not generate income on a regular basis, we do not expect to generate significant revenue or income with respect to these assets until such time as an asset is monetized through repayments or we consummate transactions involving the sale, joint venture or development of the underlying real estate or investments.Real Estate



Some of ourBBXRE’s operations are through unconsolidated joint ventures with unaffiliated third parties,others, and we may be adversely impacted by a joint venture partner’s failure to fulfill its obligations. 



By enteringFrom time to time BBXRE has entered into joint ventures we may be successful in reducingwhich reduces the amount weBBXRE is required to invest in the ownership and development of the real estate properties. However, joint venture partners may become financially unable or unwilling to fulfill their obligations under the joint venture agreements. Most joint ventures borrow money to help finance their activities, and although recourse on the loans is

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generally limited to the managing members, joint ventures and their properties, we haveBBXRE has in some cases and may in the future provide ongoing financial support or guarantees. If joint venture partners do not meet their obligations to the joint venture, weBBXRE may be required to make significant expenditures, which may have an adverse effect on our operating results or financial condition. We haveBBXRE has in the past and may in the future hold investments in a number of different joint ventures with the same or related developers, which could increase the adverse effects of any failures by such developer to fulfil its obligations. BBXRE has a substantial investment in the Altman Companies and related investments in Altis multifamily apartment joint ventures developed and managed by Altman Companies and Joel Altman (“JA”). Additionally, BBXRE has contributed $3.8 million to a newly formed joint venture with JA that guarantees the indebtedness and construction cost overruns of new real estate joint ventures established by Altman Companies, which increases BBXRE’s risk of loss in connection with its real estate joint venture investments managed by JA and the Altman Companies.



Investments by BBX Capital’s real estate divisionBBXRE in real estate developments directly or through joint ventures expose usit to market and economic risks inherent in the real estate construction and development industry.



The real estate construction and development industry is highly competitive and subject to numerous risks which in many cases are beyond management’s control. The success of ourBBXRE’s investments in real estate developments is dependent on many factors, including:



·

Demand for or oversupply of new homes, finished lots, rental apartments and commercial real estate;

·

Demand for commercial real estate tenants;

·

Real estate market values;

·

Changes in capitalization rates impacting real estate values;

·

Inventory of foreclosed homes negatively impacting selling prices;

·

Availability and reasonable pricing of skilled labor;

·

Availability and reasonable pricing of construction materials, such as lumber, framing, concrete and other building materials;materials, including increases associated with tariffs;

·

Changes in laws and regulations for new construction and land entitlements, including environmental and zoning laws and regulations;

·

Natural disasters and severe weather conditions increasing costs, delaying construction, causing uninsured losses or reducing demand for new homes;

·

Availability and cost of mortgage financing for potential purchasers;

·

Inventory of foreclosed homes negatively impacting selling prices;

·

Mortgage loan interest rates;

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·

Availability of land in desirable locations at prices that result in an economically viable project;

·

Availability, delays and costs associated with obtaining permits, approvals or licenses necessary to develop property;

·

Construction defects and product liability claims;

·

Risk of losses resulting from cost overrun guarantees in The Altman Companies’ sponsored projects that require unique high-density apartment developments in certain markets; and

·

General economic conditions.



Any of these factors could give rise to delays in the start or completion of a project, increase the cost of developing a project, or could result in reduced prices and values for BBX Capital’s developments, including developments underlying its joint venture investments. These factors could also result in BBX Capital being unable to identify real estate inventory opportunities which meet its investment criteria. In addition, BBX Capital’s efforts to identify additional investment opportunities, including the development of multifamily apartment communities that will be owned over a long-term hold period, the acquisition of existing multifamily apartment communities which can be renovated and re-leased pursuant to a “value add” strategy, and the pursuit of investment opportunities in additional geographic locations may not prove to be successful.



A significant portion of ourBBXRE’s loans and real estate assets are located in Florida, and economic conditions in the Florida real estate market could adversely affect our earnings and financial condition.



The legacy assets retained by us in the Company’s sale of BankAtlantic Salein 2012, the real estate developments managed by BBXRE, and the real estate investments madebeing developed by usjoint ventures in which BBXRE has invested are primarily concentrated in Florida, and adverse changes to the Florida economy or the real estate market may negatively impact our earnings and financial condition. Our real estate investment business is primarily concentrated in Florida. As a result, we areBBXRE is exposed to geographic risks of high unemployment rates, declines in the housing industry and declines in the real estate market in Florida. Adverse changes in laws and regulations ‘inin Florida would have a negative impact on our revenues, financial condition and business. Declines in the Florida housing markets may negatively impact the credit performance of ourBBXRE’s loans and result in significant asset impairments. Further, the State of Florida is subject to the risks of natural disasters, such as tropical storms and hurricanes, which may disrupt our operations, adversely impact the ability of our borrowers to timely repay their loans, adversely impact the value of any collateral securing loans and ourBBXRE’s portfolio of real estate, or otherwise have an adverse effect on our results of operations. The severity and impact of tropical storms, hurricanes and other weather related events are unpredictable.



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BXRE’s inability to finance its real estate developments through Community Development District Bonds or obtain performance bonds or letters of credit could adversely affect our results of operations and liquidity.

BBXRE is often required to provide performance bonds and letters of credit under construction contracts or development agreements.  BBXRE also obtained financing for the construction of infrastructure improvements for the first two phases of its Beacon Lake development in St. Johns County, Florida from the issuance of Community Development Bonds. BBXRE’s ability to obtain performance bonds, letters of credit, or additional issuances of Community Development Bonds is dependent on BBXRE’s credit rating, financial condition, and historical performance. If BBXRE is unable to obtain these bonds or letters of credit or cause the issuance of Community Development Bonds when required or desirable, our results of operations and liquidity could be adversely affected.

In connection with the sale of BankAtlantic to BB&T during July 2012, we acquired nonperforming loans and foreclosed real estate, and our results of operations and financial condition may be adversely affected if these assets are monetized below their current book values.

As a result of the Company’s sale of BankAtlantic in 2012, we maintain and manage a portfolio of foreclosed real estate and non-performing loans managed by BBXRE. As a consequence, our financial condition and results of operations will be dependent on BBXRE’s ability to successfully manage and monetize these legacy assets. Further, the loan portfolio and real estate may not be easily salable in the event BBXRE decides to liquidate an asset through a sale transaction. If the legacy assets are not monetized at or near the current book values ascribed to them, or if these assets are liquidated for amounts less than book value, our financial condition and results of operations would be adversely affected. Because a majority of these legacy assets do not generate income on a regular basis, we do not expect to generate significant revenue or income with respect to these assets until such time as an asset is monetized through repayments or BBXRE consummate transactions involving the sale, joint venture or development of the underlying real estate or investments.

BBX Sweet Holdings

Market demand for candy products could decline.

BBX Sweet Holdings confectionery businesses operate in highly competitive markets and compete with larger companies that have greater resources. BBX Sweet Holdings success is impacted by many factors, including the following:

·

Effective retail execution;

·

Effective and cost-efficient advertising campaigns and marketing programs;

·

Adequate supply of commodities at a reasonable cost;

·

Oversight of product safety;

·

Ability to sell products at competitive prices;

·

Response to changes in consumer preferences and tastes;

·

Changes in consumer health concerns, including obesity and the consumption of certain ingredients and;

·

Concerns related to effects of sugar or other ingredients which may be used to make its products.

A decline in market demand for candy products could negatively affect operating results.

IT’SUGAR’s opening of new stores in high profile locations may reduce earnings, require additional financing and increase capital expenditures.

IT’SUGAR’s business strategy is to open new stores in high profile locations. While IT’SUGAR seeks new store locations to provide opportunities for growth and earnings, IT’SUGAR may not be successful in identifying these opportunities or may open new stores which are not profitable. The expansion of stores could expose IT’SUGAR to additional debt financing, may not generate anticipated results, or may result in losses or future impairments, which can have an adverse effect on its results of operations and liquidity.

IT’SUGAR’s continued success is dependent on its ability to differentiate itself from other retailers in the confectionery industry.

IT’SUGAR in the past has differentiated itself from other retailers through merchandise packaging, licenses, store environment, and celebrity endorsements. IT’SUGAR’s results of operations and financial condition would be adversely affected if it is unable to obtain celebrity endorsements or licenses at a reasonable cost or to maintain its distinct appeal or if actions by its competitors reduce the effectiveness of its business model.

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BBX Sweet Holdings may experience product recalls or product liability claims associated with businesses in the confectionery industry.

Selling products for human consumption involves inherent legal and other risks, including product contamination, spoilage, product tampering, allergens, or other adulteration. BBX Sweet Holdings could decide or be required to destroy inventory, recall products or lose sales in connection with contamination, tampering, adulteration or other deficiencies. These events could result in significant losses and may damage the reputation of our confectionery businesses, and discourage consumers from buying products, or cause production and delivery disruptions which would adversely affect our financial condition and results of operations.  BBX Sweet Holdings may also incur losses if products cause injury, illness or death. A significant product liability claim may adversely affect both reputation and profitability, even if the claim is unsuccessful.

BBX Capital’s strategic initiatives in connection with its investment in companies in the confectionery industry may not be successful.

During 2019, 2018 and 2017,  BBX Sweet Holdings exited its candy manufacturing facilities in Utah and South Florida, consolidated its wholesale manufacturing operations in Orlando and centralized the executive management and back office activities in order to improve operating efficiencies and generate cost savings. These strategic initiatives may not be successful, and BBX Sweet Holdings may decide to exit the remaining manufacturing operations, which could result in additional losses and adversely affect our results of operations. 

Renin

Renin’s retail sales are concentrated with two significantbig-box home center customers, and there is significant competition in the industry.  



A significant amount of Renin’s sales are to big-box home centers. These home centers in many instances have significant negotiating leverage with their vendors, including Renin, and are able to affect the prices of the products sold and the terms and conditions of conducting business with them. These home centers may also reduce the number of vendors they purchase from or make significant changes in their volume of purchases. Although homebuilders, dealers and other retailers represent other channels of distribution for Renin’s products, the loss of a home center customer or reduced sales volume at any of these home centers would have a material adverse effect on Renin’s business. Further, Renin has substantial competition from overseas manufacturers of products similar to those sold by Renin.



A significant portion of Renin’s business relies on home improvement and new home construction activity, both of which are cyclical and outside of management’s control.



A significant portion of Renin’s business is dependent on the levels of home improvement activity, including spending on repair and remodeling projects, and new home construction activity. Macroeconomic conditions, including consumer confidence levels, fluctuations in home prices, unemployment and underemployment levels, interest rates, regulatory initiatives, and the availability of home equity loans and mortgage financing affect both discretionary spending on home improvement projects as well as new home construction activity. Adverse changes in these factors or uncertainty regarding these macroeconomic conditions could result in a decline in spending on home improvement projects and a decline in demand for new home construction, both of which could adversely affect Renin’s results of operations.



TheRenin’s operating results of Renin and BBX Sweet Holdings would be negatively impacted if they experienceit experiences increased commodity costs or a limited availability of commodities.



Our middle market operating businesses purchaseRenin purchases various commodities to manufacture products, including steel, aluminum, glass and mirror in the case of Renin, and sugar and cocoa in the case of BBX Sweet Holdings.mirrors. Fluctuations in the availability and prices of these commodities could increase the cost to manufacture products. Further, increases in energy costs could increase production costs as well asand transportation costs, each of which could negatively affect theirits operating results. Renin’s and BBX Sweet Holdings’ existing arrangements with customers, competitive considerations and the relative negotiating power and resistance of home center customers and big-box retailers to price increases make it difficult to increase selling prices to absorb increased production costs. If Renin and BBX Sweet Holdings areis not able to increase the prices of its products or achieve other cost savings or productivity improvements to offset any increased commodity and production costs, our operating results could be negatively impacted. Many of the raw materials purchased by Renin and BBX Sweet Holdings are sourced from China, Mexico,

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and other countries. Changes in United States trade practices, or taxestariffs levied on these imports, could significantly impact theRenin’s results of these operating companies.operations and financial condition.



Market demand for chocolate and candy products could decline.Other Risk Factors



BBX Sweet HoldingsCapital or its subsidiaries may incur additional indebtedness.

BBX Capital and its acquired businesses operatesubsidiaries have in highly competitive marketsthe past and compete with larger companiesmay in the future incur significant amounts of debt, including at Bluegreen. Further, additional indebtedness could have important effects on BBX Capital, including that have greater resources. The successdebt service requirements will reduce cash available for operations, future investment and acquisition opportunities and payments of these businesses is impacted by many factors, including the following:dividends, and that increased leverage could impact

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·

Effective retail execution;

·

Effective and cost efficient advertising campaigns and marketing programs;

·

Adequate supply of commodities at a reasonable cost;

·

Oversight of product safety;

·

Ability to sell manufactured products at competitive prices;

·

Response to changes in consumer preferences and tastes;

·

Changes in consumer health concerns, including obesity and the consumption of certain ingredients and;

·

Concerns related to effects of sugar or other ingredients which may be used to make its products.


 

A decline in

BBX Capital’s liquidity and increase its vulnerability to adverse economic or market demand for chocolate and candy productsconditions. Additionally, agreements relating to additional indebtedness could negatively affect operating results.

BBX Sweet Holdings may experience product recalls or product liability claims.

Selling products for human consumption involves inherent legalcontain financial covenants and other restrictions limiting BBX Capital’s operations and its ability to pay dividends, borrow additional funds or acquire or dispose of assets, and expose BBX Capital to the risks including product contamination, spoilage, product tampering, allergens, or other adulteration. BBX Sweet Holdings could decide or be required to destroy inventory, recall products or lose salesof being in connection with contamination, tampering, adulteration or other deficiencies. These events could result in significant losses and may damage BBX Sweet Holdings’ reputation, and discourage consumers from buying products, or cause production and delivery disruptions which would adversely affect BBX Sweet Holdings’ financial condition and resultsdefault of operations.  BBX Sweet Holdings may also incur losses if products cause injury, illness or death. A significant product liability claim may adversely affect both reputation and profitability, even if the claim is unsuccessful.

FFTRG operations require ongoing compliance with its area development and franchise agreements with MOD.such covenants.



The Company’s area development agreementtechnology requires updating, the cost involved in updating the technology may be significant, and the failure to keep pace with MOD providesdevelopments in technology could impair the Company's operations or competitive position.

The industries in which the Company withdoes business, including the exclusive rightvacation ownership and hospitality industries, require the utilization of technology and systems, including technology utilized for sales and marketing, mortgage servicing, property management, brand assurance and compliance, and reservation systems. This technology requires continuous updating and refinements, including technology required to open MOD franchised pizza restaurant locations in the state of Florida. The agreement requires the Company to open its restaurant locations based on a predetermined development schedule,remain competitive and failure to comply with the schedule gives MODlegal requirements such as privacy regulations and requirements established by third parties. The Company is taking steps to update its information technology platform, which has required, and is likely to continue to require, significant capital expenditures. Older systems which have not yet been updated may increase the right to terminate the agreement. In connectionrisk of operational inefficiencies, financial loss and non-compliance with such a termination, the Company will have no right to open additional MOD franchised pizza restaurant locations,applicable legal and MOD may grant franchise rights to competitors in the state of Florida. As a result, to remain compliant with the development schedule,regulatory requirements, and the Company may decide to develop restaurantsnot be successful in less desirable locations. Furthermore, ifupdating such systems in the time frame or at the cost anticipated. Further, as a result of the rapidly changing technological environment, systems which the Company losthas put in place or expects to put in place in the near term may become outdated, requiring new technology, and the Company may not be able to replace those systems as quickly as its exclusive development rights, our inability to open additional locations could prevent uscompetition or within budgeted costs and time frames. Further, the Company may not achieve the benefits that may have been anticipated from scaling our infrastructure and operations, and our existing locations may face increased competition from additional MOD locations.any new technology or system.



In addition, conversions to new information technology systems require effective change management processes and may result in cost overruns, delays or business interruptions. If the Company’s franchise agreements with MOD requireinformation technology systems are disrupted, become obsolete, or do not adequately support our strategic, operational, or compliance needs, the Company to comply with various operating programs designed and established by MOD. These programs include the adoptionCompany’s business, financial position, results of price discounts and promotions, the implementation of menu changes, and the funding of various ongoing operating expenses and capital expenditures, including the requirement to periodically remodel restaurant locations.operations, or cash flows may be adversely affected.



These requirements and the related risks of compliance could ultimately have an adverse effect on the operating results of the Company’s MOD franchise operations.

Information technology failures and failure to maintain the integrity of the Company’s internal or customer data security breaches could harm our business.result in faulty business decisions or operational inefficiencies, damage the Company's reputation and/or subject the Company to costs, fines, or lawsuits.

 

The Company reliesBBX Capital and its subsidiaries rely on information technology (IT) systems, including Internet sites, data hosting facilities and other hardware and platforms, some of which are hosted by third parties. These IT systems, like those of most companies, may be vulnerable to a variety of interruptions and risks, including, but not limited to, natural disasters, telecommunications failures, hackers, and other security issues. Moreover, the Company’s computer systems, like those of most companies, may become subject to computer viruses or other malicious codes, and to cyber or phishing-attacks. Although administrative and technical controls have been implemented which attempt to minimize the risk of cyber

45


incidents, computer intrusion efforts are becoming increasingly sophisticated, and any enhanced controls installed might be breached. If the IT systems cease to function properly, the Company could suffer interruptions in its operations. If the cyber-security is breached, unauthorized persons may gain access to our proprietary or confidentialThe Company collects and retains large volumes of internal and customer data, including social security numbers, credit card numbers and other personally identifiable information includingof its customers in various internal information systems and information systems of its service providers. The Company also maintains personally identifiable information about borrowers, employeesits employees. The integrity and protection of that customer, employee and company data is critical to the Company and faulty decisions could be made if that data is inaccurate or investments.incomplete. The regulatory environment as well as the requirements imposed on the Company by the payment card industry surrounding information, security and privacy is also increasingly demanding, in both the United States and other jurisdictions in which the Company operates. The Company’s systems may be unable to satisfy changing regulatory and payment card industry requirements and employee and customer expectations, or may require significant additional investments or time in order to do so.

The Company’s information systems and records, including those it maintains with its service providers, may be subject to security breaches, cyberattacks, system failures, viruses, operator error or inadvertent releases of data. A significant theft, loss, or fraudulent use of customer, employee or company data maintained by the Company or by a service provider could adversely impact the Company’s reputation and could result in remedial and other expenses, fines or litigation. A breach in the security of the Company’s information systems or those of its service providers could lead to an interruption in the operation of the Company’s systems, resulting in operational inefficiencies and a loss of profits. This could require the Company to incur significant costs to comply with legally required protocols and to repair or restore the security of its systems.

Substantial sales of BBX Capital’s Class A Common Stock or Class B Common Stock could adversely affect the market prices of such securities.

Substantial sales of BBX Capital’s Class A Common Stock or Class B Common Stock, including sales of shares by controlling shareholders and management, could adversely affect the market prices of such securities. Management has in the past and may in the future enter into Rule 10b5-1 plans pursuant to which a significant number of shares are sold into the open market.

Alan B. Levan and John E. Abdo's control position may adversely affect the market price of BBX Capital's Class A Common Stock and Class B Common Stock.

Alan B. Levan, the Chairman and Chief Executive Officer of BBX Capital, and John E. Abdo, the Vice Chairman of BBX Capital, collectively beneficially own shares of BBX Capital’s Class A Common Stock and Class B Common Stock representing approximately 77% of the general voting power of BBX Capital. In addition, each of Mr. Alan Levan and Mr. Abdo has been granted restricted securities of BBX Capital which are scheduled to vest over time. Further, Mr. Alan Levan and Mr. Abdo are parties to an agreement pursuant to which Mr. Alan Levan has agreed to vote his shares of BBX Capital’s Class B Common Stock in favor of the election of Mr. Abdo to BBX Capital’s board of directors for so long as he is willing and able to serve as a director of BBX Capital, and Mr. Abdo has agreed to vote the shares of BBX Capital’s Class B Common Stock he owns in the same manner that Mr. Alan Levan votes his shares of BBX Capital’s Class B Common Stock. Mr. Abdo has also agreed, subject to certain exceptions, not to transfer certain of his shares of BBX Capital’s Class B Common Stock and to obtain the consent of Mr. Alan Levan prior to the conversion of certain of his shares of BBX Capital’s Class B Common Stock into shares of BBX Capital’s Class A Common Stock. Because BBX Capital’s Class A Common Stock and Class B Common Stock vote as a single class on most matters, Mr. Alan Levan and Mr. Abdo effectively have the voting power to elect the members of BBX Capital’s board of directors and to control the outcome of any other vote of BBX Capital’s shareholders, except in those limited circumstances where Florida law mandates that the holders of BBX Capital’s Class A Common Stock vote as a separate class. Mr. Alan Levan’s and Mr. Abdo’s control position may have an adverse effect on the market price of BBX Capital’s Class A Common Stock and Class B Common Stock. In addition, their interests may conflict with the interests of BBX Capital’s other shareholders.

Provisions in BBX Capital's Amended and Restated Articles of Incorporation and Bylaws, as well as BBX Capital's shareholder rights plan, may make it difficult for a third party to acquire BBX Capital and could impact the price of BBX Capital's Class A Common Stock and Class B Common Stock.

BBX Capital's Amended and Restated Articles of Incorporation and Bylaws contain provisions that could delay, defer or prevent a change of control of BBX Capital or its management. These provisions could make it more difficult for shareholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of BBX Capital's Class A Common Stock or Class B Common Stock. These provisions include:

·

The provisions in BBX Capital's Amended and Restated Articles of Incorporation regarding the special voting rights of BBX Capital 's Class B Common Stock;

·

Subject to the special class voting rights of holders of BBX Capital’s Class B Common Stock under certain circumstances, the authority of BBX Capital's board of directors to issue additional shares of common or preferred stock and to fix the relative rights and preferences of the preferred stock without additional shareholder approval; and

·

Advance notice procedures to be complied with by shareholders in order to make shareholder proposals or nominate directors.

In addition, BBX Capital’s rights agreement, which was adopted and is designed to preserve certain tax benefits available to BBX Capital, may have an anti-takeover effect because the rights agreement provides a deterrent to investors from acquiring a 5% or greater ownership interest in BBX Capital’s Class A Common Stock and Class B Common Stock.

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Holders of BBX Capital’s Class A Common Stock and Class B Common Stock may not receive dividends in the amounts anticipated, when anticipated, or at all.

During each of March 2017, June 2017, September 2017 and December 2017, BBX Capital’s board of directors declared a cash dividend of $0.0075 per share on BBX Capital’s Class A Common Stock and Class B Common Stock. BBX Capital has indicated its intention to declare regular quarterly dividends on its Class A Common Stock and Class B Common Stock. However, future dividends are subject to approval and declaration by BBX Capital’s board of directors and, accordingly, BBX Capital may not make dividend payments in the future, whether in the amount anticipated, on a regular basis or as anticipated, or at all. The payment of dividends, if any, by BBX Capital will depend on many factors considered by its board of directors, including, without limitation, our financial condition and results of operations, liquidity requirements, market opportunities, and contractual constraints. Further, over time, the Company’s cash needs may change significantly from its current needs, which could affect whether BBX Capital pays dividends and the amount of any dividends it may pay in the future. The terms of BBX Capital’s indebtedness may also restrict it from paying cash dividends on its stock under certain circumstances. In addition, BBX Capital pays regular quarterly cash dividends of $187,500 with respect to its outstanding 5% Cumulative Preferred Stock. BBX Capital may not pay or set apart for payment any dividend or other distribution (other than a dividend or distribution payable solely in common stock) on its Class A Common Stock or Class B Common Stock until such time as all accrued and unpaid dividends on BBX Capital’s 5% Cumulative Preferred Stock have been or contemporaneously are declared or paid and a sum is set apart sufficient for payment of such accrued and unpaid dividends.



The provisional tax impactsimpact resulting from the Tax Cuts and Jobs Act are based on interpretations and assumptions the Company has made. Any changes in interpretations and assumptions or the issuance of additional regulatory guidance may have a material adverse impact on our tax rate in fiscal years 20182019 and beyond.



On December 22, 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”), was signed into law, significantly changing the U.S. Internal Revenue Code. The Tax Reform Act is complex, and the Company has made judgments and interpretations about the application of these changes in the tax laws. The interpretation and finalization of recently

42


proposed regulations and other interpretive guidance that may be issued by the Internal Revenue Service could differ from our interpretations of the Tax Reform Act which could result in the potential for the payment of additional taxes, penalties or interest that may adversely affect our results of operations for the fiscal years 2020 and beyond.  

The Company’s insurance policies may not cover all potential losses.

The Company maintains insurance coverage for liability, property and other risks with respect to its operations and activities. While the Company currently has comprehensive property and liability insurance policies with coverage features and insured limits that it believes are customary, market forces beyond the Company’s control may limit the scope of the insurance coverage it can obtain or ability to obtain coverage at reasonable rates. The cost of insurance may increase and coverage levels may decrease, which may affect the Company’s ability to maintain insurance coverage and deductibles at acceptable costs. There is a limit as well as various sub-limits on the amount of insurance proceeds the Company will receive in excess of applicable deductibles. Further, certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, terrorist acts, and certain environmental matters, may be outside the general coverage limits of the Company’s policies, subject to large deductibles, deemed uninsurable or too cost-prohibitive to justify insuring against. In addition, in the event of a substantial loss, the insurance coverage the Company carries may not be sufficient to pay the full market value or replacement cost of the affected property or in some cases may not provide a recovery for any part of a loss.

If an insurable event occurs that affects more than one of the Company’s properties, the claims from each affected property may be considered together to determine whether the individual occurrence limit, annual aggregate limit or sub-limits, depending on the type of claim, have been reached. If the limits or sub-limits are exceeded, each affected property may only receive a proportional share of the amount of insurance proceeds provided for under the policy. As a result, the Company could lose some or all of the capital it has invested in a property, as well as the anticipated future revenue opportunities from the property. Further, the Company could remain obligated under guarantees or other financial obligations related to a property. In addition, with respect to Bluegreen, its VOI owners could be required to contribute toward deductibles to help cover losses.

Adverse outcomes in legal or other regulatory proceedings, including claims of non-compliance with applicable regulations or development-related defects could adversely affect the Company’s financial condition and operating results.

In the ordinary course of business, the Company is subject to litigation and other legal and regulatory proceedings, which result in significant expenses and devotion of time and the Company may agree to indemnify third parties or its strategic partners from damages or losses associated with such risks. In addition, litigation is inherently uncertain, and adverse outcomes in the litigation and other proceedings to which the Company is or may be subject could adversely affect its financial condition and operating results.

Bluegreen engages third-party contractors to construct its resorts, and BBXRE engages third-party contractors in its developments. However, Bluegreen’s and BBXRE’s respective customers may assert claims against Bluegreen and BBXRE for construction defects or other perceived development defects, including, without limitation, structural integrity, the presence of mold as a result of leaks or other defects, water intrusion, asbestos, electrical issues, plumbing issues, road construction, water and sewer defects and defects in the engineering of amenities. In addition, certain state and local laws may impose liability on property developers with respect to development defects discovered in the future. Bluegreen and BBXRE could have to accrue a significant portion of the cost to repair such defects in the quarter when such defects arise or when the repair costs are reasonably estimable.   

Costs associated with litigation, including claims for development-related defects, and the outcomes thereof, which in most instances are very difficult to predict, could adversely affect the Company’s liquidity, financial condition and operating results.

BBX Capital and its subsidiaries are subject to environmental laws related to their real estate and timeshare activities including claims with respect to mold or hazardous or toxic substances, which could have a material adverse impact on our financial condition and operating results.

As current or previous owners or operators of real property, BBX Capital and its subsidiaries, including Bluegreen, may be liable under federal, state and local environmental laws, ordinances and regulations for the costs of removal or remediation of hazardous or toxic substances on, under or in the property. These laws often impose liability whether or not we knew of, or were 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 our ability to sell or lease real estate or to borrow money using such real estate or receivables generated from the sale of such property as collateral. Noncompliance with environmental, health or safety requirements may require us to cease or alter operations at one or more of our properties.  Further, we may be subject to common law claims by third parties based on damages and costs resulting from violations of environmental regulations or from contamination associated with one or more of our properties. The cost of investigating, remediating or removing such hazardous or toxic substances may be substantial.

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The Company’s business may be adversely impacted by negative publicity, including information spread through social media.

The proliferation and global reach of social media continues to expand rapidly and could cause the Company to suffer reputational harm. The continuing evolution of social media presents new challenges. Negative posts or comments about the Company, the properties it manages or its brands on any social networking or user-generated review website, including travel and vacation property websites and blog sites, could affect consumer opinions of the Company and its products, and the Company cannot guarantee that it will timely or adequately redress such instances.

The loss of the services of key management and personnel could adversely affect the Company’s business.

The Company’s ability to successfully implement its business strategy will depend on the ability to attract and retain experienced and knowledgeable management and other professional staff. If the Company is unable to retain and motivate its existing employees and efforts to retain and attract key management and other personnel are unsuccessful, the Company’s results of operations and financial condition may be materially and adversely impacted.

Changes to and replacement of the LIBOR benchmark interest rate could adversely affect our results of operations and liquidity.

In July 2017, the Financial Conduct Authority (the regulatory authority over LIBOR) stated they will plan for a phase out of regulatory oversight of LIBOR interest rate indices after 2021 to allow for an orderly transition to an alternate reference rate. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to LIBOR for promissory notes or other contracts that are currently indexed to LIBOR. The ARRC has proposed a market transition plan to SOFR from LIBOR and organizations are currently working on transition plans as it relates to derivatives and cash markets exposed to LIBOR. The Company currently has $177.1 million of LIBOR indexed junior subordinated debentures and $78.6 million of LIBOR indexed receivable-backed notes payable and $147.6 million of LIBOR indexed lines of credit and notes payable that mature after 2021. Changes in the method of calculating LIBOR, or the replacement of LIBOR with SOFR or another alternative rate or benchmark, may adversely affect interest rates and result in high borrowing costs, which could adversely affect the Company’s results of operations and liquidity. We cannot predict the effect of the potential changes to LIBOR or the establishment and use of alternative rates or benchmarks. 

Public health risks such as the recent coronavirus outbreak could have a material adverse impact on our financial condition and operating results.

Our businesses could be materially and adversely affected by widespread public health risks, including the recent outbreak of the coronavirus, which may, among other things, cause disruptions in our supply chains and the demand for our products. Disruptions in supply chains may impact the operations and results of certain of our businesses, including Renin, which has products drop shipped from Asia; the Altman Companies, which utilizes construction materials from outside the United States; and BBX Sweet Holdings, which sources confections and other products, including cacao, globally. To the extent the impact of the coronavirus continues or worsens, our businesses may have difficulty obtaining the materials necessary for the production and packaging of their products and factories which produce products may remain closed for sustained periods of time. A widespread coronavirus outbreak in the United States could cause a decline in the level of leisure travel and Bluegreen’s liquidity will be adversely impacted if there is a tightening of credit or instability in the financial markets, which may adversely affect the number of marketing guests at Bluegreen resorts, resulting in a significant decline in revenues or the closure of resorts. While it is too early to gauge the likely duration or ultimate impact, package sales have declined and trip cancelations have increased since the coronavirus outbreak in the United States. There is no assurance that Bluegreen will be able to finance or sell receivables in the term securitization market on acceptable terms or at all. In addition, our businesses may be impacted by disruptions, which may include, among other things, loweringa decrease in sales associated with traffic, or the corporate income tax rate, subjecting certain future foreign subsidiary earnings, whetherclosure of stores or not distributed,other retail or high-traffic locations or malls where our businesses have marketing activities. In addition, candy sales may be adversely impacted by public health concerns. Further, our businesses could be disrupted, and their results adversely impacted, if employees have, or are suspected of having, the coronavirus, as this could require the closure of stores or facilities or for some or all of the employees in a location to U.S. tax under a Global Intangible Low-Taxed Income provision, imposing a new alternative “Base Erosion and Anti-Abuse Tax” on U.S. corporations that limits deductions for certain amounts payablebe quarantined. The extent to foreign affiliates, imposing significant additional limitations onwhich the deductibility of interest payable to related and unrelated lenders, further limiting deductible executive compensation, and imposing a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries through the end of 2017. We continue to analyze how the Tax Reform Actcoronavirus or any public health issue may impact our results of operations.  The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to addressoperations and financial condition cannot be predicted, and will depend on future developments and conditions which are highly uncertain, including the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effectsultimate geographic spread of the Tax Reform Act. The Company has recognizedcoronavirus, the provisional tax impacts related toseverity of the revaluationcoronavirus, the duration of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued,outbreak, and actions taken by governmental authorities to contain the Company may take as a result of the Tax Reform Act. This continued analysis and resulting uncertainty, along with many of the changes effected pursuant to the Tax Reform Act, may have an adversecoronavirus or volatile effect on our tax rate in fiscal years 2018 and beyond, thereby affecting our results of operations.address its impact. 



There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Any changes in estimates, judgments and assumptions used could have a material adverse effect on our financial positioncondition and operating results.



The consolidated financial statements included in the periodic reports we file with the SEC, including this Annual Report on Form 10-K, are prepared in accordance with GAAP. The preparation of financial statements in accordance with GAAP involves making estimates, judgments and assumptions that affect reported amounts of assets (including long-lived assets, goodwill and other intangible assets), liabilities and related reserves, revenues, expenses and income. This includes estimates, judgments and assumptions for assessing the

44


amortization/accretion of purchase accounting fair value differences and the impairment of long-lived assets, goodwill and other intangible assets pursuant to applicable accounting guidance. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are often not readily apparent from other sources. However, estimates, judgments and assumptions can be highly uncertain and are subject to change in the future, and our estimates, judgments and assumptions may prove to be incorrect and our actual results may differ from these estimates under different assumptions or conditions.

47


If any estimates, judgments or assumptions change in the future, or our actual results differ from our estimates or assumptions, we may be required to record additional expenses or impairment charges, which would be recorded as a charge against our earnings and could have a material adverse impact on our financial condition and operating results. Our goodwill was tested for impairment on December 31, 2017 (annual testing date) and the goodwill assigned to one of BBX Sweet Holdings reporting units was determined to be impaired.  The goodwill assigned to another BBX Sweet Holdings reporting unit was determined not to be impaired.  If BBX Sweet Holdings’ reporting units do not meet expectations or if there is a downturn in the confectionery industry, we may recognize goodwill impairment charges in future periods.

Unexpected events, such as natural disasters, severe weather and terrorist activities, may disrupt the Company’s operations and increase our costs.

The occurrence of one or more unexpected events, including tsunamis, hurricanes, earthquakes, floods and other forms of severe weather or terrorist activities in countries or regions in which our assets, suppliers or our operating businesses are located could adversely affect our operations and financial performance.

Natural disasters, acts or threats of war or terrorism, or other unexpected events could result in temporary or long-term disruption in the delivery or supply of necessary raw materials and component products from suppliers, which would disrupt production capabilities and likely increase our cost of doing business.

Legal proceedings and the impact of any finding of liability or damages could adversely impact us and our financial condition and operating results.

BBX Capital and its subsidiaries have in the past and may in the future be subject to legal proceedings, including numerous legal proceedings against Bluegreen with respect to its operations. The impact of any finding of liability or damages could adversely impact the Company’s financial condition and operating results and the costs of defending pending or threatened legal proceedings could be significant.

The loss of the services of key management and personnel could adversely affect the Company’s business.

The Company’s ability to successfully implement its business strategy will depend on the ability to attract and retain experienced and knowledgeable management and other professional staff. If the Company is unable to retain and motivate its existing employees and efforts to retain and attract key management and other personnel are unsuccessful, the Company’s results of operations and financial condition may be materially and adversely impacted.



 

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ITEM 1B.  UNRESOLVED STAFF COMMENTS



None.

 

ITEM 2.  PROPERTIES



TheBBX Capital’s principal executive office of the Company is located at 401 East Las Olas Boulevard, Suite 800, Fort Lauderdale, Florida, 33301, and is occupied under a lease with an expiration date of June 30,February 28, 2021. The Company has the right to renew the terms of the lease for two additional terms of five years commencing as of the expiration date. BBX Capital has executed a lease for a new principal executive office located at 201 East Las Olas Boulevard, Fort Lauderdale, Florida, 33301, and expects to relocate its office upon the delivery of the new space during the first quarter of 2021. The lease agreement for the new principal executive office has an initial term of 10 years and provides the Company with the right to renew the terms of the lease for three additional terms of five years following the initial term.



Bluegreen’s principal executive office is located at 4960 Conference Way North, Suite 100, Boca Raton, Florida 33431, and consists of approximately 120,838 square feet of leased space with an expiration date of December 31, 2023. At December 31, 2017,2019, Bluegreen also maintained sales offices at or near 2326 of its resorts as well as regional administrative offices in Orlando, Florida and Indianapolis, Indiana. For information regarding Bluegreen’s resort properties that are part of the Bluegreen Vacation Club, please see Item 1 Business —Products – Vacation Club Resorts.



IT’SUGAR’sBBX Sweet Holdings maintains certain executive offices at the Company’s principal executive office is locatedand also maintains a principal executive office for IT’SUGAR at 3155 Southwest 10th Street, Deerfield Beach, Florida andthat is occupied under a lease with an expiration date of October 31, 2019.2024. BBX Sweet Holdings operates approximately 100 IT’SUGAR leases 95 retail locations in 26over 25 states and Washington DC, withD.C. which are subject to leases that expire between 2020 and 2030 and seven Hoffman’s Chocolates retail locations in South Florida which are subject to leases that expire between 2020 and 2026. BBX Sweet Holdings also operates a manufacturing facility in Orlando, Florida which is subject to a lease expirations from 2018that expires in 2020, subject to 2030.  The retailfour one-year renewals that may exercised by the Company, and leases typically have a 10 year original term.manufacturing facility in Utah which is subject to a lease that expires in 2023 and has been subleased by the Company. BBX Sweet Holdings also owns a manufacturing facility in Greenacres, Florida.



Renin’s principal executive office is located at 110 Walker Drive, Brampton, Ontario and is occupied under a lease with an expiration date of December 31, 2024. Renin leases its manufacturing facilities in the United States and Canada which have lease expiration dates of December 31, 20192022 and December 31, 2024, respectively.



BBX Sweet Holdings leases the following manufacturing facilitiesCapital has one lease associated with a restaurant in Utah and Florida and retail locationsPalm Beach County acquired through foreclosure with an expiration date in Florida:

·

50,000 square foot manufacturing, storage and distribution facility located at 680 South 500 East, American Fork, Utah, with a lease expiration date of May 31, 2023;

·

30,000 square feet of office, manufacturing, warehousing and food storage areas located at 2045 High Ridge Road, Boynton Beach, Florida with a lease expiration date of January 31, 2020;

·

80,000 square feet of office, manufacturing, warehousing and food storage areas located at 1815 Cypress Lake Drive, Orlando, Florida with a lease expiration date of September 30, 2019 with three additional option terms of five years each commencing as of the expiration date;

·

Three retail locations in Palm Beach County, Florida with lease expiration dates ranging from February 28, 2018 to November  30, 2026; and

·

Four retail locations in Broward County, Florida with lease expiration dates ranging from June 30, 2019 to May 31, 2026.

BBX Sweet Holdings also owns a chocolate manufacturing facility located at 5190 Lake Worth Road, Greenacres, Florida. The facility is comprised of a 4,000 square foot office and store front area and an 11,526 square foot manufacturing area. 

FFTRG has executed the following retail leases to operate MOD Super-Fast Pizza restaurants in Florida:

·

Two retail restaurant locations in Broward County each expiring in 2027;

·

One retail restaurant location in Dade County expiring in 2027; and

·

One retail restaurant location in Duval County expiring in 2027.

These retail leases typically have a 10 year term with the right to renew the terms of the lease for two additional terms of five years commencing as of the expiration date.

2030.

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ITEM 3.  LEGAL PROCEEDINGS



BBX Capital



In the ordinary course of business, BBX Capital and its subsidiaries are parties to lawsuits as plaintiff or defendant involving its operations and activities. Although BBX Capital and its subsidiaries believe that they have meritorious defenses in all current legal actions, the outcome of litigation and regulatory matters and timing of ultimate resolution are inherently difficult to predict and uncertain. Set forth below are descriptions of material pending legal proceedings.



In the ordinary course of business, Bluegreen becomes subject to claims or proceedings from time to time relating to the purchase, sale, marketing, or financing of VOIs or Bluegreen’s other business activities.  Bluegreen is also subject to certain matters relating to the Bluegreen Communities’ business, substantially all of the assets of which were sold by Bluegreen on May 4, 2012. Additionally, from time to time in the ordinary course of business, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties and Bluegreen receives individual consumer complaints, as well as complaints received through regulatory and consumer agencies, including Offices of State Attorneys General. Bluegreen takes these matters seriously and attempts to resolve any such issues as they arise. 

BBX Capital Litigation



Shiva Stein, on behalf of herself and all others similarly situated, v.There were no material pending legal proceedings against BBX Capital Corp., John E. Abdo, Norman H. Becker, Steven M. Coldren, Willis N. Holcombe, Jarett S. Levan, Anthony P. Segreto, Charlie C. Winningham, II, BFC Financial Corporation and BBX Merger Subsidiary LLC, Case No. CACE16014713, Circuit Courtor its subsidiaries excluding Bluegreen as of the 17thJudicial Circuit in and for Broward County, Florida.December 31, 2019.



On August 10, 2016, Shiva Stein filed a lawsuit againstBluegreen

In the Company, BBX Merger Sub, LLC (“Merger Sub”), BCC and the membersordinary course of BCC’s board of directors, which seeksbusiness, Bluegreen becomes subject to establish a class of BCC’s shareholders and challenges the Merger between BCC and BBX Capital (“the Merger”). The plaintiff asserts that the Merger consideration undervalues BCC and is unfairclaims or proceedings from time to BCC’s public shareholders, that the sales process was unfair and that BCC’s directors breached their fiduciary duties of care, loyalty and candor owedtime relating to the public shareholderspurchase, sale, marketing, or financing of BCC because, amongVOIs or its other reasons, they failedbusiness activities. Bluegreen is also subject to take steps to maximize the value of BCC to its public shareholders and instead diverted consideration to themselves. The lawsuit also alleges that BBX Capital, as the controlling shareholder of BCC, breached its fiduciary duties of care, loyalty and candor owedcertain matters relating to the public shareholdersBluegreen Communities’ business, substantially all assets of BCC by utilizing confidential, non-public informationwhich were sold on May 4, 2012.  Additionally, from time to formulate the Merger consideration and not actingtime in the best interestsordinary course of BCC’s public shareholders. In addition, the lawsuit includes a causebusiness, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties, and Bluegreen receives individual consumer complaints, as well as complaints received through regulatory and consumer agencies, including Offices of action against BCC, the CompanyState Attorneys General. Bluegreen takes these matters seriously and Merger Sub for aiding and abetting the alleged breaches of fiduciary duties. The lawsuit requested that the court grant an injunction blocking the proposed Merger or, if the proposed Merger is completed, rescind the transaction or award damagesattempts to resolve any such issues as determined by the court.  On September 15, 2016, the Defendants filed a Motion to Dismiss the amended complaint. On November 21, 2016, the Court issued an order granting the Motion to Dismiss with prejudice. Plaintiff appealed the Court’s order dismissing the amended complaint to the Fourth District Court of Appeals, and on January 9, 2018, the Fourth District of Appeals held oral argument on the appeal. The Company believes that the appeal is without merit and intends to continue vigorously defending the action.

they arise. 



Bluegreen Litigation

“Cease“Cease and Desist” Letters



Commencing in 2015, it came to Bluegreen’s attention that itsBluegreen’s collection efforts with respect to its VOI notes receivable were being impacted by a then emerging, industry-wide trend involving the receipt of “cease and desist” letters from exit firms and attorneys purporting to represent certain VOI owners. Following receipt of these letters, Bluegreen is unable to contact the owners unless allowed by law. Bluegreen believes these attorneysexit firms have encouraged such owners to become delinquent and ultimately default on their obligations and that such actions and Bluegreen’s inability to contact the owners are a primary contributor to the increase in its annual default rates. Bluegreen’s average annual default rates have increased from 6.9% in 2015 to 8.5%8.7% in 2017.2019. Bluegreen also estimates that approximately 9.3%12.6% of the total delinquencies on its VOI notes receivable as of December 31, 20172019 related to VOI notes receivable subject to these letters.this issue. Bluegreen has in a number of cases pursued, and Bluegreen may in the future pursue, legal action against the VOI owners.owners, and in certain circumstances against the exit firms.  See the “Totten” case filed in December 2018 and the “Montgomery” case filed in November 2019, described below.



50


Whitney Paxton and Jeff Reeser, on behalf of themselves and all others similarly situated, v. Bluegreen Vacations Unlimited, Inc., Phillip Hicks and Todd Smith, Case No. 3:16-CV-523-HSM-HBG, United States District Court, Eastern District of Tennessee at Knoxville

On August 24, 2016, Whitney Paxton and Jeff Reeser filed a lawsuit against Bluegreen Vacations Unlimited, Inc. (“BVU”), a wholly-owned subsidiary of Bluegreen, and certain employees of BVU (collectively, the “Defendants”), seeking to establish a class action of former and current employees of BVU and alleging violations of plaintiffs’ rights under the Fair Labor Standards Act of 1938 (the “FLSA”) and breach of contract. The lawsuit also claims that the Defendants terminated plaintiff Whitney Paxton as retaliation for her complaints about alleged violations of the FLSA. The lawsuit seeks damages in the amount of the unpaid compensation owed to the plaintiffs. During July 2017, a magistrate judge entered a report and recommendation that the plaintiffs’ motion to conditionally certify collective action and facilitate notice to potential class members be granted with respect to certain employees and denied as to others. During September 2017, the judge accepted the recommendation and granted preliminary approval of class certification. Management believes that the lawsuit is without merit and intends to vigorously defend the action. Litigation



Stephen Potje, Tamela Potje, Sharon Davis, Beafus Davis, Matthew Baldwin, Tammy Baldwin, Arnor Lee, Angela Lee, Gretchen Brown, Paul Brown, Jeremy Estrada, Emily Estrada, Guillermo Astorga Jr.,Michael Oliver, Carrie Oliver, Russell Walters, Elaine Walters, and Mike Ericson v. Bluegreen Corporation, Case No.: 2018CA004782, 15th Judicial Circuit Court, Palm Beach County, Florida

On September 22, 2017, Stephen Potje, Tamela Potje, Sharon Davis, Beafus Davis, Matthew Baldwin, Tammy Baldwin, Arnor Lee, Angela Lee, Gretchen Brown, Paul Brown, Jeremy Estrada, Emily Estrada, Michael Oliver, Carrie Oliver, Russell Walters, Elaine Walters, and Mike Ericson, individually and on behalf of all other similarly situatedv Bluegreen Corporation, Case No.: 9:17-cv-81055, United States District Court, Southern District of Florida

On September 22, 2017, the plaintiffs named in the caption above, filed a purported class action lawsuit against Bluegreen which asserts claims for alleged violations of the Florida Deceptive and Unfair Trade Practices Act and the Florida False Advertising Law. In the complaint, the plaintiffs allegealleged the making of false representations in connection with Bluegreen’s sales of VOIs, including representations regarding the ability to use points for stays or other experiences with other vacation providers, the ability to cancel VOI purchases and receive a refund of the purchase price and the ability to roll over unused points, and that annual maintenance fees would not increase. The purported class action lawsuit was dismissed without prejudice after mediation. However, on or about April 24, 2018, plaintiffs re-filed their individual claims in Palm Beach County Circuit Court. Subsequently on October 15, 2019, the Court entered an order granting Bluegreen’s summary judgement and dismissed all claims. Plaintiffs are appealing the summary judgement order.

Oscar Hernandez, individually, and on behalf of other members of the general public similarly situated; Estella Michael, individually, and on behalf of other members of the general public similarly situated, vs. Bluegreen Vacations Unlimited, Inc. an unknown business entity; and DOES 1 through 100, inclusive, Case No. CIVDS1804956, San Bernardino Superior Court, California

On February 28, 2018, Oscar Hernandez and Estella Michael filed a purported class action litigation in San Bernardino Superior Court against BVU.  The central claims in the complaint, seeksas amended during June 2018, include alleged failures to establishpay overtime and wages at termination and to provide meal and rest periods, as well as claims relating to non-compliant wage statements and unreimbursed business

47


expenses; and a claim under the Private Attorney’s General Act. Plaintiffs sought to represent a class of consumersapproximately 660 hourly, non-exempt employees who worked in the state of California since March 1, 2014. In April 2019, the parties mediated and agreed to settle the matter for an immaterial amount. It is expected that the court will approve the settlement and the dismissal of the lawsuit after the settlement documents are executed.

Melissa S. Landon, Edward P. Landon, Shane Auxier and Mu Hpare, on behalf of themselves and all others similarly situated v. Bluegreen Vacations Unlimited, Inc. and Bluegreen Vacations Corporation, Case No. 18-cv-994, United States District Court, Eastern District of Wisconsin

On June 28, 2018, Melissa S. Landon, Edward P. Landon, Shane Auxier and Mu Hpare, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against the Company and BVU asserting claims for alleged violations of the Wisconsin Timeshare Act, Wisconsin law prohibiting illegal referral selling, and Wisconsin law prohibiting illegal attorney’s fee provisions. Plaintiffs allegations include that Bluegreen failed to disclose the identity of the seller of real property at the beginning of its initial contact with the applicable statutepurchaser; that Bluegreen misrepresented who the seller of limitations, havethe real property was; that Bluegreen misrepresented the buyer’s right to cancel; that Bluegreen included an illegal attorney’s fee provision in the sales document(s); that Bluegreen offered an illegal “today only” incentive to purchase; and that Bluegreen utilized an illegal referral selling program to induce the sale of VOIs. Plaintiffs seek certification of a class consisting of all persons who, in Wisconsin, purchased VOIs from Bluegreen had their annual maintenance fees relating to Bluegreenone or more VOIs increased, or were unable to roll over their unused pointswithin six years prior to the next calendar year. The lawsuit alleges damages in excessfiling of $5,000,000 and seeks damages in the amount alleged to have been improperly obtained by Bluegreen, as well as anythis lawsuit. Plaintiffs seek statutory enhanced damages, attorneys’ fees and costs, and equitable and injunctive relief. On November 20, 2017, Bluegreen moved to dismiss the complaintcase, and on November 27, 2019, the court issued a ruling granting the dismissal in response,part. Bluegreen has answered the plaintiffs filed an amended complaint dropping the claims relating to the Florida Deceptive and Unfair Trade Practices Act and adding claims for fraud in the inducement and violation of the Florida Vacation Plan and Timesharing Act.remaining claims. Bluegreen filed a motion to dismiss the amended complaint which is currently pending before the court. Bluegreen’s management believes that the lawsuit is without merit and intends to vigorously defend the action.



Gordon Siu,Bluegreen Vacations Unlimited, Inc. and Bluegreen Vacations Corporation v. Totten Franqui Davis & Burk, LLC et al., Case No. 6:18-02188-RBD-DCI, United States District Court for the Middle District of Florida, Orlando Division

On December 21, 2018, Bluegreen and BVU filed a lawsuit against timeshare exit firm Totten Franqui and certain other affiliated timeshare exit companies (“TPEs”). In the compliant, Bluegreen argues that through various forms of deceptive advertising, as well as inappropriate direct contact with Bluegreen’s VOI owners, the TPEs make false statements about Bluegreen and provide misleading information to the VOI owners. Bluegreen also believes that the TPEs induce Bluegreen’s VOI owners to breach their contracts and stop making payments to Bluegreen, which typically results in a default on the VOI note and termination of the VOI.  Thereafter, the TPEs, despite often times doing no more than encouraging non-payment, claim that they “helped” the consumer “exit” their timeshare contract. Bluegreen believes that all of this results in the consumer paying fees to the TPEs in exchange for illusory services. Bluegreen has asserted claims under the Lanham Act, as well as tortious interference with contractual relations, civil conspiracy to commit tortious interference and other claims. During the course of the litigation, the TPEs and Totten Franqui filed for bankruptcy, which resulted in the litigation being stayed. The bankruptcy judge has appointed an independent trustee to handle the estate of the debtors and Bluegreen has been in discussions with the bankruptcy trustee about a possible settlement.  Bluegreen intends to assert all of its legal rights in the bankruptcy case.

Bluegreen Vacations Unlimited, Inc. and Bluegreen Vacations Corporation v. The Montgomery Law Firm, LLC et al., Case No. 1:19-cv-24704, United States District Court for the Southern District of Florida

On November 13, 2019, Bluegreen filed a lawsuit against timeshare exit firm The Montgomery Law Firm, and certain of its affiliates (“TPEs”). In the complaint, Bluegreen alleged that the TPEs, through various forms of deceptive advertising, as well as inappropriate direct contact with VOI owners, made false statements about Bluegreen and provided misleading information to VOI owners. The TPEs have encouraged nonpayment by consumers and exacted fees for doing so. Bluegreen believes the consumers are paying fees to the TPEs in exchange for illusory services. Bluegreen has asserted claims against the TPEs under the Lanham Act, as well as tortious interference with contractual relations, civil conspiracy to commit tortious interference and other claims.

Shehan Wijesinha, individually and on behalf of all others similarly situated, v. Bluegreen Vacations Unlimited, Inc., Choice Hotels International, Inc., et al., Case No. 3:18-CV-00022, U.S.19CV20073, United States District Court for the Southern District of CaliforniaFlorida



On January 4, 2018, the plaintiff named in the caption above7, 2019, Shehan Wijesinha filed a purported class action lawsuit alleging violations of the Telephone Consumer Protection Act (the “TCPA”). It is alleged that Bluegreen VacationsBVU called plaintiff’s cell phone for telemarketing purposes using an automated dialing system, and Choice Hotels violated California state privacy laws by recording and/or monitoring a telemarketing call to thethat plaintiff without his consent. The plaintiff claims the individual making the call requested that the plaintiff provide personal and private information and did not disclose that the call was being recorded until after making such request. The plaintiff seeksgive BVU his express written consent to do so. Plaintiffs seek certification of a class comprised of other persons in California whose telephone conversations were monitored, recorded and/the United States who received similar calls from or eavesdropped uponon behalf of BVU without their consent by Bluegreen and/or Choice Hotelsthe person’s consent.  Plaintiff seeks monetary damages, attorneys’ fees and damages of $5,000 per violation.injunctive relief. Bluegreen believes thatthe lawsuit is without merit and intend to vigorously defend the action. On July 15, 2019, the court entered an order staying this case pending a ruling from the Federal Communications Commission clarifying the definition of an automatic telephone dialing system under the TCPA and the decision of the Eleventh Circuit in a separate action brought against a VOI company by a plaintiff alleging violations of the TCPA. On January 27, 2020, the Eleventh Circuit issued a ruling consistent with BVU’s position, but the case currently remains stayed.

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Debbie Adair et al. v. Bluegreen Vacations Unlimited, Inc. et al., Case No. 19-1-003, Chancery Court for the Fourth Judicial District for Sevier County, Tennessee

On January 7, 2019, Debbie Adair and thirty-four other timeshare purchasers filed a lawsuit against BVU and Bass Pro alleging violations of the Tennessee Consumer Protection Act, the Tennessee Time-share Act, the California Time-Share Act, fraudulent misrepresentation for failure to make certain required disclosures, fraudulent inducement for inducing purchasers to remain under contract past rescission, unauthorized practice of law, civil conspiracy, unjust enrichment, and breach of contract. Plaintiffs seek rescission of their contracts, money damages, including statutory treble damages, or in the alternative, punitive damages in an amount not less than $0.5 million. Bluegreen has filed a motion to dismiss, which is pending. Bluegreen has agreed to indemnify Bass Pro with respect to the claims brought against Bluegreen in this proceeding. Bluegreen believes the lawsuit is without merit and intends to vigorously defend the action.



Eddie Boyd et al. v. Bluegreen Vacations Unlimited, Inc. et al., Case No. 19CT-CC00126, Circuit Court of Christian County, Missouri

On July 18, 2019, Plaintiffs filed a petition alleging that BVU and its co-defendants violated the Missouri Merchandise Practices Act for allegedly making false statements and misrepresentations with respect to the sale of VOIs. Plaintiffs further have filed a purported class action allegation that BVU’s charging of an administrative processing fee constitutes the unauthorized practice of law. Plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. Bluegreen has moved to dismiss the petition. Bluegreen believes the lawsuit is without merit and intends to vigorously defend the action.

Termination of Manhattan Club Purchase and Sale Agreement

On March 15, 2018, BVU entered into an Agreement for Purchase and Sale of Assets (“Purchase and Sale Agreement”) with T. Park Central, LLC, O. Park Central, LLC, and New York Urban Ownership Management, LLC (collectively “New York Urban”), which provided for BVU’s purchase of The Manhattan Club inventory over a number of years and the assumption of  the management contract with The Manhattan Club HOA  anticipated to occur in 2021. On October 7, 2019, New York Urban initiated arbitration proceedings against BVU alleging that The Manhattan Club HOA (of which BVU is a member) was obligated to pay an increased management fee to a New York Urban affiliate and that this higher amount would be the benchmark for BVU’s purchase of the management contract under the Purchase and Sale Agreement. New York Urban also sought damages in the arbitration proceedings in excess of $10 million for promissory estoppel and tortious interference. BVU denied New York Urban’s claims and terminated the Purchase and Sale Agreement and the related Security Agreement based on, among other things, New York Urban prematurely initiating arbitration in violation of the Purchase and Sale Agreement. On November 25, 2019, New York Urban sent its own Notice of Termination of the Purchase and Sale Agreement and a separate letter containing an offer to compromise if BVU resigned its position on the Manhattan Club HOA board and permitted New York Urban to enforce its rights under the Security Agreement. On November 29, 2019, BVU accepted the offer. BVU has provided New York Urban with resignations of its members on the Manhattan Club HOA board consistent with the parties’ settlement agreement and believes it has fulfilled all of its legal obligations under the settlement.

ITEM 4.  MINE SAFETY DISCLOSURE

Not Applicable.



5149

 


 

 

ITEM 4.  MINE SAFETY DISCLOSURES

Not Applicable.

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



The Company’sBBX Capital’s Class A Common Stock and Class B Common Stock have substantially identical terms, except as follows:



·

Under Florida law and our Articles of Incorporation and Bylaws, holders of our Class A Common Stock and Class B Common Stock vote together as a single class on most matters presented for a shareholder vote. On such matters, holders of our Class A Common Stock are entitled to one vote for each share held, with all holders of Class A Common Stock possessing in the aggregate 22% of the total voting power. Holders of Class B Common Stock have the remaining 78% of the total voting power. If the number of shares of Class B Common Stock outstanding decreases to 1,800,000 shares, the Class A Common Stock’s aggregate voting power will increase to 40%, and the Class B Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53%, and the Class B Common Stock will have the remaining 47%. If the number of shares of Class B Common Stock outstanding decreases to 500,000 shares, the fixed voting percentages will be eliminated, and holders of our Class A Common Stock and holders of our Class B Common Stock will each be entitled to one vote per share.

·

Each share of Class B Common Stock is convertible at the option of the holder thereof into one share of Class A Common Stock.



In addition to any other approval required by Florida law, the voting structure described in the first bullet point above may not be amended without the approval of holders of a majority of the outstanding shares of our Class B Common Stock, voting as a separate class. Holders of our Class B Common Stock also have certain other special voting rights with respect to matters affecting our capital structure and the Class B Common Stock.



Market Information



On July 13, 2017, theThe Company’s Class A Common Stock began tradingtrades on the New York Stock Exchange (“NYSE”) under the ticker symbol “BBX.“BBX,Upon commencement of trading on the NYSE, the Company’s Class A Common Stock ceased trading on the OTCQX Best Market. On February 3, 2017,and the Company’s Class B Common Stock began trading on the OTCQX Best Market under the ticker symbol “BBXTB”. 

From February 3, 2017 through July 12, 2017, our Class A Common Stock wereis quoted on the OTCQX Best Market under the ticker symbol “BBXT”.  Prior to February 3, 2017, our Class A and Class B Common Stock were quoted on the OTCQB market tier of the OTC Markets (“OTCQB”) under the ticker symbol names “BFCF” and “BFCFB,“BBXBT. respectively. 



On March 6, 2018,2, 2020, there were approximately 371343 record holders of our Class A Common Stock and approximately 135128 record holders of our Class B Common Stock.



52


The following table sets forth, for the indicated periods, the high and low trading prices for our Class A Common Stock and Class B Common Stock as quoted on the applicable exchange.



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Class A Common Stock

 

 

Class B Common Stock



 

High

 

Low

 

 

High

 

Low

Calendar Year 2016

 

 

 

 

 

 

 

 

 

First quarter

$

3.44 

$

2.50 

 

$

3.30 

$

2.57 

Second quarter

 

3.10 

 

2.51 

 

 

2.96 

 

2.50 

Third quarter

 

3.95 

 

2.73 

 

 

3.70 

 

2.60 

Fourth quarter

 

5.04 

 

3.65 

 

 

4.40 

 

3.65 

For the year ended December 31, 2016

 

5.04 

 

2.50 

 

 

4.40 

 

2.50 



 

 

 

 

 

 

 

 

 

Calendar Year 2017

 

 

 

 

 

 

 

 

 

First quarter

$

7.00 

$

4.81 

 

$

7.35 

$

4.90 

Second quarter

 

7.50 

 

6.03 

 

 

7.40 

 

6.35 

Third quarter

 

7.77 

 

5.87 

 

 

7.75 

 

6.10 

Fourth quarter

 

8.92 

 

6.32 

 

 

8.89 

 

7.05 

For the year ended December 31, 2017

 

8.92 

 

4.81 

 

 

8.89 

 

4.90 

Dividends

Prior to June 2016, no cash dividends were paid on the Company’s common stock.  Since June 2016, the Company’s board of directors has declared quarterly cash dividends on the Company’s Class A and Class B Common Stock as follows:  

Per

Common

Share

Record

Payment

Distribution

Date

Date

Amount

March 2018

3/26/2018

4/20/2018

$

0.01 

March

3/20/2017

4/20/2017

$

0.0075 

June

6/26/2017

7/20/2017

0.0075 

September

9/29/2017

10/20/2017

0.0075 

December

12/20/2017

1/22/2018

0.0075 

Total for 2017

$

0.0300 

June

6/20/2016

7/20/2016

$

0.005 

September

9/23/2016

10/20/2016

0.005 

December

12/19/2016

1/20/2017

0.005 

Total for 2016

$

0.015 

Future declaration and payment of cash dividends with respect to the Company’s common stock, if any, will be determined in light of the then-current financial condition of the Company and other factors deemed relevant by the board of directors.

See the “Liquidity and Capital Resources” section of “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion regarding the dependence of BBX Capital on dividends from Bluegreen and the ability of Bluegreen to pay dividends to the Company, as well as restrictions pertaining thereto.

Issuer Purchases of Equity Securities



On September 21, 2009, ourJune 13, 2017, BBX Capital’s board of directors approved a share repurchase program which authorized the repurchase of up to 20,000,000 shares of the Company’s Class A Common Stock and Class B Common Stock at an aggregate cost

53


of up to $10 million. On June 13, 2017, our board of directors approved a share repurchase program which replaced the September 2009 share repurchase program and authorizes the repurchase of up to 5,000,000 shares of the Company’s Class A Common Stock and Class B Common Stock at an aggregate cost of up to $35 million. The June 2017 repurchase program authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors.During April 2017, the Company repurchased 1.0 million shares of its Class A Common Stock under the September 2009 share repurchase program for approximately $6.2 million. During April 2016, the Company repurchased 1.0 million shares of its Class A Common Stock under the September 2009 share repurchase program for approximately $3.0 million.



As of December 31, 2017, 321,5932019, 4,750,483 shares of the Company’s Class A Common Stock have been repurchased for approximately $2.4$25.4 million under the June 2017 share repurchase program.program, of which 321,593 shares were repurchased in 2017 for an aggregate purchase price of $2.4 million, 1,200,000 shares were repurchased in 2018 for an aggregate purchase price of $7.6 million, and 3,228,890 shares were repurchased in 2019 for an aggregate purchase price of $15.4 million.



50


From September 30, 2017October 1, 2019 through October 8, 2017,5, 2019, a total of 2,394,492748,357 shares of the Company’s Class AB Common Stock and 176,132 shares222,848 of the Company’Company’s Class BA Common Stock previously owned by certain executive officers were surrendered to the Company by the executive officers as payment in satisfaction of tax withholding obligations relating to the vesting of certain previously reported restricted stock awards and units granted to the executive officers. Further information regarding theseshare repurchases during the quarter ended December 31, 2017,2019, is set forth in the table below:







 

 

 

 



 

 

 

 



 

 

 

 

Period

(a) Total Number of Shares Purchased

(b) Average Price Paid per Share

(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

October 1 –

October 31, 2017 (1)

2,570,624

$7.38

-

5,000,000 shares

(or approximately $35,000,000)

November 1 – 

November 30, 2017 (2)

321,593

$7.56

321,593

4,678,407 shares

(or approximately $32,567,000)

December 1 – December 31, 2017

-

$  -  

-

4,678,407 shares

(or approximately $32,567,000)

Total

2,892,217

$7.40

-

4,678,407 shares

(or approximately $32,567,000)



 

 

 

 

Period

(a) Total Number of Shares Purchased

(b) Average Price Paid per Share

(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

October 1 - October 31, 2019 

971,205(1)

$4.67

-

1,678,868 shares (or approximately $16,142,936)

November 1 - November 30, 2019 

350,000(2)

$4.76

350,000

1,328,868 shares (or approximately $14,477,914)

December 1 – December 31, 2019 

1,079,351(2)

$4.55

1,079,351

249,517 shares (or approximately $9,566,153)

Total

2,400,556

$4.63

1,429,351

249,517 shares (or approximately $9,566,153)



(1)

These shares were surrendered to the Company by certain executive officers in satisfaction of tax withholding obligations and were not repurchased under a share repurchase program.

(2)

The shares repurchased in November 20172019 and December 2019 were made under the June 2017 share repurchase program.



54In April 2018, BBX Capital completed a cash tender offer pursuant to which it purchased and retired 6,486,486 shares of its Class A Common Stock at a purchase price of $9.25 per share for an aggregate purchase price of approximately $60.1 million, inclusive of acquisition costs.




Equity Compensation Plan Information



The following table lists awards previously granted and outstanding, and securities authorized for issuance, under the Company’s equity compensation plans at December 31, 2017:

2019:





 

 

 

 

 



 

 

 

 

 



 

 

 

 

Number of



 

 

 

 

Securities



 

 

 

 

Remaining



 

 

 

 

Available for



 

 

 

 

Future Issuance



 

 

Weighted-

 

Under Equity



Number of Securities

 

Average

 

Compensation



to be Issued

 

Exercise

 

Plans



Upon Exercise

 

Price of

 

(Excluding



of Outstanding

 

Outstanding

 

Outstanding



Options,

 

Options,

 

Options,



Warrants

 

Warrants

 

Warrants,

Plan category

or Rights

 

or Rights

 

or Rights)(1)

Equity compensation plans

 

 

 

 

 

approved by security

 

 

 

 

 

holders

27,346 

 

$8.98 

 

2,228,802 



 

 

 

 

 

Equity compensation plans

 

 

 

 

 

not approved by security

 

 

 

 

 

holders

 -

 

 -

 

 -

Total

27,346 

 

$8.98 

 

2,228,802 



Plan category

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants or Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants or Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Outstanding Options, Warrants, or Rights)(1)

Equity compensation plans

approved by security

holders

 —

 —

2,817,776 

Equity compensation plans

not approved by security

holders

 —

 —

 —

Total

 —

 —

2,817,776 



(1)

In January 2018,2020, the Company’s Compensation Committee of the board of directors granted 1,487,051awarded 2,442,503 restricted shares of the Company’s Class BA Common Stock to the Company’s executive officers under the BBX Capital Corporation 2014 Incentive Plan reducing the number of securities remaining available for future issuance under equity compensation plans to 741,751.375,273 shares of Class A Common Stock.



The Company assumed BCC’s equity compensation plans upon consummation of the acquisition of all the outstanding shares of BCC not owned by the Company pursuant to a merger agreement on December 15, 2016. Pursuant to the merger agreement for this transaction, awards outstanding under the BCC Equity Compensation Plan at December 15, 2016 continue to be outstanding and governed by the BBX Capital 2005 Restricted Stock and Option Plan, and the BBX Capital 2014 Stock Incentive Plan, except that such awards were converted into awards that are eligible to be settled in shares of the Company’s Class A Common Stock resulting in the issuance of 5,090,354 restricted shares of the Company’s Class A Common Stock and non-qualifying stock options to acquire 35,716 shares of the Company’s Class A Common Stock at December 15, 2016.  No further awards will be granted under the BCC equity compensation plans.

51

 


 

Shareholder Return Performance Graph



Set forth below is a graph comparing the cumulative total returns (assuming reinvestment of dividends) for the Company’s Class A Common Stock, the Standard and Poor’s 500 Stock Index and Standard and Poor’s Small-Cap Stock Index and assumes $100 was invested on December 31, 2012.2014.



 

 

 

 

 

 

 



 

12/31/14

12/31/15

12/31/16

12/31/17

12/31/18

12/31/19

BBX Capital Corporation

$

100.00 107.62 154.92 253.02 181.90 151.43 

Standard and Poor's Small-Cap Stock Index

 

100.00 96.54 120.57 134.68 121.55 147.03 

Standard and Poor's 500 Stock Index

 

100.00 99.27 108.74 129.86 121.76 156.92 









 

 

 

 

 

 

 



 

12/31/2012

12/31/2013

12/31/2014

12/31/2015

12/31/2016

12/31/2017

BBX Capital Corporation

$

100.00 229.37 250.00 269.05 387.30 632.54 

Standard and Poor's Small-Cap Stock Index

 

100.00 139.73 146.04 140.99 176.08 196.70 

Standard and Poor's 500 Stock Index

 

100.00 129.60 144.36 143.31 156.98 187.47 

55Picture 1




The Company is not able to identify a group of peer companies or industry or line of business index which it believes is comparable to the Company and its current activities. Accordingly, the Company selected the Standard and Poor’s Small-Cap Stock Index based on the Company’s market capitalization.



The performance graph should not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.

5652

 


 

 

ITEM 6.  SELECTED FINANCIAL DATA



The following table sets forth selected historical consolidated financial data as of and for the periods indicated below. The selected historical consolidated statements of operations for fiscal years 2017, 20162019, 2018 and 20152017 and the selected consolidated statements of financial conditions as of December 31, 20172019 and 20162018 are derived from our audited consolidated financial statements included in Item 8 of this report. The selected historical consolidated statements of operations for fiscal years 20142016 and 20132015 and the selected consolidated statements of financial condition as of December 31, 2015, 20142017, 2016 and 20132015 set forth below are derived from our previously filed audited consolidated financial statements not included in this report and have been updated to conform to the current presentation. In addition, the selected historical consolidated statements of operations for fiscal years 2017 and 2016 and the selected consolidated statements of financial condition as of December 31, 2017 and 2016 have been updated to reflect the impact of the adoption of ASU 2014-09 and ASU 2017-05, while the selected historical consolidated statements of operations for fiscal year 2015 and the selected consolidated statement of financial condition as of December 31, 2015 have not been updated to reflect the adoption of these standards. As a result, the financial data presented for such periods is not comparable with respect to the application of these standards.





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

2017

 

2016

 

2015

 

2014

 

2013

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

(Dollars in thousands, except for per share data)

 

 

(Dollars in thousands, except for per share data)

Statements of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

815,782 

 

767,295 

 

744,257 

 

676,966 

 

563,991 

 

$

946,871 

 

 

945,898 

 

 

868,769 

 

 

819,602 

 

 

740,993 

 

 

 

 

 

 

 

 

 

 

Total cost and expenses

 

736,698 

 

703,108 

 

676,971 

 

611,300 

 

466,706 

 

 

936,015 

 

 

874,423 

 

 

789,317 

 

 

755,564 

 

 

676,971 

 

 

 

 

 

 

 

 

 

 

Equity in earnings (loss) from unconsolidated real estate joint ventures

 

14,483 

 

13,630 

 

(1,565)

 

(573)

 

(30)

 

37,898 

 

 

14,194 

 

 

12,541 

 

 

12,178 

 

 

(1,565)

Other income

 

82 

 

 

1,695 

 

 

801 

 

 

2,551 

 

 

3,264 

Foreign exchange (loss) gain

 

(193)

 

219 

 

(1,038)

 

(715)

 

(357)

 

 

(75)

 

 

68 

 

 

(193)

 

 

219 

 

 

(1,038)

Income before income taxes

 

93,374 

 

78,036 

 

64,683 

 

64,378 

 

96,898 

 

 

48,761 

 

 

87,432 

 

 

92,601 

 

 

78,986 

 

 

64,683 

Benefit (provision)for income taxes (1)

 

7,223 

 

(36,379)

 

76,596 

 

(37,073)

 

(26,141)

(Provision) benefit for income taxes (1)

 

 

(16,658)

 

 

(31,639)

 

 

9,702 

 

 

(36,390)

 

 

76,596 

Net income

 

100,597 

 

41,657 

 

141,279 

 

27,305 

 

70,757 

 

 

32,103 

 

 

55,793 

 

 

102,303 

 

 

42,596 

 

 

141,279 

Less: Net income attributable to noncontrolling interests

 

18,402 

 

13,295 

 

18,805 

 

13,455 

 

41,694 

 

 

14,412 

 

 

20,691 

 

 

18,378 

 

 

13,166 

 

 

18,805 

Net income attributable to shareholders

$

82,195 

 

28,362 

 

122,474 

 

13,850 

 

29,063 

 

$

17,691 

 

 

35,102 

 

 

83,925 

 

 

29,430 

 

 

122,474 

 

 

 

 

 

 

 

 

 

 

Common Share Data (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of common stock:

$

0.83 

 

0.33 

 

1.41 

 

0.16 

 

0.35 

 

$

0.19 

 

 

0.37 

 

 

0.85 

 

 

0.34 

 

 

1.41 

Diluted earnings per share of common stock:

$

0.79 

 

0.32 

 

1.40 

 

0.16 

 

0.35 

 

$

0.19 

 

 

0.36 

 

 

0.81 

 

 

0.34 

 

 

1.40 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of

 

 

 

 

 

 

 

 

 

 

common shares outstanding

 

98,745 

 

86,902 

 

87,022 

 

84,502 

 

83,202 

Diluted weighted average number of

 

 

 

 

 

 

 

 

 

 

common shares outstanding

 

103,916 

 

87,492 

 

87,208 

 

84,761 

 

84,624 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of common shares outstanding

 

 

92,628 

 

 

95,298 

 

 

98,745 

 

 

86,902 

 

 

87,022 

Diluted weighted average number of common shares outstanding

 

 

93,654 

 

 

97,860 

 

 

103,916 

 

 

87,492 

 

 

87,208 

Cash dividends declared per common share (3):

$

0.030 

 

0.015 

 

 -

 

 -

 

 -

 

$

0.050 

 

 

0.040 

 

 

0.030 

 

 

0.015 

 

 

 —

 

 

 

 

 

 

 

 

 

 

Book value per share (4):

$

5.75 

 

4.64 

 

4.46 

 

3.03 

 

3.05 

 

$

6.01 

 

 

5.90 

 

 

5.88 

 

 

4.76 

 

 

4.46 

Fully diluted book value per share (5):

 

5.52 

 

4.22 

 

4.21 

 

2.84 

 

2.77 

Fully Diluted book value per share (5):

 

5.84 

 

5.70 

 

5.63 

 

4.32 

 

4.21 



5753

 


 

 







 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

As of December 31,



 

2017

 

2016

 

2015

 

2014

 

2013



 

(Dollars in thousands)

Statements of Financial Condition Data:

 

 

 

 

 

 

 

 

 

 

Loans, loans held-for-sale

 

 

 

 

 

 

 

 

 

 

and notes receivable, net

$

451,255 

 

456,001 

 

470,987 

 

486,534 

 

581,641 

VOI Inventory

 

281,291 

 

238,534 

 

220,211 

 

194,713 

 

204,256 

Total assets

 

1,606,665 

 

1,436,068 

 

1,340,960 

 

1,402,453 

 

1,430,128 

Borrowings (6)

 

700,646 

 

701,146 

 

675,391 

 

661,583 

 

682,729 

Shareholders' equity

 

573,230 

 

454,604 

 

376,826 

 

252,906 

 

239,421 

Noncontrolling interests

 

80,271 

 

40,850 

 

106,080 

 

193,800 

 

182,975 

Total equity

 

653,501 

 

495,454 

 

482,906 

 

446,706 

 

422,396 



 

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of December 31,



 

2019

 

2018

 

 

2017

 

2016

 

2015



 

 

(Dollars in thousands)

Statements of Financial Condition Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes receivable

 

$

449,162 

 

 

439,167 

 

 

426,858 

 

 

425,800 

 

 

415,598 

VOI Inventory

 

 

346,937 

 

 

334,149 

 

 

281,291 

 

 

238,534 

 

 

220,211 

Total assets (7)

 

 

1,790,971 

 

 

1,705,020 

 

 

1,605,681 

 

 

1,437,290 

 

 

1,340,960 

Borrowings (6)

 

 

748,800 

 

 

796,243 

 

 

700,646 

 

 

701,146 

 

 

675,391 

Shareholders' equity

 

 

549,795 

 

 

549,620 

 

 

585,468 

 

 

466,158 

 

 

376,826 

Noncontrolling interests

 

 

90,275 

 

 

87,988 

 

 

82,054 

 

 

41,609 

 

 

106,080 

Total equity (7)

 

 

640,070 

 

 

637,608 

 

 

667,522 

 

 

507,767 

 

 

482,906 



(1)

The benefit for income taxes for the year ended December 31, 2017 was the result of the reduction in the Company’s net deferred income tax liability associated with the enactment of the Tax Cuts and Jobs Act which permanently lowered the corporate income tax rate from 35% to 21%. The benefit for income taxes for the year ended December 31, 2015 was the result of a $127.8 million reversal of a portion of the Company’s deferred tax asset valuation allowance on May 1, 2015 when the Company became eligible to file a consolidated group federal income tax return with BCC, Woodbridge, and Bluegreen as a result of the Company’s purchase of additional shares of BCC’s Class A Common Stock on April 30, 2015 and related increase inCompany increasing its ownership in BCC to 81%. during 2015. 

(2)

While the Company has two classes of common stock outstanding, the two-class method is not presented because the Company’s capital structure does not provide for different dividend rates or other preferences, other than voting rights, between the two classes.

(3)

During the yearyears ended December 31, 2019, 2018 and 2017, the Company declared quarterly cash dividends of $0.0125, $0.01 and $0.0075 per share, respectively, on its Class A and Class B Common Stock.  During the year ended December 31, 2016, the Company declared quarterly cash dividends of $0.005 per share on its Class A and Class B Common Stock beginning in June 2016.

(4)

The numerator of book value per share for all periods is shareholders’ equity. The denominator of book value per share for all periods was computed by adding the number of shares of Class A and Class B common sharesCommon Stock outstanding at year-end.

(5)

The numerator of fully diluted book value per share for all periods is shareholders’ equity. The denominator of fully diluted book value per share for all periods was computed by adding the number of shares of Class A and Class B sharesCommon Stock outstanding at year endyear-end and the number of non-vestedunvested restricted stock awards and exercisable stock options.options outstanding (without assuming any buybacks of such potentially dilutive shares under the treasury method).

(6)

Borrowings consist of the carrying amount of notes payable and other borrowings, receivable-backed notes payable, and junior subordinated debentures.  

(7)

Total assets as of December 31, 2019 includes $109.4 million of operating lease assets, while total assets in the prior periods presented do not include operating lease assets. Total equity as of December 31, 2019 includes a cumulative effect adjustment of $2.2 million, net of income taxes, associated with a right-of-use asset impairment loss recognized upon the adoption of the new lease accounting standard on January 1, 2019.  Based on the transition guidance elected by the Company upon the adoption of the new lease accounting standard, comparable prior periods are reported in accordance with Topic 840, which did not require the recognition of right-of-use assets and lease liabilities related to operating leases. See Note 2 – Summary of Significant Accounting Policies under Item 8 included in this report for further discussion related to the adoption of the new lease accounting standard.

5854

 


 

 

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion and analysis should be read together with the Company’s audited consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K. The following discussion contains forward-looking statements, including those that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, without limitation, those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

The Management Discussion and Analysis of this Form 10-K discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. Other than discussion related to the Company’s BBX Sweet Holdings reportable segment, discussions of 2017 items and year-to-year comparisons between 2018 and 2017 are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.  Such reports and other information filed by the Company with the SEC are available free of charge on our website at www.bbxcapital.com or with the SEC at www.sec.gov.



Overview



BBX Capital Corporation (referred to together with its subsidiaries as the “Company,” “we,” “us,” or “our,” and without its subsidiaries as “BBX Capital”) is a Florida-based diversified holding company withwhose principal investments inare Bluegreen Vacations Corporation (“Bluegreen”Bluegreen Vacations” or “Bluegreen”), real estate and real estate joint ventures, and middle market operating businesses. Bluegreen is a sales, marketing and management company focused on the vacation ownership industry. The Company’s real estate investments include real estate joint ventures and the acquisition, development, ownership, financing, and management of real estate. The Company’s investments in middle market operating businesses includeBBX Capital Real Estate LLC (“BBX Capital Real Estate” or “BBXRE”), Renin Holdings, LLC (“Renin”), a company that manufactures products for the home improvement industry, investments in confectionery businesses through its wholly-owned subsidiary,and BBX Sweet Holdings, LLC (“BBX Sweet Holdings”), and more recently, its activities as a franchisee of MOD Super Fast Pizza, LLC (“MOD”).



The Company’s goal is to build long-term shareholder value. Since many of the Company’s assets do not generate income on a regular or predictable basis, the Company’s objective continues to be long-term growth as measured by increases in book value and intrinsic value over time. In addition, the Company’s goal is to streamline its investment verticals so that the Company can be more easily analyzed and followed by the marketplace. The Company regularly reviews the performance of its investments and, based upon economic, market, and other relevant factors, considers transactions involving the sale or disposition of all or a portion of its assets, investments, or subsidiaries. These include, among other alternatives, a sale or spin-off of its assets, investments, or subsidiaries or transactions involving public or private issuances of debt or equity securities which decrease or dilute the Company’s ownership interest in such investments.

As of December 31, 2017,2019, the Company had total consolidated assets of approximately $1.6$1.8 billion and shareholders’ equity of approximately $573.2 $549.8million. Net income attributable to shareholders for the years ended December 31, 2017, 20162019, 2018, and 20152017 was approximately $82.2$17.7 million, $28.4$35.1 million, and $122.5$83.9 million, respectively.



Summary of Consolidated Results of Operations



Consolidated Results



The following summarizes key financial highlights for the year ended December 31, 2017:2019 compared to the same 2018 period:



·

Total consolidated revenues were $815.8$946.9 million, a 6.3%0.1% increase compared to 2016.2018.

·

Income before income taxes was $93.4$48.8 million, a 19.7% increase44.2% decrease compared to 2016.2018.

·

Net income attributable to common shareholders was $82.2$17.7 million, a 189.8% increase49.6% decrease compared to 2016.2018.

·

Diluted earnings per share was $0.79$0.19 per diluted share, a $0.46$0.17 per share increasedecrease compared to 2016.2018.



The Company’s consolidated results for 2017the year ended December 31, 2019 compared to the same 2018 period were significantly impacted by the following events:following:



·

InThe recognition of a charge of $39.1 million in 2019 associated with Bluegreen’s settlement agreement with Bass Pro in June 2017, BBX Sweet Holdings acquired IT’SUGAR, a specialty candy retailer with 95 locations in 26 states and Washington, DC, for a purchase price of $58.4 million, net of cash acquired. The acquisition of IT’SUGAR contributed revenues of $46.8 million and income before taxes of $2.6 million during 2017.2019.

·

On November 17, 2017, Bluegreen completed an initial public offering (“IPO”)An increase in Bluegreen’s net carrying cost of its common stock by sellingVOI inventory primarily due to the public 3,736,723 of Bluegreen shares and Woodbridge selling 2,761,925 of Bluegreen shares as a selling shareholder. In connection with the offering, Woodbridge granted the underwriters a 30-day option to purchase up to an additional 974,797 shares from Woodbridge, and on December 5, 2017, the underwriters purchased allBluegreen’s acquisition of the additional 974,797 option shares from Woodbridge. AsÉilan Hotel and Spa during April 2018 and higher net costs associated with Bluegreen owning a result, the Company currently owns approximately 90%larger amount of Bluegreen, which resulted ininventory and increasing the allocation of $5.6 million of Bluegreen’s net incomeavailable inventory to the noncontrolling interests during 2017.marketing guests.  

·

In December 2017, the enactmentA net decrease in Bluegreen’s system-wide sales of the Tax CutsVOIs and Jobs Act, which reduced the federal corporate tax rate from 35% to 21%, resulted in a $43.1 million reductionincrease in the Company’s deferred tax liability. provision for loan losses.

·

DuringA net increase in sale activity in BBX Capital Real Estate’s portfolio in 2019, including  the fourth quarterAltis at Bonterra joint venture’s sale of 2017,its multifamily apartment community in Hialeah, Florida, which resulted in the recognition of $29.2 million of equity earnings from the joint venture in 2019.

·

An decrease in operating losses generated by BBX Sweet Holdings recorded non-cash goodwill, intangible assets and property and equipment impairments aggregating $5.2 million associated with declining profits in its Orlando manufacturing operations,2019, which primarily reflects the eliminationimpact of unprofitable brands, andvarious strategic initiatives implemented by the explorationCompany during 2018, including the closure of strategic alternatives for itsa manufacturing facility and a reduction

55


in Utah.corporate personnel and infrastructure, and various impairment losses and other costs recognized in 2018 in connection with such initiatives.  

·

The Company’s exit from its restauration operations as a franchisee of MOD Super Fast Pizza (“MOD Pizza”) in September 2019, which resulted in the recognition of $6.7 million in impairment losses in 2019. 



Segment Results



WeBBX Capital currently reportreports the results of ourits business activities through the following reportable segments: Bluegreen, BBX Capital Real Estate, Renin, and BBX Sweet Holdings.



59


Information regarding incomeIncome before income taxes by reportable segment for the years ended December 31, 2017, 20162019, 2018, and 20152017 is set forth in the table below (in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

 

 

 

 

 

2017

 

2016

 

2015

 

For the Years Ended December 31,

 

 

 

 

 

 

 

2019

 

2018

 

2017

Bluegreen

$

135,336 

 

124,948 

 

124,320 

 

$

58,264 

 

 

128,893 

 

 

136,998 

BBX Capital Real Estate

 

18,533 

 

34,719 

 

45,474 

 

 

52,696 

 

 

30,214 

 

 

16,085 

Renin

 

2,180 

 

857 

 

(2,058)

 

 

1,808 

 

 

2,461 

 

 

2,180 

BBX Sweet Holdings

 

(16,783)

 

(14,945)

 

(8,768)

 

 

(5,122)

 

 

(14,986)

 

 

(16,781)

Corporate Expenses & Other

 

(45,892)

 

(67,543)

 

(94,285)

Other

 

 

(9,086)

 

 

(4,178)

 

 

(2,672)

Reconciling items and eliminations

 

 

(49,799)

 

 

(54,972)

 

 

(43,209)

Income before income taxes

 

93,374 

 

78,036 

 

64,683 

 

 

48,761 

 

 

87,432 

 

 

92,601 

Benefit (provision) for income taxes

 

7,223 

 

(36,379)

 

76,596 

(Provision) benefit for income taxes

 

 

(16,658)

 

 

(31,639)

 

 

9,702 

Net income

 

100,597 

 

41,657 

 

141,279 

 

 

32,103 

 

 

55,793 

 

 

102,303 

Less: Net income attributable to noncontrolling interests

 

18,402 

 

13,295 

 

18,805 

 

 

14,412 

 

 

20,691 

 

 

18,378 

Net income attributable to shareholders

$

82,195 

 

28,362 

 

122,474 

 

$

17,691 

 

 

35,102 

 

 

83,925 

60


 

Bluegreen Reportable Segment



Executive Overview



Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in toppopular leisure and urban destinations. Bluegreen’s resort network includes 4345 Club Resorts (resorts in which owners in its Vacation Club have the right to use most of the units in connection with their VOI ownership) and 2423 Club Associate Resorts (resorts in which owners in its Vacation Club have the right to use a limited number of units in connection with their VOI ownership). Bluegreen’s Club Resorts and Club Associate Resorts are primarily located in popular, high-volume, “drive-to” vacation locations, including Orlando, Las Vegas, Myrtle Beach and Charleston, among others. Through its points-based system, the approximately 213,000220,000 owners in its Vacation Club have the flexibility to stay at units available at any of its resorts and have access to almost 11,000over 11,350 other hotels and resorts through partnerships and exchange networks. Bluegreen has a robust sales and marketing platform supported by exclusive marketing relationships with nationally-recognized consumer brands, such as Bass Pro and Choice Hotels. These marketing relationships drive sales within its core demographic.



VOI Sales and Financing



Bluegreen’s primary business is the marketing and selling of deeded VOIs, developed either by Bluegreen or third parties. Customers who purchase these VOIs receive an annual allotment of points, which can be redeemed for stays at one of its resorts or at 11,00011,350 other hotels and resorts available through partnerships and exchange networks. Historically, VOI companies have funded the majority of the capital investment in connection with resort development with internal resources and acquisition and development funding.financing. In 2009, Bluegreen began selling VOIs on behalf of third-party developers and has successfully diversified from a business focused on capital-intensive resort development to a flexible model with a balanced mix of developed and capital-light inventory. Bluegreen relationships with third-party developers enable it to generate fees from the sales and marketing of their VOIs without incurring the significant upfront capital investment generally associated with resort acquisition or development. While sales of acquired or developed inventory typically result in greater Adjusted EBITDA contribution, fee-based sales generally require no initial investment or development financing risk. Both acquired or developed VOI sales and fee-based VOI sales drive recurring, incremental and long-term fee streams by adding owners to its Vacation Club and new resort management contracts. In conjunction with its VOI sales, Bluegreen also generates interest income by originating loans forproviding financing to qualified purchasing owners.purchasers. Collateralized by the underlying VOIs, Bluegreen’s loans are generally structured as 10-year, fully-amortizing loans with a fixed interest rate ranging from approximately 12%13% to approximately 18%17% per annum. As of December 31, 2017,2019, the weighted-average interest rate on itsBluegreen’s VOI notes receivable was 15.3%14.9%. In addition, Bluegreen earns fees for various other services, that produce recurring, predictable and long-term revenue. For example, Bluegreen providesincluding title and escrow services for fees in connection with the closing of VOI sales, and generates fees for mortgage servicing and construction management services.servicing.



56


Resort Operations and Club Management



Bluegreen enters into management agreements with the HOAsHome Owner Associations (“HOAs”) that maintain most of the resorts and earn fees for providing management services to those HOAs and Bluegreen’s approximately 213,000220,000 Vacation Club owners. These resort management services include oversight of housekeeping services, maintenance, and certain accounting and administration functions. Bluegreen’s management contracts yield highly predictable, recurring cash flows and do not have the traditional risks associated with hotel management contracts that are linked to daily rate or occupancy. Bluegreen’s management contracts are typically structured as “cost-plus,” with an initial term of three years and automatic one-yearone year renewals. In connection with the management services provided to the Vacation Club, Bluegreen manages the reservation system and provideprovides owner, billing and collection services. Bluegreen has not lost any of the 43 Club Resort management contracts. In addition to resort and club management services, Bluegreen earns fees for various other services that produce recurring, predictable and long term-revenue including construction management services to third-party developers.



Principal Components Affecting Bluegreen’s Results of Operations



Principal Components of Revenues



Fee-Based Sales. Represent sales of third-party VOIs where Bluegreen is paid a commission.



61


JIT Sales. Represent sales of VOIs acquired from third parties in close proximity to when Bluegreen intends to sell such VOIs.



Secondary Market Sales. Represent sales of VOIs acquired from HOAs or other owners, typically in connection with maintenance fee defaults. This inventory is generally purchased at a greater discount to retail price compared to developed VOI sales and VOIs purchased by Bluegreen for sale as part of Bluegreen’s JIT sales.sales activities.



Developed VOI Sales.Represent sales of VOIs in resorts that Bluegreen has developed or acquired (not including inventory acquired through JIT and secondary market arrangements).



Financing Revenue. Represents interest income from the financing of VOI sales, which includes interest income and loan servicing fees. Bluegreen also earns fees from providing mortgage servicing to certain third-party developers relating to purchasers of their VOIs.VOIs sold by them.



Other Fee-Based Services. Represents resort operation and club management recurring fees from managing the Vacation Club and transaction fees for certain resort amenitiesTraveler Plus and certainother member exchanges.services. Bluegreen also earns recurring management fees under its management agreements with HOAs for day-to-day management services, including oversight of housekeeping services, maintenance, and certain accounting and administrative functions.



Bluegreen also includes in other fee-based services revenue earned from various other services that produce recurring, predictable and long-term revenue, such as title services.



Principal Components of Expenses



Cost of VOIs Sold.Represents the cost at which Bluegreen’s owned VOIs sold during the period were relieved from inventory. In addition to inventory from Bluegreen’s VOI business, Bluegreen’s owned VOIs also include those that were acquired by Bluegreen under JIT and secondary market arrangements. Compared to the cost of Bluegreen’s developed VOI inventory, VOIs acquired in connection with JIT arrangements typically have a relatively higher associated cost of sales as a percentage of sales while those acquired in connection with secondary market arrangements typically have a lower cost of sales as a percentage of sales as secondary market inventory is generally obtained from HOAs at a significant discount to retail price. Cost of VOIs sold as a percentage of sales of VOIs varies between periods based on the relative costs of the specific VOIs sold in each period and the size of the point packages of the VOIs sold (primarily due to offered volume discounts, and taking into account consideration of cumulative sales to existing owners). Additionally, the effect of changes in estimates under the relative sales value method, including estimates of projected sales, future defaults, upgrades and incremental revenue from the resale of repossessed VOI inventory, are reflected on a retrospective basis in the period the change occurs. Cost of sales will typically be favorably impacted in periods where a significant amount of secondary market VOI inventory is acquired and actual defaults and equity trades are higher and the resulting change in estimate is recognized. While Bluegreen believes that there is additional inventory that can be obtained through the secondary market at favorable prices in the future, there can be no assurance that such inventory will be available as expected.



Net Carrying Cost of VOI Inventory. Represents the maintenance fees and developer subsidies for unsold VOI inventory paid or accrued to the HOAs that maintain the resorts. Bluegreen attempts to offset this expense, to the extent possible, by generating revenue from renting VOIs and through utilizing them in sampler programs. Bluegreen nets such revenue from this expense item.



Selling and Marketing Expense. Represents costs incurred to sell and market VOIs, including costs relating to marketing and incentive programs, tours, and related wages and sales commissions. Revenues from vacation package sales are netted against selling and marketing expenses.

57




Financing Expense. Represents financing interest expense related to Bluegreen’s receivable-backed debt and amortization of the related debt issuance costs and other expenses incurred in providing financing and servicing loans. Additionally, financing expense includes theloans, including administrative costs associated with payment processing of costs of Bluegreen’smortgage servicing activities for loans owned by Bluegreen and the loans of certain third-party developers. Mortgage servicing activities include, among other things, payment processing, reporting and collection services.



Cost of Other Fee-Based Services. Represents costs incurred to manage resorts and the Vacation Club, including payroll and related costs and other administrative costs to the extent not reimbursed by the Vacation Club or HOAs. Bluegreen also includes in costs of other fee-based services expense from various other services that produce recurring, predictable and long-term revenue, such as cost associated with title services.



General and Administrative Expense. Primarily represents compensation expense for personnel supporting Bluegreen’s business and operations, professional fees (including consulting, audit and legal fees), and administrative and related expenses.

62




Key Business and Financial Metrics and Terms Used by Management



Sales of VOIs.  Represent sales of Bluegreen’s owned VOIs, including developed VOIs, and those acquired through JIT and secondary market arrangements, reduced by equity trade allowances and an estimate of uncollectible VOI notes receivable. In addition to the factors impacting system-wide sales of VOIs net,(described below), sales of VOIs are impacted by the proportion of system-wide sales of VOIs net sold on behalf of third-parties on a commission basis, which are not included in sales of VOIs.



System-wide Sales of VOIs, net.VOIs.  Represents all sales of VOIs, whether owned by Bluegreen or a third party immediately prior to the sale. Sales of VOIs owned by third parties are transacted as sales of VOIs in Bluegreen’s Vacation Club through the same selling and marketing process used to sell Bluegreen’s VOI inventory.  Bluegreen considers system-wide sales of VOIs net to be an important operating measure because it reflects all sales of VOIs by Bluegreen’s sales and marketing operations without regard to whether Bluegreen or a third party owned such VOI inventory at the time of sale. System-wide sales of VOIs net is not a recognized term under GAAP and should not be considered as an alternative to sales of VOIs or any other measure of financial performance derived in accordance with GAAP or to any other method of analyzing our results as reported under GAAP.



Guest Tours.  Represents the number of sales presentations given at Bluegreen’s sales centers during the period.



Sale to Tour Conversion Ratio.  Represents the rate at which guest tours are converted to sales of VOIs and is calculated by dividing guest tours by number of VOI sales transactions.



Average Sales Volume Per Guest (“VPG”).  Represents the sales attributable to tours at Bluegreen’s sales locations and is calculated by dividing VOI sales by guest tours. Bluegreen considers VPG to be an important operating measure because it measures the effectiveness of Bluegreen’s sales process, combining the average transaction price with the sale-to-tour conversion ratio.



EBITDA.  Bluegreen defines EBITDA as earnings, or net income, before taking into account interest income (excluding interest earned on VOI notes receivable), interest expense (excluding interest expense incurred on debt secured by Bluegreen’s VOI notes receivable), income and franchise taxes, and depreciation and amortization.  For the purposes of the EBITDA calculation, no adjustments were made for interest income earned on Bluegreen’s VOI notes receivable or the interest expense incurred on debt that is secured by such notes receivable because they are both considered to be part of the operations of Bluegreen’s business.



Adjusted EBITDA. Bluegreen defines Adjusted EBITDA as EBITDA adjusted for amounts attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations (in which Bluegreen owns a 51% interest) and items that Bluegreen believes are not representative of ongoing operating results.



Bluegreen considers EBITDA and Adjusted EBITDA to be an indicator of its operating performance, and it is used by Bluegreen to measure its ability to service debt, fund capital expenditures and expand its business. EBITDA is also used by companies, lenders, investors and others because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.



Bluegreen considers Adjusted EBITDA to be a useful supplemental measure of Bluegreen’s operating performance that facilitates the comparability of historical financial periods.



58


EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) or any other measure of financial performance or liquidity, including cash flow, derived in accordance with GAAP, or to any other method or analyzing Bluegreen’s results as reported under GAAP. The limitations of using EBITDA or Adjusted EBITDA as an analytical tool include, without limitation, that EBITDA or Adjusted EBITDA does not reflect (i) changes in, or cash requirements for, working capital needs; (ii) interest expense, or the cash requirements necessary to service interest or principal payments on indebtedness (other than as noted above); (iii) tax expense or the cash requirements to pay taxes; (iv) historical cash expenditures or future requirements for capital expenditures or contractual commitments; or (v) the effect on earnings or changes resulting from matters that Bluegreen

63


considers not to be indicative of its future operations or performance. Further, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA or Adjusted EBITDA does not reflect any cash requirements for such replacements. In addition, Bluegreen’s definition of Adjusted EBITDA may not be comparable to definitions of Adjusted EBITDA or other similarly titled measures used by other companies.

6459

 


 

 

Results of Operations



For the years ended December 31, 2017, 20162019, 2018, and 20152017



Information regarding the results of operations for Bluegreen for the years ended December 31, 2017, 20162019, 2018 and 20152017 are set forth below (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

2019

 

2018

 

2017

 

2017

 

2016

 

2015

 

Amount

 

% of System-wide sales of VOIs, net(5)

 

Amount

 

% of System-wide sales of VOIs, net(5)

 

Amount

 

% of System-wide sales of VOIs, net(5)

 

Amount

 

% of System-wide sales of VOIs, net(5)

 

Amount

 

% of System-wide sales of VOIs, net(5)

 

Amount

 

% of System-wide sales of VOIs, net(5)

Developed Sales (1)

$

296,486 

 

48%

$

394,745 

 

65%

$

424,304 

 

77%

Developed VOI Sales (1)

 

$

355,353 

 

 

57%

 

$

287,292 

 

 

46%

 

$

299,104 

 

 

48%

Secondary Market sales

 

182,108 

 

30%

 

164,991 

 

27%

 

138,487 

 

25%

 

 

248,780 

 

 

40%

 

 

232,562 

 

 

37%

 

 

182,108 

 

 

29%

Fee-Based sales

 

330,854 

 

54%

 

294,822 

 

49%

 

251,399 

 

45%

 

 

308,032 

 

 

50%

 

 

318,540 

 

 

51%

 

 

330,854 

 

 

53%

JIT sales

 

45,982 

 

7%

 

39,626 

 

7%

 

27,593 

 

5%

 

 

13,346 

 

 

2%

 

 

56,450 

 

 

9%

 

 

45,982 

 

 

7%

Less: Equity trade allowances (6)

 

(238,780)

 

-39%

 

(288,792)

 

-48%

 

(289,060)

 

-52%

 

 

(306,403)

 

 

-49%

 

 

(270,774)

 

 

-43%

 

 

(238,780)

 

 

-39%

System-wide sales of VOIs, net

 

616,650 

 

100%

 

605,392 

 

100%

 

552,723 

 

100%

System-wide sales of VOIs

 

 

619,108 

 

 

100%

 

 

624,070 

 

 

100%

 

 

619,268 

 

 

100%

Less: Fee-Based sales

 

(330,854)

 

-54%

 

(294,822)

 

-49%

 

(251,399)

 

-45%

 

 

(308,032)

 

 

-50%

 

 

(318,540)

 

 

-51%

 

 

(330,854)

 

 

-53%

Gross sales of VOIs

 

285,796 

 

46%

 

310,570 

 

51%

 

301,324 

 

55%

 

 

311,076 

 

 

50%

 

 

305,530 

 

 

49%

 

 

288,414 

 

 

47%

Estimated uncollectible VOI

 

 

 

 

 

 

 

 

 

 

 

 

notes receivable (2)

 

(46,134)

 

-16%

 

(44,428)

 

-14%

 

(42,088)

 

-14%

Provision for loan losses (2)

 

 

(55,701)

 

 

-18%

 

 

(51,305)

 

 

-17%

 

 

(46,397)

 

 

-16%

Sales of VOIs

 

239,662 

 

39%

 

266,142 

 

44%

 

259,236 

 

47%

 

 

255,375 

 

 

41%

 

 

254,225 

 

 

41%

 

 

242,017 

 

 

39%

Cost of VOIs sold (3)

 

(17,439)

 

-7%

 

(27,346)

 

-10%

 

(22,884)

 

-9%

 

 

(21,845)

 

 

-9%

 

 

(23,813)

 

 

-9%

 

 

(17,679)

 

 

-7%

Gross profit (3)

 

222,223 

 

93%

 

238,796 

 

90%

 

236,352 

 

91%

 

 

233,530 

 

 

91%

 

 

230,412 

 

 

91%

 

 

224,338 

 

 

93%

Fee-based sales commission revenue (4)

 

229,389 

 

69%

 

201,829 

 

68%

 

173,659 

 

69%

 

 

207,832 

 

 

67%

 

 

216,422 

 

 

68%

 

 

229,389 

 

 

69%

Financing revenue, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

financing expense

 

56,899 

 

9%

 

58,657 

 

10%

 

48,633 

 

9%

 

 

48,364 

 

 

8%

 

 

51,205 

 

 

8%

 

 

56,899 

 

 

9%

Other fee-based services revenue

 

111,819 

 

18%

 

103,448 

 

17%

 

97,539 

 

18%

 

 

189,133 

 

 

31%

 

 

180,558 

 

 

29%

 

 

164,458 

 

 

27%

Cost of other fee-based services

 

(64,116)

 

-10%

 

(57,632)

 

-10%

 

(53,896)

 

-10%

 

 

(127,013)

 

 

-21%

 

 

(124,144)

 

 

-20%

 

 

(112,979)

 

 

-18%

Net carrying cost of VOI inventory

 

(4,220)

 

-1%

 

(6,847)

 

-1%

 

(7,046)

 

-1%

 

 

(23,816)

 

 

-4%

 

 

(11,358)

 

 

-2%

 

 

(4,220)

 

 

-1%

Selling and marketing expenses

 

(319,211)

 

-52%

 

(314,039)

 

-52%

 

(284,351)

 

-51%

 

 

(317,716)

 

 

-51%

 

 

(307,614)

 

 

-49%

 

 

(319,664)

 

 

-52%

General and administrative expenses

 

(97,759)

 

-16%

 

(100,988)

 

-17%

 

(89,453)

 

-16%

 

 

(151,140)

 

 

-24%

 

 

(107,789)

 

 

-17%

 

 

(101,535)

 

 

-16%

Operating profit

 

135,024 

 

22%

 

123,224 

 

20%

 

121,437 

 

22%

 

 

59,174 

 

 

10%

 

 

127,692 

 

 

20%

 

 

136,686 

 

 

22%

Other income

 

312 

 

 

 

1,724 

 

 

 

2,883 

 

 

Benefit (provision) for income taxes

 

2,974 

 

 

 

(40,172)

 

 

 

(42,311)

 

 

Other (expense) income

 

 

(910)

 

 

 

 

 

1,201 

 

 

 

 

 

312 

 

 

(Provision) benefit for income taxes

 

 

(12,140)

 

 

 

 

(28,541)

 

 

 

 

2,345 

 

 

Net income

$

138,310 

 

 

$

84,776 

 

 

$

82,009 

 

 

 

$

46,124 

 

 

 

$

100,352 

 

 

 

$

139,343 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments for EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit (provision) for income taxes

 

(2,974)

 

 

 

40,172 

 

 

 

42,311 

 

 

Provision (benefit) for income taxes

 

 

12,140 

 

 

 

 

28,541 

 

 

 

 

(2,345)

 

 

Income before taxes

 

135,336 

 

 

 

124,948 

 

 

 

124,320 

 

 

 

 

58,264 

 

 

 

 

 

128,893 

 

 

 

 

 

136,998 

 

 

 

Depreciation

 

9,632 

 

 

 

9,536 

 

 

 

9,181 

 

 

 

 

14,114 

 

 

 

 

 

12,392 

 

 

 

 

 

9,632 

 

 

 

Franchise taxes

 

178 

 

 

 

186 

 

 

 

130 

 

 

 

 

193 

 

 

 

 

 

199 

 

 

 

 

 

178 

 

 

 

Interest expense (other than interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

incurred on debt that is secured by

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VOI notes receivable)

 

12,168 

 

 

 

12,505 

 

 

 

15,390 

 

 

 

 

19,035 

 

 

 

 

 

15,195 

 

 

 

 

 

12,168 

 

 

 

Interest income (other than interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

earned on VOI notes receivable)

 

(6,874)

 

 

 

(8,167)

 

 

 

(5,652)

 

 

 

 

(7,191)

 

 

 

 

 

(6,044)

 

 

 

 

 

(6,874)

 

 

 

EBITDA

 

150,440 

 

 

 

139,008 

 

 

 

143,369 

 

 

 

 

84,415 

 

 

 

 

 

150,635 

 

 

 

 

 

152,102 

 

 

 

Adjustments for Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate realignment costs

 

5,836 

 

 

 

 -

 

 

 

 -

 

 

One-time payment to Bass Pro

 

4,781 

 

 

 

 -

 

 

 

 -

 

 

Loss(gain) on assets held for sale

 

46 

 

 

 

(1,423)

 

 

 

56 

 

 

One-time special bonus

 

 -

 

 

 

10,000 

 

 

 

 -

 

 

Severance

 

 

6,267 

 

 

 

 

 

3,650 

 

 

 

 

 

5,836 

 

 

 

Bass Pro settlement

 

 

39,121 

 

 

 

 

 

 —

 

 

 

 

 

4,781 

 

 

 

Loss on assets held for sale

 

 

3,656 

 

 

 

 

 

 

 

 

 

 

46 

 

 

 

EBITDA attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

non-controlling interest in

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interest in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bluegreen/Big Cedar Vacations

 

(12,509)

 

 

 

(9,705)

 

 

 

(11,197)

 

 

 

 

(11,670)

 

 

 

 

 

(12,468)

 

 

 

 

 

(12,485)

 

 

 

Adjusted EBITDA

$

148,594 

 

 

$

137,880 

 

 

$

132,228 

 

 

 

$

121,789 

 

 

 

 

$

141,820 

 

 

 

 

$

150,280 

 

 

 

65




(1)

Developed VOI sales represent sales of VOIs acquired or developed by Bluegreen under its developed VOI business. Developed VOI sales do not include Secondary Market sales, Fee-Based sales or JIT sales.

(2)

Percentages for estimated uncollectible VOI notes receivableprovision for loan losses are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not of system-wide sales of VOIs, net)VOI).

(3)

Percentages for costs of VOIs sold and gross profit are calculated as a percentage of sales of VOIs (and not ofbased on system-wide sales of VOIs, net)VOIs).

(4)

Percentages for Fee-Based sales commission revenue are calculated as a percentage of Fee-Based sales (and not ofbased on system-wide sales of VOIs, net).

(5)

Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, net, unless otherwise indicated in the above footnotes.

(6)

Equity trade allowances are amounts granted to customers upon trading in their existing VOIs in connection with the purchase of additional VOIs.



Bluegreen - For the year ended December 31, 20172019 compared to the year ended December 31, 20162018



Sales of VOIsVOIs..    Sales of VOIs were $239.7$255.4 million and $266.1$254.2 million during the years ended December 31, 20172019 and 2016,2018, respectively. Sales of VOIs are impacted by the factors described below in system-wide sales of VOIs. Gross sales of VOIs were reduced by $46.1$55.7 million and $44.4$51.3 million during the years ended December 31, 2017,2019 and 2016,2018, respectively, for estimated future uncollectible notes receivable. Estimatedthe provision for loan losses. The provision for loan losses for uncollectible VOI notes receivable vary withvaries based on the amount of financed, non-fee based sales during the period and changes in Bluegreen’s 

60


estimates of future notes receivable performance for existing and newly originated loans. Bluegreen’s estimated uncollectible VOI notes receivableprovision for loan losses as a percentage of gross sales of VOIs were 16%was 18% and 14%,17% during the years ended December 31, 20172019 and 2016,2018, respectively. The percentage of Bluegreen’s sales which were realized in cash within 30 days from the sale of VOIs decreased to 39%was  42% during the yearboth years ended December 31, 2017 from 41% during2019 and 2018. The increase in the year ended December 31, 2016. This resulted inprovision for loan losses was primarily due to an increase in the portion of such sales requiring an estimate of losses for uncollectible VOI notes receivable.  Bluegreen has in recent years experienced an increase in itsaverage annual default rates.rates, which Bluegreen believes that a significant portion of the default increase in recent years is due in large part to the receipt of letters from attorneys who purport to represent certain VOI owners and who have encouraged such owners to become delinquent and ultimately default on their obligations. Defaults associated with such letters in 2019 increased 26% compared to 2018, with a significant portion of such increase attributable to default activity for Bluegreen’s resorts and owners located in Missouri, where Bluegreen believes certain attorneys are currently targeting its customers. See “Item 3. Legal Proceedings” for additional information regarding such letters and actions taken by Bluegreen in connection therewith. While Bluegreen believes its notes receivable are adequately reserved at this time, actual defaults may differ from the estimates and the reserve may not be adequate.adequate, whether due to actions by Bluegreen’s attorneys or otherwise. In addition to the factors described below impacting system-wide sales of VOIs, net, sales of VOIs are impacted by the proportion of system-wide sales of VOIs net sold on behalf of third parties on a commission basis, which are not included in sales of VOIs.



The average annual default rates and delinquency rates (more than 30 days past due) on Bluegreen’s VOI notes receivable were as follows:



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

2017

 

2016

 

2019

 

2018

Average annual default rates

 

8.50%

 

7.50%

 

 

8.73%

 

 

8.41%

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

As of December 31,

 

2017

 

2016

 

 

2019

 

 

2018

Delinquency rates

 

3.04%

 

3.30%

 

 

3.62%

 

 

2.91%

 

 

 

 

 

 

 

 



System-wide sales of VOIs, net.VOIs. System-wide sales of VOIs net were $616.7$619.1 million and $605.4$624.1 million during the years ended December 31, 20172019 and 2016,2018, respectively. This growth reflected an increase in the averageSystem-wide sales price (per transaction), partially offset bydecreased during 2019 due to a decrease in the number of guest tourstours. Bluegreen believes the decrease was due in part to disruptions in staffing and the sale-to-tour conversion ratio. The averageoperations at certain of its sales price per transaction increased by 12% for the year ended December 31, 2017 comparedoffices related to the year ended December 31, 2016. During 2017, Bluegreen began screeningissues with Bass Pro which were resolved when the credit qualificationsparties entered into a settlement agreement in June 2019 (See Item 8 - Note 16: Commitments and Contingencies of potential marketing guests, resulting in a higher average transaction price, higher VPG, and a lower number of tours in the year ended December 31, 2017. Bluegreen believes its screening of marketing guests will ultimately result in improved efficiencies in its sales process, however this has not yet occurred and there is no assurance that efficiencies will be achieved.Annual Report on Form 10-K for additional information regarding this matter).   



Included in system-wide sales are Fee-Based Sales, JIT Sales, Secondary Market Sales and developed VOI sales. Sales by category are tracked based on which deeded VOI is conveyed in each transaction. Bluegreen manages which VOIs are sold based on several factors, including the needs of fee-based clients, Bluegreen’s debt service requirements and default resale requirements under term securitization and similar transactions. These factors contribute to fluctuations in the amount of sales by category from period to period.

66Fee-Based Sales comprised 50% and 51% of system-wide sales of VOIs during the years ended December 31, 2019 and 2018, respectively. Bluegreen expects this rate to decrease in 2020 as it focuses on selling Bluegreen owned inventory; however, actual results may different from this estimate in the future. 




The following table sets forth certain information for system-wide sales of VOIs net for 20172019 and 2016.  The information is provided before giving effect to the deferral of VOI2018 (dollars in thousands, except average sales in accordance with GAAP:

volume per guest):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

2017

 

2016

 

% Change

 

2019

 

2018

 

% Change

Number of sales offices at period-end

 

23 

 

23 

 

 -

 

 

26 

 

 

26 

 

 

 —

Number of active sales arrangements with
third-party clients at period-end

 

16 

 

18 

 

-11%

Number of active sales arrangements with

 

 

 

 

 

 

 

 

third-party clients at period-end

 

15 

 

 

15 

 

 

 —

Total number of VOI sales transactions

 

40,705 

 

45,340 

 

-10%

 

40,703 

 

 

40,087 

 

 

2%

Average sales price per transaction

$

15,365 

$

13,727 

 

12%

 

$

15,307 

 

$

15,692 

 

 

-2%

Number of total guest tours

 

252,257 

 

274,987 

 

-8%

 

235,842 

 

 

238,141 

 

 

-1%

Sale-to-tour conversion ratio– total marketing guests

 

16.1% 

 

16.5% 

 

-2%

Sale-to-tour conversion ratio – total

 

 

 

 

 

 

 

 

marketing guests

 

17.3% 

 

 

16.8% 

 

3%

Number of new guest tours

 

162,083 

 

190,235 

 

-15%

 

142,130 

 

 

146,623 

 

 

-3%

Sale-to-tour conversion ratio– new marketing guests

 

13.4% 

 

13.5% 

 

-1%

Sale-to-tour conversion ratio – new

 

 

 

 

 

 

 

 

marketing guests

 

14.1% 

 

 

14.3% 

 

 

-1%

Percentage of sales to existing owners

 

49.4% 

 

46.0% 

 

7%

 

54.5% 

 

 

51.6% 

 

 

6%

Average sales volume per guest

$

2,479 

$

2,263 

 

10%

 

$

2,642 

 

$

2,642 

 

 

 —



Cost of VOIs Sold. During the years ended December 31, 20172019 and 2016,2018, cost of VOIs sold was $17.4$21.8 million and $27.3$23.8 million, respectively, and represented 7% and 10%, respectively,9% of sales of VOIs.VOIs during each year. Cost of VOIs sold as a percentage of sales of VOIs varies between periods based on the relative costs of the specific VOIs sold in each period and the size of the point packages of the VOIs sold (due to

61


offered volume discounts, including consideration of cumulative sales to existing owners). Additionally, the effect of changes in estimates under the relative sales value method, including estimates of project sales, future defaults, upgrades and incremental revenue from the resale of repossessed VOI inventory, are reflected on a retrospective basis in the period the change occurs.  Therefore, cost of sales will typically be favorably impacted in periods where a significant amount of Secondary Market VOI inventory is acquired or actual defaults and equity trades are higher than anticipated and the resulting change in estimate is recognized. During 2017,2019, Bluegreen acquired more Secondary Market VOI inventory compared to 2018 due to a temporary suspension of Secondary Market VOI inventory purchases in September 2018 in connection with a system conversion involving Bluegreen’s sales and inventory process. In addition, during 2019, Bluegreen’s cost of sales benefited from sales of relatively lower cost VOIs as compared to 2018. Further, in 2018, Bluegreen increased the average selling price of VOIs by approximately 4%3%. As a result of this pricing change in 2018, Bluegreen also increased its estimate of total gross margin that will be generated on the sale of its VOI inventory under the relative sales value method. Under the relative sales value method prescribed for timeshare developers to relieve the cost of VOI inventory, changes to the estimate of gross margin expected to be generated on the sale of VOI inventory are recognized on a retrospective basis in earnings. Accordingly, during the second quarter of 2017,2018, Bluegreen recognized a benefit to cost of VOIs sold of $5.1$3.6 million. Further, in September 2016, Bluegreen increased the selling price of its VOIs by 5%. Accordingly, during the third quarter of 2016, Bluegreen recognized a benefit to cost of VOIs sold of $5.6 million.



Fee-Based Sales Commission Revenue. During the years ended December 31, 20172019 and 2016,2018, Bluegreen sold $330.9$308.0 million and $294.8$318.5 million, respectively, of third-party VOI inventory under commission arrangements and earned sales and marketing commissions of $229.4$207.8 million and $201.8$216.4 million, respectively, in connection with those sales. This increase was due primarily to an increase in commission rates with certain commission based clients, as well as the factors described above related to the increase in system-wide sales of VOIs, net. Bluegreen earned an average sales and marketing commission of 69%67% and 68% during the years ended December 31, 20172019 and 2016, respectively. Additionally, the increase2018, respectively, which is net of a reserve for commission refunds in 2017 included an incentive commission of $4.5 million related to the achievement of certain sales thresholdsconnection with early defaults and cancellations pursuant to the terms of certain of its fee-based service arrangements. The decrease in sales and conditionsmarketing commission as a percentage of the applicable contractual arrangement,fee-based sales for 2019 as compared to a $3.0 million incentive2018 is primarily related to the mix of developer sales at higher commission earnedrates in 2016.2018 as well as higher reserves for early defaults in 2019, which Bluegreen refunds to the third-party developers in certain circumstances.  



Financing Revenue, Net of Financing Expense. During the years ended December 31, 20172019 and 2016,2018, financing revenue, net of financing expense were $56.9$48.4 million and $58.7$51.2 million, respectively. The increasedecrease in finance revenue net of finance expense is a result of Bluegreen’s lowerhigher weighted average cost of borrowing and an increase inhigher outstanding debt balances during 2019 compared to 2018.  Additionally, during 2019, Bluegreen paid off its VOI notes receivable portfolio,2013 Notes Payable and, in connection with this repayment, wrote off unamortized debt issuance costs of $0.4 million which contributed to the introduction of “risk-based pricing” pursuant to which, buyer’sincrease in interest rates are determined based on their FICO score at the point of sale.  As a result, Bluegreen has realized 2017 loan originations (after 30-day payoffs same as cash), with a weighted average FICO score of 724 compared to 716 for 2016. expense in 2019.



Other Fee-Based Services Revenue. During the years ended December 31, 20172019 and 2016,2018, revenue from Bluegreen’s resort operations, club management and title operations was $111.8$189.1 million and $103.4$180.6 million, respectively, which was partially offset by expenses directly related to these operations of $64.1$127.0 million and $57.6$124.1 million, respectively.



Other fee-based services revenue increased 8%5% during the year ended December 31, 20172019 as compared to the year ended December 31, 2016. Bluegreen provides2018. Cost reimbursement revenue, which primarily consists of payroll and payroll related expenses for management services to the Vacation Club and to a majority of the HOAs of the resorts within the Vacation Club. In connection with its managementand other services Bluegreen also managesprovides where Bluegreen is the Vacation Club reservation system, provides services to owners and performs billing and collections servicesemployer, increased 2% during the year ended December 31, 2019 as compared to the Vacation Club and certain HOAs. The resort properties Bluegreen manages increased from 46 as ofyear ended December 31, 2016 to 48 as2018.  Net of cost reimbursement revenue, resort operations and club management revenues increased 5% during the year ended December 31, 2017 due2019 as compared to new resorts under management in Charleston, South Carolina and Banner Elk, North Carolina.the year ended December 31, 2018.  Resort operations and club management revenues, net of cost reimbursement revenues, increased during 20172019 compared to 20162018 primarily as a result of such increasethe receipt of management fees for the full year in the number of2019 related to two managed resorts added during 2018 and an increase in the numberhigher third-party rental commissions. Bluegreen managed 49 resort properties as of owners in the Vacation Club. Additionally, Bluegreen generates revenues from its Traveler Plus program,both December 31, 2019 and food and beverage and other retail operations. Bluegreen also earns commissions from providing rental services to third parties and fees from managing the construction activities of certain of its fee based third-party developer clients.December 31, 2018. 



67


During 2017, costCost of other fee-based services increased 11%2% during the year ended December 31, 2019 as compared to 2016.the year ended December 31, 2018. This increase iswas primarily due to increased cost reimbursement expense and the higher costs associated with programs provided to VOI owners and increased costs of providing management services as a resulttiming of the higher service volumesnew managed resorts described above.



Net Carrying Cost of VOI Inventory.The carrying cost of Bluegreen’s inventory was $16.2$35.7 million and $16.8$27.4 million during the years ended December 31, 20172019 and 2016,2018, respectively, which was partlypartially offset by rental and sampler revenuesrevenue of $12.0$11.8 million and $9.9$16.1 million, respectively. The decreaseincrease in net carrying costs isof VOI inventory was primarily related to our acquisition of the Éilan Hotel and Spa during April 2018 and higher net costs associated with Bluegreen owning a resultlarger amount of Bluegreen’s capital-light business activitiesinventory and an increase in sampler revenues.increasing the allocation of available inventory to marketing guests.  



Selling and Marketing Expenses. Selling and marketing expenses were $319.2$317.7 million and $314.0$307.6 million during the years ended December 31, 20172019 and 2016,2018, respectively.  The increase in selling and marketing expense was primarily due to increased costs from the implementation of screening the credit qualifications of potential marketing guests, including the expense of fulfillment costs associated with those guests, offset by an increase in the average sales volume per guest. As a percentage of system-wide sales of VOIs, net, selling and marketing expenses were 52%51% and 49% during each of the years ended December 31, 20172019 and 2016.  Selling2018, respectively. The increase in selling and marketing expenses varyas a percentage of system-wide sales of VOIs is primarily attributable to higher costs per guest tour,  higher fees to Bass Pro as well as a change in the timing of expense recognition under the settlement agreement with Bass Pro discussed below, additional costs related to Bluegreen’s marketing operations in 15 new Cabela’s stores in 2019, and additional costs associated with testing new traditional and digital marketing programs. In addition, 2019 includes severance of $0.6 million pursuant to an agreement entered into with an executive during 2019.    

62


Bluegreen’s agreement with Bass Pro previously provided for the payment of a variable commission upon the sale of a VOI to a marketing prospect obtained through the Bass Pro marketing channels. As discussed herein, pursuant to the settlement agreement and amended marketing arrangement with Bass Pro, the settlement payment and a portion of the ongoing annual marketing fees are fixed costs and/or are subject to annual minimums regardless of the volume of VOI sales produced from the resulting marketing prospects generated from the amended agreement. If Bluegreen’s amended agreement with Bass Pro does not generate a sufficient number of prospects and leads or is terminated or limited, Bluegreen may not be able to successfully market and sell its products and services at current sales levels, at anticipated levels or at levels required in order to offset the costs associated with its marketing efforts.  In addition, the amended arrangement with Bass Pro is expected to result in an annual 9% increase in Bluegreen’s marketing costs as a percentage of sales from period to periodthe program based on increases in part onprogram fixed costs and anticipated VOI sales volumes from this marketing channel.  Should Bluegreen’s VOI sales volumes be below expectations, the relative proportionincrease in cost of this marketing methods utilized during such periods, most notably the percentageprogram would be higher than expected and Bluegreen’s results of sales to Bluegreen’s existing owners, which has a relatively lower cost compared to other methods. operations and cash flows would be adversely impacted.



General and Administrative Expenses. General and administrative expenses were $97.8$151.1 million and $101.0$107.8 million during the yearsyear ended December 31, 20172019 and 2016,2018, respectively. As a percentage of system-wide sales of VOIs, net, general and administrative expenses were 16%24% and 17% duringfor the yearsyear ended December 31, 20172019 and 2016. The decrease in 2017 was primarily due2018, respectively. General and administrative expenses for the year ended December 31, 2019 include a charge of $39.1 million related to special bonuses totaling $10.0 million, which were paid to certainthe settlement of Bluegreen’s employeesthe dispute with Bass Pro in June 2016, with no comparable 2017 special bonuses. The decreases in general administrative expenses were partly offset by a $4.8 million commission payment to2019. (See Item 8 - Note 16: Commitments and Contingencies of this Annual Report for additional information regarding the Bass Pro as well as additionalsettlement). In addition, during the year ended December 31, 2019, Bluegreen accrued severance and transition expenses of $2.9$6.3 million payable by Bluegreen pursuant to an agreement Bluegreenagreements entered into with an executivecertain executives and members of management during September 20172019 compared to $3.7 million during 2018. The above increases in connection with his retirement.  The $2.9 million amount is included in the corporate realignmentgeneral and administration expenses were partially offset by lower self-insured health care costs, in the above table.  lower legal expenses, and lower information technology costs. See “Commitments”“Bluegreen Liquidity and Capital Resources” below for additional information.



On October 9, 2017, Bass Pro raisedOther (expense) income, net.Other income, net was an issue regarding the computationexpense of the sales commissions paid to it on the sale of VOIs. In response to the request from Bass Pro, Bluegreen made a payment of approximately $4.8$0.9 million to Bass Pro during the fourth quarter of 2017 in connection with this matter. While Bluegreen believes that the amount previously paid was consistent with the terms and intent of the parties’ agreements, the resolution of that issue could result in a future increase in Bluegreen’s marketing costs.

Bluegreen - For the year ended December 31, 2016 compared to the year ended December 31, 2015

Sales of VOIs.  Sales of VOIs were $266.1 million and $259.2 million during the years ended December 31, 2016 and 2015, respectively. In addition to the factors described below impacting system-wide sales of VOIs, net, sales of VOIs are impacted by the proportion of system-wide sales of VOIs, net sold on behalf of third parties on a commission basis, which are not included in sales of VOIs.  Gross sales of VOIs were reduced by $44.4 million and $42.1 million during the years ended December 31, 2016, and 2015, respectively, for estimated future uncollectible notes receivable. Bluegreen’s estimated uncollectible VOI notes receivable as a percentage of gross sales of VOIs were 14% during each of the years ended December 31, 2016 and 2015.

The average default rates and delinquency rates (more than 30 days past due) on Bluegreen’s VOI notes receivable were as follows:



 

 

 

 



 

 

 

 



 

For the Years Ended December 31,



 

2016

 

2015

Average annual default rates

 

7.50%

 

6.90%



 

 

 

 



 

As of December 31,



 

2016

 

2015

Delinquency rates

 

3.30%

 

3.30%



 

 

 

 

System-wide sales of VOIs, net.  System-wide sales of VOIs, net were $605.4 million and $552.7 million during the years ended December 31, 2016 and 2015, respectively. This growth reflected an increase in the number of tours and the average price per transaction partially offset by a decrease in the sale-to-tour conversion ratio.  During the year ended December 31, 2016, the number of tours increased 16% and the number of new prospect tours increased 22% compared to the year ended December 31, 2015. This increase reflects efforts to expand marketing to new sales prospects. The average sales price per transaction increased by 6% for the year ended December 31, 2016 compared to the year ended

68


December 31, 2015. Bluegreen estimates that system-wide sales were adversely impacted by approximately $6.3 million as a result of Hurricane Matthew and the Tennessee wildfires in 2016.

The following table sets forth certain information for system-wide sales of VOIs, net for 2016 and 2015.  The information is provided before giving effect to the deferral of VOI sales in accordance with GAAP:



 

 

 

 

 

 



 

 

 

 

 

 



 

For the Years Ended December 31,



 

2016

 

2015

 

% Change

Number of sales offices at period-end

 

23 

 

23 

 

 -

Number of active sales arrangements with
   third-party clients at period-end

 

18 

 

15 

 

20%

Total number of VOI sales transactions                   

 

45,340 

 

43,576 

 

4%

Average sales price per transaction     

$

13,727 

$

12,962 

 

6%

Number of total guest tours     

 

274,987 

 

237,208 

 

16%

Sale-to-tour conversion ratio– total marketing guests     

 

16.5% 

 

18.4% 

 

-10%

Number of new guest tours     

 

190,235 

 

156,554 

 

22%

Sale-to-tour conversion ratio– new marketing guests     

 

13.5% 

 

14.9% 

 

-9%

Percentage of sales to existing owners

 

46.0% 

 

48.2% 

 

-5%

Average sales volume per guest

$

2,263 

$

2,381 

 

-5%

Cost of VOIs Sold.  During the years ended December 31, 2016 and 2015, cost of VOIs sold was $27.3 million, and $22.9 million, respectively, and represented 10% and 9%, respectively, of sales of VOIs. In September 2016, Bluegreen increased the selling price of its VOIs by 5%. As a result of this pricing change, Bluegreen management also increased its estimate of total gross margin generated on the sale of its VOI inventory. Under the relative sales value method prescribed for timeshare developers to relieve the cost of VOI inventory, changes to the estimate of gross margin expected to be generated on the sale of VOI inventory are recognized on a retrospective basis in earnings. Accordingly, during the year ended December 31, 2016, Bluegreen recognized a benefit to cost2019 and income of VOIs sold of $5.6 million.

Fee-Based Sales Commission Revenue. During the years ended December 31, 2016 and 2015, Bluegreen sold $294.8$1.2 million and $251.4 million, respectively, of third-party VOI inventory under commission arrangements within its capital-light business strategy and earned sales and marketing commissions of $201.8 million and $173.7 million, respectively, in connection with those sales. This increase was due primarily to an increase in the number of commission based clients, as well as the factors described above related to the increase in system-wide sales of VOIs, net. Bluegreen earned an average sales and marketing commission of 68% and 69% during the years ended December 31, 2016, and 2015, respectively. The higher percentage in 2015 included an incentive commission of $1.1 million related to the achievement of certain sales thresholds pursuant to the terms and conditions of the applicable contractual arrangement.

Financing Revenue, Net of Financing Expense.  During the years ended December 31, 2016 and 2015, financing revenue, net of financing expense were $58.7 million and $48.6 million, respectively. The increase is a result of Bluegreen’s lower cost of borrowing and an increase in Bluegreen’s VOI notes receivable portfolio.

Other Fee-Based Services Revenue.  During the years ended December 31, 2016 and 2015, revenue from Bluegreen’s resort operations, club management and title operations was $103.4 million and $97.5 million, respectively, which was partially offset by expenses directly related to these operations of $57.6 million and $53.9 million, respectively.

Other fee-based services revenue increased 6% during the year ended December 31, 2016 as compared2018. In December 2019, Bluegreen conveyed the ski and golf operations and related property at one of its resorts to the year ended December 31, 2015.  AsHOA, which resulted in a loss on disposal of December 31, 2016, and 2015, Bluegreen managed 46 and 45 resort properties and hotels, respectively. Resort operations and club management revenue increased primarily as a result of increases in the number of owners in the Vacation Club. In January 2015, Bluegreen sold the Atlantic Palace Resort management contract and recognized a $0.3approximately $5.6 million, gain, which is included in other income for the year ended December 31, 2015. Additionally, Bluegreen generated revenues from its Traveler Plus program, and food and beverage and other retail operations. Bluegreen also earn commissions from providing rental services to third parties and fees from managing the construction activities of certain fee-based clients.

Net Carrying Cost of VOI Inventory. The carrying cost of Bluegreen’s inventory was $16.8 million and $15.3 million during the years ended December 31, 2016 and 2015, respectively, which was partly offset by rental and sampler revenues of $9.9 million and $8.3 million, respectively. The increase during 2016 as compared to 2015 was primarily due to an increase in maintenance fees related to a newly constructed building at Bluegreen/Big Cedar Vacation’s Paradise Point resort that began sales in November 2015, partially offset by an increase in rental revenues and an increased emphasis on Bluegreen’s capital-light strategy.

69


Selling and Marketing Expenses.  Selling and marketing expenses were $314.0 million and $284.4 milliona land sale during the years ended December 31, 2016 and 2015, respectively. AsJune 2019 for a percentagegain of system-wide sales of VOIs, net, selling and marketing expenses were 52% and 51% during the years ended December 31, 2016 and 2015, respectively. This increase was a result of the focus on increasing Bluegreen’s marketing efforts to new prospects as opposed to existing owners, which resulted in higher costs per tour from new and expanding marketing channels. Sales to existing owners generally involve lower marketing expenses than sales to new prospects.$2.0 million.

General and Administrative Expenses.  General and administrative expenses were $101.0 million and $89.5 million during the years ended December 31, 2016 and 2015, respectively. As a percentage of system-wide sales of VOIs, net, general and administrative expenses were 17% and 16% during the years ended December 31, 2016 and 2015, respectively.  The increase in 2016 was primarily due to special bonuses totaling $10.0 million, which were paid to certain employees in June 2016, with no comparable 2015 bonuses.



 



 

7063

 


 

 

BBX Capital Real Estate Reportable Segment



Segment Description



BBX Capital Real Estate’s primary activities includeEstate (or BBXRE) is engaged in the acquisition, development, construction, ownership, financing, and management of real estate and investments in real estate joint ventures. BBX Capital Real Estateventures,  including investments in multifamily apartment and townhome communities, single-family master-planned communities, and commercial properties located primarily in Florida. In addition, BBXRE owns a 50% equity interest in the Altman Companies, a developer and manager of multifamily apartment communities, and also manages the legacy assets acquired by BCC in connection with the Company’s sale of its BankAtlantic subsidiary in July 2012. The legacy assets include2012, including portfolios of loans receivable and real estate properties, and loans previously charged-off by BankAtlantic.properties.



Current TrendsOverview

The Altman Companies and DevelopmentsRelated Investments

In 2018, BBXRE acquired a 50% membership interest in the Altman Companies, a joint venture between the Company and Joel Altman (“JA”) engaged in the development, construction, and management of multifamily apartment communities. As of December  31, 2019, BBXRE had investments in ten active developments sponsored by the Altman Companies, comprised of three developments that are stabilized or being leased and expected to be sold over the next two years, five developments that are under construction, and two projects that are currently in predevelopment stages.



During 2017, BBX Capital Real Estate continued to focus on expandingthe year ended December  31, 2019, BBXRE monetized certain of its investments in real estate primarily through new investments in real estate joint ventures that were sponsored by the Altman Companies, including threethe following:

·

In April 2019, the Altis at Lakeline joint venture sold its 354 unit multifamily apartment community in Cedar Park, Texas. As a result of the sale, BBXRE recognized $5.0 million of equity earnings and received approximately $9.3 million of distributions from the venture during the year ended December 31, 2019.

·

In August 2019, the Altis at Bonterra joint venture sold its 314 unit multifamily apartment community located in Hialeah, Florida. As a result of the sale, BBXRE recognized $29.2 million of equity earnings and received approximately $46.0 million of distributions from the joint venture. In addition, prior to the sale, BBXRE received approximately $4.3 million of distributions from the venture during the year ended December 31, 2019 related to prior operating profits of the venture.

BBXRE also continued to invest in new investments in unconsolidatedreal estate joint ventures sponsored by the Altman Companies, which are summarized below:

·

During the year ended December 31, 2019, joint ventures sponsored by the Altman Companies closed on construction financing and commenced development of the following projects:

·

Altis at Preserve (Suncoast), a 350 unit multifamily apartment community in Tampa, Florida;

·

Altis at Little Havana, a 224 unit multifamily apartment community in Miami, Florida;  

·

Altis Miramar West, a 320 unit multifamily apartment community in Miramar, Florida; and

·

Altis Miramar East, a 330 unit multifamily apartment community, in Miramar, Florida.  

The Altman Companies is providing development, construction, and management services to the ventures in exchange for ongoing fee revenue, and BBXRE and JA have invested in the respective managing member of these ventures. As of December 31, 2019, BBXRE had invested an aggregate investment of $7.7$4.2 million in the managing members of these joint ventures.

·

In August 2019, BBXRE invested $4.5 million in the Altis at Lake Willis (Vineland Pointe) joint venture, which was formed to acquire land, obtain entitlements, and fund predevelopment costs for the development of a potential multifamily apartment community in Orlando, Florida. The joint venture expects to receive entitlements for the project, close on the capital to construct the project, and commence construction in 2020.

Beacon Lake Master Planned Development

During the year ended December 31, 2019, BBXRE continued progress in ourits development of the Beacon Lake Community in St. Johns County, Florida. Florida and sold to homebuilders the remaining 51 developed lots in Phase I of the project, which is comprised of 302 lots.

BBXRE has commenced land development on the lots comprising Phase II of the project, which is expected to include approximately 400 single-family homes and 196 townhomes, and an additional 79 lots for single-family homes as part of Phase III of the project. BBXRE has entered into purchase agreements with homebuilders to sell developed lots for 422 single-family homes and all of the 196 townhomes, and closings on the sale of developed lots in Phase II to homebuilders commenced in January 2020.

64


Other Joint Venture Activity

During the year ended December  31, 2019, the PGA Design Center joint venture sold its remaining commercial buildings located in Palm Beach Gardens, Florida and provided seller financing to the buyer for a portion of the sales price. As a result of the sale, BBXRE recognized $2.8 million of equity earnings and received approximately $2.3 million of distributions from the venture.

In addition, while revenuesBBXRE invested in two new real estate joint ventures, including The Main Las Olas joint venture, which was formed to invest in the development of The Main Las Olas, a mixed-used project in downtown Fort Lauderdale, Florida that is planned to be comprised of an office tower with approximately 365,000 square feet of leasable area, a residential tower with approximately 341 units, and recoveriesapproximately 45,000 square feet of ground floor retail, and the Sky Cove joint venture, which was formed to develop, construct, and sell 204 single-family homes in Westlake Florida. BBXRE has invested $2.0 million in The Main Las Olas joint venture and $4.2 million in the Sky Cove joint venture and expects to invest an additional $2.0 million in The Main Las Olas joint venture as the development progresses.

Other Real Estate Activity

During the year ended December  31, 2019, BBXRE sold other various real estate assets within its portfolio, including RoboVault, a self-storage facility located in Fort Lauderdale, Florida, its remaining land parcels located at PGA Station in Palm Beach Gardens, Florida, and various land parcels located in Florida. As a result of these sales, BBXRE recognized total net gains on sales of real estate of $13.6 million and received aggregate net proceeds of $35.2 million.

In connection with the sale of its remaining land parcels at PGA Station, which were sold to the buyer of the commercial buildings sold by the PGA Design Center joint venture, as described above, BBXRE reinvested $2.1 million of the proceeds in the PGA Lender joint venture, a joint venture formed with the PGA Design Center joint venture to invest in the seller financing provided to the buyer.

Outlook

As a result of BBXRE’s monetization of a significant number of investments in its portfolio in 2019 and the overall decline in the balance of the legacy asset portfolio, BBXRE expects that its operating profits and income before income taxes will decline in the near term, including a significant decline in equity in net earnings of unconsolidated joint ventures in 2020. In addition, the Altman Companies has historically incurred operating costs in excess of the fees earned from loan losses associated with various legacy assetsthe projects, and its earnings have decreasedgenerally arisen as a result of an overall declinethe promoted equity interests received as the managing member of the projects. As a result, BBXRE is currently focused on leveraging the Altman Companies, as well as BBXRE’s relationships with third party developers, to source investments in new development opportunities with the goal of building a diversified portfolio of real estate investments that generate profits. In addition to the development and sale of multifamily apartment communities, these investment opportunities may also include the development of multifamily apartment communities that will be owned over a long-term hold period and the acquisition of existing multifamily apartment communities which can be renovated and re-leased pursuant to a “value add” strategy to generate sustainable cash flows. Furthermore, while BBXRE’s investments in multifamily apartment communities sponsored by the Altman Companies primarily involve investing in the outstanding balance of legacy assets, BBX Capital Real Estate has generated incomemanaging member in connection with the completion of various development projects by its unconsolidated joint ventures includingthat are formed to invest in such projects, BBXRE may also consider opportunistically making increased debt or equity investments in one or more of such projects in lieu of seeking such funding from unaffiliated third parties.

Due to the CC Homes Bonterra joint venture,historically strong performance of multifamily apartment assets within the real estate market, BBXRE is experiencing increased competition from other real estate investors and developers, which soldis increasing the remaining homescost of land and resulting in a 394 single-family home developmentincreased inventories of multifamily apartment communities in the fourth quartermarkets in which BBXRE invests and operates, which can decrease market rental rates and increase the time required to lease and stabilize its development projects. As a result of 2017,these factors, BBXRE is experiencing increased difficulties in identifying development opportunities that meet its investment criteria. In addition to enhancing its resources dedicating to identifying new opportunities, BBXRE is also evaluating the expansion of its investment pipeline through the acquisition of existing multifamily apartment communities pursuant to a “value add” strategy, as discussed above, and the Gardens on Millenia retail joint venture, which sold a portion of its newly-developed retail center in December 2017.entry into one or more new geographic markets.



65


Results of Operations



Information regarding the results of operations for BBX Capital Real Estate for the years ended December 31, 2017, 2016 and 2015 is set forth below (dollars in thousands):







 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

For the Years Ended

 

Change

 

Change



 

December 31,

 

2017 vs

 

2016 vs



 

2017

 

2016

 

2015

 

2016

 

2015

Total revenues

 $

9,314 

 

14,749 

 

46,642 

 

(5,435)

 

(31,893)

Recoveries from loan losses, net

 

(7,495)

 

(20,508)

 

(13,457)

 

13,013 

 

(7,051)

Asset impairments, net

 

1,646 

 

2,304 

 

287 

 

(658)

 

2,017 

Selling, general and

 

 

 

 

 

 

 

 

 

 

administrative expenses

 

11,113 

 

11,864 

 

12,773 

 

(751)

 

(909)

Total costs and expenses

 

5,264 

 

(6,340)

 

(397)

 

11,604 

 

(5,943)

Equity in net earnings (losses) of unconsolidated

 

 

 

 

 

 

 

 

 

 

joint ventures

 

14,483 

 

13,630 

 

(1,565)

 

853 

 

15,195 

Income before income taxes

 $

18,533 

 

34,719 

 

45,474 

 

(16,186)

 

(10,755)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Years Ended
December 31,

 

Change
2019 vs

 

Change
2018 vs



 

2019

 

2018

 

2017

 

2018

 

2017

Sales of real estate inventory

 

$

5,049 

 

 

21,771 

 

 

 —

 

 

(16,722)

 

 

21,771 

Interest income

 

 

750 

 

 

2,277 

 

 

2,225 

 

 

(1,527)

 

 

52 

Net gains on sales of real estate assets

 

 

13,616 

 

 

4,563 

 

 

1,451 

 

 

9,053 

 

 

3,112 

Other

 

 

1,619 

 

 

2,541 

 

 

4,997 

 

 

(922)

 

 

(2,456)

Total revenues

 

$

21,034 

 

 

31,152 

 

 

8,673 

 

 

(10,118)

 

 

22,479 

Cost of real estate inventory sold

 

 

2,643 

 

 

14,116 

 

 

 —

 

 

(11,473)

 

 

14,116 

Recoveries from loan losses, net

 

 

(5,428)

 

 

(8,653)

 

 

(7,546)

 

 

3,225 

 

 

(1,107)

Impairment losses

 

 

47 

 

 

571 

 

 

1,696 

 

 

(524)

 

 

(1,125)

Selling, general and administrative expenses

 

 

9,144 

 

 

9,210 

 

 

11,127 

 

 

(66)

 

 

(1,917)

Total costs and expenses

 

 

6,406 

 

 

15,244 

 

 

5,277 

 

 

(8,838)

 

 

9,967 

Equity in net earnings of unconsolidated joint ventures

 

 

37,898 

 

 

14,194 

 

 

12,541 

 

 

23,704 

 

 

1,653 

Other income

 

 

170 

 

 

112 

 

 

148 

 

 

58 

 

 

(36)

Income before income taxes

 

$

52,696 

 

 

30,214 

 

 

16,085 

 

 

22,482 

 

 

14,129 



BBX Capital Real Estate’s income before income taxes for the year ended December 31, 20172019 compared to 2016 decreasedthe 2018 period increased by $16.2$22.5 million, or 46.6%74.4%, primarily due to the following:



·

A decrease in revenues, including net gains on sales of assets and interest income, primarily due to lower gains on sales of commercial land parcels and deferred gains associated with properties contributed to unconsolidated joint ventures and the overall decline in the loan portfolio balance as a result of loan sales and the continued payoff of nonaccrual loans; and

·

A decrease in recoveries from loan losses as loans in the legacy asset portfolio are collected and the overall balance of the loan portfolio declines; partially offset by

·

A decrease in asset impairments on commercial land parcels and residential loans;

·

A decrease in selling, general and administrative expenses primarily due to lower legal fees incurred in connection with loan portfolio recoveries and foreclosures and real estate and joint venture transactions; and

·

A net increase in equity in earnings of unconsolidated joint ventures and gains on sales of real estate assets primarily due to a $2.6 million increaseassociated with the sales in equity in earnings from the CC Homes Bonterra joint venture due to2019 described above, as well as the sale of single-family homes by the remaining homes in the development in 2017 and $3.4Chapel Trail joint venture; partially offset by

·

The recognition of a $3.1 million in equity in earnings from the Gardens on Millenia retail development joint venture due tonet gain upon the sale of a portion of the retail developmentstudent housing complex in 2017, partially offset by a $3.1 million2018;

·

A decrease in equity in earningsinterest income and recoveries from the Altis at Kendall Square joint ventureloan losses primarily due to the salecontinued decline in the balance of the projectlegacy asset portfolio, as several significant nonaccrual commercial loans were repaid in 2018; and

A decrease in net profits from the sale of developed lots to homebuilders at the Beacon Lake Community development, as BBXRE sold 51 developed lots in 2019 and 251 in 2018.

BBX Sweet Holdings Reportable Segment

BBX Sweet Holdings is engaged in the ownership and management of operating businesses in the confectionery industry, including IT’SUGAR, Hoffman’s Chocolates, and Las Olas Confections and Snacks. IT’SUGAR is a specialty candy retailer which operates approximately 100 retail locations, which include a mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban locations in over 25 states and Washington D.C., and its products include bulk candy, candy in giant packaging, and licensed and novelty items. Hoffman’s Chocolates is a retailer of gourmet chocolates with retail locations in South Florida, and Las Olas Confections and Snacks is a manufacturer and wholesaler of chocolate and other confectionery products.

Overview

During the fourth quarter of 2019, the Company reorganized the operating businesses in the confectionery industry that are owned by BBX Sweet Holdings, including the centralization of various management and back office activities and the management of the operations of these businesses by the Company’s executive management based on the consolidated activities and results of BBX Sweet Holdings. In addition, BBX Sweet Holdings is continuing its efforts to streamline and integrate the operations of these businesses, including the manufacturing and sourcing of certain products by Las Olas Confections and Snacks for BBX Sweet Holdings’ retail operations at IT’SUGAR and Hoffman’s Chocolates. As a result of these organizational changes, the Company has updated its internal and external presentations of the operating results of these businesses to reflect the consolidated results of BBX Sweet Holdings.

Although BBX Sweet Holdings incurred a loss before income taxes in 2019 and may incur a loss before income taxes in 2020, the Company expects continued improvements in BBX Sweet Holdings’ operating results as compared to 2018 and prior periods as a result of the implementation of its strategies, including the opening of new retail locations by IT’SUGAR and continued efforts to create efficiencies and reduce costs related to these businesses. However, the Company will continue to periodically evaluate its manufacturing operations in the confectionery industry, including whether its efforts to reduce costs are continuing to result in improved operating results, and to the extent that it decides to divest of or otherwise exit certain of these operations, the Company may recognize additional impairment charges and incur additional losses in future periods.

66


IT’SUGAR

Consistent with its focus  on selectively opening larger stores in resort and entertainment locations which experience high traffic, IT’SUGAR invested capital in several new retail locations in 2019, including Grand Bazaar, a 6,000 square foot location in Las Vegas, Nevada that was opened in June 2019, and a 22,000 square foot, three story candy department store at American Dream, a 3 million square foot shopping and entertainment complex in New Jersey, that was opened in December 2019.

IT’SUGAR is also continuing to evaluate its current retail locations where sales volumes may give rise to early lease termination rights and the potential opportunity to renegotiate lease terms and occupancy costs. For certain underperforming locations where IT’SUGAR does not have early lease termination rights, IT’SUGAR is evaluating potential opportunities to close or sublease such locations. In certain circumstances, IT’SUGAR may determine that it is in its best interest to incur costs to exit  a location if the Company believes that the closure of such locations will improve IT’SUGAR’s overall operating efficiencies and profitability over the long term.

Hoffman’s Chocolates

During the year ended December 31, 2019, BBX Sweet Holdings implemented various initiatives to reduce costs at Hoffman’s Chocolates, including reductions in corporate personnel and the integration of certain of its management and back office activities with BBX Sweet Holdings.

Las Olas Confections and Snacks

During the year ended December 31, 2019, Las Olas Confections and Snacks significantly reduced its operating losses as a result of various strategic initiatives implemented by BBX Sweet Holdings during 2018, including the closure of a manufacturing facility in Utah and a reduction in corporate personnel and infrastructure, and various impairment losses and other costs recognized in 2018 in connection with such initiatives that did not reoccur in 2019.

Las Olas Confections and Snacks is currently focused on expanding its customer base and manufacturing and sourcing certain products for IT’SUGAR and Hoffman’s Chocolates.  

Results of Operations

Information regarding the results of operations for BBX Sweet Holdings is set forth below (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Years Ended

 

Change

 

Change



 

December 31,

 

2019 vs

 

2018 vs



 

2019

 

2018

 

2017

 

2018

 

2017

Trade sales

 

$

105,406 

 

 

101,187 

 

 

72,899 

 

 

4,219 

 

 

28,288 

Cost of trade sales

 

 

(67,703)

 

 

(65,829)

 

 

(51,975)

 

 

(1,874)

 

 

(13,854)

Gross margin

 

 

37,703 

 

 

35,358 

 

 

20,924 

 

 

2,345 

 

 

14,434 

Selling, general and administrative expenses

 

 

43,203 

 

 

46,130 

 

 

31,703 

 

 

(2,927)

 

 

14,427 

Total operating losses

 

 

(5,500)

 

 

(10,772)

 

 

(10,779)

 

 

5,272 

 

 

Interest and other income

 

 

716 

 

 

241 

 

 

119 

 

 

475 

 

 

122 

Interest expense

 

 

(196)

 

 

(308)

 

 

(335)

 

 

112 

 

 

27 

Impairment losses

 

 

(142)

 

 

(4,147)

 

 

(5,786)

 

 

4,005 

 

 

1,639 

Loss before income taxes

 

$

(5,122)

 

 

(14,986)

 

 

(16,781)

 

 

9,864 

 

 

1,795 

Gross margin percentage

 

%

35.77 

 

 

34.94 

 

 

28.70 

 

 

0.83 

 

 

6.24 

SG&A as a percent of trade sales

 

%

40.99 

 

 

45.59 

 

 

43.49 

 

 

(4.60)

 

 

2.10 

BBX Sweet Holdings’ results of operations include the results of IT’SUGAR’s operations commencing on June 16, 2017, the date on which BBX Sweet Holdings acquired IT’SUGAR.

BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 2019 compared to the same 2018 period decreased by $9.9 million, or 65.8%, primarily due to the following:

·

The recognition of impairment losses in 2018 in connection with the implementation of various strategic initiatives in 2018, as described above, and ongoing losses from BBX Sweet Holdings’ businesses;

·

A net decrease in selling, general and administrative expenses primarily due to the above mentioned strategic initiatives, which have resulted in lower ongoing operating costs and the recognition of severance and other expenses in 2018 that did not reoccur

7167

 


 

 

2016in 2019, partially offset by costs associated with new IT’SUGAR locations opened in 2019 and a $850,000 decrease2018, including theFAO Schweetz location in earningsNew York City, the Grand Bazaar location in Las Vegas, and the American Dream location in New Jersey; and

·

A net increase in gross margin primarily due to sales from the Altis at Bonterra joint venture due tonew IT’SUGAR locations described above and improvements in Las Olas Confections and Snacks’ gross margin percentage as a result of improved efficiencies in its manufacturing facility and the commencementclosure of depreciation expenses associated with the projectits manufacturing facility in 2017 and an increase in ongoing marketing and operating costs while the project is being stabilized.Utah.



BBX Capital Real Estate’s incomeSweet Holdings’ loss before income taxes for the year ended December 31, 20162018 compared to 2015the same 2017 period decreased by $10.8$1.8 million, or 23.7%10.7%, primarily due to the following:



·

A decreasenet increase in revenues primarilythe loss before income taxes generated by IT’SUGAR as a result of costs and expenses associated with replacing various executives and opening new locations, as well as the operating results for 2018 reflecting seasonal operating losses that are typically incurred during the first half of the annual period which are not reflected in IT’SUGAR’s operating results for 2017 due to lower gains on salesthe timing of land parcels, including the impactBBX Sweet Holdings’ acquisition of the sale of four parcelsIT’SUGAR in 2015 that generated net gains of $31.4 million for the year ended December 31, 2015, and lower interest income primarily resulting from the payoff of two nonaccrual commercial loans in 2015 that generated $5.8 million of interest income for the year ended December 31, 2015; and

·

An increase in asset impairments on commercial land parcels and residential loans; partially offset by

·

An increase in recoveries from loan losses due to various significant recoveries on loans in the legacy asset portfolio in 2016;June 2017;

·

A net decrease in Las Olas Confections and Snacks selling, general and administrative expenses and improvements in gross margin primarily due to lower operating expenses, including real estate taxes and insurance, associated with real estate acquired through foreclosure as a result of the sale of properties and the contribution of real estate to joint ventures, partially offset by an increase in legal fees incurred in connection with loan portfolio recoveries and foreclosures;above mentioned strategic initiatives; and

·

A net increasedecrease in equity in earningsimpairment losses related to certain of unconsolidated joint ventures primarily due to a $10.3 million increase in equity earnings from the CC Homes Bonterra joint venture due to the sale of 212 single-family homes in the 394 single-family home development in 2016, a $3.6 million increase in equity earnings from the Altis at Kendall Square joint venture due to the sale of the project in 2016, and a $1.2 million increase in equity earnings from the Village at Victoria Park joint venture due to the sale of 9 single-family homes in the 30 single-family home development in 2016.  BBX Sweet Holdings’ businesses.

Information regarding the results of operations for IT’SUGAR is set forth below (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

June 16, 2017

 

 

 

 

 

 



 

For the Years Ended

 

 

to

 

Change

 

Change



 

December 31,

 

December 31,

 

2019 vs

 

2018 vs



��

2019

 

2018

 

2017

 

2018

 

2017

Trade sales

 

$

85,275 

 

 

79,618 

 

 

46,765 

 

 

5,657 

 

 

32,853 

Cost of trade sales

 

 

(50,748)

 

 

(46,718)

 

 

(26,639)

 

 

(4,030)

 

 

(20,079)

Gross margin

 

 

34,527 

 

 

32,900 

 

 

20,126 

 

 

1,627 

 

 

12,774 

Selling, general and administrative expenses

 

 

36,521 

 

 

35,404 

 

 

17,594 

 

 

1,117 

 

 

17,810 

Total operating profits

 

 

(1,994)

 

 

(2,504)

 

 

2,532 

 

 

510 

 

 

(5,036)

Interest and other income

 

 

286 

 

 

160 

 

 

66 

 

 

126 

 

 

94 

Impairment losses

 

 

(142)

 

 

 —

 

 

 —

 

 

(142)

 

 

 —

Interest expense

 

 

(114)

 

 

(40)

 

 

 —

 

 

(74)

 

 

(40)

(Loss) income before income taxes

 

$

(1,964)

 

 

(2,384)

 

 

2,598 

 

 

420 

 

 

(4,982)

Gross margin percentage

 

%

40.49 

 

 

41.32 

 

 

43.04 

 

 

(0.83)

 

 

(1.71)

SG&A as a percent of trade sales

 

%

42.83 

 

 

44.47 

 

 

37.62 

 

 

(1.64)

 

 

6.85 





 

7268

 


 

 

ReninBBX Sweet Holdings Reportable Segment



Segment Description

ReninBBX Sweet Holdings is engaged in the design, manufacture,ownership and distributionmanagement of specialty doors, systems and hardware, and home décor productsoperating businesses in the United Statesconfectionery industry, including IT’SUGAR, Hoffman’s Chocolates, and CanadaLas Olas Confections and Snacks. IT’SUGAR is a specialty candy retailer which operates throughapproximately 100 retail locations, which include a mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban locations in over 25 states and Washington D.C., and its headquartersproducts include bulk candy, candy in Canadagiant packaging, and twolicensed and novelty items. Hoffman’s Chocolates is a retailer of gourmet chocolates with retail locations in South Florida, and Las Olas Confections and Snacks is a manufacturer and wholesaler of chocolate and other confectionery products.

Overview

During the fourth quarter of 2019, the Company reorganized the operating businesses in the confectionery industry that are owned by BBX Sweet Holdings, including the centralization of various management and back office activities and the management of the operations of these businesses by the Company’s executive management based on the consolidated activities and results of BBX Sweet Holdings. In addition, BBX Sweet Holdings is continuing its efforts to streamline and integrate the operations of these businesses, including the manufacturing and distribution facilities insourcing of certain products by Las Olas Confections and Snacks for BBX Sweet Holdings’ retail operations at IT’SUGAR and Hoffman’s Chocolates. As a result of these organizational changes, the United StatesCompany has updated its internal and Canada.external presentations of the operating results of these businesses to reflect the consolidated results of BBX Sweet Holdings.



Current Trends and Developments

Following its achievement of profitability in 2016, Renin has continued to improve its operating performance through an increase in sales, gross margin, and incomeAlthough BBX Sweet Holdings incurred a loss before income taxes forin 2019 and may incur a loss before income taxes in 2020, the Company expects continued improvements in BBX Sweet Holdings’ operating results as compared to 2018 and prior periods as a result of the implementation of its strategies, including the opening of new retail locations by IT’SUGAR and continued efforts to create efficiencies and reduce costs related to these businesses. However, the Company will continue to periodically evaluate its manufacturing operations in the confectionery industry, including whether its efforts to reduce costs are continuing to result in improved operating results, and to the extent that it decides to divest of or otherwise exit certain of these operations, the Company may recognize additional impairment charges and incur additional losses in future periods.

66


IT’SUGAR

Consistent with its focus  on selectively opening larger stores in resort and entertainment locations which experience high traffic, IT’SUGAR invested capital in several new retail locations in 2019, including Grand Bazaar, a 6,000 square foot location in Las Vegas, Nevada that was opened in June 2019, and a 22,000 square foot, three story candy department store at American Dream, a 3 million square foot shopping and entertainment complex in New Jersey, that was opened in December 2019.

IT’SUGAR is also continuing to evaluate its current retail locations where sales volumes may give rise to early lease termination rights and the potential opportunity to renegotiate lease terms and occupancy costs. For certain underperforming locations where IT’SUGAR does not have early lease termination rights, IT’SUGAR is evaluating potential opportunities to close or sublease such locations. In certain circumstances, IT’SUGAR may determine that it is in its best interest to incur costs to exit  a location if the Company believes that the closure of such locations will improve IT’SUGAR’s overall operating efficiencies and profitability over the long term.

Hoffman’s Chocolates

During the year ended December 31, 2017 as compared2019, BBX Sweet Holdings implemented various initiatives to 2016. While this performance was primarily driven by increased sales of its barn door productreduce costs at Hoffman’s Chocolates, including reductions in corporate personnel and product development, Renin has also continued to increase operating efficiencies through the integration of certain of its management and back office activities with BBX Sweet Holdings.

Las Olas Confections and Snacks

During the year ended December 31, 2019, Las Olas Confections and Snacks significantly reduced its operating losses as a result of various strategic initiatives implemented by BBX Sweet Holdings during 2018, including the closure of a manufacturing facilities. In addition, Renin successfully obtainedfacility in Utah and a new credit facility which lowersreduction in corporate personnel and infrastructure, and various impairment losses and other costs recognized in 2018 in connection with such initiatives that did not reoccur in 2019.

Las Olas Confections and Snacks is currently focused on expanding its borrowing costscustomer base and contains less restrictive financial covenants than its prior facility.manufacturing and sourcing certain products for IT’SUGAR and Hoffman’s Chocolates.  



Results of Operations



Information regarding the results of operations for Renin for the years ended December 31, 2017, 2016 and 2015 areBBX Sweet Holdings is set forth below (dollars in thousands):







 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

For the Years Ended

 

Change

 

Change



 

December 31,

 

2017 vs

 

2016 vs



 

2017

 

2016

 

2015

 

2016

 

2015

Trade sales

 $

69,648 

 

65,225 

 

56,461 

 

4,423 

 

8,764 

Cost of goods sold

 

(49,358)

 

(47,088)

 

(42,123)

 

(2,270)

 

(4,965)

Gross margin

 

20,290 

 

18,137 

 

14,338 

 

2,153 

 

3,799 

Interest expense

 

509 

 

313 

 

309 

 

196 

 

Selling, general and

 

 

 

 

 

 

 

 

 

 

administrative expenses

 

17,408 

 

17,186 

 

15,049 

 

222 

 

2,137 

Foreign exchange loss (gain)

 

193 

 

(219)

 

1,038 

 

412 

 

(1,257)

Total costs and expenses

 

18,110 

 

17,280 

 

16,396 

 

830 

 

884 

Income (loss) before income taxes

 $

2,180 

 

857 

 

(2,058)

 

1,323 

 

2,915 

Gross margin percentage

%

29.13 

 

27.81 

 

25.39 

 

1.33 

 

2.41 

SG&A as a percent of trade sales

%

24.99 

 

26.35 

 

26.65 

 

(1.35)

 

(0.31)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Years Ended

 

Change

 

Change



 

December 31,

 

2019 vs

 

2018 vs



 

2019

 

2018

 

2017

 

2018

 

2017

Trade sales

 

$

105,406 

 

 

101,187 

 

 

72,899 

 

 

4,219 

 

 

28,288 

Cost of trade sales

 

 

(67,703)

 

 

(65,829)

 

 

(51,975)

 

 

(1,874)

 

 

(13,854)

Gross margin

 

 

37,703 

 

 

35,358 

 

 

20,924 

 

 

2,345 

 

 

14,434 

Selling, general and administrative expenses

 

 

43,203 

 

 

46,130 

 

 

31,703 

 

 

(2,927)

 

 

14,427 

Total operating losses

 

 

(5,500)

 

 

(10,772)

 

 

(10,779)

 

 

5,272 

 

 

Interest and other income

 

 

716 

 

 

241 

 

 

119 

 

 

475 

 

 

122 

Interest expense

 

 

(196)

 

 

(308)

 

 

(335)

 

 

112 

 

 

27 

Impairment losses

 

 

(142)

 

 

(4,147)

 

 

(5,786)

 

 

4,005 

 

 

1,639 

Loss before income taxes

 

$

(5,122)

 

 

(14,986)

 

 

(16,781)

 

 

9,864 

 

 

1,795 

Gross margin percentage

 

%

35.77 

 

 

34.94 

 

 

28.70 

 

 

0.83 

 

 

6.24 

SG&A as a percent of trade sales

 

%

40.99 

 

 

45.59 

 

 

43.49 

 

 

(4.60)

 

 

2.10 



BBX Sweet Holdings’ results of operations include the results of IT’SUGAR’s operations commencing on June 16, 2017, the date on which BBX Sweet Holdings acquired IT’SUGAR.

Renin’s income

BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 20172019 compared to 2016 increasedthe same 2018 period decreased by $1.3$9.9 million, or 154%65.8%, primarily due to the following:

·

The recognition of impairment losses in 2018 in connection with the implementation of various strategic initiatives in 2018, as described above, and ongoing losses from BBX Sweet Holdings’ businesses;

·

A net decrease in selling, general and administrative expenses primarily due to the above mentioned strategic initiatives, which have resulted in lower ongoing operating costs and the recognition of severance and other expenses in 2018 that did not reoccur

67


in 2019, partially offset by costs associated with new IT’SUGAR locations opened in 2019 and 2018, including theFAO Schweetz location in New York City, the Grand Bazaar location in Las Vegas, and the American Dream location in New Jersey; and

·

A net increase in gross margin primarily due to sales from the new IT’SUGAR locations described above and improvements in Las Olas Confections and Snacks’ gross margin percentage as a result of improved efficiencies in its manufacturing facility and the closure of its manufacturing facility in Utah.

BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 2018 compared to the same 2017 period decreased by $1.8 million, or 10.7%, primarily due to the following:



·

AnA net increase in trade sales reflecting higher sales volume from Renin’s retail channel customers, including higher sales of Renin’s barn door product, as well as growth in e-commerce sales; and

·

Continued improvement in gross margins resulting primarily from an increasing proportion of sales of higher margin door and hardware products; partially offsetthe loss before income taxes generated by

·

An increase in total costs and expenses resulting primarily from foreign currency exchange losses, an increase in selling, general and administration expenses primarily associated with the hiring of marketing personnel and legal expenses, and an increase in interest expense associated with a higher outstanding balance on Renin’s credit facilities IT’SUGAR as a result of higher working capital requirementscosts and expenses associated with increased sales volume.

Renin’s income before income taxes for the year ended December 31, 2016 compared to 2015 increased by $2.9 million primarily due to the following:

·

An increasereplacing various executives and opening new locations, as well as the operating results for 2018 reflecting seasonal operating losses that are typically incurred during the first half of the annual period which are not reflected in trade sales associated with increased sales volume from Renin’s retail channel customers; and

73


·

An improvementIT’SUGAR’s operating results for 2017 due to the timing of BBX Sweet Holdings’ acquisition of IT’SUGAR in gross margins resulting primarily from an increasing proportion of sales of higher margin door and hardware products; partially offset byJune 2017;

·

A net increasedecrease in total costsLas Olas Confections and expenses resulting primarily fromSnacks selling, general and administrationadministrative expenses associated withand improvements in gross margin primarily due to the transitionabove mentioned strategic initiatives; and

·

A net decrease in impairment losses related to a new executive management team, which resulted in increased compensation and benefits associated with new hires and incentive bonuses, higher distribution costs from increased sales volume, higher depreciation expense in connection with technology expenditures, and increased marketing expenses from product promotions, partially offset by foreign current exchange gains in 2016.certain of BBX Sweet Holdings’ businesses.



Information regarding the results of operations for IT’SUGAR is set forth below (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

June 16, 2017

 

 

 

 

 

 



 

For the Years Ended

 

 

to

 

Change

 

Change



 

December 31,

 

December 31,

 

2019 vs

 

2018 vs



��

2019

 

2018

 

2017

 

2018

 

2017

Trade sales

 

$

85,275 

 

 

79,618 

 

 

46,765 

 

 

5,657 

 

 

32,853 

Cost of trade sales

 

 

(50,748)

 

 

(46,718)

 

 

(26,639)

 

 

(4,030)

 

 

(20,079)

Gross margin

 

 

34,527 

 

 

32,900 

 

 

20,126 

 

 

1,627 

 

 

12,774 

Selling, general and administrative expenses

 

 

36,521 

 

 

35,404 

 

 

17,594 

 

 

1,117 

 

 

17,810 

Total operating profits

 

 

(1,994)

 

 

(2,504)

 

 

2,532 

 

 

510 

 

 

(5,036)

Interest and other income

 

 

286 

 

 

160 

 

 

66 

 

 

126 

 

 

94 

Impairment losses

 

 

(142)

 

 

 —

 

 

 —

 

 

(142)

 

 

 —

Interest expense

 

 

(114)

 

 

(40)

 

 

 —

 

 

(74)

 

 

(40)

(Loss) income before income taxes

 

$

(1,964)

 

 

(2,384)

 

 

2,598 

 

 

420 

 

 

(4,982)

Gross margin percentage

 

%

40.49 

 

 

41.32 

 

 

43.04 

 

 

(0.83)

 

 

(1.71)

SG&A as a percent of trade sales

 

%

42.83 

 

 

44.47 

 

 

37.62 

 

 

(1.64)

 

 

6.85 

68


BBX Sweet Holdings Reportable Segment

Segment Description



BBX Sweet Holdings is engaged in the acquisitionownership and management of operating businesses in the confectionery industry, including manufacturers, wholesalers,IT’SUGAR, Hoffman’s Chocolates, and retailers of chocolate, hard candy,Las Olas Confections and confectionery products.

Current Trends and Developments

In June 2017, BBX Sweet Holdings acquired IT’SUGAR through the purchase of all of its Class A Preferred Units and 90.4% of its Class B Common Units for cash consideration of approximately $58.4 million, net of cash acquired. The remaining 9.6% of IT’SUGAR’s Class B Common Units are owned by JR Sugar Holdings, LLC (“JR Sugar”), an entity owned by the founder and CEO of IT’SUGAR.Snacks. IT’SUGAR is a specialty candy retailer with 95 retail locations in 26 states and Washington, DC, and its products include bulk candy, giant candy packaging, and novelty items that are purchased and sold at itswhich operates approximately 100 retail locations, which include a mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban locations across the United States. IT’SUGAR’sin over 25 states and Washington D.C., and its products include bulk candy, candy in giant packaging, and licensed and novelty items. Hoffman’s Chocolates is a retailer of gourmet chocolates with retail locations generally utilizein South Florida, and Las Olas Confections and Snacks is a store modelmanufacturer and wholesaler of chocolate and other confectionery products.

Overview

During the fourth quarter of 2019, the Company reorganized the operating businesses in the confectionery industry that requires a relatively low initial investment, with a goalare owned by BBX Sweet Holdings, including the centralization of shorter payback periodsvarious management and increased investment returnsback office activities and cash flows. In addition, while a portionthe management of IT’SUGAR’s locations are in lifestyle and mall/outlet locations where traffic may be impactedthe operations of these businesses by the increase in online retail sales, we believe IT’SUGAR’s business is generally less directly impacted by online sales due toCompany’s executive management based on the nature of IT’SUGAR’s productsconsolidated activities and its emphasis on creating an entertainment experience for customers in high-traffic locations.

As a resultresults of BBX Sweet Holdings’ plansHoldings. In addition, BBX Sweet Holdings is continuing its efforts to further expand IT’SUGARstreamline and integrate the operations of these businesses, including the manufacturing and sourcing of certain products by opening new retail locations, including six to seven locations during 2018. IT’SUGAR is not expected to generate net income in 2018 due to the expected costs of opening new storesLas Olas Confections and related ongoing depreciation expenses. However, the acquisition of IT’SUGAR is expected to be cash flow accretive to the Company and has significantly expandedSnacks for BBX Sweet Holdings’ retail footprint in the confectionery industry.

Although the operating results ofoperations at IT’SUGAR are not reflected in the Company’s consolidated financial statements prior to its acquisition on June 16, 2017, IT’SUGAR generated sales growth during the year ended December 31, 2017, with an approximately 2% increase in overall sales as compared to 2016 as a result of new store openings and an increase in sales at its existing stores. The increase in sales in its existing stores was largely driven by an increase in average dollars per transaction and increased conversion in spite of an overall decrease in traffic count as compared to 2016.

BBX Sweet Holdings’ other operations have continued to generate operating losses and the Company is continuing the process of integrating and consolidating the manufacturing facilities and operations of various acquired businesses and eliminating certain unprofitable brands, including the exploration of strategic alternatives for its manufacturing facility in Utah.Hoffman’s Chocolates. As a result of these initiativesorganizational changes, the Company has updated its internal and declining profits in its Orlando manufacturing operations,external presentations of the operating results of these businesses to reflect the consolidated results of BBX Sweet Holdings.

Although BBX Sweet Holdings recorded non-cash goodwill, intangible assetsincurred a loss before income taxes in 2019 and property and equipment impairments aggregating $5.2 million during the fourth quarter of 2017. Subsequent to December 31, 2017,may incur a loss before income taxes in 2020, the Company commenced the process of exiting its manufacturing facilityexpects continued improvements in Utah, and it is anticipated that BBX Sweet HoldingsHoldings’ operating results as compared to 2018 and prior periods as a result of the implementation of its strategies, including the opening of new retail locations by IT’SUGAR and continued efforts to create efficiencies and reduce costs related to these businesses. However, the Company will incur various costs in connection with this initiative, including severance costs for certain employees. In addition, BBX Sweet Holdings remains obligated undercontinue to periodically evaluate its lease agreement for the manufacturing facility, which has estimated future minimum rental payments of $2.5 million, and expects that it will be required to recognize a lease liability when it ceases operations in the facility or will otherwise incurconfectionery industry, including whether its efforts to reduce costs to terminate the lease agreement. The Company is alsoare continuing to evaluate the operations of BBX Sweet Holdings’ wholesale business, including the potential divestiture of certain operations or acquired businesses. Toresult in improved operating results, and to the extent that the Companyit decides to divest of or otherwise exit certain of these operations, BBX Sweet Holdingsthe Company may recognize additional impairment charges and incur additional costs in the first quarter of 2018 orlosses in future periods. As of December 31, 2017, the net book value of the operations under evaluation was $9.3 million, and the total estimated future minimum rental payments for operating leases (excluding the $2.5 million above) was $1.1 million.

7466

 


 

 

IT’SUGAR

Consistent with its focus  on selectively opening larger stores in resort and entertainment locations which experience high traffic, IT’SUGAR invested capital in several new retail locations in 2019, including Grand Bazaar, a 6,000 square foot location in Las Vegas, Nevada that was opened in June 2019, and a 22,000 square foot, three story candy department store at American Dream, a 3 million square foot shopping and entertainment complex in New Jersey, that was opened in December 2019.

IT’SUGAR is also continuing to evaluate its current retail locations where sales volumes may give rise to early lease termination rights and the potential opportunity to renegotiate lease terms and occupancy costs. For certain underperforming locations where IT’SUGAR does not have early lease termination rights, IT’SUGAR is evaluating potential opportunities to close or sublease such locations. In certain circumstances, IT’SUGAR may determine that it is in its best interest to incur costs to exit  a location if the Company believes that the closure of such locations will improve IT’SUGAR’s overall operating efficiencies and profitability over the long term.

Hoffman’s Chocolates

During the year ended December 31, 2019, BBX Sweet Holdings implemented various initiatives to reduce costs at Hoffman’s Chocolates, including reductions in corporate personnel and the integration of certain of its management and back office activities with BBX Sweet Holdings.

Las Olas Confections and Snacks

During the year ended December 31, 2019, Las Olas Confections and Snacks significantly reduced its operating losses as a result of various strategic initiatives implemented by BBX Sweet Holdings during 2018, including the closure of a manufacturing facility in Utah and a reduction in corporate personnel and infrastructure, and various impairment losses and other costs recognized in 2018 in connection with such initiatives that did not reoccur in 2019.

Las Olas Confections and Snacks is currently focused on expanding its customer base and manufacturing and sourcing certain products for IT’SUGAR and Hoffman’s Chocolates.  

Results of Operations



Information regarding the results of operations for BBX Sweet Holdings for the years ended December 31, 2017, 2016 and 2015 areis set forth below (dollars in thousands):





 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

For the Years Ended

 

Change

 

Change



 

December 31,

 

2017 vs

 

2016 vs



 

2017

 

2016

 

2015

 

2016

 

2015

Trade sales

 $

72,905 

 

30,771 

 

27,823 

 

42,134 

 

2,948 

Interest income

 

38 

 

10 

 

 -

 

28 

 

10 

Other revenue

 

74 

 

 

14 

 

66 

 

(6)

Total revenues

 

73,017 

 

30,789 

 

27,837 

 

42,228 

 

2,952 

Cost of trade sales

 

48,306 

 

27,253 

 

20,584 

 

21,053 

 

6,669 

Interest expense

 

335 

 

409 

 

950 

 

(74)

 

(541)

Assets impairments, net

 

5,785 

 

2,352 

 

 -

 

3,433 

 

2,352 

Selling, general and

 

 

 

 

 

 

 

 

 

 

administrative expenses

 

35,374 

 

15,720 

 

15,071 

 

19,654 

 

649 

Total costs and expenses

 

89,800 

 

45,734 

 

36,605 

 

44,066 

 

9,129 

Loss before income taxes

 $

(16,783)

 

(14,945)

 

(8,768)

 

(1,838)

 

(6,177)

Gross margin percentage

%

33.74 

 

11.43 

 

26.02 

 

50.03 

 

(126.22)

SG&A as a percent of trade sales

%

48.52 

 

51.09 

 

54.17 

 

46.65 

 

22.01 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Years Ended

 

Change

 

Change



 

December 31,

 

2019 vs

 

2018 vs



 

2019

 

2018

 

2017

 

2018

 

2017

Trade sales

 

$

105,406 

 

 

101,187 

 

 

72,899 

 

 

4,219 

 

 

28,288 

Cost of trade sales

 

 

(67,703)

 

 

(65,829)

 

 

(51,975)

 

 

(1,874)

 

 

(13,854)

Gross margin

 

 

37,703 

 

 

35,358 

 

 

20,924 

 

 

2,345 

 

 

14,434 

Selling, general and administrative expenses

 

 

43,203 

 

 

46,130 

 

 

31,703 

 

 

(2,927)

 

 

14,427 

Total operating losses

 

 

(5,500)

 

 

(10,772)

 

 

(10,779)

 

 

5,272 

 

 

Interest and other income

 

 

716 

 

 

241 

 

 

119 

 

 

475 

 

 

122 

Interest expense

 

 

(196)

 

 

(308)

 

 

(335)

 

 

112 

 

 

27 

Impairment losses

 

 

(142)

 

 

(4,147)

 

 

(5,786)

 

 

4,005 

 

 

1,639 

Loss before income taxes

 

$

(5,122)

 

 

(14,986)

 

 

(16,781)

 

 

9,864 

 

 

1,795 

Gross margin percentage

 

%

35.77 

 

 

34.94 

 

 

28.70 

 

 

0.83 

 

 

6.24 

SG&A as a percent of trade sales

 

%

40.99 

 

 

45.59 

 

 

43.49 

 

 

(4.60)

 

 

2.10 



As a result of the acquisition of IT’SUGAR, BBX Sweet Holdings’ results of operations include the results of IT’SUGAR’s operations commencing on June 16, 2017, the date on which BBX Sweet Holdings acquired IT’SUGAR.

BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 2017 include2019 compared to the results of IT’SUGAR’s operations from June 16, 2017same 2018 period decreased by $9.9 million, or 65.8%, primarily due to December 31, 2017, which are included in the table below (dollars in thousands):

following:



·

The recognition of impairment losses in 2018 in connection with the implementation of various strategic initiatives in 2018, as described above, and ongoing losses from BBX Sweet Holdings’ businesses;

·

June 16, 2017A net decrease in selling, general and administrative expenses primarily due to the above mentioned strategic initiatives, which have resulted in lower ongoing operating costs and the recognition of severance and other expenses in 2018 that did not reoccur

67


in 2019, partially offset by costs associated with new IT’SUGAR locations opened in 2019 and 2018, including theFAO Schweetz location in New York City, the Grand Bazaar location in Las Vegas, and the American Dream location in New Jersey; and

·

to

December 31,

2017

TradeA net increase in gross margin primarily due to sales

$

46,772 

Other revenue

59 

Total revenues

46,831 

Cost of trade sales

24,528 

Selling, general from the new IT’SUGAR locations described above and

administrative expenses

19,705 

Total costs improvements in Las Olas Confections and expenses

44,233 

Income before income taxes

$

2,598 

GrossSnacks’ gross margin percentage

%

47.56 

SG&A as a percentresult of trade salesimproved efficiencies in its manufacturing facility and the closure of its manufacturing facility in Utah.

%

42.13 



BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 20172018 compared to the same 20162017 period increaseddecreased by $1.9$1.8 million, or 12%10.7%, primarily due to the following:

·

A net increase in the loss before income taxes generated by IT’SUGAR as a result of costs and expenses associated with replacing various executives and opening new locations, as well as the operating results for 2018 reflecting seasonal operating losses that are typically incurred during the first half of the annual period which are not reflected in IT’SUGAR’s operating results for 2017 due to the timing of BBX Sweet Holdings’ acquisition of IT’SUGAR in June 2017;

·

A net decrease in Las Olas Confections and Snacks selling, general and administrative expenses and improvements in gross margin primarily due to the above mentioned strategic initiatives; and

·

A net decrease in impairment losses related to certain of BBX Sweet Holdings’ businesses.

Information regarding the results of operations for IT’SUGAR is set forth below (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

June 16, 2017

 

 

 

 

 

 



 

For the Years Ended

 

 

to

 

Change

 

Change



 

December 31,

 

December 31,

 

2019 vs

 

2018 vs



��

2019

 

2018

 

2017

 

2018

 

2017

Trade sales

 

$

85,275 

 

 

79,618 

 

 

46,765 

 

 

5,657 

 

 

32,853 

Cost of trade sales

 

 

(50,748)

 

 

(46,718)

 

 

(26,639)

 

 

(4,030)

 

 

(20,079)

Gross margin

 

 

34,527 

 

 

32,900 

 

 

20,126 

 

 

1,627 

 

 

12,774 

Selling, general and administrative expenses

 

 

36,521 

 

 

35,404 

 

 

17,594 

 

 

1,117 

 

 

17,810 

Total operating profits

 

 

(1,994)

 

 

(2,504)

 

 

2,532 

 

 

510 

 

 

(5,036)

Interest and other income

 

 

286 

 

 

160 

 

 

66 

 

 

126 

 

 

94 

Impairment losses

 

 

(142)

 

 

 —

 

 

 —

 

 

(142)

 

 

 —

Interest expense

 

 

(114)

 

 

(40)

 

 

 —

 

 

(74)

 

 

(40)

(Loss) income before income taxes

 

$

(1,964)

 

 

(2,384)

 

 

2,598 

 

 

420 

 

 

(4,982)

Gross margin percentage

 

%

40.49 

 

 

41.32 

 

 

43.04 

 

 

(0.83)

 

 

(1.71)

SG&A as a percent of trade sales

 

%

42.83 

 

 

44.47 

 

 

37.62 

 

 

(1.64)

 

 

6.85 

68


Renin Reportable Segment

Segment Description

Renin is engaged in the design, manufacture, and distribution of sliding doors, door systems and hardware, and home décor products and operates through its headquarters in Canada and two manufacturing and distribution facilities in the United States and Canada. In addition to its own manufacturing, Renin also sources various products and materials from China. Renin’s products are sold through three channels in North America: retail, commercial, and direct installation in the greater Toronto area.

Overview

During the year ended December 31, 2019, Renin’s trade sales were down compared to its trade sales in 2018. Although Renin’s gross trade sales marginally increased during 2019 as compared to 2018, this increase was offset by higher volume rebates and promotional spend on customers in its retail channel. Overall, sales to retail customers, including big box retailers, continue to comprise a significant portion of Renin’s customer mix, as retail, commercial, and direct installation trade sales as a percentage of total gross trade sales were 63%, 26%, and 11%, respectively, during the year ended December 31, 2019. With respect to Renin’s product mix, although barn door products had been historically increasing as a percentage of its overall product mix, Renin’s product mix based on gross sales within its major product categories remained relatively consistent in 2019 as compared to 2018.

Although Renin has been able to maintain its sales volumes in 2019, it is experiencing increased competition, particularly in its retail channel and related to its barn door product, which has resulted in increased pricing concessions, including volume rebates and promotional spend. As a result, Renin is currently focused on developing new, innovative products and delivering superior customer service to grow sales across all of its channels. Renin is also renewing its focus on sales to customers in its commercial and direct installation channels, in which Renin has experienced decreased or flat sales in recent years.

Although Renin’s gross margins improved in 2019 as compared to 2018 partially due to the impact of certain promotions in which products were sold at low margins in 2018, Renin is experiencing increased costs on the products it sources from China as a result of tariffs levied on these products. As a result, Renin is focusing on identifying alternative sources for such products and reducing the costs of its manufactured products. Renin has also recently experienced increased interest in its manufactured products in its commercial channel, as its domestically produced products are becoming more competitive with Chinese imports as a result of tariffs.

Results of Operations

Information regarding the results of operations for Renin is set forth below (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Years Ended

 

Change

 

Change



 

December 31,

 

2019 vs

 

2018 vs



 

2019

 

2018

 

2017

 

2018

 

2017

Trade sales

 

 $

67,537 

 

 

68,417 

 

 

68,935 

 

 

(880)

 

 

(518)

Cost of trade sales

 

 

(54,243)

 

 

(55,483)

 

 

(54,941)

 

 

1,240 

 

 

(542)

Gross margin

 

 

13,294 

 

 

12,934 

 

 

13,994 

 

 

360 

 

 

(1,060)

Selling, general and administrative expenses

 

 

11,066 

 

 

9,903 

 

 

11,112 

 

 

1,163 

 

 

(1,209)

Total operating profits

 

 

2,228 

 

 

3,031 

 

 

2,882 

 

 

(803)

 

 

149 

Other income

 

 

153 

 

 

 —

 

 

 —

 

 

153 

 

 

 —

Interest expense

 

 

(498)

 

 

(638)

 

 

(509)

 

 

140 

 

 

(129)

Foreign exchange (gain) loss 

 

 

(75)

 

 

68 

 

 

(193)

 

 

(143)

 

 

261 

Income before income taxes

 

 

1,808 

 

 

2,461 

 

 

2,180 

 

 

(653)

 

 

281 

Gross margin percentage

 

%

19.68 

 

 

18.90 

 

 

20.30 

 

 

0.78 

 

 

(1.40)

SG&A as a percent of trade sales

 

%

16.39 

 

 

14.47 

 

 

16.12 

 

 

1.91 

 

 

(1.65)

Renin’s income before income taxes for the year ended December 31, 2019 compared to the same 2018 period decreased by $0.7 million, or 26.5%, primarily due to the following:



·

An increase in impairments resulting from a decline inselling, general and administrative expenses primarily due to consulting expenses related to the fair valueprocurement of certainraw materials, severance expenses, and higher employee compensation expenses associated with the accrual of BBX Sweet Holdings’ operating businessesperformance bonuses; and the implementation of various strategic initiatives, including the consolidation of manufacturing facilities and elimination of unprofitable brands; partially offset by

·

Income before taxes from IT’SUGAR’s operations.

The profitability of IT’SUGAR from June 16, 2017 through December 31, 2017 reflects the seasonal nature of IT’SUGAR’s trade sales and the timing of costs to open new stores, and it is anticipated that IT’SUGAR will not generate net income in the short term due to the expected costs of the new store expansion.

75


BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 2016 compared to the same 2015 period increased by $6.2 million primarily due to the following:

·

A decrease in gross margintrade sales primarily resulting from inventory markdowns associated with excesshigher volume rebates and obsolete inventory and excess manufacturing capacity associated with an operating business acquiredpromotional spend on customers in 2015;Renin’s retail channel; partially offset by

69


·

Asset impairments recognized during the year ended December 31, 2016 in connection with a decrease in the fair value of one of the operating businesses of BBX Sweet Holdings and the relocation of certain manufacturing and operating facilities from California to Utah; and

·

An increaseimprovement in selling, generalRenin’s gross margin percentage which reflects improved pricing for the procurement of raw materials in 2019 and administrative expenses relateda barn door promotion to costs associated withsell excess inventory in 2018 that was not repeated in 2019, partially offset by the above described consolidationimpact of manufacturing and operating facilities and higher marketing, advertising, and compensation associated with the expansion of Hoffman’s Chocolates retail stores.tariffs on products imported from China.

 

We anticipate that BBX Sweet Holdings will continue to generate losses during the year ended December 31, 2018. Additionally, if BBX Sweet Holdings’ operations do not meet expectations or if there is a downturn in the confectionery industry, BBX Sweet Holdings may recognize additional goodwill and other intangible assets impairment charges in future periods.

Corporate Expenses & Other



Corporate Expenses & Other in the Company’s segment information consistsincludes its investments in other operating businesses, including a restaurant located in South Florida that was acquired through a loan foreclosure and an insurance agency, as well as its operations as a franchisee of MOD Pizza in Florida through September 2019, as described below.

MOD Pizza Restaurant Operations

In 2016, Food for Thought Restaurant Group (“FFTRG”), a wholly-owned subsidiary of BBX Capital, entered into area development and franchise agreements with MOD Pizza related to the development of up to approximately 60 MOD Pizza franchised restaurant locations throughout Florida. Through 2019, FFTRG had opened nine restaurant locations. As a result of FFTRG’s overall operating performance and the Company’s goal of streamlining its investment verticals, the Company entered into an agreement with MOD Pizza to terminate the area development and franchise agreements and transferred seven of its restaurant locations, including the related assets, operations, and lease obligations, to MOD Pizza during the third quarter of 2019. In addition, the Company closed the remaining two locations and terminated the related lease agreements.

The net losses before taxes from the Company’s MOD Pizza franchise operations for the years ended December 31, 2019, 2018, and 2017 were $9.4 million, $4.5 million, and $2.5 million, respectively. The net losses for the year ended December 31, 2019 included aggregate impairment losses of $6.7 million related to the transfer of the seven restaurant locations to MOD Pizza and the closure of the two restaurant locations.

Reconciling Items and Eliminations

Reconciling items and eliminations in the Company’s segment information primarily includes the following:



·

BBX Capital’s corporate selling, general and administrative expenses;

·

Woodbridge’s interestInterest expense primarily associated with itsWoodbridge’s junior subordinated debentures;debentures and BBX Capital’s $50.0 million revolving line of credit and redeemable cumulative preferred stock;

·

BBX Capital’s interest expense associated with its $80.0 million note payable to Bluegreen;Interest income on interest-bearing cash accounts; and

·

The Company’s activities related toelimination of Bluegreen’s interest income on its MOD franchise operations.$80 million notes receivable from BBX Capital.



In addition, Corporate Expenses & Other for the year ended December 31, 2017 included $6.9 million of net gains on the cancellation of Woodbridge’s junior subordinated debentures, $8.6 million of insurance carrier reimbursements from litigation costs, and the reimbursement of a $4.6 million fine previously paid in connection with the SEC civil litigation against BCC, while Corporate Expenses & Other for year ended December 31, 2015 included $36.5 million in litigation costs incurred in connection with the settlement of litigation brought by Bluegreen’s former shareholders related to the April 2013 acquisition of Bluegreen.

Corporate Selling, General and Administrative Expenses



BBX Capital’s corporate selling, general and administrative expenses consist primarily of expenses associated with administering the various support functions at its corporate headquarters, including executive compensation, legal, accounting, legal, human resources, risk management, investor relations, and executive offices. BBX Capital’s corporate selling, general and administrative expenses were $57.8 million, $57.9 million, and $51.1 million for the years ended December 31, 2019, 2018, and 2017, 2016,were $41.1 million, $45.5 million, and 2015,$52.9 million, respectively.



BBX Capital’s corporate selling, general and administrative expenses for the year ended December 31, 20172019 compared to the same 2016 period remained flat,2018 decreased by $4.4 million, which primarily reflects the impact of the following:

·

$3.0 million of consulting and diligence-related costs incurred in 2017 in connection with the acquisition of IT’SUGAR; and

·

$2.3 million of increased costs incurred in 2017 associated with the Company’s MOD franchise operations; partially offset by

·

$3.8 million of lower costs associated with executive compensation.

BBX Capital’s corporate selling, general,lower costs related to executive incentive bonuses and administrative expenses for the year ended December 31, 2016 compared to the same 2015 period increased by $6.8 million primarily resulting from highershare-based compensation expense and increasedlower professional fees.fees, partially offset by higher severance costs. 



Interest Expense



Woodbridge’sExcluding BBX Capital’s note payable to Bluegreen, its interest expense on its junior subordinated debentures was $3.4 million, $4.0 million, and $3.6 million for the years ended December 31, 2019, 2018 and 2017 2016was $5.5 million, $6.6 million, and 2015,$4.6 million, respectively. The decrease in interest expense during the year ended December 31, 2019 compared to the same 2018 period primarily resulted from BBX Capital’s repayment of the outstanding balance of $30.0 million on its $50.0 million revolving line of credit in January 2019.  

BBX Capital’s interest expense on the $80.0 million note payable to Bluegreen for the years ended December 31, 2019, 2018, and 2017 was $4.8 million, $4.8 million and $6.4 million, respectively. The decrease for the 2019 and 2018 periods compared to the 2017 period reflects the reduction in the interest rate on the note on July 1, 2017 from 10% per annum to 6% per annum. The interest expense on this note and the related interest income recognized by Bluegreen are eliminated in the Company’s consolidated statements of operations.



7670

 


 

 

Interest Income

During the years ended December 31, 2019, 2018 and 2017, the Company recognized $2.3 million, $2.0 million and $0.9 million, respectively, of interest income primarily from BBX Capital’s interest expense oninterest-bearing cash accounts. 

Other Items

In addition to the $80 million note payable to Bluegreen was $6.4 million, $8.0above items, Reconciling Items and Eliminations includes $0.6 million and $5.6$8.6 million of insurance carrier reimbursements of litigation costs for the years ended December 31, 2017, 20162018 and 2015,2017, respectively, and is eliminatedthe reimbursement of a $4.6 million fine previously paid in connection with the Company’s consolidated statements of operations. Effective July 1, 2017, the interest rate on the note payable was reduced from 10% per annum to 6% per annum.

MOD Franchise Operations

In 2016, the Company entered into area development agreements with MOD with a goal of developing approximately 60 MOD franchised pizza restaurant locations throughout Florida over six years. In 2017, the Company hired personnel to establish its initial restaurant operations and opened two restaurant locations during the fourth quarter of 2017. In addition, the Company continued to establish its pipeline of restaurant locations and anticipates opening eight to twelve locations during the year ended December 31, 2018.

During the year ended December 31, 2017, the Company’s MOD franchise operations generated a net loss before taxes of $2.5 million, which was primarily attributable to $2.6 million in selling, general, and administrative expenses, partially offset by sales generated from the two restaurant locations that were opened during the fourth quarter of 2017. The selling, general, and administrative expenses for the year ended December 31, 2017 included compensation costs associated with operations, human resource, marketing, and finance personnel that were hired to establish initial restaurant operations, as well as costs associated with store openings and the review of potential restaurant sites. On average, the Company incurred approximately $725,000 in capital expenditures, net of anticipated tenant improvement allowances, and $150,000 in store opening costs for each of the two restaurant locations that were opened in the fourth quarter of 2017.

The Company expects to continue to incur net losses and capital expenditures due to the expected costs of opening new locations in 2018 and future years.

Benefit (Provision) for Income Taxes

The benefit for income taxes for the year ended December 31, 2017 resulted from the enactment of the Tax Cuts and Jobs Act on December 22, 2017, which reduced the federal corporate tax rate from 35% to 21% commencing on January 1, 2018 and resulted in a $43.1 million reduction in the Company’s deferred tax liability. The Company is currently evaluating the impact the Tax Cuts and Jobs Act will have on our consolidated financial statements in future periods.

The Company’s effective tax rate excluding the rate change benefit was 38.4%SEC civil litigation against BCC for the year ended December 31, 2017. The Company’s effective tax rate was higher thanReconciling Items and Eliminations also includes $6.9 million of net gains on the expected federal income tax ratecancellation of 35% due to state income taxes and nondeductible executive compensation and was lower than the effective tax rateWoodbridge’s junior subordinated debentures for the year ended December 31, 2016 as a result of an increase in the deferred tax asset valuation allowance during 2016 based on an updated evaluation of the future deductibility of net operating loss carryforwards.2017.

(Provision) Benefit for Income Taxes



The provision for income taxes for the year ended December 31, 20162019 reflected the Company’s effective tax rate of 46.6%34.2% on income before income taxes. The effective tax rate was higher than the expected federal income tax rate of 35%21.0% primarily due to state income taxes, nondeductible executive compensation and increases in deferred tax asset valuation allowance.state income taxes.



The benefitprovision for income taxes for the year ended December 31, 2015 resulted from2018 reflected the releaseCompany’s effective tax rate of a portion of BBX Capital’s deferred36.2% on income before income taxes. The effective tax asset valuation allowance on May 1, 2015 as BBX Capital became eligible to file a consolidated grouprate was higher than the expected federal income tax returnrate of 21% primarily due to nondeductible executive compensation, which included a $2.8 million adjustment associated with BCCthe Company’s completion of its analysis of its accounting for the enactment of the Tax Reform Act in December 2017, and Bluegreen as described in further detail instate income taxes. See Note 14 under Item 8 – Note 14 of this report.

report for additional information with respect to the Company’s accounting for the Tax Reform Act.



Net Income Attributable to Noncontrolling Interests 



BBX Capital includes in itsCapital’s consolidated financial statements include the results of operations and financial position of various partially-owned subsidiaries in which it holds a controlling financial interest, including Bluegreen, Bluegreen/Big Cedar Vacations, and IT’SUGAR. As a result, the Company is required to attribute net income to the noncontrolling interests in these subsidiaries.



Net income attributable to noncontrolling interests was $18.4 million, $13.3 million, and $18.8 million during the years ended December 31, 2019, 2018, and 2017 2016was $14.4 million, $20.7 million, and 2015,$18.4 million, respectively. The increase in net income attributable to noncontrolling interests for the year ended December 31, 2017 compared to the same 2016 period was primarily due to Bluegreen’s IPO, which resulted in a decrease of BBX Capital’s ownership in Bluegreen from 100% to 90%, and an increase in net

77


income for Bluegreen/Big Cedar Vacations, partially offset by the impact of BBX Capital’s acquisition of the outstanding noncontrolling interests in BCC on December 15, 2016.

The decrease in net income attributable to noncontrolling interests for the year ended December 31, 20162019 compared to the same 20152018 period was primarily due to a decrease in the net income associated withof Bluegreen and Bluegreen/Big Cedar Vacations and the recognition of a gain on sale of assets by the JRG/BBX Development joint venture, a consolidated real estate joint venture, during the year ended December 31, 2015.

Consolidated Financial Condition

Consolidated Assets and Liabilities

Total assets at December 31, 2017 and 2016 were $1.6 billion and $1.4 billion, respectively. The primary changes in the components of total assets are summarized below:

·

Increase in cash was primarily from $65.6 million of cash generated from operating activities and $95.9 million of cash received in the Bluegreen IPO partially offset by $58.4 million of cash paid to acquire IT’SUGAR, $27.6 million of cash paid to repurchase common stock, and $11.4 million of cash distributions to noncontrolling interests;

·

Increase in VOI inventory was primarily from increased spending by Bluegreen on the acquisition of JIT and secondary market inventory purchases and development expenditures associated with expanding the capacity of existing resorts;

·

Increase in trade inventory was primarily attributable to the acquisition of IT’SUGAR;

·

Increase in real estate was primarily related to $11.5 million of construction costs associated with real estate inventory and the transfer of a $6.2 million student housing facility from property and equipment to real estate held for sale, partially offset by $11.5 million of real estate sales and impairment losses of $1.7 million; 

·

Increase in investment in unconsolidated real estate joint ventures reflects $14.5 million of equity in earnings and $8.7 million of additional investments, partially offset by $19.3 million of distributions received;

·

Increase in property and equipment reflects $18.7 million of property and equipment acquired in connection with the IT’SUGAR acquisition and $22.0 million of property and equipment purchases, primarily at Bluegreen, partially offset by $6.2 million of property transferred to real estate held for sale and depreciation of $15.8 million;

·

Increase in goodwill reflects $35.2 million of goodwill recognized in the IT’SUGAR acquisition, partially offset by a $2.4 million impairment loss associated with a reporting unit of BBX Sweet Holdings;

·

Increase in intangible assets reflects $4.5 million of intangible assets recognized in the IT’SUGAR acquisition, partially offset by impairment losses and intangible asset amortization; and

·

Increase in other assets resulting primarily from higher prepaid expenses and receivables from commissions associated with the fee-based services provided by Bluegreen.

Total liabilities at December 31, 2017 and 2016 were $950.4 million and $940.6 million, respectively. The primary changes in components of total liabilities are summarized below:

·

Increase in receivable-backed notes payable – non-recourse was primarily a result of  Bluegreen’s completion of a private offering and sale of approximately $120.2 million of investment-grade, VOI receivable-backed notes (the “2017 Term Securitization”). This increase was partially offset by repayments of notes payable with proceeds from the 2017 Term Securitization and payments received from the obligors of notes receivables;

·

Decrease in receivable-backed notes payable – recourse was due to Bluegreen’s repayment of notes payable with a portion of the proceeds it received in connection with its 2017 Term Securitization;

·

Increase in notes payable and other borrowings reflects $3.8 million of BBX Sweet Holdings line of credit borrowings, the issuance of a $3.4 million promissory note in connection with an investment in an unconsolidated real estate joint venture, and $3.2 million of additional borrowings by Renin to fund increases in working capital;

·

Decrease in deferred income tax liability was primarily a result of a decrease in the federal corporate income tax rate partially offset by a reduction in deferred tax assets associated with the utilization of NOL carryforwards;  

·

Decrease in junior subordinated debentures was due to the redemption and cancellation of $18.75 million of junior subordinated debentures; and

·

Increase in other liabilities resulting primarily as a result of accrued severance expenses.

78Vacations.  


 

Consolidated Cash Flows



A summary of our consolidated cash flows is set forth below (in thousands):





 

 

 

 

 

 



 

 

 

 

 

 



 

For the Years Ended



 

December 31,



 

2017

 

2016

 

2015

Cash flows provided by (used in) operating activities

$

65,599 

 

81,163 

 

(1,651)

Cash flows (used in) provided by investing activities

 

(54,765)

 

49,198 

 

49,962 

Cash flows provided by (used in) financing activities

 

52,096 

 

(42,314)

 

(124,098)

Net increase (decrease) in cash, cash equivalents, and restricted cash

$

62,930 

 

88,047 

 

(75,787)

Cash, cash equivalents and restricted cash at beginning of period 

 

346,317 

 

258,270 

 

334,057 

Cash, cash equivalents and restricted cash at end of period 

$

409,247 

 

346,317 

 

258,270 



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2019

 

2018

 

2017

Cash flows provided by operating activities

 

$

78,242 

 

 

86,639 

 

 

65,599 

Cash flows provided by (used in) investing activities

 

 

16,319 

 

 

(31,063)

 

 

(54,765)

Cash flows (used in) provided by financing activities

 

 

(108,788)

 

 

(43,726)

 

 

52,096 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

$

(14,227)

 

 

11,850 

 

 

62,930 

Cash, cash equivalents and restricted cash at beginning of period 

 

 

421,097 

 

 

409,247 

 

 

346,317 

Cash, cash equivalents and restricted cash at end of period 

 

$

406,870 

 

 

421,097 

 

 

409,247 



 

 

 

 

 

 

 

 

 



Cash Flows provided by/used inby Operating Activities 



The Company’s operating cash flows decreased $15.6$8.4 million during the year ended December 31, 20172019 compared to the same period in 2016.2018. The decrease was primarily due to increasedthe $20.0 million payment made to Bass Pro in June 2019 pursuant to the settlement agreement described above, an increase in payments for federal income taxes, a decrease in proceeds from the sale of developed lots at the Beacon Lake Community development, and an increase in spending on the development of real estate inventory at Beacon Lake. The above decreases in operating cash flows were partially offset by Bluegreenan increase in operating distributions from real estate joint ventures and decreased spending on the acquisition and development of VOI inventory. During the year ended December 31, 2017, Bluegreen paid $30.8 million for development expenditures, primarily related to Bluegreen/Big Cedar Vacations, as compared to $17.4 million of development expenditures in 2016 and a $6.1 million payment in 2016 for the purchase of a parcel of land adjacent to our Club 36 Resort in Las Vegas for the future development of VOI inventory. Additionally, Bluegreen paid $29.8 million for JIT and secondary market inventory purchases in the 2017 period, as compared to $17.7 million for such purchases in 2016.



The Company’s operating cash flows increased $82.8 million during the year ended December 31, 2016 compared to the same period in 2015. The increase was primarily due to positive changes in components of working capital mainly associated with Bluegreen’s operations and a $13.3 million increase in cash distributions from unconsolidated real estate joint ventures. Bluegreen’s operating cash flows increased due to growth in VOI sales and decreased VOI inventory development expenditures.  

71

 


Cash Flows provided by/used in Investing Activities 



The Company’sCash provided by investing cash flows decreasedactivities increased by $104.0$47.4 million during the year ended December 31, 20172019 compared to the same period in 2016.2018. The decreaseincrease primarily reflects the $58.4a $19.4 million increase in distributions from unconsolidated real estate joint ventures, $22.2 million of cash paid forhigher proceeds from the acquisitionsale of IT’SUGAR in June 2017, increased purchases ofreal estate and property and equipment, $10.0 million of lower capital expenditures, and lower repayments of loans receivable.

The Company’s investing cash flows decreased by $0.8a $3.9 million during the year ended December 31, 2016 compared to the same periodnet decrease in 2015.  The decrease reflects lower proceeds from sales ofinvestments in unconsolidated real estate partlyjoint ventures, partially offset by highera $13.2 million net decrease in cash collections on loans receivable and lower additions to real estate.from loan recoveries.  



Cash Flows provided by/used in Financing Activities 



The Company’s cash provided byCash used in financing activities increased by $94.4$65.1 million during the year ended December 31, 20172019 compared to the same period in 2016.2018. The increase in cash used was primarily the result of $95.9a $114.6 million reduction in borrowings, net proceeds received from Bluegreen’s IPOof repayments, primarily at Bluegreen, and cash consideration of $16.9the payment $10.0 million paid during the year ended December 31, 2016 for all the outstanding shares of BCC not previously owned by the Company (the “BCC Merger”)to redeem BBX Capital’s redeemable cumulative preferred stock, partially offset by an increasea $57.1 million decline in the cash paid to repurchasefor the purchase and retireretirement of the Company’s common stock during the year ended December 31, 2017.stock.

Commitments



The Company’s cash used for financing activities decreased by $81.8 million during the year ended December 31, 2016 compared to the same period in 2015.  The decrease in cash used in financing activities was primarily due to the April 2015 tender offer in which the Company paid cash consideration of $95.4 million to BCC’s shareholders in connection with the purchase of shares of BCC’s Class A Common Stock partially offset by the $16.9 million of cash consideration paid in the BCC Merger.

79


Commitments

��

The Company’s material commitments as of December 31, 20172019 included the required payments due on its receivable-backed debt, lines-of-creditnotes payable and other notes payable,borrowings, junior subordinated debentures, commitments to complete certain projects based on its sales contracts with customers, subsidy advances to certain HOAs, inventory purchase commitments under JIT arrangements and commitments under non-cancelable operating leases.



The following table summarizes the contractual minimum principal and interest payments, net of unamortized discount, required on all of the Company’s outstanding debt, outstanding payments required under the Bass Pro settlement agreement, and payments required on the Company’s non-cancelable operating leases and inventory purchase commitments by period due date as of December 31, 20172019 (in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments Due by Period

 

Payments Due by Period

 

 

 

 

 

 

 

 

 

Unamortized

 

 

 

 

 

 

 

 

 

 

 

 

Unamortized

 

 

 

 

 

 

 

 

 

 

 

Debt

 

 

 

 

 

 

 

 

 

 

 

Debt

 

 

 

Less than

 

1 — 3

 

4 — 5

 

After 5

 

Issuance

 

 

 

Less than

 

1 — 3

 

4 — 5

 

After 5

 

Issuance

 

 

Contractual Obligations

 

1 year

 

Years

 

Years

 

Years

 

Costs

 

Total

 

1 year

 

Years

 

Years

 

Years

 

Costs

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Receivable-backed notes payable

$

 -

 

24,989 

 

49,425 

 

352,852 

 

(6,148)

 

421,118 

 

$

 —

 

 

13,124 

 

 

102,381 

 

 

312,435 

 

 

(5,125)

 

 

422,815 

Lines-of-credit and notes payable

 

36,796 

 

37,704 

 

50,365 

 

21,829 

 

(2,580)

 

144,114 

Notes payable and other borrowings

 

17,127 

 

33,512 

 

112,904 

 

27,422 

 

 

(2,234)

 

188,731 

Jr. subordinated debentures

 

 -

 

 -

 

 -

 

177,129 

 

(41,715)

 

135,414 

 

 

 —

 

 —

 

 —

 

177,129 

 

 

(39,875)

 

137,254 

Inventory purchase commitment

 

5,749 

 

 -

 

 -

 

 -

 

 -

 

5,749 

Noncancelable operating leases

 

26,736 

 

46,088 

 

39,329 

 

47,177 

 

 -

 

159,330 

 

 

26,384 

 

48,981 

 

32,507 

 

44,508 

 

 

 —

 

152,380 

Bass Pro settlement agreement

 

 

4,000 

 

 

8,000 

 

 

8,000 

 

 

 —

 

 

 —

 

 

20,000 

Total contractual obligations

 

69,281 

 

108,781 

 

139,119 

 

598,987 

 

(50,443)

 

865,725 

 

 

47,511 

 

 

103,617 

 

 

255,792 

 

 

561,494 

 

 

(47,234)

 

 

921,180 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Obligations (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable-backed notes payable

 

15,334 

 

30,544 

 

26,198 

 

89,397 

 

 -

 

161,473 

 

16,728 

 

33,086 

 

29,076 

 

85,629 

 

 

 —

 

164,519 

Lines-of-credit and notes payable

 

6,754 

 

8,429 

 

3,815 

 

12,678 

 

 -

 

31,676 

Notes payable and other borrowings

 

7,456 

 

13,354 

 

10,306 

 

21,681 

 

 

 —

 

52,797 

Jr. subordinated debentures

 

10,480 

 

20,958 

 

20,958 

 

138,794 

 

 -

 

191,190 

 

 

11,428 

 

 

22,856 

 

 

22,856 

 

 

127,550 

 

 

 —

 

 

184,690 

Total contractual interest

 

32,568 

 

59,931 

 

50,971 

 

240,869 

 

 -

 

384,339 

 

 

35,612 

 

 

69,296 

 

 

62,238 

 

 

234,860 

 

 

 —

 

 

402,006 

Total contractual obligations

$

101,849 

 

168,712 

 

190,090 

 

839,856 

 

(50,443)

 

1,250,064 

 

$

83,123 

 

 

172,913 

 

 

318,030 

 

 

796,354 

 

 

(47,234)

 

 

1,323,186 



(1)

Assumes that the scheduled minimum principal payments are made in accordance with the table above and the interest rate on variable rate debt remains the same as the rate at December 31, 2017.2019.



In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen provides subsidies tomay enter into subsidy agreements with certain homeowners’ associations to provide for funds necessary to operate and maintain vacation ownership properties in excess of assessments collected from owners of the VOIs.HOAs. During the years ended December 31, 2017, 20162019, 2018 and 2015,2017, Bluegreen made subsidy payments in connection with these arrangements of $24.9 million, $12.6 million and $12.6 million, respectively, which are included within cost of other fee-based services, of $12.6 million, $13.9 million and $15.8 million, respectively.services. As of December 31, 20172019 and 2016,2018, Bluegreen had no accrued liabilityliabilities for such subsidies.



In September 2017, Bluegreen entered into an agreement with an executive inDecember 2019 Bluegreen’s President and Chief Executive Officer, resigned. In connection with his retirement. Pursuant to the terms of the agreement,resignation, Bluegreen agreed to make payments totaling approximately $2.9$3.5 million through March 2019 (allover a period of 18 months, all of which was accruedremained payable as of December 31, 2017). Also,2019. Additionally, during the second half of 2017,2019, Bluegreen implemented an initiative designed to streamline its operations inentered into certain areas to facilitate future growth. Such initiative resulted in $5.8 million of severance for the year ended December 31, 2017, $1.9 million which will be paid in 2018. The Bluegreen 2017 Corporate Realignment Initiative resulted in an estimated reduction in their annual salaries and benefits expenses of $19.5 million.  Bluegreen expects to apply a portion of these savings toward additional associates and expenditures for growth-driving initiatives this year, particularly various digital projects including website enhancement, online vacation package booking, virtual reality kiosks, and improvementsagreements with executives related to their customer relationship management.

During 2016, the Company entered into a severance arrangement with an executive. Underseparation from Bluegreen or change in position. Pursuant to the terms of the arrangement, the executive will receive $3.7these agreements, Bluegreen agreed to make payments totaling $2.5 million over a three year period ending in August 2019.through November 2020. As of December 31, 2017, $1.92019, $2.3 million was left to be paidremained payable under this agreement. 

80


A wholly-owned subsidiary of BBX Capital has entered into area development agreements with MOD Super Fast Pizza Franchising, LLC which will involve entering into lease agreements for MOD restaurant locations. BBX Capital may be required to guarantee performance on these lease agreements. 



The Company believes that its existing cash, anticipated cash generated from operations, anticipated future permitted borrowings under existing or future credit facilities, and anticipated future sales of Bluegreen’s notes receivable under existing, future, or replacement purchase facilities will be sufficient to meet the Company’sits anticipated working capital, capital expenditureexpenditures, and debt service requirements,and other contractual obligations, including the contractual payment of the obligations set forth above, for the foreseeable future, subject to the success of the Company’s ongoing

72


business strategy and the ongoing availability of credit. The Company will continue its efforts to renew, extend, or replace any credit and receivables purchase facilities that have expired or that will expire in the near term. The Company may, in the future, also obtain additional credit facilities and may issue corporate debt or equity securities. Any debt incurred or issued by the Company may be secured or unsecured, bear interest at fixed or variable rates, and may be subject to such terms as the lender may require. In addition, the Company’s efforts to renew or replace credit facilities or receivables purchase facilities which have expired or which are scheduled to expire in the near term may not be successful, and sufficient funds may not be available from operations or under existing, proposed, or future revolving credit or other borrowing arrangements or receivables purchase facilities to meet its cash needs, including debt service and other contractual obligations. To the extent the Company is not ableunable to sell notes receivable or borrow under such facilities, itsthe Company’s ability to satisfy its obligations would be materially adversely affected.



Bluegreen’s receivables purchase facilities, and its credit facilities, indentures and other outstanding debt instruments include what Bluegreen believes to be customary conditions to funding, eligibility requirements for collateral, cross-default and other acceleration provisions, and certain financial and other affirmative and negative covenants, including, among others, limits on the incurrence of indebtedness, payment of dividends, investments in joint ventures and other restricted payments, the incurrence of liens and transactions with affiliates, as well as covenants concerning net worth, fixed charge coverage requirements, debt-to-equity ratios, portfolio performance requirements and cash balances, and events of default or termination. In the future, Bluegreen may be required to seek waivers of such covenants, but may not be successful in obtaining waivers, and such covenants may limit Bluegreen’sits ability to raise funds, sell receivables or satisfy or refinance its obligations, or otherwise adversely affect Bluegreen’s ability to pay dividends and the Company’sits financial condition and results of operations.operations, as well as its ability to pay dividends. In addition, Bluegreen’s future operating performance and ability to meet its financial obligations will be subject to future economic conditions and to financial, business and other factors, many of which may be beyond the Company’sBluegreen’s control.



Pursuant to the settlement agreement Bluegreen has an exclusive marketing agreement with Bass Pro, a nationally-recognized retailer of fishing, marine, hunting, camping and sports gear, that provides Bluegreen with the right to market and sell vacation packages at kiosks in each of Bass Pro’s retail locations and through other means. As of December 31, 2017, Bluegreen sold vacation packages in 68 of Bass Pro’s stores. In exchange, Bluegreen compensates Bass Pro based on VOI sales generated through the program. No compensation is paid to Bass Pro under the agreement on sales made at Bluegreen/Big Cedar Vacations’ resorts. During the years ended December 31, 2017, 2016 and 2015, VOI sales to prospects and leads generated by the agreement with Bass Pro accounted for approximately 15%, 16% and 20%, respectively, of Bluegreen’s VOI sales volume. On October 9, 2017, Bass Pro advised Bluegreen that it believes the amounts paid to it as VOI sales commissions should not have been adjusted for certain purchaser defaults. Bluegreen previously informed Bass Pro that the aggregate amount of such adjustments for defaults charged back to Bass Pro between January 2008 and June 2017 totaled approximately $4.8 million. Bluegreen believes these chargebacks were appropriate and consistent with the terms and intent of the agreementsentered into with Bass Pro and Bluegreen is continuing to discuss the matter with Bass Pro. On October 20, 2017, in order to demonstrate good faith,its affiliates during June 2019, Bluegreen paid this amountBass Pro $20.0 million and agreed to make five annual payments to Bass Pro pending a resolutionof $4.0 million each commencing in 2020. Additionally, in lieu of the matterprevious commission arrangement, Bluegreen agreed to pay Bass Pro a fixed annual fee of $70,000 for each Bass Pro and Cabela’s retail store that Bluegreen is accessing (excluding sales at retail stores which are designated to provide tours to Bluegreen/Big Cedar Vacations, or “Bluegreen/Big Cedar feeder stores”), plus $32.00 per net vacation package sold (less cancellations or refunds within 45 days of sale). Bluegreen also agreed to contribute to the Wonders of Wildlife Foundation $5.00 per net package sold (less certain cancellations and refunds within 45 days of sale), subject to an annual minimum of $700,000. The fixed annual fee was prorated for 2019. Subject to the terms and conditions of the settlement agreement, Bluegreen will generally be required to pay the fixed annual fee with respect to at least 59 Bass Pro retail stores and a minimum number of Cabela’s retail stores that increases over time to a total of at least 60 Cabela’s retail stores by the end of 2021. Bluegreen had marketing operations at 15 Cabela’s stores at December 31, 2019 and are required to begin marketing operations in at least 25 more stores by December 31, 2020. Notwithstanding the foregoing, the minimum number of Bass Pro and Cabela’s retail stores for purposes of the fixed annual fee may be reduced under certain circumstances set forth in the ordinary course. Bluegreen recognizedparties’ agreement, including as a result of a reduction of traffic in the $4.8 million payment as general and administrative expense during the fourth quarterstores in excess of 2017. In addition, the resolution of the matter may adversely impact Bluegreen’s future marketing expenses.25% year-over-year.



Off-balance-sheet Arrangements



BBX Capital guarantees certain obligations of its wholly-owned subsidiaries and unconsolidated real estate joint ventures, which are not included in the contractual obligations table above, and also guarantees certain of the obligations in the above table as described in further detail in Item 8 – Note 1516 of this Annual Report. 



81The Company has investments in joint ventures involved in the development of multifamily apartment and townhome communities, as well as single-family master planned communities. The Company’s investments in these joint ventures are accounted for under the equity method of accounting, and as a result, the Company does not recognize the assets and liabilities of these joint ventures in its financial statements. As of December  31, 2019 and 2018, the Company’s investments in these joint ventures totaled $57.3 million and $64.7 million, respectively. These unconsolidated real estate joint ventures generally finance their activities with a combination of debt financing and equity. The Company generally does not directly guarantee the financing of these joint ventures, other than as described in further detail in Item 8 – Note 16 of this Annual Report, and the Company’s maximum exposure to losses from these joint ventures is its equity investment. The Company is typically not obligated to fund additional capital to its joint ventures; however, the Company’s interest in a joint venture may be diluted if the Company elects not to fund a joint venture capital call. 




Liquidity and Capital Resources



BBX Capital and Subsidiaries, excluding Bluegreen



As of December 31, 20172019 and 2016,2018, the Company, excluding Bluegreen, had cash, cash equivalents and short-term investments of approximately $165.2$166.6 million and $155.7$146.9 million, respectively. Management believes that BBX Capital has sufficient liquidity from the sources described below to fund operations, including its anticipated working capital, capital expenditure, and debt service requirements, for the foreseeable future.future, subject to the success of the Company’s ongoing business strategy and the ongoing availability of credit.



73


BBX Capital’s principal sources of liquidity are its available cash and short-term investments, distributionsdividends received from Bluegreen, borrowings from its $50.0 million IberiaBank revolving line of credit, distributions from unconsolidated real estate joint ventures, funds obtainedproceeds received from loan recoverieslot sales at the Beacon Lake Community development, and payoffs, sales of real estate, and income from income producing real estate. BBX Capital expects to use its available funds for general corporate purposes, to make additional investments in real estate based opportunities, middle market operating businesses, or other opportunities, or to repurchase shares of its common stock pursuant to the share repurchase program.

In June 2017, the Company acquired IT’SUGAR, a specialty candy retailer with 95 retail locations in 26 states and Washington, DC, for a purchase price of $58.4 million, net of cash acquired and plans to further expand IT’SUGAR by opening new retail locations, including six to seven locations during 2018. In addition, the Company anticipates opening up to 60 MOD franchised pizza restaurant locations throughout Florida over the next six years, including eight to twelve locations during 2018. During 2018, the Company expects to incur $5.4 million to $8.0 million of capital expenditures, net of tenant allowance reimbursements, to open new MOD franchised pizza restaurant locations and $7 million to $10 million of capital expenditures, net of tenant allowance reimbursements, to open additional IT’SUGAR store locations, and to renovate existing stores.



BBX Capital believes that its current financial condition and credit relationships, together with anticipated cash flows from other sources of funds, including potential dividends from Bluegreen (which, as described below, are subject to certain limitations), and, to the extent determined to be advisable, proceeds from the disposition of properties or investments, will allow it to meet its anticipated near-term liquidity needs. BBX Capital may also seek additional liquidity from outside sources, including traditional bank financing, secured or unsecured indebtedness, or the issuance of equity and/or debt securities. However, these alternatives may not be available to us on attractive terms, or at all. The inability to raise funds through the sources discussed above would have a material adverse effect on the Company’s business, results of operations, and financial condition.



BBX Capital expects that it will receive dividends from time to time from Bluegreen. During For the years ended December 31, 2019, 2018, and 2017, 2016 and 2015,BBX Capital received from Bluegreen paid dividends totaling $43.0 million, $40.4 million and $40.0 million, $70.0 million and $54.4 million, respectively. In November 2017,addition, on  February 20, 2020, BBX Capital received from Bluegreen completed an IPO, and as a consequence, subsequent dividend decisions will be atdividends of $8.7 million. Bluegreen has indicated that it intends to pay regular quarterly dividends on its common stock subject to the discretion of Bluegreen’sits board of directors, anddirectors. The ultimate payment of such dividends will be based upon such factors asthat the Bluegreen board deems to be appropriate, including Bluegreen’s operating results, financial condition, cash position, and operating and capital needs. Dividends from Bluegreen are also dependent on restrictions contained in Bluegreen’s debt facilities. facilities and may not continue at current or previous levels. Except as otherwise noted, the debts and obligations of Bluegreen are not direct obligations of the CompanyBBX Capital and generally are non-recourse to the Company.BBX Capital. Similarly, the assets of Bluegreen are not available to BBX Capital, absent a dividend or distribution. Furthermore, certain of Bluegreen’s credit facilities contain terms which could limit the payment of cash dividends without the lender’s consent or waiver, and Bluegreen may only pay dividends subject to such restrictions as well as the declaration of dividends by its board of directors. As a consequence, BBX Capital may not receive dividends from Bluegreen consistent with prior periods, in the time frames or amounts anticipated, or at all.



BBX Capital may also receive funds from its subsidiaries, including Bluegreen, in connection with its tax sharing agreement to the extent Bluegreenthat the subsidiary utilizes BBX Capital’s tax benefits in BBX Capital’s consolidated tax return. During the years ended December 31, 20172019, 2018, and 2016,2017, BBX Capital received $39.4$13.0 million, $23.1 million, and $26.2$39.3 million, respectively, of tax sharing payments from Bluegreen.



In March 2017, June 2017, September 2017Anticipated and December 2017,Potential Liquidity Requirements

BBX Capital expects to use its available funds for operations and general corporate purposes (including working capital, capital expenditures, and debt service requirements and the Company’s Board of Directors declared quarterlyother commitments described above) to make additional investments in real estate opportunities, operating businesses, or other opportunities, to declare and pay cash dividends on the Company’s common stock, or to purchase shares of its common stock.    

In November 2018, BBXRE acquired a 50% membership interest in the Altman Companies, a joint venture between the Company and JA engaged in the development, construction, and management of multifamily apartment communities. Although the Altman Companies generates revenues from the performance of development, general contractor, leasing, and property management services to the joint ventures that are formed to invest in the development projects that it originates, it is expected to generate profits for BBXRE and JA primarily through the equity distributions that BBXRE and JA receive through their investment in the managing member of such joint ventures. Therefore, as the timing of such distributions to BBXRE and JA is generally contingent upon the sale or refinancing of a completed development project, it is anticipated that BBXRE and JA will be required to contribute capital to the Altman Companies for its ongoing operating costs and predevelopment expenditures, as well as to the managing member of newly formed joint ventures. At the current time, BBXRE anticipates that it will invest approximately $4.0 million to $6.0 million in the Altman Companies and related joint ventures during the year ended December 31, 2020 related to planned predevelopment expenditures, investments in new joint ventures, and ongoing operating costs. In addition, BBXRE currently anticipates that it will contribute an additional $1.3 million to ABBX Guaranty, LLC, a joint venture between BBXRE and JA that provides guarantees on the indebtedness and construction cost overruns of new real estate joint ventures formed by the Altman Companies.

Pursuant to the operating agreement of the Altman Companies, BBXRE will also acquire an additional 40% equity interest in the Altman Companies from JA for a purchase price of $9.4 million in January 2023, and JA can also, at his option or in other predefined circumstances, require BBXRE to purchase his remaining 10% equity interest in the Altman Companies for $2.4 million. In addition, in certain circumstances, BBXRE may acquire the 40% membership interests in Altman-Glenewinkel Construction that are not owned by the Altman Companies for a purchase price based on prescribed formulas in the operating agreement of Altman-Glenewinkel Construction.

In addition to BBXRE’s anticipated investments in the Altman Companies and related joint ventures, BBXRE has entered into two real estate joint ventures, CCB Miramar, LLC and L03/212 Partners, LLC, in which the Company expects to contribute additional capital of approximately $4.5 million during the next twelve to twenty-four months based on the current plans and estimates associated with the related development projects.

74


IT’SUGAR expects to renovate certain existing stores during the year ended December 31, 2020 and is evaluating potential new locations to be opened in 2020 and 2021. Although IT’SUGAR is continuing to evaluate the size and location of these potential new stores, IT’SUGAR expects that it may incur between $5.0 million to $10.0 million of capital expenditures, net of tenant allowance reimbursements, during the year ended December 31, 2020 related to such locations.

BBX Capital has previously indicated its intention to declare regular quarterly dividends on its Class A and Class B Common Stock of $0.0075 per share. In June 2016, September 2016 and December 2016, the Company’s Board of Directors declared a quarterly cash dividend on the Company’s Class A and Class B Common Stock at $0.005 per share. Prior to June 2016, no cash dividends were paid on the Company’s common stock. On March 6, 2018, the Company’s board of directors declared a quarterly cash dividend on the Company’s Class A and Class B Common Stock of $0.01$0.05 per share payable on April 20, 2018 to shareholders of record as of March 26, 2018. Futureits common stock, or $4.8 million in the aggregate, during the year ended December 31, 2019. However, future declaration and payment of cash dividends with respect to the Company’s common stock, if any, will be determined in light of the then-current financial condition of the Company, its operating and capital needs, and other factors deemed relevant by the board of directors.

On June 13, 2017, BBX Capital’s board of directors approved a share repurchase program which authorizes the purchase of a total of up to 5,000,000 shares of the Company’s Class A Common Stock and Class B Common Stock at an aggregate cost of no more than $35.0 million. This program authorizes management, at its discretion, to purchase shares from time to time subject to market conditions and other factors. During the year ended December  31, 2019, BBX Capital purchased 3,228,890 shares of its Class A Common Stock for approximately $15.4 million. As of December  31, 2019, BBX Capital had purchased 4,750,483 shares of its Class A Common Stock for approximately $25.4 million pursuant to the June 2017 share repurchase program.

In October 2019, a total of 222,848 shares of the Company’s Class A Common Stock and 748,357 shares of the Company’s Class B Common Stock previously owned by certain executive officers were surrendered to the Company to satisfy $4.5 million of withholding tax obligations associated with the vesting of their restricted stock awards. The Company has 2,817,776 unvested restricted stock awards outstanding as of December 31, 2019 and anticipates that, to the extent that such awards vest, it will fund the cash payments associated with the related withholding tax obligations in return for the surrender of a portion of such awards.



In April 2015, BBX Capital borrowed $80.0 million from a wholly-owned subsidiary of Bluegreen to finance in part the purchase of 4,771,221 shares of BCC’s Class A Common Stock.Bluegreen. Payments of interest are required on a quarterly basis,

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with the entire $80.0 million principal balance and accrued interest currently being due and payable in April 2020. This debt currently accrues interest at a per annum rate of 6% with quarterly interest payments to Bluegreen of $1.2 million, andmillion.  BBX Capital may be required to repay all or a portion of the $80.0 million borrowed from Bluegreen if required by Bluegreen to maintain its compliance with the covenants of its outstanding debt and will be required to repay the loan if the maturity date is not in compliance with debt covenants under its debt instruments.extended. 



In addition to the note payable to Bluegreen, the Company has other indebtedness which is summarized in Commitments above. The Company’s indebtedness, including any future debt incurred by the Company, may make us more vulnerable to downturns in the economy and may subject the Company to covenants or restrictions on its operations and activities. 



On September 21, 2009,Credit Facilities with Future Availability

As of December  31, 2019, BBX Capital and certain of its subsidiaries had the Company’s board of directors approved a share repurchase program which authorized the repurchase of up to 20,000,000 shares of Class A Common Stock and Class B Common Stock at an aggregate cost of up to $10.0 million. The share repurchase program authorized management, at its discretion, to repurchase shares from time to timefollowing credit facilities with future availability, subject to market conditionseligible collateral and other factors. During April 2017, the Company repurchased 1.0 million shares of its Class A Common Stock under this share repurchase program for approximately $6.2 million.

On June 13, 2017, the Company’s board of directors approved a share repurchase program which authorizes the repurchase of a total of up to 5,000,000 shares of the Company’ Class A Common Stock and Class B Common Stock at an aggregate cost of no more than $35.0 million. This program replaces the Company’s repurchase program that the board approved in September 2009 discussed above. The current program, like the prior program, authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. During November 2017, the Company repurchased 321,593 shares of its Class A Common Stock under this share repurchase program for approximately $2.4 million.

The Company has outstanding 15,000 shares of 5% Cumulative Preferred Stock at a stated value of $1,000 per share. The shares of 5% Cumulative Preferred Stock are redeemable at the option of the Company, from time to time, at a redemption price of $1,000 per share. Shares of the 5% Cumulative Preferred Stock are also subject to mandatory redemption as described below. The 5% Cumulative Preferred Stock’s liquidation preference is equal to its stated value of $1,000 per share plus any accumulated and unpaid dividends or an amount equal to the applicable redemption price in a voluntary liquidation or winding up of the Company. Holders of the 5% Cumulative Preferred Stock have no voting rights, except as provided by Florida law, and are entitled to receive, when and as declared by the Company’s board of directors, cumulative quarterly cash dividends on each such share at a rate per annum of 5% of the stated value from the date of issuance. The Company pays regular quarterly cash dividends of $187,500 on its 5% Cumulative Preferred Stock.  The terms of the 5% Cumulative Preferred Stock requires a mandatory redemption of the stock and accordingly is classifiedfacilities, as a liability in the Company’s Consolidated Statements of Financial Condition.  The Company is required to redeem the preferred shares in $5.0 million annual payments in each of the years ending December 31, 2018, 2019 and 2020. During December 2013, the Company made a $5.0 million loan to the holders of 5% Cumulative Preferred Stock. The loan is secured by 5,000 shares of 5% Cumulative Preferred Stock, has a term of five years, accrues interest at a rate of 5% per annum and provides for payments of interest only on a quarterly basis during the term of the loan, with all outstanding amounts being due and payable at maturity.

Additionally, in October 2017, BBX Capital borrowed $3.4 million from the holders of 5% Cumulative Preferred Stock in connection with its initial capital contribution to the Chapel Grove real estate joint venture. See Note 13 included under Item 8 of this report for a discussion of the unsecured promissory note and investment in the real estate joint venture.applicable.



OnIberiaBank $50.0 million Revolving Line of Credit. In March 6, 2018, BBX Capital BBX Sweet Holdings, Food for Thought Restaurant Group-Florida, LLC, BCC and Woodbridge,certain of its wholly-owned subsidiaries entered into a Loan and Security Agreement and related agreements with Iberiabank,IberiaBank (“Iberia”), as administrative agent and lender, and City National Bank of Florida, as lender, which which provide for a $50$50.0 million revolving line of credit. Amounts borrowed under the facility will accrue interest at a floating rate of 30-day LIBOR plus a margin of 3.0% to 3.75% or the Prime Rate plus a margin of 1.50% to 2.25%. The applicable margin is based on BBX Capital’s debt to EBITDA ratio. Payments of interest only will beare payable monthly. The facility matures, and all outstanding principal and interest will be payable, on March 6, 2020,June 30, 2021, with twelve monthtwelve-month renewal options at BBX Capital’s request, subject to satisfaction of certain conditions. The facility is secured by a pledge of a percentage of BBX Capital’s membership interests in Woodbridge having a value of not less than $100$100.0 million. Borrowings under the facility may be used for business acquisitions, real estate investments, stock repurchases, letters of credit, and general corporate purposes.

Under the terms and conditions of the Loan and Security Agreement, we areBBX Capital is required to comply with certain financial covenants, including maintaining minimum unencumbered liquidity and complying with financial ratios related to fixed charge coverage and debt to EBITDA.EBITDA financial ratios. The Loan and Security Agreement also contains customary affirmative and negative covenants, including those that, among other things, limit the ability of BBX Capital and the other borrowers to incur additional indebtedness and to make certain loans and investments. As of December  31, 2019, there were no borrowings outstanding under the credit facility.

Toronto-Dominion Commercial Bank. In May 2017, Renin entered into a credit facility with TD Bank that was subsequently renewed in September 2019 and 2018. Under the terms and conditions of the credit facility, TD Bank agreed to provide term loans for up to $1.7 million and loans under a revolving credit facility for up to approximately $16.3 million subject to certain terms and conditions. As of December 31, 2019, the outstanding amounts under the term loan and revolving credit facility were $0.7 million and $6.1 million, respectively, with effective interest rates of 5.89% and 5.62%, respectively. 



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As of December 31, 2019, Renin was not in compliance with certain covenants under the credit facility as a result of a breach of its quarterly debt service coverage ratio. During the first quarter of 2020, Renin received a waiver of the default from TD Bank, and the credit facility was amended to replace the existing debt service coverage ratio with an interest coverage ratio. In connection with the amendment to the credit facility, Renin repaid the outstanding balance of the term loan with borrowings from the revolving credit facility.

Bank of America Revolving Line of Credit. In August 2018, IT’SUGAR entered into a revolving credit facility with Bank of America. Under the terms and conditions of the credit facility, Bank of America has agreed to provide a revolving line of credit to IT’SUGAR for up to $4.0 million based on available collateral as defined by the credit facility and subject to IT’SUGAR’s compliance with the terms and conditions of the credit facility, including certain specific financial covenants. The revolving credit facility matures in August 2021, and amounts outstanding bear interest at a LIBOR daily floating rate plus 1.50% or a monthly LIBOR rate subject to the terms and conditions of the credit facility. Payments of interest only are payable monthly. As of December 31, 2019, the outstanding amount under the revolving credit facility was $2.0 million.

Banc of America Leasing & Capital Equipment Note. In September 2018, IT’SUGAR entered into a Master Loan and Security Agreement with Banc of America Leasing & Capital, LLC which sets forth the terms and conditions pursuant to which IT’SUGAR may borrow funds to purchase equipment under one or more equipment security notes. The Agreement contains customary representations and covenants. Each equipment note constitutes a separate, distinct and independent financing of equipment and is secured by a security interest in the purchased equipment and is an unconditional contractual obligation of IT’SUGAR. As of December 31, 2019, there was one equipment note outstanding with a balance of $0.4 million. 

As of December 31, 2019, BBX Capital and its subsidiaries (other than Bluegreen) had availability of approximately $57.0 million under the above revolving lines of credit, subject to eligible collateral and the terms of the facilities, as applicable.

Bluegreen

Bluegreen believes that it has sufficient liquidity from the sources described below to fund operations, including its anticipated working capital, capital expenditure, and debt service requirements, for the foreseeable future, subject to the success of its ongoing business strategy and the ongoing availability of credit.



Bluegreen’s primary sources of funds from internal operations are: (i) cash sales, (ii) down payments on VOI sales which are financed; (iii) proceeds from the sale of, or borrowings collateralized by, notes receivable, (iv) cash from finance operations, including mortgage servicing fees and principal and interest payments received on the purchase money mortgage loans arising from sales of VOIs, and (v) net cash generated from sales and marketing fee-based services and other fee-based services, including resortsresort management operations.



While the vacation ownership business has historically been capital intensive, and Bluegreen has in the past and may from time to timein the future pursue transactions or activities which may require significant capital investment, and adversely impact cash flows, Bluegreen generally has sought to focus on the generation of “free cash flow” (defined as cash flow from operating activities, less capital expenditures) by (i) incentivizing its sales associates and creating programs with third-party credit card companies to generate a higher percentage of sales in cash; (ii) maintaining sales volumes that focus on its more efficient marketing channels; (iii) limiting its capital and inventory expenditures; (iv) utilizing sales and marketing, mortgage servicing, resort management services, title and construction expertise to pursue fee-based-service business relationships that generally require minimal up-front capital investment and have the potential to produce incremental cash flows, and (v) more recently by selling VOIs obtained through secondary markets or JIT arrangements. Bluegreen considers free cash flow to be a measure of cash generated by operating activities that can be used for future investing and financing activities, however, it is not a guarantee that Bluegreen will use its excess cash flows for such purposes. 



VOI sales are generally dependent upon providing financing to buyers. The ability to sell and/or borrow against notes receivable from VOI buyers has been a critical factor in Bluegreen’s continued liquidity. A financed VOI buyer is generally only required to payprovide a minimum of 10% to 20% of the purchase price in cash or equity at the time of sale; however, selling, marketing and administrative expenses attributable to the sale are primarily cash expenses that generally exceed a buyer’s minimum required down payment. Accordingly, having financing facilities available for the hypothecation, sale or transfer of these VOI notes receivable has been a critical factor in Bluegreen’s ability to meet its short and long-term cash needs. Bluegreen has attempted to maintain a number of diverse financing facilities. Historically, Bluegreen has relied on its ability to sell receivables in the term securitization market in order to generate liquidity and create capacity in its receivable facilities. If there is a tightening of credit or instability or volatility in the financial markets, as a result of the coronavirus or otherwise, there is no assurance that financing or securitization of VOIs will be available to us in the future at acceptable terms, or at all.  Further, the recent coronavirus outbreak in the United States could impact leisure travel and the sale of vacation packages and VOIs.  While it is too early to gauge the likely duration or ultimate impact, package sales have declined and trip cancelations have increased since the coronavirus outbreak in the United States.  In addition, maintaining adequate VOI inventory to sell and pursue growth into new markets has historically required Bluegreen to incur debt for the acquisition, construction, and development of new resorts. Development expenditures during 20182020 are expected to be in a range of $55.0$50.0 million to $65.0$60.0 million, which primarily relate to developments at the Bluegreen/Big Cedar Vacations resort and developmentrefurbishments at certain of Bluegreen’s Fountainsresorts, including Bluegreen’s Blue Ridge Village resort in Orlando, Florida. Bluegreen expects to seek to acquire or develop additional VOI inventory, which may increase acquisition and development expenditures as compared to prior periods and may involve or require the incurrence of additional debt.Banner Elk, North Carolina.

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In connection with Bluegreen’s capital-light business strategy activities, Bluegreen has entered into agreements with third party developers that allow Bluegreen to buy VOI inventory typically on a non-committed basis prior to when Bluegreen intends to sell such VOI.VOIs. Bluegreen’s capital-light business strategy also includes secondary market sales pursuant to which Bluegreen enters into secondary market arrangements with certain HOAs and others generally on a non-committed basis, which allows Bluegreen to acquire VOIs generally at a significant discount, as such VOIs are typically obtained by the HOAs through foreclosure in connection with maintenance fee defaults. Acquisition of JIT and secondary market inventory in 20182020 is expected to range from $25.0between $10.0 million to $30.0$15.0 million.



In addition, capitalCapital expenditures in connection with Bluegreen’s sales and marketing facilities, as well as its information technology capital expenditures, are expected to be in a range of $25.0$5.0 million to $35.0$10.0 million during 2018.in 2020.



Available funds may also be used to acquire or develop VOIs at other existing or new locations, acquire other businesses or assets, invest in other real estate based opportunities, or loanto fund loans to affiliates or others.



Bluegreen’s level of debt and debt service requirements have several important effects on Bluegreen’s operations, including the following:that: (i) significant debt service cash requirements reduce the funds available for operations and future business opportunities and increases Bluegreen’s vulnerability to adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii) Bluegreen’s leverage position increases its vulnerability to economic and competitive pressures; (iii) the financial covenants and other restrictions contained in indentures, credit agreements and other agreements relating to Bluegreen’s indebtedness require Bluegreen to meet certain financial tests and may restrict Bluegreen’s ability to, among other things, pay dividends, borrow additional funds, dispose of assets or make investments; and (iv) Bluegreen’s leverage position may limit funds available for acquisitions, working capital, capital expenditures, dividends, and other general corporate purposes. Certain of Bluegreen’s competitors operate on a less leveraged basis and have greater operating and financial flexibility than Bluegreen does.



2017 Term Securitization 

On June 6, 2017, Bluegreen completed a private offering and sale of approximately $120.2 million of investment-grade, VOI receivable-backed notes. The 2017 Term Securitization consisted of the issuance of two tranches of VOI receivable-

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backed notes (the “Notes”): approximately $88.8 million of Class A notes and approximately $31.4 million of Class B notes with interest rates of 2.95% and 3.59%, respectively, which blended to an overall weighted average interest rate of approximately 3.12%. The gross advance rate for this transaction was 88%. The Notes mature in October 2032.

The amount of the VOI notes receivable sold to BXG Receivables Note Trust 2017 (the “2017 Trust”) was approximately $136.5 million, approximately $117.0 million of which was sold to the 2017 Trust at closing, and approximately $19.6 million of which was subsequently sold to the 2017 Trust. The gross proceeds of such sales to the 2017 Trust were $120.2 million. A portion of the proceeds received were used to: repay KeyBank and DZ $32.3 million, representing all amounts outstanding (including accrued interest) under the KeyBank/DZ Purchase Facility; repay Liberty Bank approximately $26.8 million (including accrued interest) under Bluegreen’s existing facility with Liberty Bank; capitalize a reserve fund; and pay fees and expenses associated with the transaction. In April 2017, Bluegreen, as servicer, redeemed the notes related to BXG Receivables Note Trust 2010-A for approximately $10.0 million, and certain of the VOI notes receivable in such trust were sold to the 2017 Trust in connection with the 2017 Term Securitization. The remainder of the proceeds from the 2017 Term Securitization were used for or are expected to be used for general corporate purposes. As a result of the facility repayments described above, immediately after the closing of the 2017 Term Securitization, (i) there were no amounts outstanding under the KeyBank/DZ Purchase Facility, which allows for maximum outstanding receivable-backed borrowings of $80.0 million on a revolving basis through December 31, 2019 and (ii) there was approximately $10.0 million outstanding under the Liberty Bank Facility, which permits maximum outstanding receivable-backed borrowings of  $50.0 million on a revolving basis through March 31, 2018, in each case, subject to eligible collateral and the other terms and conditions of the facility. Thus, additional availability of approximately $58.9 million in the aggregate was created under the KeyBank/DZ Purchase Facility and Liberty Bank Facility as a result of the repayments.

While ownership of the VOI notes receivable included in the 2017 Term Securitization is transferred and sold for legal purposes, the transfer of these VOI notes receivable is accounted for as a secured borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of this transaction. Subject to the performance of the collateral, Bluegreen will receive any excess cash flows generated by the receivables transferred under the 2017 Term Securitization (excess meaning after payments of customary fees, interest, and principal under the 2017 Term Securitization) on a pro-rata basis as borrowers make payments on their notes.

See Note 13 – Debt under Item 8 included in this report for additional information with respect to Bluegreen’s receivable-backed notes payable facilities.facilities



Credit Facilities for Bluegreen Receivables with Future Availability



Bluegreen maintains various credit facilities with financial institutions which allow Bluegreen to borrow against or sell its VOI notes receivable. As of December  31, 2019, Bluegreen had the following credit facilities with future availability, as of December 31, 2017, all of which are subject to revolving availability terms during the advance period and therefore provide for additional availability as the facility is paid down, subject to compliance with relevant covenants, eligible collateral and applicable terms and conditions during the advance period (dollars in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowing Limit as of December 31, 2017

 

Outstanding Balance as of December 31, 2017

 

Availability as of December 31, 2017

 

Advance Period Expiration; Borrowing Maturity as of December 31, 2017

 

Borrowing Rate; Rate as of December 31, 2017

 

Borrowing Limit as of December 31, 2019

 

Outstanding Balance as of December 31, 2019

 

Availability as of December 31, 2019

 

Advance Period Expiration; Borrowing Maturity as of December 31, 2019

 

Borrowing Rate; Rate as of December 31, 2019

Liberty Bank Facility

$

50,000 

$

24,990 

$

25,010 

 

March 2018;   November 2020

 

Prime Rate +0.50%; floor of 4.00%; 5.00%

 

$

50,000 

 

$

25,860 

 

$

24,140 

 

June 2020;

March 2023

 

Prime Rate; floor of 4.00%; 4.75%

NBA Receivable Facility (1)

 

50,000 

 

44,414 

 

5,586 

 

September 2020; March 2025

 

30 day LIBOR + 2.75%; floor of 3.50%; 4.10%

Pacific Western Bank Facility

 

40,000 

 

18,008 

(2)

21,992 

(2)

September 2018; September 2021

 

30 day LIBOR+3.50% to 4.50%; 6.00%

NBA Receivables Facility

 

70,000 

 

 

32,405 

 

 

37,595 

 

September 2020; March 2025

 

30 day LIBOR+2.75%;

floor of 3.50%;

4.55%

Pacific Western Facility

 

40,000 

 

 

30,304 

 

 

9,696 

 

September 2021;

September 2024

 

30 day LIBOR+2.75% to 3.00%; 4.68%

KeyBank/DZ Purchase Facility

 

80,000 

 

16,144 

 

63,856 

 

December 2019; December 2022

 

30 day LIBOR+2.75%; 4.31%(3)

 

80,000 

 

 

31,708 

 

 

48,292 

 

December 2022;

December 2024

 

30 day LIBOR or        CP +2.25%; 3.99%  (1)

Quorum Purchase Facility

 

50,000 

 

16,771 

 

33,229 

 

June 2018; December 2030

 

(4)

 

 

50,000 

 

 

44,525 

 

 

5,475 

 

June 2020;

December 2032

 

(2)

$

270,000 

$

120,327 

$

149,673 

 

 

 

 

 

$

290,000 

 

$

164,802 

 

$

125,198 

 

 

 

 

(1)Borrowings accrue interest at a rate equal to either LIBOR, a “Cost of Funds” rate or commercial paper (“CP”) rates plus 2.25%. The interest rate will increase to the applicable rate plus 3.25% upon the expiration of the advance period.

(2)Of the amounts outstanding under the Quorum Purchase Facility at December 31, 2019, $3.1 million accrues interest at a rate per annum of 4.75%, $21.3 million accrues interest at a fixed rate of 4.95%, $1.6 million accrues interest at a fixed rate of 5.0%, $17.2 million accrues interest at a fixed rate of 5.10%, and $1.3 million accrues at a fixed rate of 5.50%.





(1)

The borrowing limit excludes the $20.0 million borrowing limit under the NBA Line of Credit. 

(2)

The outstanding balance includes $2.7 million outstanding as of December 31, 2017 under the Pacific Western Term Loan. 

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(3)

Borrowings accrue interest at a rate equal to either LIBOR, a “Cost of Funds” rate or commercial paper rates plus 2.75%. The interest rate will increase to the applicable rate plus 4.75% upon the expiration of the advance period. 

(4)

Of the amounts outstanding as of December 31, 2017, $3.3 million bears interest at a fixed rate of 6.9%, $3.0 million bears interest at a fixed rate of 5.5%, $3.6 million bears interest at a fixed rate of 5.0%, and $6.8 million bears interest at a fixed rate of 4.75%. The interest rate on future borrowings will be set at the time of funding based on rates mutually agreed upon by all parties.

Other Credit Facilities and Outstanding Notes Payable



Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan.In December 2016, Bluegreen entered into a $100.0 million syndicated credit facility with Fifth Third Bank, as administrative agent and lead arranger, and certain other bank participants as lenders. In October 2019, Bluegreen amended the facility and increased the facility to $225.0 million.  The amended facility includes a $25.0$100.0 million term loan (the “Fifth Third Syndicated Term Loan”) with quarterly amortization requirements and a $75.0$125.0 million revolving line of credit (the “Fifth Third Syndicated Line-of-Credit”). Amounts borrowedBorrowings under the amended facility generally bear interest at LIBOR plus 2.75%2.00% - 3.75%2.50%, depending on Bluegreen’s leverage ratio, are collateralized by certain of itsBluegreen’s VOI inventory,inventories, sales center buildings, management fees, and short-term receivables and cash flows from residual interests relating to certain term securitizations, and will mature in December 2021.October 2024. At closing, Bluegreen borrowed the entire $100.0 million term loan and $30.0 million under the revolving line of credit. Proceeds were used to repay the outstanding balance on the existing Fifth Third Syndicated Credit Facility, repay $3.6 million on the existing Fifth Third Bank Note Payable and pay expenses and fees associated with the amendment with the remainder to be used for general corporate purposes. As of December 31, 2017,2019, outstanding borrowings under the facility totaled $43.8$128.8 million, including $23.8$98.8 million under the Fifth Third Syndicated Term Loan with an interest rate of 4.32%3.71%, and $20.0$30.0 million under the Fifth Third Syndicated Line of Credit with an interest rate of 4.27%3.85%.



Bluegreen also has outstanding obligations under various credit facilities and securitizations that have no remaining future availability as the advance periods have expired.



See Note 13 – Debt under Item 8 included in this report for additional information with respect to Bluegreen’s credit facilities terms and covenants. 



Critical Accounting Policies



Management views critical accounting policies as accounting policies that are important to the understanding of our financial statements and also involve estimates and judgments about inherently uncertain matters. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated statements of financial condition and assumptions that affect the recognition of income and expenses on the consolidated statements of operations and comprehensive income for the periods presented. On an ongoing basis, management evaluates its estimates, including, but not limited to, those that relate to the determination of:



·

The allowance for credit losses;loan losses on VOI notes receivable;

·

The estimated future sales value of VOI inventory;

·

The recognition of revenue, including revenue recognition under the percentage-of-completion method of accounting;revenue;

·

The recovery of the carrying value of real estate inventories;

·

The fair value of assets measured at, or compared to, fair value on a non-recurring basis, such as assets held for sale, intangible assets, other long-lived assets and goodwill;

·

The valuation of assets and liabilities assumed in the acquisition of a business;

·

The amount of deferred tax valuation allowance;allowance and accounting for uncertain tax positions; and

·Accounting for uncertain tax positions; and

·The estimate of contingent liabilities related to litigation and other claims and assessments.



The accounting policies that we have identified as critical accounting policies are:



·Revenue

The recognition and inventory cost allocation;of revenue;

·The carrying value of completed

Allowance for loan losses on VOI inventory;notes receivable;

·

The carryingestimated future sales value of VOIs held for future VOI development and VOI properties under development or held for development;inventory;

·

Evaluating long-lived assets and definite lived intangible assets for impairment; and

·

Evaluating goodwill and indefinite lived intangible assets for impairment; and

·Allowance for credit losses on VOI Notes Receivable.impairment.



Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values

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of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions and conditions. If actual results significantly differ from management’s estimates, our results of operations and financial condition could be materially and adversely impacted.



Revenue Recognition and Inventory Cost Allocation

Sales of Real Estate

In accordance with the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 970-605, Real Estate-Revenue Recognition,  Bluegreen recognizes revenue on VOI sales when a minimum of 10% of the sales price has been received in cash (buyer’s commitment), the legal rescission period has expired, collectibility of the receivable representing the remainder of the sales price is reasonably assured and Bluegreen has completed substantially all of its obligations with respect to any development related to the real estate sold. 

Bluegreen believes that it uses a reasonably reliable methodology to estimate the collectibility of the receivables representing the remainder of the sales price of VOIs sold.  See the further discussion of Bluegreen’s policies regarding the estimation of credit losses on Bluegreen’s notes receivable below. Should Bluegreen become unable to reasonably estimate the collectibility of its receivables, Bluegreen may have to defer the recognition of sales and its results of operations could be negatively impacted. 

Under timeshare accounting rules, the buyer’s minimum cash down payment towards the purchase of Bluegreen’s VOIs is met only if the cash down payment received, reduced by the value of certain incentives provided to the buyer at the time of sale, is at least 10% of the sales price.  If, after consideration of the value of the incentive, the total down payment received from the buyer is less than 10% of the sales price, the VOI sale, and the related cost of sales and direct selling expenses, are deferred until such time that sufficient cash is received from the customer, generally through receipt of mortgage payments, to meet the 10% threshold.  Changes to the quantity, type or value of sales incentives that Bluegreen provides to buyers of its VOIs may increase the number of VOI sales being deferred or extend the period during which a sale is deferred, which could materially adversely impact Bluegreen’s results of operations.

In cases where construction and development on Bluegreen-owned resorts has not been substantially completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of accounting. Should Bluegreen’s estimates of the total anticipated cost of completing any of its projects increase, Bluegreen may be required to defer a greater amount of revenue or may be required to defer revenue for a longer period of time, which could materially adversely impact its results of operations.

Timeshare accounting rules require the use of an industry-specific relative sales value method for relieving VOI inventory and recording cost of sales.  Under the relative sales value method, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage — the ratio of total estimated development cost to total estimated VOI revenue, including the estimated incremental revenue from the resale of repossessed VOI inventory, as a result of the default of the related receivable.

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Fee-Based Sales Commissions and Other Revenue Recognition



In additionVariable Consideration

Bluegreen generally offers qualified purchasers financing for up to 90% of the purchase price of VOIs. The typical financing provides for a term of ten years and a fixed interest rate, is fully amortizing in equal installments, and may be prepaid without penalty. For sales of VOIs for which Bluegreen provides financing, Bluegreen reduces the transaction price for expected loan losses, which is considered to be variable consideration. To the extent Bluegreen determines that it is probable that a significant reversal of cumulative revenue recognized may occur, it records an estimate of variable consideration as a reduction to the transaction price of the sales of VOIs until the uncertainty associated with the variable consideration is resolved. Bluegreen’s estimate of variable consideration is based on the results of its static pool analysis, which relies on historical payment data for similar VOI notes receivable and tracks uncollectibles for each period’s sales over the entire life of the notes. Bluegreen also generatesconsiders whether historical economic conditions are comparable to then current economic conditions, as well as variations in underwriting standards. Bluegreen reviews its estimate of variable consideration on at least a quarterly basis. See “Allowance for Loan Losses on VOI Notes Receivable” below for a further discussion on expected loan loss estimates.

Variable Consideration on Trade Sales and Sales of Real Estate Inventory

The Company’s trade sales are generally sold with a right of return, and the Company may provide other sales credits or incentives, such as volume discounts or rebates. Additionally, the Company is entitled to contingent consideration on certain single-family lot sales to builders. These programs are accounted for as variable consideration when determining the amount of revenue to recognize upon transfer of control. Estimates of contingent consideration, returns, and incentives are calculated using the expected value method and updated at the end of each reporting period when additional information becomes available. Variable consideration estimates are based on historical experience adjusted for current economic conditions and sales trends. These estimates rely on assumptions and judgments regarding issues where the outcome is unknown, and actual results or values may differ significantly from these estimates.  A significant change in the activities listed below. timing of revenue recognized could occur if actual variable consideration is significantly different than our estimates. 

Identification of Distinct Performance Obligations

Bluegreen’s resort and club management revenue and related cost reimbursements are recognized as services are rendered. These services provided to the resort HOAs are comprised of day-to-day services to operate the resort, including management services and certain accounting and administrative functions. Management services provided to the Vacation Club include managing the reservation system and providing owner, billing and collection services. Bluegreen’s management contracts are typically structured as cost-plus with an initial term of three years and automatic one year renewals. Bluegreen believes these services to be a series of distinct goods and services to be accounted for as a single performance obligation over time and recognizes revenue as the customer receives the benefits of its services.

Allowance for Loan Losses on VOI Notes Receivable

The table providesallowance for loan losses is related to the notes receivable generated in connection with financing Bluegreen’s VOI sales. Bluegreen holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility based on pools of receivables, as Bluegreen believes that there are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating future loan losses, Bluegreen does not use a brief descriptionsingle primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a static pool analysis that incorporates the age of the applicable revenue recognition policy:respective receivables, default trends and prepayment rates by origination year, as well as the FICO scores of the borrowers.



Activity

Revenue is recognized when:

Fee-based sales commissions

The sale transaction with the VOI purchaser is consummated in accordance with the terms of the agreement with the third-party developer and the related consumer rescission period has expired.

Resort management and service fees

Management services are rendered. (1)

Resort title fees

Escrow amounts are released and title documents are completed.

Rental and sampler program

Guests complete stays at the resorts.  Rental and sampler program proceeds are classified as a reduction to “Cost of other fee-based services” in the consolidated statements of operations and comprehensive income.

(1)

In connection with Bluegreen’s management of the HOAs, among other things, Bluegreen acts as agent for the HOAs to operate the resort as provided under the management agreements. In certain cases, personnel at the resorts are Bluegreen employees. The HOAs bear the costs of such personnel and generally pay Bluegreen in advance of, or simultaneously with, the payment of payroll. In accordance with ASC 605-45, Overall Considerations of Reporting Revenues Gross as a Principal versus Net as an Agent, reimbursements from the HOAs relating to direct pass-through costs are recorded net of the related expenses. 

CarryingThe Estimated Future Sales Value of Completed VOI Inventory



Bluegreen carries its completed VOIsinventory at the lower of (i) cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest, real estate taxes and other costs incurred during construction, or (ii) estimated fair market value, less costs to sell. The outstanding balanceBluegreen uses the relative sales value method for establishing the cost of completedits VOI sales and relieving inventory, which requires Bluegreen to make estimates subject to significant uncertainty. Under the relative sales value method required by timeshare accounting rules, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage based on the ratio of total estimated development costs to total estimated VOI revenue, including the estimated incremental revenue from the resale of VOI inventory was $194.5 millionrepossessed, generally as a result of December 31, 2017.the default of the related receivable. Also, pursuant to timeshare accounting rules, Bluegreen does not relieve inventory for VOI cost of sales related to anticipated loan losses. Accordingly, no adjustment is made when inventory is reacquired upon default of the related receivable.



Bluegreen capitalizes interest expense, real estate taxes and other costs when activities that are necessary to prepare the VOI inventory for its intended use are underway. Bluegreen ceases capitalization of costs during prolonged gaps in development when substantially all activities are suspended or when projects are considered substantially complete.

79

 

Carrying Value of Real Estate Held for Future VOI Development and VOI Properties Under Development or Held for Development,


 

The Company evaluates the recoverability of its real estate properties under development or held for development, if certain trigger events occur.  If the estimated undiscounted future cash flows are less than the carrying amount of the asset, the asset is written down to its estimated fair value. The outstanding balance of construction in progress and real estate held for future VOI development was $22.3 million and $64.5 million, respectively, as of December 31, 2017.

 

Evaluating Long-lived Assets and Definite-lived Intangible Assets for Impairment



The Company evaluates its long-lived assets and definite-lived intangible assets, whenincluding property and equipment, real estate held-for-investment, and Bluegreen’s undeveloped or under development resort properties, for potential impairment whenever events andor changes in circumstances indicate that the carrying amounts of such assets may not be impairedrecoverable. With respect to property and equipment associated with new retail locations, the Company assesses whether there are indicators of impairment upon the earlier of the stabilization of the applicable retail location or twelve to eighteen months following the opening of the location (depending on the maturity of the retail brand). The carrying amounts of assets are not considered recoverable when the carrying amounts exceed the undiscounted cash flows estimated to be generated by those assets are less than theirassets. As the carrying amounts. The carrying valueamounts of these assets isare dependent upon estimates of future earnings that they are expected to generate. Ifgenerate, these assets may be impaired if cash flows decrease significantly these assets may be impaired,or do not meet expectations, in which case they would be written down to their fair value. The estimates of useful lives and expected cash flows require us to make significant judgments regarding future periods that are subject to a number of factors, many of which may be beyond our control. The outstanding balance of long-lived assets and definite lived intangible assets was $112.9 million and $9.2 million, respectively, asAs of December 31, 2017. During the year ended December 31, 2017,2019, the Company recognized a $1.9had capitalized in excess of $9.2 million intangible asset impairment lossof property and equipment associated with certain BBX Sweet Holding’s acquisitions in 2014 and 2015.  The impairment loss was measured asnew IT’SUGAR retail locations which had not stabilized or had not been open for twelve to eighteen months. To the amount by whichextent that these retail locations do not meet expectations or actual performance within twelve to eighteen months following the opening of such locations indicates that the carrying amountamounts of the intangible assets exceeded their fair value.property and equipment associated with such locations may not be recoverable, we may recognize impairment charges associated with these locations in future periods.

88




Evaluating Goodwill and Indefinite Lived Intangible Assets for Impairment



The process of evaluating goodwill for impairment involves the determination of the fair value of the Company’s reporting units. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such evaluations, actual results could differ materially from such estimates. The Company tested its goodwill for impairment on December 31, 2019  (its annual testing date). The Company determined that the $35.2 million of goodwill assigned to the IT’SUGAR reporting unit at December 31, 2019 was not impaired. However, if the IT’SUGAR reporting unit does not meet expectations or if there is a downturn in the confectionery industry, we may recognize goodwill impairment charges in future periods. The Company’s goodwill as of December 31, 20172019 and 2018 was $39.5 million and was recorded in association with BBX Sweet Holding’s acquisitions during 2017, 2015 and 2014.The goodwill was tested for impairment on December 31, 2017 (annual testing date) and was determined to be impaired, and an impairment loss of $2.4 million was recorded. $37.2 million.



The Company’s indefinite lived intangible assets as of December 31, 20172019 consisted of $62.0$61.3 million of management contracts, which were originated in connection with the November 16, 2009 acquisition of a controlling interest in Bluegreen. Such management contracts are not amortized but instead are reviewed for impairment at least annually, or if events or changes in circumstances indicate that it is more likely than not that the related carrying amounts may be impaired. Management contracts are impaired when the fair value of the contract is lower than the carrying value.  The fair value of management contracts is based on an evaluation of estimated cash flows that can be generated from the contract which are uncertain and subject to change.  Due to the uncertainties associated with such evaluations, actual results could differ materially from such estimates. estimates and the Company could recognize impairments on management contracts if future cash flows do not meet expectations.   

80


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Allowance for Credit Losses on VOI Notes ReceivableMarket Risk

Market risk is defined as the risk of loss arising from adverse changes in market valuations resulting from interest rate risk, foreign currency exchange rate risk, commodity price risk and equity price risk. The Company’s primary market risk is equity price risk, interest rate risk and commodity price risk.



The allowanceCompany’s real estate assets market risk consists primarily of equity pricing risk and secondarily interest rate risk. The Company’s real estate assets are investments in unconsolidated real estate companies, real estate held-for-investment or held-for-sale and real estate inventory. The Company’s financial condition and earnings are affected by changes in real estate values in the markets where the real estate or real estate collateral is located and changes in interest rates which affects the affordability of real estate.  As a result, there is exposure to equity pricing and interest rate risk in the real estate market.

The Company’s results of operations are subject to foreign currency exchange risk of the U.S. dollar compared to the Canadian dollar though its ownership of Renin.  Renin’s assets, liabilities, revenue and expenses that are denominated in foreign currencies will be affected by changes in the exchange rates between the U.S. dollar and the Canadian dollar.  As of December 31, 2019, the Company has not entered into any foreign exchange forward contracts as hedges against foreign currency exchange risk.

The market price of BBX Capital’s Class A Common Stock and Class B Common Stock and Bluegreen’s common stock are important to the valuation and financing capability of BBX Capital.

The Company, particularly with respect to Bluegreen, is affected by interest rates, which are subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The nature and timing of any changes in such policies or general economic conditions and their effect on the Company and its subsidiaries are unpredictable. 

As of December 31, 2019, Bluegreen had fixed interest rate debt of approximately $334.2 million and floating interest rate debt of approximately $343.6 million, excluding purchase accounting adjustments for credit lossesjunior subordinated debentures of $36.8 million. In addition, Bluegreen’s notes receivables as of December 31, 2019 were comprised of approximately $589.2 million of notes bearing interest at fixed rates and approximately $0.6 million of notes bearing interest at floating rates. The floating interest rates are subject to floors and are generally based either upon the prevailing prime or LIBOR rates. For floating rate financial instruments, interest rate changes generally do not affect the market value of the debt, but do impact earnings and cash flows relating to the debt, assuming other factors are held constant. Conversely, for fixed rate financial instruments, interest rate changes affect the market value of the debt but do not impact earnings or cash flows relating to the debt, assuming other factors are held constant.

The Company is subject to interest rate risk on Woodbridge’s junior subordinated debentures. The interest rates for Woodbridge’s $66.3 million of junior subordinated debentures are variable rates based upon the prevailing 3-month LIBOR rates. For variable rate financial instruments, interest rate changes do not generally affect the market value of the debt, but they do impact future earnings and cash flows, assuming other factors are held constant. If interest rates were to increase one percentage point, the effect on interest expense related to the notes receivable generatedWoodbridge’s variable-rate debt would be an annual increase of approximately $663,000, based on December 31, 2019 balances.

The Company is subject to commodity pricing risk in connection with its Renin and BBX Sweet Holdings operating businesses. Commodity price increases or decreases ultimately result in corresponding changes in raw material prices which could impact our financial condition and results of operations. We have not in the past entered into, and do not currently have any plans to enter into, commodity futures and options contracts to reduce our commodity pricing risk.  

To the extent inflationary trends, tightened credit markets or other factors affect interest rates, Bluegreen’s financingdebt service costs may increase.  If interest rates increased one percentage point, the effect on interest expense related to Bluegreen’s floating-rate debt would be an annual increase of VOI sales.approximately $3.4 million based on December 31, 2019 balances and interest rates. Due to the interest rate floors on Bluegreen’s floating rate debt, if interest rates decreased one percentage point, the effect on interest expense related to its floating rate debt would be an annual decrease of approximately $3.0 million based on December 31, 2019 balances and interest rates. In addition, a one percentage point increase or decrease in interest rates would affect the total fair value of Bluegreen’s fixed rate debt by an immaterial amount. This analysis does not consider the effects of changes in the level of overall economic activity that could result due to interest rate changes. Further, in the event of a significant change in interest rates, Bluegreen usesmay pursue actions in order to mitigate any exposure to the change.  However, due to the uncertainty of the specific actions that may be taken and their possible effects, the foregoing sensitivity analysis assumes no changes in Bluegreen’s financial structure. Further, in the event of tightened credit markets, there may a static pool analysis as a basis for determining an estimated reserve requirement onsignificant tightening of availability under our existing lines, we may be unable to renew our lines of credit or obtain new facilities. In addition, Bluegreen’s ability to borrow against or sell its VOI notes receivable. The adequacyreceivable has historically been a critical factor in its liquidity. As a result, instability or volatility in the financial markets restricting the availability of credit, including any tightening of the related allowance is determined by Bluegreen’s management through analysescredit markets in connection with the recent coronavirus outbreak, may adversely impact the Company’s business, results of several qualitative and quantitative factors requiring judgment, such as economic factors, default trends by origination year and FICO scores of borrowers. Changes in estimates used could result in a material change to Bluegreen’s allowance.operations, liquidity, or financial condition. 

81

 


 

Impact of Inflation



The financial statements and related financial data and notes presented herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.



The Company is subject to significant interest rate risk on Bluegreen’s notes receivables as well as otherits outstanding debt. As a result, interest rates have a more significant impact on our performance than the effects of general price levels. Although interest rates generally move in the same direction as inflation, the magnitude of such changes varies.



The Company believes that inflation and changing prices have had and may in the future have a material impact on its revenues and results of operations. Bluegreen has increased the sales prices of its VOIs periodically, including in September 2016 and June 2017,December 2018, and has from time to time experienced increases in construction and development costs. Bluegreen may not be able to increase or maintain the current level of its sales prices, and increased construction and development costs may have a material adverse impact on its gross margin. In addition, to the extent that inflation in general or increased prices for VOIs adversely impacts consumer demand, Bluegreen’s results of operations could be adversely impacted. Furthermore, while increases in real estate construction and development costs may result in increases in rental rates and real estate sales prices, rental rates and sales prices may not increase commensurate with the increase in costs or they may decrease, and increased construction costs may have a material adverse impact on gross margin. In addition, inflation is often accompanied by higher interest rates which could have a negative impact on consumer demand and the costs of financing activities. Rising interest rates as well as increased materials and labor costs may reduce margins.



 













89




ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Market Risk



Market risk is defined as the risk of loss arising from adverse changes in market valuations resulting from interest rate risk, foreign currency exchange rate risk, commodity price risk and equity price risk. BBX Capital’s primary market risk is equity price risk and interest rate risk.



The Company’s real estate assets market risk consists primarily of equity pricing risk and secondarily interest rate risk. The Company’s real estate assets are investments in unconsolidated real estate companies, real estate held-for-investment or held-for-sale, real estate inventory and loans secured by real estate. The Company’s financial condition and earnings are affected by changes in real estate values in the markets where the real estate or real estate collateral is located and changes in interest rates which affects the affordability of real estate.  As a result, there is exposure to equity pricing and interest rate risk in the real estate market.



The Company’s results of operations are subject to foreign currency exchange risk of the U.S. dollar compared to the Canadian dollar though its ownership of Renin.  Renin’s assets, liabilities, revenue and expenses that are denominated in foreign currencies will be affected by changes in the exchange rates between the U.S. dollar and the Canadian dollar.  As of December 31, 2017, the Company has not entered into any foreign exchange forward contracts as hedges against foreign currency exchange risk.



The market price of BBX Capital’s Class A Common Stock and Class B Common Stock are important to the valuation and financing capability of BBX Capital.



The Company, particularly with respect to Bluegreen, is affected by interest rates, which are subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The nature and timing of any changes in such policies or general economic conditions and their effect on the Company and its subsidiaries are unpredictable.



As of December 31, 2017, Bluegreen had fixed interest rate debt of approximately $381.4 million and floating interest rate debt of approximately $210.3 million.  In addition, Bluegreen’s notes receivables as of December 31, 2017 were comprised of approximately $549.4 million of notes bearing interest at fixed rates and approximately $1.3 million of notes bearing interest at floating rates. The floating interest rates are subject to floors and are generally based either upon the prevailing prime or LIBOR rates.  For floating rate financial instruments, interest rate changes generally do not affect the market value of the debt, but do impact earnings and cash flows relating to the debt, assuming other factors are held constant.  Conversely, for fixed rate financial instruments, interest rate changes affect the market value of the debt but do not impact earnings or cash flows relating to the debt, assuming other factors are held constant.



The Company is subject to interest rate risk on Woodbridge’s junior subordinated debentures. The interest rates for Woodbridge’s $66.3 million of junior subordinated debentures are variable rates based upon the prevailing 3-month LIBOR rates. For variable rate financial instruments, interest rate changes do not generally affect the market value of the debt, but they do impact future earnings and cash flows, assuming other factors are held constant. If interest rates were to increase one percentage point, the effect on interest expense related to Woodbridge’s variable-rate debt would be an annual increase of approximately $663,000, based on December 31, 2017 balances.



To the extent inflationary trends, tightened credit markets or other factors affect interest rates, Bluegreen’s debt service costs may increase.  If interest rates increased one percentage point, the effect on interest expense related to Bluegreen’s floating-rate debt would be an annual increase of approximately $2.1 million based on December 31, 2017 balances and interest rates.  Due to the interest rate floors on Bluegreen’s floating rate debt, if interest rates decreased one percentage point, the effect on interest expense related to its floating rate debt would be an annual decrease of approximately $1.4 million based on December 31, 2017 balances and interest rates. In addition, a one percentage point increase or decrease in interest rates would affect the total fair value of Bluegreen’s fixed rate debt by an immaterial amount. This analysis does not consider the effects of changes in the level of overall economic activity that could result due to interest rate changes. Further, in the event of a significant change in interest rates, Bluegreen may pursue actions in order to mitigate any exposure to the change.  However, due to the uncertainty of the specific actions that may be taken and their possible effects, the foregoing sensitivity analysis assumes no changes in Bluegreen’s financial structure.



 

9082

 


 

 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



BBX CAPITAL CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





 

 



Report of Independent Registered Public Accounting Firm …………….……………………………..…….....

F-2F-2



Consolidated Statements of Financial Condition as of December 31, 20172019 and 2016………………….………2018

F-3F-3



Consolidated Statements of Operations and Comprehensive Income for each of the years

in the three year period ended December 31, 2017 ……………………………………………….………2019

F-4F-4



Consolidated Statements of Changes in Equity for each of the years in the three year period

ended December 31, 2017 ………………………………………………………………………...………2019

F-5F-5



Consolidated Statements of Cash Flows for each of the years in the three year period

ended December 31, 2017 ……………………………………………………………………...…………2019

F-7F-7



Notes to Consolidated Financial Statements ………………………………………………………...…………

F-10F-9

 

F-1

 


 

 





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors and Shareholders

BBX Capital Corporation

Opinion on the financial statements

We have audited the accompanying consolidated statements of financial condition of BBX Capital Corporation (a Florida corporation) and subsidiaries (the “Company”) as of December 31, 20172019 and 2016,2018, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2017,2019, and the related notes and schedules (collectively referred to as the “financial statements”).  In our opinion, thefinancial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20172019 and 2016,2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2019, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017,2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 9, 201813, 2020 expressed an unqualified opinion.opinion.

Change in accounting principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for opinion

These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on the Company’s financial statements based on our audits.  We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audits provide a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2015.



Fort Lauderdale, Florida

March 9, 2018

13, 2020









 

F-2

 


 

 

BBX Capital Corporation

Consolidated Statements of Financial Condition

(In thousands, except share data)





 

 

 

 

BBX Capital Corporation

Consolidated Statements of Financial Condition

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

2017

 

2016

 

2019

 

2018

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

362,526 

 

299,861 

 

$

356,604 

 

366,305 

Restricted cash ($19,488 in 2017 and $21,894 in 2016 in variable

 

 

 

 

interest entities ("VIEs"))

 

46,721 

 

46,456 

Loans receivable, net

 

19,454 

 

25,521 

Notes receivable, net ($282,599 in 2017 and $287,012 in 2016 in VIEs)

 

431,801 

 

430,480 

Restricted cash ($22,534 in 2019 and $28,400 in 2018 in variable interest entities ("VIEs"))

 

50,266 

 

54,792 

Notes receivable, net ($292,590 in 2019 and $341,975 in 2018 in VIEs)

 

449,162 

 

439,167 

Trade inventory

 

23,902 

 

14,726 

 

22,843 

 

20,110 

Vacation ownership interest ("VOI") inventory

 

281,291 

 

238,534 

 

346,937 

 

334,149 

Real estate ($27,828 in 2017 and $33,345 in 2016 held for sale)

 

68,536 

 

61,003 

Real estate ($11,297 in 2019 and $20,202 in 2018 held for sale)

 

65,818 

 

54,956 

Investments in unconsolidated real estate joint ventures

 

47,275 

 

43,491 

 

57,330 

 

64,738 

Property and equipment, net

 

112,858 

 

95,998 

 

129,686 

 

139,628 

Goodwill

 

39,482 

 

6,731 

 

37,248 

 

37,248 

Intangible assets, net

 

70,449 

 

68,455 

 

68,186 

 

69,710 

Operating lease assets

 

109,351 

 

 —

Other assets

 

102,370 

 

104,812 

 

 

97,540 

 

 

124,217 

Total assets

$

1,606,665 

 

1,436,068 

 

$

1,790,971 

 

 

1,705,020 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

$

31,370 

 

28,855 

 

$

25,957 

 

29,537 

Deferred income

 

36,311 

 

37,015 

 

18,074 

 

16,522 

Escrow deposits

 

21,079 

 

20,152 

 

22,711 

 

22,255 

Other liabilities

 

103,926 

 

95,611 

 

120,362 

 

104,441 

Receivable-backed notes payable - recourse

 

84,697 

 

87,631 

 

88,569 

 

76,674 

Receivable-backed notes payable - non-recourse (in VIEs)

 

336,421 

 

327,358 

 

334,246 

 

382,257 

Notes payable and other borrowings

 

144,114 

 

133,790 

 

188,731 

 

200,887 

Junior subordinated debentures

 

135,414 

 

152,367 

 

137,254 

 

136,425 

Operating lease liabilities

 

123,430 

 

 —

Deferred income taxes

 

43,093 

 

44,318 

 

87,558 

 

86,363 

Redeemable 5% cumulative preferred stock of $.01 par value; authorized 15,000 shares;

 

 

 

 

 

 

 

 

issued and outstanding 15,000 shares with a stated value of $1,000 per share

 

13,974 

 

13,517 

issued and outstanding 0 shares in 2019 and 10,000 shares in 2018 with a stated value of $1,000 per share

 

 

 —

 

 

9,472 

Total liabilities

 

950,399 

 

940,614 

 

 

1,146,892 

 

 

1,064,833 

 

 

 

 

Commitments and contingencies (See Note 15)

 

 

 

 

 

 

 

 

Commitments and contingencies (See Note 16)

 

 

 

 

 

 

Redeemable noncontrolling interest

 

2,765 

 

 -

 

4,009 

 

2,579 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Preferred stock of $.01 par value; authorized 10,000,000 shares

 

 -

 

 -

 

 —

 

 —

Class A Common Stock of $.01 par value; authorized 150,000,000 shares;

 

 

 

 

 

 

 

 

issued and outstanding 85,689,163 in 2017 and 84,844,439 in 2016

 

857 

 

848 

issued and outstanding 75,530,331 in 2019 and 78,379,530 in 2018

 

755 

 

784 

Class B Common Stock of $.01 par value; authorized 20,000,000 shares;

 

 

 

 

 

 

 

 

issued and outstanding 13,963,200 in 2017 and 13,184,789 in 2016

 

140 

 

132 

issued and outstanding 15,957,853 in 2019 and 14,840,634 in 2018

 

160 

 

148 

Additional paid-in capital

 

229,379 

 

193,347 

 

152,775 

 

161,684 

Accumulated earnings

 

341,146 

 

259,110 

 

394,551 

 

385,789 

Accumulated other comprehensive income

 

1,708 

 

1,167 

 

 

1,554 

 

 

1,215 

Total shareholders' equity

 

573,230 

 

454,604 

 

 

549,795 

 

 

549,620 

Noncontrolling interests

 

80,271 

 

40,850 

 

 

90,275 

 

 

87,988 

Total equity

 

653,501 

 

495,454 

 

 

640,070 

 

 

637,608 

Total liabilities and equity

$

1,606,665 

 

1,436,068 

 

$

1,790,971 

 

 

1,705,020 

 

 

 

 

See Notes to Consolidated Financial Statements

 

See Notes to Consolidated Financial Statements

 

F-3

 


 

 



BBX Capital Corporation

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except per share data)



 

 

 

 

 

 

BBX Capital Corporation

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

2017

 

2016

 

2015

 

2019

 

2018

 

2017

Revenues

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Sales of VOIs

$

239,662 

 

266,142 

 

259,236 

 

$

255,375 

 

254,225 

 

242,017 

Fee-based sales commission revenue

 

229,389 

 

201,829 

 

173,659 

Other fee-based services revenue

 

111,819 

 

103,448 

 

97,539 

Fee-based sales commissions

 

207,832 

 

216,422 

 

229,389 

Other fee-based services

 

125,244 

 

118,024 

 

111,819 

Cost reimbursements

 

63,889 

 

62,534 

 

52,639 

Trade sales

 

142,798 

 

95,996 

 

84,284 

 

186,337 

 

179,486 

 

142,085 

Sales of real estate inventory

 

5,049 

 

21,771 

 

 —

Interest income

 

83,708 

 

85,746 

 

89,071 

 

86,326 

 

85,501 

 

83,708 

Net gains on sales of assets

 

2,442 

 

6,076 

 

31,092 

Net gains on sales of real estate assets

 

13,616 

 

4,563 

 

1,451 

Other revenue

 

5,964 

 

8,058 

 

9,376 

 

 

3,203 

 

 

3,372 

 

 

5,661 

Total revenues

 

815,782 

 

767,295 

 

744,257 

 

 

946,871 

 

 

945,898 

 

 

868,769 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

Cost of sales of VOIs

 

17,439 

 

27,346 

 

22,884 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Cost of VOIs sold

 

21,845 

 

23,813 

 

17,679 

Cost of other fee-based services

 

68,336 

 

64,479 

 

60,942 

 

86,940 

 

72,968 

 

64,560 

Cost reimbursements

 

63,889 

 

62,534 

 

52,639 

Cost of trade sales

 

97,755 

 

74,341 

 

62,707 

 

127,720 

 

125,640 

 

107,335 

Cost of real estate inventory sold

 

2,643 

 

14,116 

 

 —

Interest expense

 

35,205 

 

36,037 

 

40,408 

 

45,782 

 

42,075 

 

35,205 

Recoveries from loan losses, net

 

(7,495)

 

(20,508)

 

(13,457)

 

(5,428)

 

(8,653)

 

(7,546)

Asset impairments, net

 

7,431 

 

4,656 

 

287 

Impairment losses

 

6,938 

 

4,718 

 

7,482 

Net gains on cancellation of junior subordinated debentures

 

(6,929)

 

 -

 

 -

 

 —

 

 —

 

(6,929)

Litigation settlement

 

 -

 

 -

 

36,500 

Reimbursements of litigation costs and penalty

 

(13,169)

 

 -

 

 -

 

 —

 

(600)

 

(13,169)

Selling, general and administrative expenses

 

538,125 

 

516,757 

 

466,700 

 

 

585,686 

 

 

537,812 

 

 

532,061 

Total costs and expenses

 

736,698 

 

703,108 

 

676,971 

 

 

936,015 

 

 

874,423 

 

 

789,317 

 

 

 

 

 

 

Equity in net earnings (losses) of unconsolidated

 

 

 

 

 

 

real estate joint ventures

 

14,483 

 

13,630 

 

(1,565)

Equity in net earnings of unconsolidated real estate joint ventures

 

 

37,898 

 

 

14,194 

 

 

12,541 

Other income

 

82 

 

1,695 

 

 

801 

Foreign exchange (loss) gain

 

(193)

 

219 

 

(1,038)

 

 

(75)

 

 

68 

 

 

(193)

Income before income taxes

 

93,374 

 

78,036 

 

64,683 

 

 

48,761 

 

 

87,432 

 

 

92,601 

Benefit (provision) for income taxes

 

7,223 

 

(36,379)

 

76,596 

(Provision) benefit for income taxes

 

 

(16,658)

 

 

(31,639)

 

 

9,702 

Net income

 

100,597 

 

41,657 

 

141,279 

 

 

32,103 

 

 

55,793 

 

 

102,303 

Less: Net income attributable to noncontrolling interests

 

18,402 

 

13,295 

 

18,805 

 

 

14,412 

 

 

20,691 

 

 

18,378 

Net income attributable to shareholders

$

82,195 

 

28,362 

 

122,474 

 

$

17,691 

 

 

35,102 

 

 

83,925 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.83 

 

0.33 

 

1.41 

 

$

0.19 

 

 

0.37 

 

 

0.85 

Diluted earnings per share

$

0.79 

 

0.32 

 

1.40 

 

$

0.19 

 

 

0.36 

 

 

0.81 

Basic weighted average number of common

 

 

 

 

 

 

shares outstanding

 

98,745 

 

86,902 

 

87,022 

Diluted weighted average number of common and

 

 

 

 

 

 

common equivalent shares outstanding

 

103,916 

 

87,492 

 

87,208 

 

 

 

 

 

 

Basic weighted average number of common shares outstanding

 

 

92,628 

 

 

95,298 

 

 

98,745 

Diluted weighted average number of common and common equivalent shares outstanding

 

 

93,654 

 

 

97,860 

 

 

103,916 

Cash dividends declared per Class A common share

$

0.030 

 

0.015 

 

0.000 

 

$

0.05 

 

 

0.04 

 

 

0.03 

Cash dividends declared per Class B common share

$

0.030 

 

0.015 

 

0.000 

 

$

0.05 

 

 

0.04 

 

 

0.03 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

100,597 

 

41,657 

 

141,279 

 

$

32,103 

 

55,793 

 

102,303 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities available for sale

 

 

 

 

 

 

net of taxes: $20 provision for 2017, $131 provision

 

 

 

 

 

 

for 2016 and $(16) benefit for 2015

 

135 

 

(33)

 

(10)

Unrealized gain (loss) on securities available for sale

 

52 

 

 

(47)

 

135 

Foreign currency translation adjustments

 

406 

 

584 

 

353 

 

 

287 

 

 

(194)

 

 

406 

Other comprehensive income, net

 

541 

 

551 

 

343 

Other comprehensive gain (loss), net

 

 

339 

 

 

(241)

 

 

541 

Comprehensive income, net of tax

 

101,138 

 

42,208 

 

141,622 

 

 

32,442 

 

 

55,552 

 

 

102,844 

Less: Comprehensive income attributable

 

 

 

 

 

 

to noncontrolling interests

 

18,402 

 

13,295 

 

18,885 

Less: Comprehensive income attributable to noncontrolling interests

 

 

14,412 

 

 

20,691 

 

 

18,378 

Comprehensive income attributable to shareholders

$

82,736 

 

28,913 

 

122,737 

 

$

18,030 

 

 

34,861 

 

 

84,466 

 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

See Notes to Consolidated Financial Statements



 

F-4

 


 

 



BBX Capital Corporation

Consolidated Statements of Changes in Equity

For Each of the Years in the Three Year Period Ended December 31, 2019

(In thousands)



 

 

 

 

 

 

 

 

 

 

 

BBX Capital Corporation

Consolidated Statements of Changes in Equity

For Each of the Years in the Three Year Period Ended December 31, 2017

(In thousands)



 

 

 

 

 

 

 

 

 

 

 



Shares of

 

 

 

 

 

Accumulated

 

 

 



Common Stock

 

Common

 

 

Other

 

 

 



Outstanding

 

Stock

Additional

 

Comprehen-

Total

Non-

 



Class

 

Class

Paid-in

Accumulated

sive

Shareholders'

controlling

Total



A

B

 

A

B

Capital

Earnings

Income

Equity

Interests

Equity

Balance, December 31, 2014

73,307 10,168 

$

733 102 142,058 109,660 353 252,906 193,800 446,706 

Net income

 -

 -

 

 -

 -

 -

122,474 

 -

122,474 18,805 141,279 

Other comprehensive income

 -

 -

 

 -

 -

 -

 -

263 263 80 343 

Subsidiaries' capital transactions

 -

 -

 

 -

 -

1,904 

 -

 -

1,904 1,039 2,943 

Distributions to noncontrolling interest

 -

 -

 

 -

 -

 -

 -

 -

 -

(14,059)(14,059)

Net effect of tender offer for BCC attributable to non-controlling interest

 -

 -

 

 -

 -

92,763 

 -

 -

92,763 (92,763)

 -

Consideration paid in connection with the tender offer for BCC

 -

 -

 

 -

 -

(95,424)

 -

 -

(95,424)

 -

(95,424)

Increase in investment in BCC from share exchange agreements

 -

1,218 

 

 -

11 811 

 -

 -

822 (822)

 -

Repurchase and retirement of Common Stock

(1,549)

 -

 

(15)

 -

(4,439)

 -

 -

(4,454)

 -

(4,454)

Conversion of Common Stock from Class B to Class A

40 (40)

 

 -

 -

 -

 -

 -

 -

 -

 -

Issuance of Common Stock from vesting of restricted stock awards

1,389 

 -

 

14 

 -

(14)

 -

 -

 -

 -

 -

Issuance of Common Stock from exercise of options

25 

 -

 

 -

 -

10 

 -

 -

10 

 -

10 

Share-based compensation

 -

 -

 

 -

 -

5,562 

 -

 -

5,562 

 -

5,562 

Balance, December 31, 2015

73,212 11,346 

$

732 113 143,231 232,134 616 376,826 106,080 482,906 

Net income

 -

 -

 

 -

 -

 -

28,362 

 -

28,362 13,295 41,657 

Other comprehensive income

 -

 -

 

 -

 -

 -

 -

360 360 

 -

360 

Subsidiaries' capital transactions

 -

 -

 

 -

 -

1,608 

 -

 -

1,608 413 2,021 

Increase in investment in BCC from share exchange agreements

 -

1,531 

 

 -

15 1,101 

 -

 -

1,116 (1,116)

 -

Issuance of Class A common stock and consideration paid to acquire BCC noncontrolling interest

12,038 

 -

 

121 

 -

48,366 

 -

191 48,678 (65,572)(16,894)

Distributions to noncontrolling interest

 -

 -

 

 -

 -

 -

 -

 -

 -

(12,250)(12,250)

Class A common stock cash dividends declared

 -

 -

 

 -

 -

 -

(1,174)

 -

(1,174)

 -

(1,174)

Class B common stock cash dividends declared

 -

 -

 

 -

 -

 -

(212)

 -

(212)

 -

(212)

Repurchase and retirement of Common Stock

(1,880)(247)

 

(19)(2)(7,299)

 -

 -

(7,320)

 -

(7,320)

Conversion of Common Stock from Class B to Class A

38 (38)

 

 -

 -

 -

 -

 -

 -

 -

 -

Issuance of Common Stock from vesting of restricted stock awards

1,389 593 

 

14 (20)

 -

 -

 -

 -

 -

Issuance of Common Stock from exercise of options

48 

 -

 

 -

 -

10 

 -

 -

10 

 -

10 

Share-based compensation

 -

 -

 

 -

 -

6,350 

 -

 -

6,350 

 -

6,350 

Balance, December 31, 2016

84,845 13,185 

$

848 132 193,347 259,110 1,167 454,604 40,850 495,454 



 

 

 

 

 

 

 

 

 

 

Continued



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Shares of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Common Stock

 

 

 

 

Common

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 



 

Outstanding

 

 

 

 

Stock

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

Non-

 

 

 



 

Class

 

 

 

 

Class

 

 

 

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Shareholders'

 

 

controlling

 

 

Total



 

A

 

 

B

 

 

A

 

 

B

 

 

Capital

 

 

Earnings

 

 

Income

 

 

Equity

 

 

Interests

 

 

Equity

Balance, December 31, 2016

 

 

84,845 

 

 

13,185 

 

$

848 

 

 

132 

 

 

193,347 

 

 

270,665 

 

 

1,167 

 

 

466,159 

 

 

41,609 

 

 

507,768 

Cumulative effect from excess tax benefits on share based compensation associated with the adoption of ASU 2016-09

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3,054 

 

 

 —

 

 

3,054 

 

 

 —

 

 

3,054 

Net income excluding $175 of earnings attributable to redeemable noncontrolling interest

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

83,925 

 

 

 —

 

 

83,925 

 

 

18,203 

 

 

102,128 

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

541 

 

 

541 

 

 

 —

 

 

541 

Bluegreen initial public offering, net of income taxes

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

50,303 

 

 

 —

 

 

 —

 

 

50,303 

 

 

33,632 

 

 

83,935 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(11,390)

 

 

(11,390)

Class A common stock cash dividends declared

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,711)

 

 

 —

 

 

(2,711)

 

 

 —

 

 

(2,711)

Class B common stock cash dividends declared

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(501)

 

 

 —

 

 

(501)

 

 

 —

 

 

(501)

Purchase and retirement of common stock

 

 

(3,716)

 

 

(176)

 

 

(37)

 

 

(2)

 

 

(27,585)

 

 

 —

 

 

 —

 

 

(27,624)

 

 

 —

 

 

(27,624)

Conversion of common stock from Class B to Class A

 

 

95 

 

 

(95)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Issuance of common stock from vesting of restricted stock awards

 

 

4,315 

 

 

1,049 

 

 

43 

 

 

10 

 

 

(53)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Issuance of common stock from exercise of options

 

 

150 

 

 

 —

 

 

 

 

 —

 

 

60 

 

 

 —

 

 

 —

 

 

63 

 

 

 —

 

 

63 

Share-based compensation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12,259 

 

 

 —

 

 

 —

 

 

12,259 

 

 

 —

 

 

12,259 

Balance, December 31, 2017

 

 

85,689 

 

 

13,963 

 

$

857 

 

 

140 

 

 

228,331 

 

 

354,432 

 

 

1,708 

 

 

585,468 

 

 

82,054 

 

 

667,522 

Cumulative effect from the adoption of ASU 2016-01 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

252 

 

 

(252)

 

 

 —

 

 

 —

 

 

 —

Net income excluding $370 of loss attributable to redeemable noncontrolling interest

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

35,102 

 

 

 —

 

 

35,102 

 

 

21,061 

 

 

56,163 

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(241)

 

 

(241)

 

 

 —

 

 

(241)

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(14,284)

 

 

(14,284)

Bluegreen purchase and retirement of its common stock

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,124)

 

 

 —

 

 

 —

 

 

(2,124)

 

 

(1,876)

 

 

(4,000)

Increase in noncontrolling interest from loan foreclosure

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

704 

 

 

704 

Purchase of noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(587)

 

 

 —

 

 

 —

 

 

(587)

 

 

329 

 

 

(258)

Class A common stock cash dividends declared

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(3,281)

 

 

 —

 

 

(3,281)

 

 

 —

 

 

(3,281)

Class B common stock cash dividends declared

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(716)

 

 

 —

 

 

(716)

 

 

 —

 

 

(716)

Purchase and retirement of common stock from tender offer

 

 

(6,486)

 

 

 —

 

 

(65)

 

 

 —

 

 

(60,076)

 

 

 —

 

 

 —

 

 

(60,141)

 

 

 —

 

 

(60,141)

Purchase and retirement of common stock

 

 

(1,990)

 

 

(505)

 

 

(20)

 

 

(5)

 

 

(16,981)

 

 

 —

 

 

 —

 

 

(17,006)

 

 

 —

 

 

(17,006)

Conversion of common stock from Class B to Class A

 

 

38 

 

 

(38)

 

 

 

 

(1)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Issuance of common stock from vesting of restricted stock awards

 

 

1,101 

 

 

1,421 

 

 

11 

 

 

14 

 

 

(25)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Issuance of common stock from exercise of options

 

 

27 

 

 

 —

 

 

 —

 

 

 —

 

 

245 

 

 

 —

 

 

 —

 

 

245 

 

 

 —

 

 

245 

Share-based compensation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12,901 

 

 

 —

 

 

 —

 

 

12,901 

 

 

 —

 

 

12,901 

Balance, December 31, 2018

 

 

78,379 

 

 

14,841 

 

$

784 

 

 

148 

 

 

161,684 

 

 

385,789 

 

 

1,215 

 

 

549,620 

 

 

87,988 

 

 

637,608 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continued

See Notes to Consolidated Financial Statements

F-5

 


 

 



 

 

 

 

 

 

 

 

 

 

 

BBX Capital Corporation

Consolidated Statements of Changes in Equity

For Each of the Years in the Three Year Period Ended December 31, 2017

(In thousands)



 

 

 

 

 

 

 

 

 

 

 



Shares of

 

 

 

 

 

Accumulated

 

 

 



Common Stock

 

Common

 

 

Other

 

 

 



Outstanding

 

Stock

Additional

 

Comprehen-

Total

Non-

 



Class

 

Class

Paid-in

Accumulated

sive

Shareholders'

controlling

Total



A

B

 

A

B

Capital

Earnings

Income

Equity

Interests

Equity

Balance, December 31, 2016

84,845 13,185 

$

848 132 193,347 259,110 1,167 454,604 40,850 495,454 

Cumulative effect from excess tax benefits on share based compensation associated with the adoption of ASU 2016-09

 -

 -

 

 -

 -

 -

3,054 

 -

3,054 

 -

3,054 

Net income excluding $175 of earnings attributable to redeemable noncontrolling interest

 -

 -

 

 -

 -

 -

82,195 

 -

82,195 18,227 100,422 

Other comprehensive income

 -

 -

 

 -

 -

 -

 -

541 541 

 -

541 

Bluegreen initial public offering, net of income taxes

 -

 -

 

 -

 -

51,351 

 -

 -

51,351 32,584 83,935 

Distributions to noncontrolling interests

 -

 -

 

 -

 -

 -

 -

 -

 -

(11,390)(11,390)

Class A Common Stock cash dividends declared

 -

 -

 

 -

 -

 -

(2,712)

 -

(2,712)

 -

(2,712)

Class B Common Stock cash dividends declared

 -

 -

 

 -

 -

 -

(501)

 -

(501)

 -

(501)

Repurchase and retirement of common stock

(3,716)(176)

 

(37)(2)(27,585)

 -

 -

(27,624)

 -

(27,624)

Conversion of common stock from Class B to Class A

95 (95)

 

 -

 -

 -

 -

 -

 -

 -

 -

Issuance of Common Stock from vesting of restricted stock awards

4,315 1,049 

 

43 10 (53)

 -

 -

 -

 -

 -

Issuance of Common Stock from exercise of options

150 

 -

 

 -

60 

 -

 -

63 

 -

63 

Share-based compensation

 -

 -

 

 -

 -

12,259 

 -

 -

12,259 

 -

12,259 

Balance, December 31, 2017

85,689 13,963 

$

857 140 229,379 341,146 1,708 573,230 80,271 653,501 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

See Notes to Consolidated Financial Statements

BBX Capital Corporation

Consolidated Statements of Changes in Equity

For Each of the Years in the Three Year Period Ended December 31, 2019

(In thousands)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Shares of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Common Stock

 

 

 

 

Common

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 



 

Outstanding

 

 

 

 

Stock

 

 

 

 

Additional

 

 

 

 

Other

 

Total

 

Non-

 

 

 



 

Class

 

 

 

 

Class

 

 

 

 

Paid-in

 

Accumulated

 

Comprehensive

 

Shareholders'

 

controlling

 

Total



 

A

 

B

 

A

 

B

 

Capital

 

Earnings

 

Income

 

Equity

 

Interests

 

Equity

Balance, December 31, 2018

 

 

78,379 

 

 

14,841 

 

$

784 

 

 

148 

 

 

161,684 

 

 

385,789 

 

 

1,215 

 

 

549,620 

 

 

87,988 

 

 

637,608 

Cumulative effect from the adoption of ASU 2016-02, net of income taxes and redeemable noncontrolling interest

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,202)

 

 

 —

 

 

(2,202)

 

 

 —

 

 

(2,202)

Net income excluding $326 of loss attributable to redeemable noncontrolling interest

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

17,691 

 

 

 —

 

 

17,691 

 

 

14,738 

 

 

32,429 

Accretion of redeemable noncontrolling interest

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,902)

 

 

 —

 

 

(1,902)

 

 

 —

 

 

(1,902)

Purchase and retirement of common stock

 

 

(3,451)

 

 

(749)

 

 

(35)

 

 

(7)

 

 

(19,997)

 

 

 —

 

 

 —

 

 

(20,039)

 

 

 —

 

 

(20,039)

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

339 

 

 

339 

 

 

 —

 

 

339 

Bluegreen purchase and retirement of its common stock

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(332)

 

 

 —

 

 

 —

 

 

(332)

 

 

(503)

 

 

(835)

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(11,948)

 

 

(11,948)

Class A common stock cash dividends declared

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(3,878)

 

 

 —

 

 

(3,878)

 

 

 —

 

 

(3,878)

Class B common stock cash dividends declared

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(947)

 

 

 —

 

 

(947)

 

 

 —

 

 

(947)

Conversion of common stock from Class B to Class A

 

 

36 

 

 

(36)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Issuance of common stock from vesting of restricted stock awards

 

 

566 

 

 

1,902 

 

 

 

 

19 

 

 

(25)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Share-based compensation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

11,445 

 

 

 —

 

 

 —

 

 

11,445 

 

 

 —

 

 

11,445 

Balance, December 31, 2019

 

 

75,530 

 

 

15,958 

 

$

755 

 

 

160 

 

 

152,775 

 

 

394,551 

 

 

1,554 

 

 

549,795 

 

 

90,275 

 

 

640,070 

 

See Notes to Consolidated Financial Statements

 



 

F-6

 


 

 



BBX Capital Corporation

Consolidated Statements of Cash Flows

(In thousands)





 

 

 

 

 

 



 

 

 

 

 

 

BBX Capital Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)



 

 

 

 

 

 



 

 

 



 

For the Years Ended December 31,



 

2017

 

2016

 

2015

Operating activities:

 

 

 

 

 

 

Net income

$

100,597 

 

41,657 

 

141,279 



 

 

 

 

 

 

Adjustment to reconcile net income to net cash

 

 

 

 

 

 

provided by operating activities:

 

 

 

 

 

 

Recoveries from loan losses and asset impairments, net

 

(3,131)

 

(15,300)

 

(13,233)

Provision for notes receivable allowances

 

46,149 

 

44,337 

 

42,063 

Depreciation, amortization and accretion, net

 

21,444 

 

17,827 

 

18,433 

Share-based compensation expense

 

12,259 

 

6,350 

 

5,562 

Share-based compensation expense of subsidiaries

 

 -

 

6,099 

 

5,472 

Net gains on sales of real estate, loans held-for-sale,

 

 

 

 

 

 

and properties and equipment

 

(2,471)

 

(5,139)

 

(31,211)

Equity in (earnings) losses of unconsolidated real estate

 

 

 

 

 

 

joint ventures

 

(14,483)

 

(13,630)

 

1,565 

Return on investment in unconsolidated real estate joint ventures

 

12,852 

 

13,267 

 

 -

(Decrease) increase in deferred income tax

 

(10,201)

 

35,704 

 

(84,329)

Impairment of goodwill

 

2,413 

 

870 

 

 -

Net gains realized on cancellation of junior subordinated debentures

 

(6,929)

 

 -

 

 -

Interest accretion on shares subject to mandatory redemption

 

1,207 

 

1,169 

 

1,134 

Increase in notes receivable

 

(47,470)

 

(59,219)

 

(33,394)

Increase in vacation ownership interest inventory

 

(42,757)

 

(18,323)

 

(25,498)

Increase in trade inventory

 

(2,261)

 

(2,704)

 

(559)

Increase in real estate inventory

 

(273)

 

 -

 

 -

(Increase) decrease in other assets

 

(6,941)

 

5,035 

 

(12,462)

Increase (decrease) in other liabilities

 

5,595 

 

23,163 

 

(16,473)

Net cash provided by (used in) operating activities

 

65,599 

 

81,163 

 

(1,651)



 

 

 

 

 

Continued



 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2019

 

2018

 

2017

Operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

32,103 

 

 

55,793 

 

 

102,303 

Adjustment to reconcile net income to net cash

 

 

 

 

 

 

 

 

 

provided by operating activities:

 

 

 

 

 

 

 

 

 

Recoveries from loan losses, net

 

 

(5,428)

 

 

(8,653)

 

 

(7,546)

Provision for notes receivable allowances

 

 

55,677 

 

 

51,236 

 

 

46,412 

Depreciation, amortization and accretion, net

 

 

27,720 

 

 

25,739 

 

 

20,731 

Share-based compensation expense

 

 

11,445 

 

 

12,901 

 

 

12,259 

Net gains on sales of real estate and property and equipment

 

 

(9,396)

 

 

(4,563)

 

 

(1,451)

Equity earnings of unconsolidated real estate joint ventures

 

 

(37,898)

 

 

(14,194)

 

 

(12,541)

Return on investment in unconsolidated real estate joint ventures

 

 

39,043 

 

 

17,679 

 

 

12,852 

Increase (decrease) in deferred income tax

 

 

2,072 

 

 

27,444 

 

 

(12,680)

Impairment losses

 

 

6,938 

 

 

4,718 

 

 

7,482 

Net gains on cancellation of junior subordinated debentures

 

 

 —

 

 

 —

 

 

(6,929)

Interest accretion on redeemable 5% cumulative preferred stock

 

 

1,028 

 

 

1,061 

 

 

1,207 

Increase in notes receivable

 

 

(65,672)

 

 

(63,545)

 

 

(47,470)

Increase in VOI inventory

 

 

(12,788)

 

 

(32,022)

 

 

(42,757)

(Increase) decrease in trade inventory

 

 

(2,733)

 

 

3,882 

 

 

(2,261)

(Increase) decrease in real estate inventory

 

 

(7,445)

 

 

12,001 

 

 

(273)

Net change in operating lease asset and operating lease liability

 

 

1,444 

 

 

 —

 

 

 —

Decrease (increase) in other assets

 

 

19,315 

 

 

(1,607)

 

 

(7,410)

Increase (decrease) in other liabilities

 

 

22,817 

 

 

(1,231)

 

 

3,671 

Net cash provided by operating activities

 

 

78,242 

 

 

86,639 

 

 

65,599 

Investing activities:

 

 

 

 

 

 

 

 

 

Return of investment in unconsolidated real estate joint ventures

 

 

31,442 

 

 

12,080 

 

 

6,440 

Investments in unconsolidated real estate joint ventures

 

 

(25,179)

 

 

(29,070)

 

 

(5,310)

Proceeds from repayment of loans receivable

 

 

6,171 

 

 

19,394 

 

 

11,168 

Proceeds from sales of real estate held-for-sale

 

 

23,512 

 

 

17,431 

 

 

15,081 

Proceeds from sales of property and equipment

 

 

16,642 

 

 

569 

 

 

341 

Additions to real estate held-for-sale and held-for-investment

 

 

(600)

 

 

(1,221)

 

 

(1,642)

Purchases of property and equipment

 

 

(35,588)

 

 

(45,550)

 

 

(22,045)

Cash paid for acquisition, net of cash received

 

 

 —

 

 

 —

 

 

(58,418)

Decrease in cash from other investing activities

 

 

(81)

 

 

(4,696)

 

 

(380)

Net cash provided by (used in) investing activities

 

 

16,319 

 

 

(31,063)

 

 

(54,765)



 

 

 

 

 

(Continued)

 

 

 



See Notes to Consolidated Financial Statements

 

 

F-7

 


 

 

BBX Capital Corporation

Consolidated Statements of Cash Flows

(In thousands)





 

 

 

 

 

 



 

 

 

 

 

 

BBX Capital Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)



 

 

 

 

 

 



 

 

 



 

For the Years Ended December 31,



 

2017

 

2016

 

2015

Investing activities:

 

 

 

 

 

 

Return of investment in unconsolidated real estate joint ventures

 

6,440 

 

3,321 

 

510 

Investments in unconsolidated real estate joint ventures

 

(5,310)

 

(3,370)

 

(9,687)

Repayment of loans receivable

 

11,168 

 

46,454 

 

30,170 

Proceeds from sales of loans and real estate

 

15,081 

 

23,606 

 

72,154 

Proceeds from contribution of real estate to

 

 

 

 

 

 

unconsolidated real estate joint ventures

 

 -

 

 -

 

701 

Additions to real estate

 

(1,642)

 

(8,176)

 

(30,699)

Purchases of property and equipment

 

(22,045)

 

(12,939)

 

(12,810)

Proceeds from the sale of property and equipment

 

341 

 

2,321 

 

372 

Cash paid for acquisition, net of cash received

 

(58,418)

 

 -

 

(10)

Decrease in cash from other investing activities

 

(380)

 

(2,019)

 

(739)

Net cash (used in) provided by investing activities

 

(54,765)

 

49,198 

 

49,962 



 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Repayment of BB&T preferred interest in Florida Asset

 

 

 

 

 

 

Resolution Group, LLC ("FAR")

 

 -

 

 -

 

(12,348)

Repayments of notes payable and other borrowings

 

(233,132)

 

(281,177)

 

(253,615)

Proceeds from notes payable and other borrowings

 

246,771 

 

285,682 

 

262,900 

Redemption of junior subordinated debentures

 

(11,438)

 

 -

 

 -

Payments for debt issuance costs

 

(3,390)

 

(4,608)

 

(3,830)

Payments of interest on shares subject to mandatory redemption

 

(750)

 

(750)

 

(750)

Proceeds from the exercise of stock options

 

63 

 

10 

 

10 

Dividends paid on common stock

 

(2,937)

 

(856)

 

 -

Repurchase and retirement of common stock

 

(27,624)

 

(7,320)

 

(4,453)

Repurchase and retirement of subsidiary's common stock

 

 -

 

(4,151)

 

(2,529)

Purchase of BCC noncontrolling interest

 

 -

 

(16,894)

 

(95,424)

Bluegreen initial public offering, net of offering costs

 

95,923 

 

 -

 

 -

Distributions to noncontrolling interest

 

(11,390)

 

(12,250)

 

(14,059)

Net cash provided by (used in) financing activities

 

52,096 

 

(42,314)

 

(124,098)

Increase (decrease) in cash, cash equivalents and restricted cash

 

62,930 

 

88,047 

 

(75,787)

Cash, cash equivalents and restricted cash at beginning of period 

 

346,317 

 

258,270 

 

334,057 

Cash, cash equivalents and restricted cash at end of period 

$

409,247 

 

346,317 

 

258,270 



 

 

 

 

 

Continued



 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

 

2019

 

2018

 

2017

Financing activities:

 

 

 

 

 

 

 

 

 

Repayments of notes payable and other borrowings

 

 

(258,198)

 

 

(279,737)

 

 

(233,132)

Proceeds from notes payable and other borrowings

 

 

200,781 

 

 

336,951 

 

 

246,771 

Redemption of junior subordinated debentures

 

 

 —

 

 

 —

 

 

(11,438)

Payments for debt issuance costs

 

 

(3,428)

 

 

(1,121)

 

 

(3,390)

Payments of interest of redeemable 5% cumulative preferred stock

 

 

(500)

 

 

(563)

 

 

(750)

Payments to redeem redeemable 5% cumulative preferred stock

 

 

(10,000)

 

 

 —

 

 

 —

Purchase and retirement of Class A common stock

 

 

(20,039)

 

 

(77,147)

 

 

(27,624)

Purchase and retirement of subsidiary common stock

 

 

(835)

 

 

(4,000)

 

 

 —

Purchase of noncontrolling interest

 

 

 —

 

 

(258)

 

 

 —

Proceeds from the exercise of stock options

 

 

 —

 

 

245 

 

 

63 

Dividends paid on common stock

 

 

(4,621)

 

 

(3,812)

 

 

(2,937)

Bluegreen initial public offering, net of offering costs

 

 

 —

 

 

 —

 

 

95,923 

Distributions to noncontrolling interests

 

 

(11,948)

 

 

(14,284)

 

 

(11,390)

Net cash (used in) provided by financing activities

 

 

(108,788)

 

 

(43,726)

 

 

52,096 

(Decrease) increase in cash, cash equivalents and restricted cash

 

 

(14,227)

 

 

11,850 

 

 

62,930 

Cash, cash equivalents and restricted cash at beginning of period 

 

 

421,097 

 

 

409,247 

 

 

346,317 

Cash, cash equivalents and restricted cash at end of period 

 

$

406,870 

 

 

421,097 

 

 

409,247 



 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

Interest paid on borrowings, net of amounts capitalized

 

$

40,306 

 

 

37,424 

 

 

29,980 

Income taxes paid

 

 

11,381 

 

 

3,801 

 

 

4,015 

Supplementary disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

Construction funds receivable transferred to real estate

 

 

18,318 

 

 

14,548 

 

 

11,276 

Acquisition of VOI inventory, property and equipment for notes payable

 

 

 —

 

 

24,258 

 

 

 —

Loans receivable transferred to real estate

 

 

333 

 

 

1,673 

 

 

1,365 

Reduction in note receivable from holder of redeemable 5% cumulative preferred stock

 

 

 —

 

 

(5,000)

 

 

 —

Reduction in redeemable 5% cumulative preferred stock

 

 

 —

 

 

4,862 

 

 

 —

Increase in other assets upon issuance of Community Development District Bonds

 

 

8,110 

 

 

15,996 

 

 

 —

Assumption of Community Development District Bonds by builders

 

 

1,035 

 

 

5,572 

 

 

 —

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

356,604 

 

 

366,305 

 

 

362,526 

Restricted cash

 

 

50,266 

 

 

54,792 

 

 

46,721 

Total cash, cash equivalents, and restricted cash

 

$

406,870 

 

 

421,097 

 

 

409,247 

See Notes to Consolidated Financial Statements

 



 

 

F-8

 


 

 



 

 

 

 

 

 



 

 

 

 

 

 

BBX Capital Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)



 

 

 

 

 

 



 

 

 



 

For the Years Ended December 31,



 

2017

 

2016

 

2015

Supplemental cash flow information:

 

 

 

 

 

 

Interest paid on borrowings

$

(29,980)

 

(32,139)

 

(35,111)

Income taxes paid

 

(4,015)

 

(2,203)

 

(26,092)

Income taxes refunded

 

 -

 

2,695 

 

309 



 

 

 

 

 

 

Supplementary disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Construction funds receivable transferred to real estate

 

11,276 

 

 -

 

 -

Loans receivable transferred to real estate

 

1,365 

 

4,807 

 

3,215 

Loans held-for-sale transferred to loans receivable

 

 -

 

16,078 

 

7,365 

Loans receivable increase from sale of real estate

 

 -

 

 -

 

10,000 

Real estate transferred to property and equipment

 

 -

 

6,557 

 

 -

Real estate transferred to investments in unconsolidated real estate

 

 

 

 

 

 

joint ventures

 

 -

 

 -

 

19,448 

Property and equipment transferred to real estate

 

6,181 

 

 -

 

 -

Decrease in deferred tax liabilities due to cumulative effect of excess

 

 

 

 

 

 

tax benefits

 

3,054 

 

 -

 

 -

Increase in other assets upon issuance of Community

 

 

 

 

 

 

Development District Bonds

 

 -

 

20,743 

 

 -

Issuance of common stock to acquire BCC noncontrolling interest

 

 -

 

48,487 

 

 -



 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash

 

 

 

 

 

 

Cash and cash equivalents

 

362,526 

 

299,861 

 

198,905 

Restricted cash

 

46,721 

 

46,456 

 

59,365 

Total cash, cash equivalents, and restricted cash

$

409,247 

 

346,317 

 

258,270 



 

 

 

 

 

 

See Notes to Consolidated Financial Statements

 

F-9


BBX Capital Corporation

Notes to Consolidated Financial Statements

 

1.    Basis of Financial Statement PresentationOrganization



BBX Capital Corporation and its subsidiaries (the “Company” or, unless otherwise indicated or the context otherwise requires, “we,” “us,” or “our,”“our”) is a Florida-based diversified holding company. BBX Capital Corporation as a standalone entity without its subsidiaries is referred to as “BBX Capital”.  Capital.”  

In December 2016, BBX Capital completed the acquisition of all the outstanding shares of the former BBX Capital Corporation (“BCC”) not previously owned by it. Prior to the acquisition, BBX Capital had an 82% equity interest in BCC and a direct 54% equity interest in Woodbridge Holdings Corporation (“Woodbridge”), and BCC held the remaining 46% interest in Woodbridge. As a result of the acquisition, BCC and Woodbridge are wholly-owned subsidiaries of BBX Capital, and on January 30, 2017, BBX Capital changed its name from BFC Financial Corporation to BBX Capital Corporation.

Principal Investments

The Company’s coreprincipal investments include Bluegreen Vacations Corporation (“Bluegreen” or “Bluegreen Vacations”), real estateBBX Capital Real Estate LLC (“BBX Capital Real Estate”), Renin Holdings, LLC (“Renin”), and real estate joint ventures, and middle market operating businesses. BBX Sweet Holdings, LLC (“BBX Sweet Holdings”). 

Bluegreen



Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in toppopular leisure and urban destinations. Bluegreen’s resort network includes 4345 Club Resorts (resorts in which owners in the Bluegreen Vacation Club (“Vacation(the “Vacation Club”) have the right to use most of the units in connection with their VOI ownership) and 2423 Club Associate Resorts (resorts in which owners in Bluegreen’s Vacation Club have the right to use a limited number of units in connection with their VOI ownership). Bluegreen is a sales, marketing, and management company focused on the vacation ownership industry. Bluegreen markets, sells, and manages vacation ownership interests (“VOIs”)VOIs in resorts which are generally located in popular, high-volume, “drive-to” vacation destinations.destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, and New Orleans, among others. Through its points-based system, the approximately 220,000 owners in Bluegreen’s Vacation Club have the flexibility to stay at units available at its resorts and have access to over 11,350 other hotels and resorts through partnerships and exchange networks. The resorts in which Bluegreen markets, sells, or manages VOIs were either developed or acquired by Bluegreen or were developed and are owned by third parties. Bluegreen earnearns fees for providing sales and marketing services to third party developers. Bluegreen also earns fees by providing management services to the Bluegreen Vacation Club (the “Vacation Club”) and home owners’homeowners’ associations (“HOAs”), mortgage servicing, VOI title services, reservation services, and construction design and development services. In addition, Bluegreen provides financing to FICO score-qualified individual purchasers of VOIs, which generates significant interest income.



Prior to Novemberthe fourth quarter of 2017, Bluegreen Vacations’ parent, Woodbridge Holdings, LLC (“Woodbridge”), a wholly-owned subsidiary of BBX Capital, owned 100% of Bluegreen.  On November 17,Bluegreen’s common stock. During the fourth quarter of 2017, Bluegreen completed an initial public offering (“IPO”) of its common stock by sellingin which Bluegreen sold to the public 3,736,723 shares of Bluegreen sharesits common stock and Woodbridge, selling 2,761,925 of Bluegreen shares as a selling shareholder.shareholder, sold to the public 3,736,722 shares of Bluegreen’s common stock. In connection with the offering, Woodbridge granted the underwriters a 30-day option to purchase up to an additional 974,797addition, as of December 31, 2019, Bluegreen has repurchased and retired 371,762 shares from Woodbridge, and on December 5, 2017, the underwriters purchased all of the additional 974,797 option shares from Woodbridge.its common stock for $4.8 million. As a result of Bluegreen’s IPO and subsequent share repurchases, BBX Capital currently owns 90%approximately 90.5% of BluegreenBluegreen’s common stock through Woodbridge.



The Company’s real estate investments include real estate joint ventures andBBX Capital Real Estate

BBX Capital Real Estate is engaged in the acquisition, development, construction, ownership, financing, and management of real estate. The Company’s investments in middle market operating businesses include Renin Holdings, LLC (“Renin”), a company that manufactures products for the home improvement industry,estate and investments in confectionery businesses through its wholly-owned subsidiary, real estate joint ventures,  including investments in multifamily apartment and townhome communities, single-family master-planned communities, and commercial properties located primarily in Florida. In addition, BBX Capital Real Estate owns a 50% equity interest in The Altman Companies, LLC (the “Altman Companies”), a developer and manager of multifamily apartment communities, and manages the legacy assets acquired in connection with the Company’s sale of BankAtlantic in 2012, including portfolios of loans receivable and real estate properties.

BBX Sweet Holdings

BBX Sweet Holdings LLC (“BBX Sweet Holdings”). The Company’s investment in confectionery businesses includes BBX Sweet Holdings’ acquisition of IT’SUGAR, LLC (“IT’SUGAR”) in June 2017. See Note 3 for additional information regarding the acquisition of IT’SUGAR.

On December 15, 2016, BBX Capital completed the acquisition of all the outstanding shares of the former BBX Capital Corporation (“BCC”) not previously owned by the Company. Prior to the acquisition, the Company had an 82% equity interest in BCC and a direct 54% equity interest in Woodbridge. As a result of the acquisition, BCC and Woodbridge are wholly-owned subsidiaries of BBX Capital, and on January 30, 2017, the Company changed its name from BFC Financial Corporation to BBX Capital Corporation. See Note 3 for additional information regarding the acquisition of BCC.

On April 30, 2015, the Company completed a cash tender offer pursuant to which it purchased from the shareholders of BCC a total of 4,771,221 shares of BCC’s Class A Common Stock at a purchase price of $20.00 per share, for an aggregate purchase price of approximately $95.4 million.  Prior to the tender offer, the Company owned approximately 51% of the issued and outstanding shares of BCC’s Class A Common Stock and all of the issued and outstanding shares of BCC’s Class B Common Stock.  The purchase of BCC’s Class A Common Stockis engaged in the tender offer increased the Company’s ownership interest to approximately 81%and management of the issued and outstanding shares of BCC’s Class A Common Stock.  As a result of the increaseoperating businesses in the Company’s ownership interestconfectionery industry, including IT’SUGAR, Hoffman’s Chocolates, and Las Olas Confections and Snacks. IT’SUGAR is a specialty candy retailer which operates approximately 100 retail locations, which include a mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban locations in BCCover 25 states and Washington D.C., and its products include bulk candy, candy in excess of 80%,  thegiant packaging, and novelty items.

 

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Hoffman’s Chocolates is a retailer of gourmet chocolates with retail locations in South Florida, and Las Olas Confections and Snacks is a manufacturer and wholesaler of chocolate and other confectionery products.

Renin

Renin is engaged in the design, manufacture, and distribution of sliding doors, door systems and hardware, and home décor products and operates through its headquarters in Canada and two manufacturing and distribution facilities in the United States and Canada. In addition to its own manufacturing, Renin also sources various products and raw materials from China. During the year ended December 31, 2019, Renin’s total revenues included $36.0 million of trade sales to two major customers and their affiliates and $18.4 million of revenues generated outside the United States. Renin’s properties and equipment located outside the United States had a carrying amount of $1.6 million as of December 31, 2019. 

Other

In addition to its principal investments, the Company began filing has investments in other operating businesses, including a consolidated group tax return which includesrestaurant located in South Florida that was acquired through a loan foreclosure and an insurance agency, and previously operated pizza restaurant locations as a franchisee of MOD Super Fast Pizza (“MOD Pizza”), as described below.

In 2016, Food for Thought Restaurant Group (“FFTRG”), a wholly-owned subsidiary of BBX Capital, entered into area development and franchise agreements with MOD Pizza related to the operationsdevelopment of BCC, Woodbridgeup to approximately 60 MOD Pizza franchised restaurant locations throughout Florida. Through 2019, FFTRG had opened nine restaurant locations. As a result of FFTRG’s overall operating performance and Bluegreen. See Note 14 for additional information regarding the Company’s income taxes.

goal of streamlining its investment verticals, the Company entered into an agreement with MOD Pizza to terminate the area development and franchise agreements and transferred seven of its restaurant locations, including the related assets, operations, and lease obligations, to MOD Pizza during the third quarter of 2019. In addition, the Company closed the remaining two locations and terminated the related lease agreements. In connection with the transfer of the seven restaurant locations to MOD Pizza, the Company recognized an aggregate impairment loss of $4.0 million related to the disposal group, which included property and equipment, intangible assets, and net lease liabilities. In addition, prior to the transaction, the Company previously recognized $2.7 million of impairment losses associated with property and equipment at three restaurant locations. Accordingly, the Company recognized $6.7 million of impairment losses associated with its investment in MOD Pizza restaurant locations during the year ended December 31, 2019.

 

2.    SummaryBasis of Presentation and Significant Accounting Policies



Consolidation Policy - The accounting policies applied by the Company conform toconsolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”)

Consolidation Policy - The consolidated financial statements and include the accounts of all the Company’sBBX Capital’s wholly-owned subsidiaries, and other entities in which the Company andBBX Capital or its subsidiaries hold controlling financial interests, as well as accounts ofand any variable interest entities (“VIEs”)VIEs in which the CompanyBBX Capital or one of its consolidated subsidiaries is deemed the primary beneficiary of the VIE. All significant inter-company accounts and transactions have been eliminated among consolidated entities.in consolidation. 



Use of Estimates – The preparation of GAAP financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management evaluates its estimates, including those that relate to the estimated future sales value of inventory; the recognition of revenue, including revenue recognition underrevenue; the percentage-of-completion method of accounting; allowance for creditloan losses; the recovery of the carrying value of VOI inventories;inventories and real estate; the measurement of assets and liabilities at fair value, including amounts recognized in business combinations and measuring theitems measured at fair value on a non-recurring basis, ofsuch as intangible assets, goodwill, real estate held-for-sale and real estate held-for-investment;estate; the amount of the deferred tax valuation allowance and accounting for uncertain tax positionspositions; and the estimate of contingent liabilities related to litigation and other claims and assessments. Management bases its estimates on historical experience and on other various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions and conditions.



Reclassifications - Certain amounts for prior years have been reclassified to conform to the revised financial statement presentation for 2017.2019. The reclassification had no impact on the Company’s statements of operations and comprehensive income or  statements of cash flows.     

   

Cash, Cash Equivalents, and Restricted Cash - Cash equivalents consist of demand deposits at financial institutions, money market funds, and other short-term investments with original maturities at the time of purchase of 90 days or less. Management generally invests cashCash in excess of itsthe Company’s immediate operating requirements are generally invested in short-term time deposits and money market instruments that typically withhave original maturities at the date of purchase of three months or less.  Restricted cash consists primarily of customer deposits held in escrow accounts and cash collected on pledged/secured notes receivable not yet remitted to lenders. Management maintains cashCash and cash equivalents with

F-10


are maintained at various financial institutions located throughout the United States, as well as in Canada and Aruba, in amounts exceeding the $250,000 federally insured limit. Accordingly, the Company is subject to credit risk. Management performs periodic evaluations of the relative credit standing of financial institutions maintaining the Company’s deposits to evaluate and, if necessary, take actions in an attempt to mitigate credit risk. 

Revenue Recognition  



Revenue RecognitionSales of VOIsRevenue is recordedrecognized for the salesales of VOIs net of a provision for credit losses, in accordance with timeshare accounting guidance.  In accordance with the requirements of Accounting Standards Codification (“ASC”) 970, Real Estate (“ASC 970”), Bluegreen recognizes revenue on VOI sales when a minimum of 10%after control of the sales price has been received in cash (demonstratingVOI is deemed transferred to the buyer’s commitment),customer, which is when the legal rescission period has expired collectibilityon a binding executed VOI sales agreement and the collectability of the note receivable representingfrom the remainderbuyer, if any, is reasonably assured. Transfer of control of the sales price is reasonably assured and Bluegreen has completed substantially all of its obligations with respect to any development relatedVOI to the real estate sold. 

Bluegreen believes that it uses a reasonably reliable methodologybuyer is deemed to estimateoccur when the collectibility oflegal rescission period expires as the receivables representing the remainder of the sales price of real estate sold.  Bluegreen’s policies regarding the estimation of credit losses on its notes receivablerisk and rewards associated with VOI ownership are discussed in further detail under “Notes Receivable”.

Under timeshare accounting rules, the calculation of the adequacy of a buyer’s commitment for the sale of VOIs requires that cash received towards the purchase of Bluegreen VOIs be reduced by the value of certain incentives providedtransferred to the buyer at that time. The Company records Bluegreen’s customer deposits from contracts within the timelegal rescission period in restricted cash and escrow deposits in the Company’s consolidated statements of sale. If after consideringfinancial condition, as such amounts are refundable until the value of the incentives provided, the 10% requirement is not met, the VOI sale, and the related cost and direct selling expenses, are deferred until such time that sufficient cash is received from the customer, generally through receipt of mortgage payments, to meet the 10% threshold. Changes to the quantity, type, or value of sales incentives that Bluegreen provides to buyers of its VOIs may result in additional VOI sales being deferred or extend thelegal rescission period during which a sale is deferred.

F-11


has expired. In cases where construction and development on Bluegreen-ownedof Bluegreen’s developed resorts has not been substantially completed, Bluegreen recognizes revenuedefers all of the revenues and associated expenses for the sales of VOIs until construction is substantially complete and the resort may be occupied.

Bluegreen generally offers qualified purchasers financing for up to 90% of the purchase price of VOIs. The typical financing provides for a term of ten years and a fixed interest rate, is fully amortizing in accordance withequal installments, and may be prepaid without penalty. For sales of VOIs for which Bluegreen provides financing, Bluegreen reduces the percentage-of-completion method of accounting.transaction price for expected loan losses, which it considers to be variable consideration. To the extent Bluegreen determines that it is probable that a significant reversal of cumulative revenue recognized may occur, it records an estimate of variable consideration as a reduction to the transaction price of the sales of VOIs until the uncertainty associated with the variable consideration is resolved. Bluegreen’s estimates of variable consideration are based on the total anticipated cost of completing anyresults of its projects increase,static pool analysis, which relies on historical payment data for similar VOI notes receivable and tracks uncollectibles for each period’s sales over the entire life of the notes. Bluegreen may be requiredalso considers whether historical economic conditions are comparable to deferthen current economic conditions, as well as variations in underwriting standards. Bluegreen reviews its estimate of variable consideration on at least a greater amount of revenue or may be required to defer revenuequarterly basis. VOI sales for a longer period of time.which no financing is provided do not have any significant payment terms.



Under timeshare accounting rules, rentalFee-based sales commissions –  Bluegreen enters into fee-based sales arrangements with third-party developers to sell VOIs through its sales and marketing platforms for which Bluegreen earns a commission. Commission revenue is recognized to the extent that it is probable that a significant reversal of such revenue will not occur and the related consumer rescission period has expired. Commission revenue is recognized over time as the third-party developer receives and consumes the benefits of the services.

Other fee-based services and cost reimbursements - Revenue associated with Bluegreen’s other fee-based services is recognized as follows:

·

Resort and club management revenue is recognized as services are rendered. These services provided to the resort HOAs are comprised of day-to-day services to operate the resort, including management services and certain accounting and administrative functions. Management services provided to the Vacation Club include managing the reservation system and providing owner, billing, and collection services. Bluegreen’s management contracts are typically structured as cost-plus, with an initial term of three years and automatic one year renewals. Bluegreen believes these services to be a series of distinct goods and services to be accounted for as a single performance obligation over time and recognizes revenue as the customer receives the benefits of its services. Bluegreen allocates variable consideration to the distinct good or service within the series, such that revenue from management fees and cost reimbursements is recognized in each period as the uncertainty with respect to such variable consideration is resolved.

·

Cost reimbursements are received for performing day to day management services based on agreements with the HOAs. These costs primarily consist of payroll and payroll related costs for the management of the HOAs and other services provided where Bluegreen is the employer. Cost reimbursements are based upon actual expenses and are billed to the HOA on a monthly basis. Bluegreen recognizes cost reimbursement when they incur the related reimbursable costs as the HOA receives and consumes the benefits of the management services.

·

Resort title fee revenue is recognized when escrow amounts are released and title documents are completed.

·

Rental revenues are recognized on a daily basis, which is consistent with the period for which the customer benefits from such service. Revenue from the sampler program is typically recognized when guests complete stays at the resorts, which typically occurs within a year from sale.

·

Mortgage servicing revenue is recognized as services are rendered. 

Fees received in advance are generally included in deferred income in the Company’s consolidated statements of financial condition until the related service is rendered and revenue is recognized as stated above. 

Rental operations, including accommodations provided through the use of Bluegreen’s sampler program, are accounted for as incidental operations whereby incremental carrying costs in excess of incremental revenues are expensed as incurred. Conversely, incremental revenues in excessincurred, and as noted above, revenue from the sampler program is deferred and typically recognized within a year from sale as guests complete stays at the resorts. During

F-11


each of incrementalthe years presented, Bluegreen’s aggregate rental revenue and sampler revenue was less than the aggregate carrying costs arecost of its VOI inventory. Accordingly, Bluegreen recorded such revenue as a reduction to the carrying cost of VOI inventory.  Incremental carrying costs include costs that have been incurred by Bluegreen during the holding period of unsold VOIs, such as developer subsidies and maintenance fees on unsold VOI inventory. During each of the years presented, all of Bluegreen’s rental revenue and sampler revenue earned was recorded as an offset toinventory, which is included in cost of other fee-based services as such amounts were less thanin the incremental carrying costs.  Company’s consolidated statements of operations and comprehensive income for each year.



In addition toTrade sales of VOIs, Bluegreen also generates revenue from the activities listed below.  The table provides a brief description of the applicable revenue recognition policy:

Activity

Revenue is recognized when:

Fee-based sales commissions

The sale transaction with the VOI purchaser is consummated in accordance with the terms of the agreement with the third-party developer and the related consumer rescission period has expired.

Resort management and service fees

Management services are rendered.  – Revenue is recognized on trade sales as follows:(1)

Resort title fees

Escrow amounts are released and title documents are completed.

Rental and sampler program

Guests complete stays at the resorts. Rental and sampler program proceeds are classified as a reduction to “Cost of other fee-based services” in the consolidated statements of operations and comprehensive income.



(1)·

In connectionRevenue is recognized on wholesale trade sales when control of the products is transferred to customers, which generally occurs when the products are shipped or the customers accept delivery. Wholesale trade sales typically have payment terms between 10 and 90 days. Certain customer trade sale contracts have provisions for right of return, volume rebates, and price concessions. These types of discounts are accounted for as variable consideration, and the Company uses the expected value method to calculate the estimated reduction in the trade sales revenue. The inputs used in the expected value method include historical experience with Bluegreen’s managementthe customer, sales forecasts, and outstanding purchase orders.

·

Revenue is recognized on retail trade sales at the point of homeowners’ associations (“HOA”), Bluegreen actssale, which occurs when products are sold at the Company’s retail locations.

·

Sales and other taxes imposed by governmental authorities that are collected by the Company from customers are excluded from revenue or the transaction price.

·

Shipping and handling activities that occur after the control of goods is transferred to a customer are accounted for as agentfulfillment activities instead of a separate performance obligation.

·

Revenue is not adjusted for the HOA to operateeffects of a significant financing component if the resort as provided under the management agreements.  In certain cases, the personnelCompany expects, at the resorts are Bluegreen employees.  The HOA bearscontract inception, that the costs of such personnel and generally pay Bluegreen in advance of,performance obligation will be satisfied within one year or simultaneously with, the payment of payroll.  In accordance with ASC 605-45, Overall Considerations of Reporting Revenues Gross as a Principal versus Net as an Agent, reimbursements from the HOAs relating to direct pass-through costs are recorded net of the related expenses.less.



Bluegreen’s costSales of other fee-based services consists of the costs associated with the various activities described above, as well as developer subsidies and maintenance fees on Bluegreen’s unsold VOIs.

real estate inventory -Revenue is generally recognized fromon sales of real estate and the transfer of real estateinventory to joint venturescustomers when the sales are closed and title passes to the buyer,buyer. The Company generally receives payment from the buyer’s initial and continuing investmentsale of real estate inventory at the date of closing. In addition, certain real estate sales contracts provide for a contingent purchase price. The contingent purchase price in contracts pursuant to which the Company sells developed lots to homebuilders is adequategenerally calculated as a percentage of the proceeds that the homebuilders receive from sales to demonstrate a commitment to pay for the property, the buyer’s receivable, if applicable, is not subject to future subordinationtheir own customers, and the Company does not have substantial continuing involvementreceive payment of such amounts until the homebuilders close on such sales. The Company accounts for the contingent purchase price in these contracts as variable consideration and estimates the amount of such consideration that may be recognized upon the closing of the real estate transaction based on the expected value method. The estimate of variable consideration is recognized as revenue to the extent that it is not probable that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty associated with the property.variable consideration is subsequently resolved. The inputs used in the expected value method include current sales prices (net of incentives), historical contingent purchase price receipts, and sales contracts on similar properties.



Revenues are recognizedInterest income - Bluegreen provides financing for a significant portion of sales of its owned VOIs. Bluegreen recognizes interest income from financing VOI sales on wholesale trade sales when products are shippedthe accrual method as earned based on the outstanding principal balance, interest rate, and the customer takes title and assumes the risk of loss. Revenues are recognized on retail trade sales at the point of sale, which occurs when products are sold at the Company’s retail locations. terms stated in each individual financing agreement.



RevenuesInterest income from interest income areother loans receivable originated by the Company is recognized on accruing loans when management determines that it is probable that all of the principal and interest will be collected in accordance with the loan’s contractual terms. Interest income is recognized on non-accrual loans on a cash basis. Loans receivable are included in other assets in the Company’s consolidated statements of financial condition.



Net gains on sales of real estate assets – Net gains on sales of real estate assets represents sales of assets to non-customers. Gains (or losses) are recognized from sales to non-customers when the control of the asset has been transferred to the buyer, which generally occurs when title passes to the buyer.



F-Other revenue –12


Revenues from real estate operations are generallyOther revenue is primarily comprised of rental income from properties under short-term operating leases. Rental income is recognized as rents become due, and rental payments received in advance are deferred until earned.

Loans Receivable - Loans that the Company has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at their outstanding principal balances net of any discounts and allowance for loan losses.  Loans that management has the intent to sell are classified as loans held-for-sale and are reported at the lower of aggregate cost or estimated fair value. Discounts on loans held-for-sale are deferred until the related loan is sold and included in gains and losses upon sale.  Loans are classified as loans held-for-sale when management decides to sell loans that were not originated or purchased for sale. Transfers of loans between classifications are recorded at the lower of aggregate cost or estimated fair value at the transfer date. 

An allowance for loan losses is recorded to reflect management’s reasonable estimate of probable credit losses inherent in the loan portfolio based on its evaluation of credit risk as of period end.  Loans are charged off against the allowance when management believes the loan is not collectible. Recoveries are credited to the allowance. 

Management segregates loans into segments with certain common characteristics to form a basis for estimating losses for each segment. The loan portfolio has the following loan segments: residential, consumer, commercial non-real estate, commercial real estate, and small business loans.  Impaired loans are measured based on the fair value of the collateral less costs to sell.  Consumer and residential loans past due 120 days or more are evaluated individually for impairment and measured based on the lower of the estimated fair value of the loan’s collateral less cost to sell or the carrying value of the loan. 

Loans are generally placed on non-accrual status at the earlierof the loan becoming past due 90 days as to either principal or interest or when the borrower has entered bankruptcy proceedings and the loan is delinquent. When a loan is placed on non-accrual, all accrued interest is reversed against interest income.  Loans may be restored to accrual status when there has been a satisfactory period of performance and the loan is expected to perform in the future according to its contractual terms. 



Notes Receivable - Bluegreen’s notes receivable are carried at amortized cost less an allowance for credit losses.loan losses, and its loan origination costs are deferred and recognized over the life of the related notes receivable. Interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent Bluegreen notes receivable when principal or interest payments are more than 90 days contractually past due and is not resumed until such notes receivable are less than 90 days past due. As of December 31, 20172019 and 2016, $12.9December 31, 2018, $25.5 million and $11.4$20.4 million, respectively, of Bluegreen’s VOI notes receivable were more than 90 days past due, and accordingly, consistent with Bluegreen’s policy, were not accruing interest income.  After 120approximately 127 days, Bluegreen’s VOI notes receivable are generally written off against the allowance for creditloan loss.

Bluegreen records an estimate of expected uncollectible VOI notes receivable as a reduction of revenue at the time Bluegreen recognizes a VOI sale.  Bluegreen estimates uncollectible VOI notes receivable in accordance with timeshare accounting rules. Under these rules, Bluegreen estimates of uncollectible VOI notes receivable is based on historical uncollectibles for similar VOI notes receivable. Bluegreen uses a static pool analysis, which tracks uncollectibles for each year’s sales over the entire life of the notes.  Bluegreen also considers whether the historical economic conditions are comparable to current economic conditions, as well as variations in underwriting standards.  Additionally, under timeshare accounting rules, no consideration is given for future recoveries of defaulted inventory in the estimate of uncollectible VOI notes receivable.  Bluegreen reviews its allowance for credit losses on at least a quarterly basis. Bluegreen’s loan origination costs are deferred and recognized over the life of the related notes receivable.



VOI Inventory - Bluegreen’s VOI inventory is primarily comprised of completed VOIs, VOIs under construction, and land held for future VOI development. Completed VOI completed inventory is carried at the lower of (i) cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest and real estate taxes, and other costs incurred during construction, or (ii) estimated fair market value, less costs to sell. VOI inventory and cost of sales are accounted for under timeshare accounting rules, which require

F-12


the use of a specific method of the relative sales value method for relieving VOI inventory and recording cost of sales. Under the relative sales value method, required by timeshare accounting rules, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage -that is the ratio of total estimated development costs to total estimated VOI revenue, including the estimated incremental revenue from the resale of repossessed VOI inventory repossessed,that is generally obtained as a result of the default of the related receivable. Also,In addition, pursuant to timeshare accounting rules, we doBluegreen does not relieve inventory for VOI cost of sales related to anticipated creditloan losses. Accordingly, no adjustment is made when inventory is reacquired upon default of the related receivable.

F-13


Bluegreen also periodically evaluates the recoverability of the carrying amount of its undeveloped or under development resort properties in accordance with ASC 360, Property, Plant and Equipment (“ASC 360”), which provides guidance relating to the accounting for the impairment or disposal of long-lived assets. No impairment charges were recorded with respect to VOI inventory during any of the periods presented.



Trade Inventory – Trade inventory is measured at the lower of cost or market. Cost includes all costs of conversions, including materials, direct labor, production overhead, depreciation of equipment, and shipping costs. Raw materials are stated at the lower of approximate cost, on a first-in, first-out or average cost basis, and market is determined by reference to replacement cost. Raw materials are not written down unless the goods in which they are incorporated are expected to be sold for less than cost, in which case, they are written down by reference to replacement cost of the raw materials. Finished goods and work in progress are stated at the lower of cost or market determined on a first-in, first-out or average cost basis. Shipping and handling fees billed to customers are recorded as trade sales, and shipping and handling fees paid by the Company are recorded as selling, general, and administrative expenses.  Included in the Company’s Consolidated Statementscost of Operations and Comprehensive Income as selling, general, and administrative expenses for the years ended December 31, 2017, 2016 and 2015 were $8.2 million, $6.0 million and $5.5 million, respectively, of costs associated with shipping goods to customers.sold. 



In valuing inventory, the Company makes assumptions regarding the write-downs required for excess and obsolete inventory based on judgments and estimates formulated from available information. Estimates for excess and obsolete inventory are based on historical and forecasted usage. Inventory is also examined for upcoming expiration, and write-downs are recorded where appropriate.



Real Estate – From time to time,the Company purchasesacquires real estate or takes possession or ownership of real estate through the foreclosure of the underlying loan collateral.  Realcollateral on loans receivable. Such real estate acquired through foreclosure is measured at the fair value of the collateral and classified as real estate held-for-sale, real estate held-for-investment, or real estate inventory. When real estate is classified as held-for-sale, it is initially recorded at fair value less estimated selling costs (cost basis) and subsequently measured at the lower of cost or estimated fair value.value less selling costs. When real estate is classified as held-for-investment, it is initially recorded at fair value and, if applicable, is depreciated in subsequent periods depreciated over its useful life using the straight line method, if applicable.straight-line method. Real estate is classified as real estate inventory when the property is under development for sale to customers and is measured at cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest and real estate taxes, and interest capitalizedother costs incurred during the construction period. Expenditures for capital improvements are generally capitalized, while the ongoing costs of owning and operating real estate are charged to selling, general and administrative expenses as incurred. Impairments required on loans receivable at the time of foreclosure of real estate collateral are charged to the allowance for loan losses. Expenditures for capital improvements are generally capitalized. Valuation allowance adjustments are madelosses, while impairments of real estate required under ASC 360 to reflect any subsequent declines in fair values for real estate held-for-sale.  The costs of holding real estate are charged to real estate operating expenses as incurred. Changes in the real estate valuation allowancevalue are recorded as asset impairments, netimpairment losses in the Company’s Consolidated Statementconsolidated statements of Operationsoperations and Comprehensive Income.comprehensive income.



Investments in Unconsolidated Real Estate Joint Ventures - The Company uses the equity method of accounting to record its interestsequity investments in entities in which it has significant influence but does not hold a controlling financial interest, and to record its investmentincluding equity investments in VIEs in which itthe Company is not the primary beneficiary. Under the equity method, an investment is shownreflected on the Statementstatement of Financial Conditionfinancial condition of an investor as a single amount, and an investor’s share of earnings or losses from its investment is shownreflected in the Statementstatement of Operationsoperations as a single amount. The investment is initially measured at cost and subsequently adjusted for the investor’s share of the earnings or losses of the investee and dividendsdistributions received from the investee. The investor recognizes its share of the earnings or losses of the investee in the periods forin which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend.distribution. Intra-entity profits and losses on assets still remaining with an investor or investee are eliminated. 



The Company recognizes its share of earnings or losses onfrom certain equity method investments based on the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, earnings or losses are recognized based on how an entity would allocate and distribute its cash if it were to sell all of its assets and settle its liabilities for their carrying amounts and liquidate at the reporting date. The HLBV method is used to calculate the Company’s share of earnings or losses forfrom equity method investments when the contractual cash disbursements are different than the investors’ equity interest.



InterestThe Company capitalizes interest expense is capitalized by the Company on investments in and advances or loans to real estate joint ventures accounted for under the equity method companies that beganhave commenced qualifying activities. Totalactivities, such as real estate development projects. The capitalization of interest expense ceases when the investee completes its qualifying activities, and total capitalized interest expense cannot exceed interest expense incurred. Interest expense capitalization ceases when the investee completes its qualifying activities.   



The Company reviews its equity and cost method investments on an ongoing basis for indicators of other-than-temporary impairment. This determination requires significant judgment in which the Company evaluates, among other factors, the fair market value of theits investments, general market conditions, the duration and extent to which the fair value of thean investment is less than cost, and the Company’s intent and ability to hold thean investment until it

F-14


recovers. The Company also considers specific adverse conditions related to the financial health of and business outlook forof the investee, including industry and sectormarket performance, rating agency actions, changes in operationsand expected future operating and financing cash flow factors.flows. If a decline in the fair value of thean investment is determined to be other-than-temporary, an impairment chargeloss is recorded to reduce the investment to its fair value, and a new cost basis in the investment is established.



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Property and Equipment - Land is carried at cost. Property and equipment are carried at cost less accumulated depreciation. Depreciation is primarily computedcalculated on the straight-line method over the estimated useful lives of the assets, which generally range up to 40 years for buildings and building improvements, from 3 to 14 years for office furniture, and fixtures, and equipment, from 3 to 5 years for transportation and equipment, and from 3 to 14 years for leasehold improvements. The cost of leasehold improvements is amortizeddepreciated using the straight-line method over the shorter of the terms of the related leases or the estimated useful lives of the assets. improvements.



Expenditures for new property, leasehold improvements, and equipment and major renewals and betterments are capitalized. Expenditures for maintenance and repairs are expensed as incurred, and gains or losses on disposal of assets are reflected in current operations.



The cost of software developmentdeveloped for internal use is capitalized in accordance with the accounting guidance for costs of computer software developed or obtained for internal use. CapitalizationThe capitalization of costs of software developed for internal use commences during the development phase of the project and ends when the assetsoftware is ready for its intended use. SoftwareThe costs of software developed or obtained for internal use isare generally amortized on a straight-line basis over 3 to 5 years. The Company capitalized costs of software for internal use of $10.1 million and $10.2 million for the years ended December 31, 2019 and 2018, respectively.

Goodwill and Intangible Assets



Goodwill and Intangible Assets – The Company recognizes goodwill upon the acquisition of a business when the fair values of the consideration transferred and any noncontrolling interests in the acquiree are in excess of the fair value of the acquiree’s identifiable net assets. The Company tests goodwill for potential impairment on an annual basis as of December 31 or during interim periods if impairment indicators exist. The Company first assesses qualitatively whether it is necessary to perform goodwill impairment testing. Impairment testing is performed when it is more-likely-than-notmore likely than not that the reporting unit’s goodwill fair value is less than its carrying amount. The Company evaluates the following factors in its qualitative assessment: macroeconomic conditions, market considerations, cost factors, financial performance and events affecting the reporting unit. 

If the Company concluded from the qualitative assessment that further testing was required, as was the case for certain of the Company’s reporting units during the years ended December 31, 2016 and 2015, the Company performed the two-step goodwill impairment test. The first step of the goodwill impairment test was used to identify potential impairment and consisted of comparing the fair value of a reporting unit withis less than its carrying value. amount, including goodwill. The Company evaluates various factors affecting a reporting unit in its qualitative assessment, including, but not limited to, macroeconomic conditions, industry and market considerations, cost factors, and financial performance. 

If the Company concludes from its qualitative assessment that goodwill impairment testing is required, the fair value of the reporting unit exceeded its carrying value, goodwill was considered not impaired, and the second step of the impairment test was not performed. If the fair value of the reporting unit was less than the carrying value, the second step of the test was used to measure the amount of goodwill impairment, if any, in the reporting unit. This stepis compared the current implied goodwill in the reporting unit to its carrying amount. If the carrying amount of the goodwill exceeded the implied goodwill, an impairment was recorded for the excess. The implied goodwill was determined in the same manner as the amount of goodwill recognized in a business combination.

During the year ended December 31, 2017, the Company early adopted Accounting Standards Update (“ASU”) No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance removes the second step of the two-step goodwill impairment test described above. Instead, if a reporting unit’s carrying amountunit exceeds its fair value, the Company will recordrecords an impairment charge based on that difference. Theloss for the excess amount, although the impairment chargeloss is limited to the amount of goodwill allocated to thatthe reporting unit.   



Intangible assetsIntangible assets consist primarily of indefinite livedindefinite-lived management contracts recognized upon the consolidation of Bluegreen duringin November 2009. The remaining balance in intangible assets consistedincludes various amortizable intangible assets that are amortized on a straight-line basis of their respective estimated useful lives, including trade names customer relationships,and non-competition agreements area development contracts and lease premiumsacquired in connection with business combinations that were initially recorded at fair value at the applicable acquisition datedate. Prior to the adoption of athe new lease accounting standard on January 1, 2019, intangible assets also included off-market lease agreements acquired in connection with business and are amortized on a straight-line basis over their respective estimated useful lives.combinations that were initially recorded at fair value. 



Indefinite livedIndefinite-lived intangible assets are not amortized and are tested for impairment on at least an annual basis, or more frequently if events and circumstances indicate that it is more likely than not that the related carrying amounts may be impaired. The Company evaluates indefinite livedindefinite-lived intangible assets for impairment by first qualitatively considering relevant events and circumstances to determine whether it is more-likely-than-notmore likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value.amount. If it is more-likely-than-notmore likely than not that the fair value of the indefinite-lived intangible asset is greater than its carrying value,amount, the indefinite-lived intangible asset is not impaired. If the

F-15


Company concludes that further testingit is required,more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company calculatesestimates the fair value of the indefinite-lived intangible asset and compares the estimated fair value to the carrying value.amount. If the fair value of the indefinite-lived intangible asset is less than the carrying value, an impairment loss is recognized for the difference.



Amortizable intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. The carrying amount of an intangible asset is not considered recoverable when the carrying amount exceeds the sum of the undiscounted cash flows expected to result from the use of the intangible asset. TheTo the extent that the carrying amount of an intangible asset exceeds the sum of such undiscounted cash flows, an impairment loss is measured asand recorded based on the amount by which the carrying amount of the intangible asset exceeds its fair value.

Operating Lease Assetsand Operating Lease LiabilitiesThe Company recognizes right-of-use assets and lease liabilities associated with lease agreements with an initial term of greater than 12 months, while lease agreements with an initial term of 12 months or less are not recorded in the Company’s consolidated statements of financial condition. The Company determines if an arrangement is a lease at inception. The operating lease assets represent the Company’s right to use an underlying asset for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments. Operating lease assets and liabilities are recognized when the Company takes possession of the underlying asset based on the present value of lease payments over the lease term. The Company generally does not include lease payments associated with renewal options that are exercisable at its discretion in the measurement of its operating lease assets and operating lease liabilities as it is not reasonably certain that such options will be exercised. The Company

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generally recognizes lease costs associated with its operating leases on a straight-line basis over the lease term, while variable lease payments that do not depend on an index or rate are recognized as variable lease costs in the period in which the obligation for those payments is incurred. The Company recognizes accrued straight-line rent and unamortized tenant allowances received from landlords associated with its operating leases as a reduction of the operated lease assets associated with such leases. The Company has lease agreements with lease and non-lease components which it generally accounts for as a single lease component for lease classification, recognition and measurement purposes. 



Trade ReceivablesTrade receivables are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its trade receivable portfolio. In establishing the required allowance, management considers various factors, including historical losses, adjusted to take into account current market conditions, and the customers' financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns.patterns related to the receivables. The Company reviews its allowance for doubtful accounts on a quarterly basis. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. Account balances are charged off against the allowance after all standard means of collection have been exhausted and the potential for recovery is considered remote. Trade receivables are included in other assets in the Company’s Consolidated Statementsconsolidated statements of Financial Condition withfinancial condition and had an outstanding balance of $16.0$13.1 million and $18.3 million as of December 31, 20172019 and 2016.2018, respectively.



Deferred Financing Costs Deferred financing costs are comprised of costs incurred in connection with obtaining financing from third-party lenders and are presented in the Company’s Consolidated Statementconsolidated statements of Financial Conditionfinancial condition as other assets or as a direct deduction from the carrying valueamount of the associated debt liability. These costs are capitalized and amortized to interest expense over the terms of the related financing arrangements.

Deferred Income - Bluegreen defers the recognition of sales of VOIs, net of direct incremental selling expenses, for sales for which the legal rescission period has expired but the required revenue recognition criteria described above has not been met. Additionally, in connection with Bluegreen’s sampler program, Bluegreen defers revenue, net of direct incremental selling expenses, for guest stays not yet completed. As of December 31, 2019 and 2018, unamortized deferred financing costs presented in other assets totaled $6.0 million and $5.6 million, respectively, while unamortized costs presented against the associated debt liabilities totaled $8.5 million and $9.1 million, respectively. Interest expense from the amortization of deferred financing costs for the years ended December 31, 2019, 2018 and 2017 was $4.5 million, $3.5 million, and 2016, Bluegreen’s deferred income consisted of the following (in thousands):$3.1 million, respectively.



 

 

 

 

 

 



 

 

 

 

 

 



 

As of December 31,



 

2017

 

2016



 

 

 

 

 

 

Deferred sampler program income

 

$

10,056 

 

$

11,821 

Deferred VOI sales revenue

 

 

22,461 

 

 

21,126 

Other deferred income

 

 

3,794 

 

 

4,068 

Total

 

$

36,311 

 

$

37,015 



Advertising – The Company expenses advertising costs, which are primarily marketing costs, as incurred. Advertising expenseexpenses totaled $148.6 million, $146.0 million, $138.9 million and $123.8$148.6 million for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, respectively, and are included in selling, general and administrative expenses in the accompanying Consolidated Statementsconsolidated statements of Operationsoperations and Comprehensive Income.comprehensive income.



Bluegreen has entered into marketing arrangements with various third parties. For the years ended December 31, 2017, 20162019, 2018, and 2015,2017, sales of VOIs to prospects and leads generated by Bluegreen’s marketing arrangement with Bass Pro accounted for approximately 15%13%, 16%14%, and 20%15%, respectively, of total VOI sales volume.  There can be no guarantee that Bluegreen will be able to maintain this agreement in accordance with its terms or extend or renew these agreementsthis agreement on similar terms, or at all, nor is there any assurance that Bluegreen’s business relationship with Bass Pro under the revised terms of its marketing agreement entered into in June 2019 will be as profitable as under the prior terms, or at all. See Note 16 for a description of the revised terms of Bluegreen’s marketing agreement with Bass Pro.



Income Taxes – The Company and its subsidiaries in which it owns 80% or more of the voting power and value of the subsidiary’s outstanding equitystock file a consolidated U.S. Federal and Florida income tax return. Other than Florida, the Company and its subsidiaries file separate or unitary state income tax returns for each jurisdiction. Subsidiaries in which the Company owns less than 80% of the outstanding equity are not included in the Company’s consolidated U.S. Federal or Florida state income tax return. For years prior to December 31, 2015, BCC and Bluegreen filed separate tax returns with the Internal Revenue Service as the Company owned less than 80% of the outstanding equity of these subsidiaries. As a result of the Company’s purchase of additional shares of BCC’s Class A Common Stock in the above-described April 2015 cash tender offer and the related increase in the Company’s ownership interest in BCC, the Company files a



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consolidated group tax return which includes the operations of BCC, Woodbridge and Bluegreen for the years ended December 31, 2017, 2016 and 2015.

The provision for income taxes is based on income before taxes reported for financial statement purposes after adjustment for transactions that do not have tax consequences. Deferred tax assets and liabilities are realizedrecognized according to the estimated future tax consequences attributable to differences between the carrying value of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates as of the date of the Statementstatement of Financial Condition.financial condition. The effect of a change in tax rates on deferred tax assets and liabilities is reflected in the period that includes the statutory enactment date. A deferred tax asset valuation allowance is recorded when it has been determined that it is more likely than not that deferred tax assets will not be realized.  If a valuation allowance is recorded, a subsequent change in circumstances that causes a change in judgment about the realization of the related deferred tax amount could result in the reversal of the deferred tax valuation allowance.



An uncertain tax position is defined as a position taken or expected to be taken in a tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes.



Noncontrolling Interests – Noncontrolling interests reflect third parties’ ownership interests in entities that are consolidated in the Company’s financial statements but are less than 100% owned by the Company. A noncontrolling interest isNoncontrolling interests are recognized as equity in the Statementconsolidated statement of Financial Conditionfinancial condition and itemizedpresented separately from the equity attributable to BBX Capital’s shareholders, while a noncontrolling interestinterests that isare redeemable for cash at the holder’s option or upon a contingent event outside of the Company’s control isare classified as redeemable noncontrolling interests and presented in the mezzanine section between total liabilities and equity

F-15


in the Statementconsolidated statement of Financial Condition. financial condition. The Company measures redeemable noncontrolling interests on an ongoing basis by accreting changes in the estimated redemption value of such interests from the date of issuance to the earliest redemption date and adjusts the carrying amount of such interests to the calculated value in the event that it is in excess of the carrying amount of such interests at such time.

A change in the ownership interests inof a subsidiary is accounted for as an equity transaction if the Company retains its controlling financial interest in the subsidiary.



The amounts of consolidated net income and comprehensive income attributable to BBX Capital’s shareholders and to noncontrolling interests are separately presented in the Company’s Consolidated Statementconsolidated statement of Operationsoperations and Comprehensive Income.comprehensive income.



Accounting for Loss Contingencies Loss contingencies, including those arising from legal actions, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. 



Earnings Per Share - - Basic earnings per share is computed by dividing net income attributable to BBX Capital’s shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed in the same manner as basic earnings per share but also reflects potential dilution that could occur if options to acquire BBX Capital’s common shares were exercised or if restricted stock awards of the Companyissued by BBX Capital were exercised or vest.vested. Common stock options and restricted stock awards, if dilutive, are considered in the weighted average number of dilutive common shares outstanding based on the treasury stock method.  Diluted earnings per share also takes into consideration the potential dilution from securities issued by subsidiaries that enable their holders to obtain the subsidiary’s common stock. The resulting net income amount is divided by the weighted average number of dilutive common shares outstanding.



Stock-Based Compensation – Compensation cost for non-vestedunvested restricted stock awards is based on the fair value of the award on the measurement date, which is generally the grant date. The Company recognizes these compensation costsdate, and is recognized on a straight-line basis over the requisite service period of the award, which is generally four years for non-vestedunvested restricted stock awards. The fair value of non-vestedunvested restricted stock awards is generally determined based on the market price of the Company’s common stock on the grant date.



Recently Adopted Accounting Pronouncements



The Financial Accounting Standards Board (“FASB”) has issued the following accounting pronouncements and guidance relevant to the Company’s operations which have been adopted as of December 31, 2017:January 1, 2019:



ASU No. 2016-18, Statement2016-02 – Leases (Topic 842). This standard, as subsequently amended and clarified by various ASUs, requires lessees to recognize assets and liabilities for the rights and obligations created by leases of Cash Flows, Restricted Cash (Topic 230). This updateassets. For income statement purposes, the standard retains a dual model which requires leases to be classified as either operating or finance based on criteria that are largely similar to those applied under prior lease accounting but without explicit bright lines. The standard also requires extensive quantitative and qualitative disclosures, including significant judgments and assumptions made by management in applying the statementstandard, intended to provide greater insight into the amount, timing, and uncertainty of cash flows explainarising from leases.

The Company adopted the change duringstandard on January 1, 2019 and applied the periodtransition guidance as of the date of adoption under the current-period adjustment method. As a result, the Company recognized right-of-use assets and lease liabilities associated with its leases on January 1, 2019, with a cumulative-effect adjustment to the opening balance of accumulated earnings, while the comparable prior periods in the totalCompany’s financial statements have been and will continue to be reported in accordance with Topic 840, including the disclosures of cash, cash equivalents and restricted cash. The amount of restricted cash should be included with cash and cash equivalents when reconciling the beginning of the period andTopic 840. 



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The standard includes a number of optional practical expedients under the end of period cash as shown on the statement of cash flows.  The guidance is effective for fiscal years beginning after December 15, 2017 with early adoption permitted.transition guidance. The Company elected the package of practical expedients which allowed the Company to early adoptnot reassess prior conclusions about lease identification, lease classification, and initial direct costs. The Company also made accounting policy elections by class of underlying asset to not apply the recognition requirements of the standard usingto leases with terms of 12 months or less and to not separate non-lease components from lease components. Consequently, each separate lease component and the retrospective transition method to each period presentednon-lease components associated with that lease component is accounted for as a single lease component for lease classification, recognition, and measurement purposes.

Upon adoption of the standard on January 1, 2019, the Company recognized a lease liability of $123.2 million and a right-of-use asset of $113.2 million. The difference between the lease liability and right-of-use asset primarily reflects the reclassification of accrued straight-line rent and unamortized tenant allowances from other liabilities in the accompanying consolidatedCompany’s statement of financial statements.condition to a reduction of the right-of-use asset. In addition, the Company recognized an impairment loss of $3.4 million in connection with the recognition of right-of-use assets for certain IT’SUGAR retail locations as a cumulative-effect adjustment to the opening balance of accumulated earnings. The Company’s adoptionimplementation of ASU 2016-18the standard did not have a material impact on the Company’s consolidated financial statements. 

ASU No. 2016-15, Statementstatement of Cash Flows (Topic 230), Classification of Certain Cash Receiptsoperations and Cash Payments. (Topic 230) - This update provides guidance on the classification of certain cash receipts and payments with the objective of reducing the existing diversity in current practice. The Company elected to early adopt the standard using the retrospective transition method to each period presented in the accompanying consolidated financial statements.  The Company’s adoption of ASU 2016-15 did not have a material impact on the Company’s consolidated financial statements.

ASU No. 2017-04, Intangibles- Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. This update eliminates the second step of the goodwill impairment test under current guidance. As a result, the annualcomprehensive income or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the reporting unit. The guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company elected to early adopt the standard effective for the Company’s goodwill impairment tests performed on December 31, 2017. This statement was adopted on a prospective basis.   

ASU No. 2016-09, Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-based Payment Accounting. This update requires the recognition of excess tax benefits (“windfall”) and tax deficiencies in the income statement when the stock awards vest or are settled, thus eliminating additional paid in capital pools. The new standard also removes the requirement to delay recognition of windfall tax benefits until it reduces current taxes payable. The new standard instead requires the recognition of windfall tax benefits at the time of settlement, subject to valuation allowance considerations. The new standard clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on the Company’s statement of cash flows and cash flows related to windfall tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows which are classified as operating activities.  The new standard provides an accounting policy election to accountflows. See Note 12 for forfeitures as they occur instead of on an estimated basis andadditional information regarding the Company’s lease agreements.

F- allows for the employer to repurchase more of an employee’s shares for tax withholding purposes up to the maximum statutory rate in the employee’s applicable jurisdictions without triggering liability accounting. The new standard changes the computation of diluted earnings per share as windfall tax benefits will not be included in the calculation of assumed proceeds when applying the treasury stock method. 16

 

The Company adopted the standard on January 1, 2017. The primary impact of the adoption of this standard on the Company’s consolidated financial statements was the recognition of a $3.1 million windfall tax benefit as a cumulative effect to accumulated earnings associated with windfall tax benefits that were not previously recognized because the related tax deduction had not reduced current taxes payable. 


 

Upon adoption of the new standard, the Company made an accounting policy election to recognize forfeitures as they occur. The presentation requirement for cash flows related to employee taxes paid for withheld shares had no impact to operating cash flows on any of the periods presented in the Company’s consolidated cash flows statements since these cash flows have historically been presented as a financing activity.

 

Future Adoption of Recently Issued Accounting Pronouncements



The FASB has issued the following accounting pronouncements and guidance relevant to the Company’s operations which have not been adopted as of December 31, 2017: 

ASU No. 2014-09 –  Revenue Recognition (Topic 606): In May 2014, the FASB issued a new standard related to revenue recognition (as subsequently clarified and amended by various ASUs). Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at

F-18


the date of initial application (modified retrospective method). The Company adopted the standard on January 1, 2018 under the full retrospective method and accordingly will retrospectively adjust each prior reporting period presented in subsequent filings to the new standard.

In preparation for adoption of the standard, the Company analyzed the potential impact that adopting this standard will have on its consolidated financial statements and related disclosures and its business processes, accounting policies and controls and reached conclusions on key accounting assessments related to the standard in subsequent filings.

The adoption of the standard will impact Bluegreen in the following areas: (i) gross versus net presentation for payroll and insurance premium reimbursements related to resorts managed by Bluegreen and on behalf of third parties and (ii) the timing of the recognition of VOI revenue related to the removal of certain bright line tests regarding the determination of the adequacy of the buyer’s commitment under existing industry-specific guidance. In addition, Bluegreen concluded that the recognition of fee-based sales commission revenue, ancillary revenues, and rental revenues will remain materially unchanged.

The adoption of the standard will impact the Company’s real estate activities asrevenue will be recognized sooner for contingent consideration on sales of real estate inventory. 

The adoption of the standard will not materially affect revenue recognition associated with the Company’s trade sales. Retail trade sales performance obligations are generally satisfied at the time of the sales transaction as customers of the retail business typically pay in cash at the time of transfer of the promised goods, while wholesale trade sales performance obligations are generally satisfied when the promised goods are shipped by the Company or received by the customer. However, the adoption of the standard will impact the classification of certain marketing concessions provided to customers of Renin and BBX Sweet Holdings as the marketing concessions are required to be reflected as a reduction of revenue instead of a selling, general and administrative expense. Additionally, the Company has historically recognized shipping and handling costs in selling, general and administration expenses, and upon the adoption of the standard, the Company will account for such costs as a fulfillment cost and include such costs in cost of trade sales.

See Expected Impacts to Reported Results below for the impact of adoption of the standard on the Company’s consolidated financial statements. 

ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20).  This update provides guidance on the recognition of revenues for the transfer of nonfinancial assets to non-customers. The standard indicates that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a non-customer or counterparty and derecognize each asset when the counterparty obtains control of the asset. This update supersedes the guidance in Topic 845 and eliminates partial sale accounting for the transfer of real estate to joint ventures.

The Company adopted the standard on January 1, 2018 under the full retrospective method and accordingly will retrospectively adjust each prior reporting period presented in subsequent filings to the new standard.

The standard significantly changes the guidance on the transfer of real estate to unconsolidated joint ventures. Under prior guidance, the transfer of real estate to a joint venture was accounted for as a partial sale, resulting in the recognition of a partial gain, and the noncontrolling interest retained was measured at historical cost, resulting in a basis adjustment to the seller’s investment in the joint venture. In addition, the partial gain could be deferred if the sale did not satisfy certain criteria for gain recognition. Under the new statement, the full gain is recognized upon the transfer of control in the real estate to the unconsolidated joint venture, and any noncontrolling interest retained is measured at fair value.

In certain unconsolidated real estate joint ventures, the Company accounted for the transfer of land to such ventures for initial capital contributions as partial sales, resulting in deferred gains and joint venture basis adjustments. The adoption of the standard will result in the recognition of deferred gains and joint venture basis adjustments of $3.2 million and $7.4 million, respectively, in accumulated earnings as a cumulative effect as of January 1, 2016 upon adoption of the standard.  As a result of the cumulative effect adjustment, net gains on sales of assets will be reduced by $0.5 million and $2.3 million, respectively, for the years ended December 31, 2017 and 2016, and equity in earnings from unconsolidated joint ventures will be reduced by $1.9 million and $1.5 million, respectively, for the years ended December 31, 2017 and 2016.  

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Expected Impacts to Reported Results

The retrospective adjustments to the Company’s Statement of Financial Condition as of December 31, 2017 and 2016 and the Company’s Statements of Operations for the years ended December 31, 2017 and 2016 due to the adoption of these new accounting standards are as follows (dollars in thousands, except per share data):



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

As of and for the Year ended December 31, 2017



 

As Reported Herein

 

ASU 2014-09 Adjustments

 

ASU 2017-05 Adjustments

 

As Adjusted

Statement of Financial Condition

 

 

 

 

 

 

 

 

Notes receivable, net

$

431,801 

 

(4,507)

 

 —

 

427,294 

Investment in unconsolidated real estate joint ventures

 

47,275 

 

 —

 

3,959 

 

51,234 

Property and equipment, net

 

112,858 

 

(929)

 

 —

 

111,929 

Other assets

 

102,370 

 

929 

 

 —

 

103,299 

Other liabilities

 

103,926 

 

 —

 

(462)

 

103,464 

Deferred income

 

36,311 

 

(19,418)

 

 —

 

16,893 

Deferred income taxes

 

43,093 

 

3,647 

 

1,120 

 

47,860 

Total equity

$

653,501 

 

11,264 

 

3,301 

 

668,066 



 

 

 

 

 

 

 

 

Statement of Operations

 

 

 

 

 

 

 

 

Sales of VOIs

$

239,662 

 

12,633 

 

 —

 

252,295 

Reimbursement revenue

 

 —

 

52,639 

 

 —

 

52,639 

Cost of reimbursement

 

 —

 

52,639 

 

 —

 

52,639 

Cost of VOIs sold

 

17,439 

 

240 

 

 —

 

17,679 

Trade sales

 

142,798 

 

(713)

 

 —

 

142,085 

Net gains on sales of assets

 

2,442 

 

 —

 

(493)

 

1,949 

Cost of trade sales

 

97,755 

 

8,163 

 

 —

 

105,918 

Selling, general and administrative expenses

 

538,125 

 

(8,423)

 

 —

 

529,702 

Equity in earnings of unconsolidated real estate joint ventures

 

14,483 

 

 —

 

(1,942)

 

12,541 

Income before income taxes

 

93,374 

 

11,940 

 

(2,435)

 

102,879 

Benefit (provision) for income taxes

 

7,223 

 

(2,464)

 

1,525 

 

6,284 

Net income

 

100,597 

 

9,476 

 

(910)

 

109,163 

  Less: Net income attributable to non-controlling interest

 

18,402 

 

463 

 

 —

 

18,865 

Net income attributable to    Shareholders

$

82,195 

 

9,013 

 

(910)

 

90,298 

Basic earnings per share

$

0.83 

 

 

 

 

 

0.91 

Diluted earnings per share

$

0.79 

 

 

 

 

 

0.87 

F-20




 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

As of and for the Year ended December 31, 2016



 

As Reported Herein

 

ASU 2014-09 Adjustments

 

ASU 2017-05 Adjustments

 

As Adjusted

Statement of Financial Condition

 

 

 

 

 

 

 

 

Notes receivable, net

$

430,480 

 

(4,600)

 

 —

 

425,880 

Investment in unconsolidated real estate joint ventures

 

43,491 

 

 —

 

5,901 

 

49,392 

Property and equipment, net

 

95,998 

 

(590)

 

 —

 

95,408 

Other assets

 

104,812 

 

590 

 

 —

 

105,402 

Other liabilities

 

95,611 

 

 —

 

(956)

 

94,655 

Deferred income

 

37,015 

 

(17,493)

 

 —

 

19,522 

Deferred income taxes

 

44,318 

 

4,734 

 

2,645 

 

51,697 

Total equity

$

495,454 

 

8,160 

 

4,212 

 

507,826 



 

 

 

 

 

 

 

 

Statement of Operations

 

 

 

 

 

 

 

 

Sales of VOIs

$

266,142 

 

14,781 

 

 —

 

280,923 

Reimbursement revenue

 

 —

 

49,557 

 

 —

 

49,557 

Cost of reimbursement

 

 —

 

49,557 

 

 —

 

49,557 

Cost of VOIs sold

 

27,346 

 

1,483 

 

 —

 

28,829 

Trade sales

 

95,996 

 

(157)

 

 —

 

95,839 

Net gains on sales of assets

 

6,076 

 

 —

 

(2,274)

 

3,802 

Cost of trade sales

 

74,341 

 

6,022 

 

 —

 

80,363 

Selling, general and administrative expenses

 

516,757 

 

(4,607)

 

 —

 

512,150 

Equity in earnings of unconsolidated real estate joint ventures

 

13,630 

 

 —

 

(1,452)

 

12,178 

Income before income taxes

 

78,036 

 

11,726 

 

(3,726)

 

86,036 

Provision for income taxes

 

(36,379)

 

4,276 

 

1,437 

 

(30,666)

Net income

 

41,657 

 

7,450 

 

(2,289)

 

46,818 

  Less: Net income attributable to non-controlling interest

 

13,295 

 

401 

 

(429)

 

13,267 

Net income attributable to
Shareholders

$

28,362 

 

7,049 

 

(1,860)

 

33,551 

Basic earnings per share

$

0.33 

 

 

 

 

 

0.39 

Diluted earnings per share

$

0.32 

 

 

 

 

 

0.38 

The cumulative effect impact of adopting the new revenue standard and ASU 2017-05 was to increase accumulated earnings from the amount originally reported as of January 1, 2016 of $232.1 million to $243.9 million, an adjustment of $11.8 million.

The adoption of the new standards had no impact to each prior period statement of cash flows.

ASU No. 2016-02 – Leases (Topic 842).  This standard will require assets and liabilities to be recognized on the balance sheet of a lessee for the rights and obligations created by leases of assets with terms of more than 12 months.  For income statement purposes, the update retained a dual model, requiring leases to be classified as either operating or finance based on largely similar criteria to those applied in current lease accounting, but without explicit bright lines.  This standard also requires extensive quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases. This standard will be effective for the Company on January 1, 2019.  Early adoption is permitted.  The Company expects that the implementation of this new standard will have a material impact on its consolidated financial statements and related disclosures as the Company has aggregate future minimum lease payments of $159.3 million at December  31, 2017 under its current non-cancelable lease agreements with various expirations dates between 2018 and 2030. The Company anticipates the recognition of additional assets and corresponding liabilities related to these leases on its consolidated statement of financial condition.

F-21


The Company is currently compiling a listing of contracts that meet the statement’s definition of a lease and is reviewing the functionality of its systems to prepare for the adoption of this statement.

The Company will be required to recognize and measure leases at the beginning of the earliest period presented using the modified retrospective approach.  The Company is currently evaluating the impact that ASU 2016-02 will have on its consolidated financial statements.2019: 



ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.Instruments (as subsequently amended and clarified by various ASUs). This standard introduces an approach of estimating credit losses on certain types of financial instruments based on expected losses. The standard alsolosses and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating theits allowance for loan and credit losses. The standard also requires entities to record an allowance for credit losses for available for sale debt securities rather than reduce the carrying amount under the other-than temporary impairment model. In addition, the standard requires entities to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination (i.e., by vintage year). This standard will bewas effective for the Company on January 1, 2020. Although the Company is finalizing its assessment,  the Company believes that the adoption of the standard will not have a material impact on its consolidated financial statements. 

ASU 2018-15, Intangibles (Topic 350-40): Goodwill and Other – Internal–Use Software. This standard requires a customer in a cloud computing arrangement that is a service contract (“CCA”) to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The standard also requires entities to present implementation costs related to a CCA in the same financial statement line items as the CCA service fees. The Company adopted this standard on January 1, 2020 and is applying the transition guidance as of the date of adoption prospectively, under the current period adjustment method. The Company expects that capitalized implementation costs related to a CCA that were in the implementation phase as of January 1, 2020 ranging from $1.5 million to $2.5 million will be reclassified from property and equipment to prepaid expenses in connection with the adoption of the standard. The Company believes that the adoption of the standard will not have a material impact on its consolidated financial statements. 

ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard removes specific exceptions to the general principles in Topic 740 including exceptions related to (i) the incremental approach for intraperiod tax allocations, (ii) accounting for basis differences when there are ownership changes in foreign investments, and (iii) interim period income tax accounting for year-to-date losses that exceed anticipated losses. The statement is effective for the Company on January 1, 2021 and interim periods within that fiscal year. Early adoption is permitted beginning on January 1, 2019.permitted. The Company is currently evaluating the impact that ASU 2016-132019-12 may have on its consolidated financial statements.



ASU No. 2017-09, Compensation2018-13, Fair Value Measurement (Topic 820), Disclosure FrameworkStock Compensation (Topic 718).Changes to the Disclosure Requirements for Fair Value Measurement. This update was issued to provide guidance on determining which changesstandard modifies the disclosure requirements in Topic 820 related to the termsvaluation techniques and conditions of share-based compensation awards require an entity to apply modification accounting under Topic 718.  An entity should apply modification accounting to changes to terms or conditions of a share-based compensation award unless there is no changeinputs used in the fair value vesting or classification of the modified award as compared to the original award. Themeasurements, uncertainty in measurement, and changes in measurements applied. This standard iswas effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Thethe Company adopted this standard on January 1, 2018. The2020, and the adoption of this statement didthe standard is not expected to have a material impact on the Company’s consolidated financial statements.

ASU No. 2017-01, Business Combinations - Clarifying the Definition of a Business. This update affects the determination of whether a company has acquired or sold a business. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwillstatements and consolidations, and the standard will help entities determine whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is expected to result in more acquisitions being accounted for as asset purchases instead of business combinations. The guidance will be effective for fiscal years beginning after December 15, 2017.  The Company adopted this standard on January 1, 2018 using the prospective transition method. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.disclosures.

ASU No.2016-01 –– Financial Instruments – Overall (Topic 825) – Recognition and Measurement of Financial Assets and Financial Liabilities. This update requires all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) to generally be measured at fair value through earnings. The update eliminates the available-for-sale classification for equity securities with readily determinable fair values and the cost method for equity investments without readily determinable fair values. However, entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment. This update also simplifies the impairment assessment for equity investments and requires the use of an exit price when measuring the fair value of financial instruments for disclosure purposes. The amendments in this statement are effective for fiscal years beginning after December 15, 2017. The Company adopted this statement on January 1, 2018 and recognized a cumulative effect adjustment of $0.4 million to accumulated earnings as of January 1, 2018 for equity securities with readily determinable fair values. The statement was adopted prospectively for $2.4 million of equity securities without readily determinable fair values. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements.

 

3.    Acquisitions and Mergers



Acquisition of IT’SUGAR



On June 16, 2017, a wholly-owned subsidiary of BBX Sweet Holdings acquired IT’SUGAR, a specialty candy retailer with 95approximately 100 retail locations in 26over 25 states and Washington, DC,D.C., through the acquisition of all of its Class A Preferred Units and 90.4% of its Class B Common Units for cash consideration of approximately $58.4 million, net of cash acquired. The remaining 9.6% of IT’SUGAR’s Class B Common Units areis owned by JR Sugar Holdings, LLC (“JR Sugar”), an entity owned by the founder and CEO of IT’SUGAR. 



F-22


The consolidated net assets and results of operations of IT’SUGAR are included in the Company’s consolidated financial statements commencing on June 16, 2017 and resulted in the following impact to trade sales and net income attributable to shareholdersbefore income taxes from the acquisition date to December 31, 2017 (in thousands):



 

 

 



 

June 16, 2017



 

to December 31, 2017

Trade sales

$

46,77246,765 

Income before income taxes

$

2,598 



F-17


Purchase Price Allocation



The Company accounted for the acquisition of IT’SUGAR using the acquisition method of accounting, which requires among other things, that the assets acquired and liabilities assumed associated with an acquiree be recognized at their fair values at the acquisition date. The following table summarizes the purchase price allocation based on the Company’s valuation, including the fair values of the assets acquired, liabilities assumed, and the redeemable noncontrolling interest in IT’SUGAR at the acquisition date (in thousands):





 

 

 



 

 

Property and equipment

$

18,747 

Cash, inventory and other assets

 

12,212 

Identifiable intangible assets (1)

 

4,512 

Total assets acquired

 

35,471 

Accounts payable and other liabilities

 

(5,370)

Identifiable intangible liabilities (2)

 

(716)

Total liabilities assumed

 

(6,086)

Fair value of identifiable net assets

 

29,385 

Redeemable noncontrolling interest

 

(2,490)

Goodwill

 

35,164 

Purchase consideration

 

62,059 

Less: cash acquired

 

(3,641)

Cash paid for acquisition less cash acquired

$

58,418 

 

 

 

Acquisition-related costs included in selling, general and administrative expenses

$

2,963 



(1)

Identifiable intangible assets were comprised of $4.2 million, $0.2 million and $0.1 million associated with IT’SUGAR’s trademark, favorable operating lease agreements, and a noncompetition agreement, respectively.

(2)

Identifiable intangible liabilities were comprised of unfavorable operating lease agreements.



The fair values reported in the above table have beenwere estimated by the Company using available market information and appropriate valuation methods. As considerable judgment is involved in estimates of fair value, the fair values presented above are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methods could have a material effect on the estimated fair value amounts.



The following summarizes the Company’s methodologies for estimating the fair values of certain assets and liabilities associated with IT’SUGAR:



Property and Equipment



Property and equipment acquired consisted primarily of leasehold improvements at IT’SUGAR’s retail stores.locations. The fair value of the leasehold improvements and other equipment was estimated based on the replacement cost approach.



Identifiable Intangible Assets and Liabilities



The identifiable intangible assets acquired primarily consisted of the fair value of IT’SUGAR’s trademark, which was estimated using the relief-from-royalty method, a form of the income approach. Under this approach, the fair value was estimated by calculating the present value using a risk-adjusted discount rate of the expected future royalty payments that would have to be paid if the IT’SUGAR trademark was not owned. 



F-23


The identifiable intangible assets and liabilities also included the fair value of IT’SUGAR’s operating lease agreements associated with its retail stores. The fair valuevalues of these assets and liabilities were estimated by calculating the present value using a risk-adjusted discount rate of the difference between the contractual amounts to be paid pursuant to the lease agreements and the estimate of market lease rates at the acquisition date.



The $4.2 million trademark intangible asset is being amortized over 15 years, and the $0.2 million of favorable lease agreements and the $0.7 million of unfavorable lease agreements arewere being amortized over a weighted average period of 6.5 years. Upon the Company’s adoption of the new lease accounting standard on January 1, 2019, the unamortized balances of the intangibles related to IT’SUGAR’s lease agreements were reclassified and included in the measurement of the right-of-use assets associated with the applicable lease agreements. The noncompetition agreement is being amortized over five years.



F-18


Goodwill



The goodwill recognized in connection with the acquisition reflects the difference between the estimated fair value of the net assets acquired and the Company’s consideration paid by BBX Sweet Holdings to acquire IT’SUGAR. The goodwill recognized in the acquisition is deductible for income tax purposes.



Pro Forma Information (unaudited)



The following unaudited pro forma financial data presents the Company’s revenues and earnings for the yearsyear ended December 31, 2017 and 2016 as if the acquisition was completed on January 1, 2016 (in thousands):





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

Pro Forma

 

Actual



 

For the Years Ended December 31,

 

For the Years Ended December 31,



 

2017

 

2016

 

2017

 

2016

Trade sales

$

179,356 

 

172,769 

 

142,798 

 

95,996 

Income before income taxes

$

94,046 

 

73,644 

 

93,374 

 

78,036 

Net income (1)

$

100,997 

 

38,965 

 

100,597 

 

41,657 

Net income attributable to shareholders (1)

$

82,626 

 

26,068 

 

82,195 

 

28,362 



Pro Forma

For the Year Ended December 31, 2017

Trade sales

$

178,643 

Income before income taxes

$

93,273 

Net income(1)

$

102,703 

Net income attributable to shareholders (1)

$

84,356 



(1)

The pro forma income before income taxes, net income, and net income attributable to shareholders for the year ended December 31, 2017 were adjusted to exclude $3.0 million of acquisition-related costs.



The unaudited pro forma financial data reported in the above table does not purport to represent what the actual results of the Company’s operations would have been assuming that the acquisition date was January 1, 2016, nor does it purport to predict the Company’s results of operations for future periods.



Noncontrolling Interest



Under the terms of IT’SUGAR’s operating agreement, JR Sugar may require the Company to purchase for cash its IT’SUGAR Class B Common Units of IT’SUGAR upon the occurrence of certain events, including events relating to the employment agreement between BBX Sweet Holdingsthe Company and the CEO of IT’SUGAR, as described below. The purchase price payable by the Company for such Class B Common Units will be determined based on the circumstance giving rise to such purchase obligation in accordance with prescribed formulas set forth in IT’SUGAR’s operating agreement. In addition, commencing on the seventh anniversary of the acquisition date, the Company shall have the right, but not the obligation, to require JR Sugar to sell its Class B Common Units to the Company in accordance with a prescribed formula set forth in IT’SUGAR’s operating agreement.



As a result of the redemption features, JR Sugar’s Class B Common Units are considered redeemable noncontrolling interests and reflected in the mezzanine section as a separate line item in the Company’s Consolidated Statementconsolidated statement of Financial Condition as of December 31, 2017.financial condition. As the noncontrolling interests are not currently subject to redemption but are probable of becoming redeemable in a future period, the Company will measureis measuring the noncontrolling interests by accreting changes in the estimated purchase price from the acquisition date to the earliest redemption date and may adjustadjusts the carrying amount of such interests to equal the calculated value in the event it is in excess of the carrying amount of such interests at such time.



F-24


Employment and Loan Agreements



In connection with the acquisition of IT’SUGAR, BBX Sweet Holdingsthe Company entered into an employment agreement with the founder and CEO of IT’SUGAR for his continued services as CEO of IT’SUGAR. Upon the occurrence of certain events constituting a breach of the employment agreement by the CEO resulting in his termination, the Company may exercise its ability to purchase JR Sugar’s Class B Common Units for cash for an amount equal to the lesser of the fair market value of such units determined in accordance with the prescribed formula set forth in IT’SUGAR’s operating agreement and the initial value ascribed to such units at the acquisition date. Similarly, upon the occurrence of certain “not for cause” termination events associated with the termination of the CEO’s employment, JR Sugar may require the Company to purchase its Class B Common Units for cash for an amount equal to the greater of the fair market value of such units determined in accordance with the prescribed formula set forth in IT’SUGAR’s operating agreement and the initial value ascribed to such units at the acquisition date.



Concurrent with the acquisition, JR Sugar borrowed $2.0 million from BBX Sweet Holdingsthe Company in the form of two promissory notes, as partial consideration for the purchase of its 9.6% ownership of IT’SUGAR’s Class B Common Units. The notes mature on June 16, 2024, and a portion of the aggregate principal balance and accrued interest of such notes maywill be forgiven on an annual basis provided that IT’SUGAR’s CEO continues to remain employed with BBX Sweet Holdingsthe Company pursuant to his employment agreement. The notes receivable are presented as a deduction from the balance of the related Class B Common Units included in redeemable noncontrolling interests in the Consolidated Statementconsolidated statement of Financial Condition as of December 31, 2017.

Merger of BCC

On December 15, 2016, the Company acquired all of the outstanding shares of BCC not previously owned by the Company. Pursuant to the terms of the Agreement and Plan of Merger, dated as of July 27, 2016, as amended on October 20, 2016, between BBX Capital, a wholly-owned subsidiary of BBX Capital (“Merger Sub”), and BCC (the “Merger Agreement”), BCC merged with and into Merger Sub and BCC is now a wholly owned subsidiary of BBX Capital.

Pursuant to the terms of the Merger Agreement, each share of BCC’s Class A Common Stock outstanding immediately prior to December 15, 2016 (other than shares held by the Company and shares as to which appraisal rights were exercised in accordance with Florida law) was converted into the right to receive, at the election of the holder thereof, either (i) $20.00 in cash, without interest (the “Cash Consideration”), or (ii) 5.4 shares of the Company’s Class A Common Stock (the “Stock Consideration” and, collectively with the Cash Consideration, the “Merger Consideration”). Shares of BCC’s Class A Common Stock which were converted into the right to receive Merger Consideration but as to which no election was made were converted into the right to receive Cash Consideration. Based on the foregoing, the Company paid to BCC’s shareholders a total of approximately $16.9 million of Cash Consideration and issued to BCC’s shareholders a total of approximately 12.0 million shares of the Company’s Class A Common Stock as Stock Consideration.

The merger was accounted for as an equity transaction as the Company increased its ownership interest in BCC and retained its controlling financial interest.  The Company held an approximately 82% equity interest in BCC prior to the Merger and, as a result of the Merger, the Company owns 100% of BCC.  Accounting for the merger as an equity transaction resulted in no gain or loss being recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income and the difference between the consideration paid and the amount of noncontrolling interest was recognized in additional paid-in capital.

Pursuant to the terms of the Merger Agreement, effective upon consummation of the Merger on December 15, 2016,  the Company adopted and assumed BCC’s 2014 Stock Incentive Plan, as amended, and BCC’s 2005 Restricted Stock and Option Plan, as amended (collectively, the “BCC Capital Equity Plans”). Options and restricted stock awards granted under the BCC Equity Plans and outstanding at December 15, 2016, including those held by the Company’s executive officers, other employees, and directors, were converted into BBX Capital’s options or restricted stock awards, as the case may be. As a result,  5,090,354 restricted shares of BBX Capital’s Class A Common Stock awards were issued in exchange for 942,657 restricted shares of BCC’s Class A Common Stock awards outstanding as of December 15, 2016 and BCC options to acquire 6,614 of BCC Class A Common Stock were exchanged for options to acquire 35,716 shares of the Company's Class A Common Stock pursuant to the terms of the Merger Agreement as of December 31, 2016.

condition.

 

 

F-2519

 


 

 

4.    Consolidated Variable Interest Entities



Bluegreen sells VOI notes receivable through special purpose finance entities. These transactions are generally structured as non-recourse to Bluegreen and are designed to provide liquidity for Bluegreen and to transfer the economic risks and benefits of the notes receivable to third parties. In a securitization, various classes of debt securities are issued by the special purpose finance entities that are generally collateralized by a single tranche of transferred assets, which consist of VOI notes receivable. Bluegreen services the securitized notes receivable for a fee pursuant to servicing agreements negotiated with third parties based on market conditions at the time of the securitization.securitization.



In these securitizations, Bluegreen generally retains a portion of the securities and continues to service the securitized notes receivable. Under these arrangements, the cash payments received from obligors on the receivables sold are generally applied monthly to pay fees to service providers, make interest and principal payments to investors, and fund required reserves, if any, with the remaining balance of such cash retained by Bluegreen; however, to the extent the portfolio of receivables fails to satisfy specified performance criteria (as(which may occur due to, among other things, an increase in default rates or credit loss severity) or other trigger events occur, the funds received from obligors are required to be distributed on an accelerated basis to investors. Depending on the circumstances and the transaction, the application of the accelerated payment formula may be permanent or temporary until the trigger event is cured. As of December 31, 2017,2019, Bluegreen was in compliance with all applicable terms under its securitization transactions, and no trigger events had occurred.



In accordance with the applicable accounting guidance for the consolidation of VIEs, Bluegreen analyzes its variable interests, which may consist of loans, servicing rights, guarantees, and equity investments, to determine if an entity in which Bluegreen has a variable interest is a VIE. The analysis includes a review of both quantitative and qualitative factors. Bluegreen bases its quantitative analysis on the forecasted cash flows of the entity and bases its qualitative analysis on the structure of the entity, including its decision-making ability and authority with respect to the entity, and relevant financial agreements. Bluegreen also uses its qualitative analysis to determine if Bluegreen must consolidate a VIE as the primary beneficiary. In accordance with the applicable accounting guidance, Bluegreen has determined these securitization entities to be VIEs of which Bluegreen is primary beneficiary and, therefore, Bluegreen consolidates the entities intoin its consolidated financial statements.



Under the terms of certain VOI notenotes receivable sales, Bluegreen has the right to repurchase or substitute a limited amount of defaulted notes for new notes receivable at the outstanding principal balance plus accrued interest. VoluntaryBluegreen’s voluntary repurchases and substitutions by Bluegreen of defaulted notes receivable during 2019, 2018 and 2017 2016 and 2015 were $9.5$11.5 million, $6.5$13.7 million, and $3.3$9.5 million, respectively. Bluegreen’s maximum exposure to loss relating to its non-recourse securitization entities is the difference between the outstanding VOI notes receivable and the notes payable, plus cash reserves and any additional residual interest in future cash flows from collateral.



Information related toThe table below sets forth information regarding the assets and liabilities of Bluegreen’s consolidated VIEs included in the Company’s Consolidated Statementsconsolidated statements of Financial Condition is set forth belowfinancial condition (in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

2017

 

2016

 

2019

 

2018

Restricted cash

$

19,488 

 

21,894 

 

$

22,534 

 

 

28,400 

Securitized notes receivable, net

 

282,599 

 

287,012 

 

292,590 

 

341,975 

Receivable backed notes payable - non-recourse

 

336,421 

 

327,358 

 

334,246 

 

382,257 



The restricted cash and the securitized notes receivable balances disclosed in the table above are restricted to satisfy obligations of the VIEs.

 

 

F-26


5.    Loans Receivable 

Loans receivable consisted of the following components (in thousands):



 

 

 

 



 

 

 

 



 

December 31,



 

2017

 

2016

Commercial non-real estate

$

789 

 

1,169 

Commercial real estate

 

4,615 

 

5,880 

Small business

 

1,585 

 

2,506 

Consumer

 

787 

 

1,799 

Residential

 

11,678 

 

14,167 

Total loans receivable

$

19,454 

 

25,521 

The underlying collateral for the real estate loan portfolio, except residential loans, was located primarily in Florida at December 31, 2017.  As of December 31, 2017, 27%,  33% and 13% of the residential loan portfolio underlying collateral was located in California, New York and Florida, respectively.

As of December 31, 2017, foreclosure proceedings were in process on $8.0 million of residential loans and $0.1 million of consumer loans.

The total discount on loans receivable was $2.3 million and $3.3 million as of December 31, 2017 and 2016, respectively.

The loan portfolio is segregated into five segments: commercial non-real estate loans, commercial real estate loans, small business loans, consumer loans, and residential loans described below: 

Commercial non-real estate -  represents loans secured by general corporate assets of the borrowers’ business.

Commercial real estate - represents loans for acquisition, development and construction of various types of properties.

Small business – consists of loans originated to businesses in principal amounts that do not generally exceed $2.0 million. The principal source of repayment for these loans is generally from the cash flow of a business.

Consumer - consists of loans to individuals originated through BankAtlantic’s branch network. Consumer loans are generally home equity lines of credit secured by a second mortgage on the primary residence of the borrower.

Residential – represents loans secured by one to four dwelling units.

Credit Quality Information

The Company assesses loan credit quality by monitoring delinquencies and current loan to value ratios. 

The recorded investment (unpaid principal balance less charge-offs and discounts)  in non-accrual loans receivable was as follows (in thousands):



 

 

 

 



 

 

 

 



 

December 31,

Loan Class

 

2017

 

2016

Commercial non-real estate

$

789 

 

1,169 

Commercial real estate

4,615 

 

5,880 

Small business

 

1,585 

 

2,506 

Consumer

 

715 

 

1,701 

Residential

 

10,355 

 

12,762 

Total nonaccrual loans

$

18,059 

 

24,018 

F-27


An age analysis of the past due recorded investment in loans receivable as of December 31, 2017 and 2016 was as follows (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Total



 

31-59 Days

 

60-89 Days

 

90 Days

 

Total

 

 

 

Loans

December 31, 2017

 

Past Due

 

Past Due

 

or More (1)

 

Past Due

 

Current

 

Receivable

Commercial non-real estate

$

 -

 

 -

 

789 

 

789 

 

 -

 

789 

Commercial real estate

 

 -

 

 -

 

2,996 

 

2,996 

 

1,619 

 

4,615 

Small business

 

 -

 

 -

 

 -

 

 -

 

1,585 

 

1,585 

Consumer

 

25 

 

168 

 

291 

 

484 

 

303 

 

787 

Residential

 

297 

 

21 

 

7,995 

 

8,313 

 

3,365 

 

11,678 

Total

$

322 

 

189 

 

12,071 

 

12,582 

 

6,872 

 

19,454 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Total



 

31-59 Days

 

60-89 Days

 

90 Days

 

Total

 

 

 

Loans

December 31, 2016

 

Past Due

 

Past Due

 

or More (1)

 

Past Due

 

Current

 

Receivable

Commercial non-real estate

$

 -

 

 -

 

330 

 

330 

 

839 

 

1,169 

Commercial real estate

 

 -

 

 -

 

3,986 

 

3,986 

 

1,894 

 

5,880 

Small business

 

 -

 

 -

 

 -

 

 -

 

2,506 

 

2,506 

Consumer

 

23 

 

 -

 

467 

 

490 

 

1,309 

 

1,799 

Residential

 

609 

 

231 

 

9,541 

 

10,381 

 

3,786 

 

14,167 

Total

$

632 

 

231 

 

14,324 

 

15,187 

 

10,334 

 

25,521 

1)

There were no loans that were 90 days or more past due and still accruing interest as of December 31, 2017 or 2016.

The activity in the allowance for loan losses for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands): 



 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

 

For the Years Ended December 31,



 

 

2017

 

2016

 

2015

Allowance for Loan Losses:

 

 

 

 

 

 

 

Beginning balance

 

$

 -

 

 -

 

977 

     Charge-offs

 

 

(137)

 

(156)

 

(1,037)

     Recoveries

 

 

7,632 

 

20,664 

 

13,517 

     Provision

 

 

(7,495)

 

(20,508)

 

(13,457)

Ending balance

 

$

 -

 

 -

 

 -

Ending balance individually evaluated for impairment

 

$

 -

 

 -

 

 -

Ending balance collectively evaluated for impairment

 

 

 -

 

 -

 

 -

Total

 

$

 -

 

 -

 

 -

Loans receivable:

 

 

 

 

 

 

 

Ending balance individually evaluated for impairment

 

$

16,728 

 

21,363 

 

12,849 

Ending balance collectively evaluated for impairment

 

 

2,726 

 

4,158 

 

21,186 

Total

 

$

19,454 

 

25,521 

 

34,035 

Proceeds from loan sales

 

$

1,666 

 

 -

 

68 

Transfer to loans held-for-sale

 

$

1,029 

 

 -

 

 -

Transfer from loans held-for-sale

 

$

 -

 

16,078 

 

7,365 

Impaired Loans

Loans are considered impaired when, based on current information and events, management believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impairment is evaluated based on past due status for consumer and residential loans. Impairment is evaluated for commercial and small business loans based on payment history and cash flow associated with the collateral or business. Collateral

F-28


dependent impaired loans are charged down to the fair value of collateral less cost to sell. Interest payments on impaired loans are recognized on a cash basis as interest income. Impaired loans, or portions thereof, are charged off when deemed uncollectible.    

Individually impaired loans as of December 31, 2017 and 2016 were as follows (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

As of December 31, 2017

 

As of December 31, 2016



 

 

 

Unpaid

 

 

 

 

 

Unpaid

 

 



 

Recorded

 

Principal

 

Related

 

Recorded

 

Principal

 

Related



 

Investment

 

Balance

 

Allowance

 

Investment

 

Balance

 

Allowance

Total with allowance recorded

$

 -

 

 -

 

 -

 

 -

 

 -

 

 -

Total with no allowance recorded

 

18,667 

 

30,321 

 

 -

 

24,188 

 

39,901 

 

 -

Total

$

18,667 

 

30,321 

 

 -

 

24,188 

 

39,901 

 

 -

Average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2017 and 2016 were as follows (in thousands):



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2017

 

2016



 

Average Recorded

 

Interest Income

 

Average Recorded

 

Interest Income



 

Investment

 

Recognized

 

Investment

 

Recognized

Total with allowance recorded

$

 -

 

 -

 

 -

 

 -

Total with no allowance recorded

 

20,686 

 

647 

 

24,573 

 

657 

Total

$

20,686 

 

647 

 

24,573 

 

657 

Individually impaired loans and the average recorded investment and interest income recognized on impaired loans as of December 31, 2015 were as follows (in thousands):



 

 

 

 

 

 

 

 

 

 



 

As of

 

For the Year Ended



 

December 31, 2015

 

December 31, 2015



 

 

 

Unpaid

 

 

 

Average

 

 



 

Recorded

 

Principal

 

Related

 

Recorded

 

Interest



 

Investment

 

Balance

 

Allowance

 

Investment

 

Income

Total with allowance recorded

$

 -

 

 -

 

 -

 

 -

 

 -

Total with no allowance recorded

 

17,380 

 

30,212 

 

 -

 

22,186 

 

1,299 

Total

$

17,380 

 

30,212 

 

 -

 

22,186 

 

1,299 

Impaired loans without allowances represent loans that were written-down to the fair value of the collateral less cost to sell, loans in which the collateral value less cost to sell was greater than the carrying value of the loan, loans in which the present value of the cash flows discounted at the loans’ effective interest rate was equal to or greater than the carrying value of the loans, or loans that were collectively measured for impairment.

There were no commitments to lend additional funds on impaired loans as of December 31, 2017.

F-2920

 


 

 

65.    Notes Receivable



The table below providessets forth information relating toregarding Bluegreen’s notes receivable and related allowance for creditloan losses as of December 31, 2017 and 2016 (in(dollars in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

2017

 

2016

 

2019

 

2018

Notes receivable:

 

 

 

 

 

 

 

 

 

 

VOI notes receivable - non-securitized

$

184,971 

 

175,123 

 

$

203,872 

 

124,642 

VOI notes receivable - securitized

 

364,349 

 

369,259 

 

385,326 

 

447,850 

Notes receivable secured by homesites(1)

 

1,329 

 

1,688 

 

 

659 

 

 

898 

Gross notes receivable

 

550,649 

 

546,070 

 

 

589,857 

 

 

573,390 

Allowance for credit losses - non-securitized

 

(37,098)

 

(33,343)

Allowance for credit losses - securitized

 

(81,750)

 

(82,247)

Allowance for loan losses - non-securitized

 

(47,894)

 

(28,258)

Allowance for loan losses - securitized

 

(92,736)

 

(105,875)

Allowance for loan losses - homesites (1)

 

 

(65)

 

 

(90)

Notes receivable, net

$

431,801 

 

430,480 

 

$

449,162 

 

 

439,167 

Allowance as a % of gross notes receivable

 

22% 

 

21% 

 

 

24% 

 

 

23% 



(1)

Notes receivable secured by homesites were originated through a business, substantially all of the assets of which were sold by Bluegreen in 2012.    



The weighted-average interest rate on Bluegreen’s notes receivable was 15.3%14.9% and 15.7%15.1% at December 31, 20172019 and 2016,2018, respectively. Bluegreen’s notes receivable secured by VOI notes receivable bear interest at fixed rates.  Bluegreen’s VOI notes receivablerates and are generally secured by property located in Florida, Missouri, Nevada, South Carolina, Tennessee, and Wisconsin.



FutureThe table below sets forth future principal payments due on Bluegreen’s notes receivable (including notes receivable secured by homesites) during each of the five years subsequent to December 31, 20172019 and thereafter are set forth below (in thousands):





 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

December 31, 2019

2018

$

62,360 

2019

 

56,879 

2020

 

59,500 

 

$

62,808 

2021

 

63,061 

 

 

62,320 

2022

 

66,246 

 

 

67,086 

2023

 

 

70,589 

2024

 

 

72,559 

Thereafter

 

242,603 

 

 

254,495 

$

550,649 

Gross notes receivable

 

$

589,857 



Credit Quality of Notes Receivable and the Allowance for CreditLoan Losses



Bluegreen monitors the credit quality of its receivables on an ongoing basis. Bluegreen holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility based on pools of receivables.receivables as Bluegreen does not believe that there are significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating future creditloan losses, Bluegreen’s managementBluegreen does not use a single primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a static pool analysis that incorporates the aging of the respective receivables, default trends, and prepayment rates by origination year, as well as the FICO scores of the borrowers.



The activity in Bluegreen’s allowance for creditloan losses (including notes receivable secured by homesites) was as follows (in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

2017

 

2016

 

2015

 

2019

 

2018

 

2017

Balance, beginning of period

$

115,590 

 

110,714 

 

102,566 

 

$

134,223 

 

 

123,791 

 

 

120,270 

Provision for credit losses

 

46,149 

 

44,337 

 

42,062 

Provision for loan losses

 

55,677 

 

51,236 

 

46,412 

Write-offs of uncollectible receivables

 

(42,891)

 

(39,461)

 

(33,914)

 

 

(49,205)

 

 

(40,804)

 

 

(42,891)

Balance, end of period

$

118,848 

 

115,590 

 

110,714 

 

$

140,695 

 

 

134,223 

 

 

123,791 

 

F-3021

 


 

 

The table below sets forth information regarding the percentage of gross VOI notes receivable outstanding by FICO score at origination:



 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

December 31,

FICO Score

 

2019

 

 

2018

700+

 

59.00 

%

 

 

57.00 

%

600-699

 

37.00 

 

 

 

39.00 

 

<600

 

3.00 

 

 

 

3.00 

 

No score (1)

 

1.00 

 

 

 

1.00 

 

Total

 

100.00 

%

 

 

100.00 

%

(1)

VOI notes receivables without a FICO score are primarily related to foreign borrowers.



The following table showsbelow sets forth information regarding the delinquency status of Bluegreen’s VOI notes receivable as of December 31, 2017 and 2016 (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

2017

 

2016

 

2019

 

2018

Current

$

525,482 

 

521,536 

 

$

557,849 

 

 

541,783 

31-60 days

 

6,088 

 

6,378 

 

6,794 

 

 

5,783 

61-90 days

 

4,897 

 

5,082 

 

5,288 

 

 

4,516 

> 90 days (1)

 

12,853 

 

11,386 

> 91 days (1)

 

 

19,267 

 

 

20,410 

Total

$

549,320 

 

544,382 

 

$

589,198 

 

 

572,492 



(1)

Includes $7.6$10.6 million and $5.3$14.3 million of VOI notes receivable as of December 31, 20172019 and 2016,2018, respectively, related to VOI notes receivable that, as of such date, had defaulted but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of Bluegreen's receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for creditloan losses.  

 

7.6.     Trade Inventory



The Company’s trade inventory consistsconsisted of the following as of December 31, 2017 and 2016 (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

2017

 

2016

 

2019

 

2018

Raw materials

$

3,320 

 

5,059 

 

$

3,048 

 

 

2,718 

Paper goods and packaging materials

 

865 

 

2,090 

 

 

1,327 

 

1,122 

Finished goods

 

19,717 

 

7,577 

 

 

18,468 

 

 

16,270 

Total

$

23,902 

 

14,726 

Total trade inventory

 

$

22,843 

 

 

20,110 





Included in cost of trade sales for the years ended December 31, 2017, 2016 and 2015 was $1.7 million, $4.7 million and $1.7 million, respectively, of inventory write-downs.

8.7.     VOI Inventory



Bluegreen’s VOI inventory consisted of the following (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

2017

 

2016

 

 

2019

 

 

2018

Completed VOI units

$

194,503 

 

156,401 

 

$

269,847 

 

$  

237,010 

Construction-in-progress

 

22,334 

 

10,427 

 

3,946 

 

 

26,587 

Real estate held for future VOI development

 

64,454 

 

71,706 

 

 

73,144 

 

 

70,552 

Total VOI Inventory

$

281,291 

 

238,534 

Total VOI inventory

 

$

346,937 

 

$

334,149 



In September 2016, Bluegreen increased the average selling price of its VOIs by 5%3% in December 2018 and 4%  in June 2017, Bluegreen increased the average selling price of its VOIs by 4%.2017. As a result of these pricing changes, Bluegreen’s management increased its estimate of total gross margin generated on the sale of its VOI inventory. Under the relative sales value method prescribed for timeshare developers to relieve the cost of VOI inventory, changes to the estimate of gross margin expected to be generated on the sale of VOI inventory are recognized on a retrospective basis in earnings. Accordingly, during 2017the years ended December 31, 2018 and 2016,2017, Bluegreen recognized a benefit to cost of VOIs sold of $3.6 million and $5.1 million, and $5.6 million, respectively.

The interest expense reflectedrespectively, in the Company’s Consolidated Statements of Operations and Comprehensive Income is net of capitalized interest. Interest capitalized to VOI inventory was $1.1 million, $0.4 million and $0.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.

connection with these pricing changes.  No such pricing change occurred in 2019.

 

 

F-3122

 


 

 

9.8.    Real Estate  



RealThe Company’s real estate consisted of the following (in thousands):







 

 

 

 



 

December 31,



 

2017

 

2016

Real estate held-for-sale

 

 

 

 

Land

$

20,528 

 

28,701 

Rental properties

 

6,181 

 

1,748 

Residential single-family

 

1,119 

 

2,896 

Total real estate held-for-sale

 

27,828 

 

33,345 



 

 

 

 

Real estate held-for-investment

 

 

 

 

Land

 

13,066 

 

11,524 

Other

 

839 

 

880 

Total real estate held-for-investment

 

13,905 

 

12,404 



 

 

 

 

Real estate inventory

 

26,803 

 

15,254 

Total real estate

$

68,536 

 

61,003 



 

 

 

 

 

 



 

December 31,



 

2019

 

2018

Real estate held-for-sale

 

$

11,297 

 

 

20,202 

Real estate held-for-investment

 

 

6,015 

 

 

10,976 

Real estate inventory

 

 

48,506 

 

 

23,778 

Total real estate

 

$

65,818 

 

 

54,956 



The amount of interest capitalized to real estate inventory forDuring the yearsyear ended December  31, 20172019, the Company sold various real estate assets that were classified as held-for-sale or held-for-investment, including its remaining land parcels located at PGA Station in Palm Beach Gardens, Florida and 2016various land parcels located in Florida, as well as RoboVault, a self-storage facility in Fort Lauderdale, Florida that was $1.4previously classified in property and equipment. As a result of these sales, the Company recognized total net gains on sales of real estate of $13.6 million and $0, respectively. 

The following table presents real estate held-for-sale valuation allowance activity forreceived aggregate net proceeds of $35.2 million during the yearsyear ended December 31, 2017, 2016 and 2015 (in thousands):



 

 

 

 

 

 



 

 

 

 

 

 



 

For the Years Ended December 31,



 

2017

 

2016

 

2015

Beginning of period

$

5,240 

 

4,400 

 

2,940 

Transfer to held-for-investment

 

 -

 

 -

 

(93)

Impairments, net (1)

 

1,696 

 

3,563 

 

3,089 

Sales

 

(3,837)

 

(2,723)

 

(1,536)

End of period

$

3,099 

 

5,240 

 

4,400 

(1)  Tax certificate impairments are not included.2019.  

 

0

109.     Investments in Unconsolidated Real Estate Joint Ventures



As of December 31, 2017,2019, the Company had equity interests in 16 unconsolidated real estate joint ventures involved in the development of multifamily apartment and townhome communities, as well as single-family master planned communities,communities. In addition, the Company owns a 50% equity interest in the Altman Companies, a developer and manager of multifamily apartment facilities and retail centers.  communities.

Investments in unconsolidated real estate joint ventures are accounted for as unconsolidated variable interest entities.VIEs. See Note 4 for information regarding the Company’s investments in consolidated variable interest entities.VIEs.



Investments in unconsolidated real estate joint ventures consisted of the following (in thousands):



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

December 31,

 



 

2019

 

 

Ownership(1)

 

2018

 

Altis at Lakeline - Austin Investors, LLC

 

$

242 

 

%

34.47 

 

$

4,531 

 

Altis at Grand Central Capital, LLC

 

 

2,653 

 

 

11.07 

 

 

2,549 

 

Altis Promenade Capital, LLC

 

 

2,126 

 

 

6.61 

 

 

2,195 

 

Altis at Bonterra - Hialeah, LLC

 

 

618 

 

 

96.73 

 

 

21,602 

 

Altis Ludlam - Miami Investor, LLC

 

 

1,081 

 

 

33.30 

 

 

675 

 

Altis Suncoast Manager, LLC

 

 

753 

 

 

33.30 

 

 

1,857 

 

Altis Pembroke Gardens, LLC

 

 

1,277 

 

 

0.41 

 

 

1,284 

 

Altis Fairways, LLC

 

 

1,880 

 

 

0.42 

 

 

1,876 

 

Altis Wiregrass, LLC

 

 

1,792 

 

 

2.22 

 

 

1,897 

 

Altis LH-Miami Manager, LLC

 

 

811 

 

 

3.43 

 

 

 —

 

Altis Vineland Pointe Manager, LLC

 

 

4,712 

 

 

50.00 

 

 

 —

 

Altis Miramar East/West

 

 

2,631 

 

 

5.00 

 

 

 —

 

The Altman Companies, LLC (2)

 

 

14,745 

 

 

50.00 

 

 

14,893 

 

ABBX Guaranty, LLC

 

 

3,750 

 

 

50.00 

 

 

2,500 

 

Sunrise and Bayview Partners, LLC

 

 

1,562 

 

 

50.00 

 

 

1,439 

 

PGA Design Center Holdings, LLC

 

 

996 

 

 

40.00 

 

 

691 

 

CCB Miramar, LLC

 

 

5,999 

 

 

70.00 

 

 

1,575 

 

BBX/Label Chapel Trail Development, LLC

 

 

1,126 

 

 

46.75 

 

 

4,515 

 

L03/212 Partners, LLC

 

 

2,087 

 

 

3.41 

 

 

 —

 

PGA Lender, LLC

 

 

2,111 

 

 

45.88 

 

 

 —

 

Sky Cove, LLC

 

 

4,178 

 

 

26.25 

 

 

 —

 

All other investments in real estate joint ventures

 

 

200 

 

 

 

 

 

659 

 

Total

 

$

57,330 

 

 

 

 

$

64,738 

 

(1)

The Company’s ownership percentage in each real estate joint venture represents the Company’s percentage of the contributed capital in each venture. The operating agreements for many of these ventures provide for a disproportionate allocation of distributions to the extent that certain investors receive specified returns on their investments, and as a result, these percentages do not necessarily reflect the Company’s economic interest in the expected distributions from such ventures. 

 

F-3223

 


 

 

(2)

The investment in The Altman Companies, LLC includes $2.3 million of transaction costs that were incurred in connection with the formation of the joint venture. See additional information below in this Note 9 regarding the Company’s acquisition of its interest in the Altman Companies, LLC.

Unconsolidated Variable Interest Entities

In accordance with the applicable accounting guidance for the consolidation of VIEs, the Company had the followinganalyzes its investments in unconsolidated real estate joint ventures (in thousands):



 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

December 31,

 

BBX Capital

 

Investment in unconsolidated real estate joint ventures

 

2017

 

2016

 

% Ownership

 

Altis at Kendall Square, LLC

$

78 

 

154 

 

20.24

%

Altis at Lakeline - Austin Investors LLC

 

4,156 

 

5,165 

 

33.74

 

New Urban/BBX Development, LLC

 

1,556 

 

907 

 

50.00

 

Sunrise and Bayview Partners, LLC

 

1,499 

 

1,574 

 

50.00

 

Hialeah Communities, LLC

 

467 

 

2,758 

 

57.00

 

PGA Design Center Holdings, LLC

 

1,862 

 

1,904 

 

40.00

 

CCB Miramar, LLC

 

1,225 

 

875 

 

35.00

 

Centra Falls, LLC

 

159 

 

595 

 

7.14

 

The Addison on Millenia Investment, LLC

 

5,525 

 

5,935 

 

48.00

 

BBX/S Millenia Blvd Investments, LLC

 

5,218 

 

5,095 

 

90.00

 

Altis at Bonterra - Hialeah, LLC

 

16,922 

 

17,626 

 

95.00

 

Altis at Shingle Creek Manager, LLC

 

338 

 

332 

 

2.50

 

Altis at Grand Central Capital, LLC

 

1,872 

 

 -

 

10.54

 

Centra Falls II, LLC

 

551 

 

571 

 

7.14

 

BBX/Label Chapel Trail Development, LLC

 

4,885 

 

 -

 

46.75

 

Altis Promenade Capital, LLC

 

962 

 

 -

 

5.00

 

Investments in unconsolidated real estate joint ventures

$

47,275 

 

43,491 

 

 

 

Theto determine if such entities are VIEs, and to the extent that such entities are VIEs, if the Company analyzedis the primary beneficiary. Based on the Company’s analysis of the forecasted cash flows and structure of these ventures, including the respective operating agreements governing these entities and any relevant financial agreements, such as financing arrangements, the Company has determined that its investments in unconsolidated real estate joint ventures and determined that itare VIEs in which the Company is not the primary beneficiary, and therefore, the Company accounts for its investments in the real estate joint ventures are accounted for under the equity method of accounting. The conclusions wereCompany’s conclusion that it is not the primary beneficiary of these entities is primarily based primarily on the determination that the Company does not have the power to direct activities of the joint venturesentities that most significantly affect their economic performance. In many of the joint ventures’ economic performance asventures, the Company onlyis not the operating manager and has limited protective rights under the operating agreements, is not the manager of the joint ventures and does not have day-to-day decision making authority.   Additionally, in the majority of the joint ventures the managing member guarantees the indebtedness of the joint venture andwhile in certain joint ventures, the managing member is responsible for construction cost overruns.  investors share decision-making authority in a manner that prevents any individual investor from exercising power over such entities.

The Company’s maximum exposure to loss exposure in its unconsolidated real estate joint ventures was $49.8$59.8 million as of December 31, 2017.2019.



In certain joint ventures, the Company transferred land to the joint venture as an initial capital contribution resulting in deferred gains and joint venture basis adjustments.  The Company accounted for the contribution of land to the joint ventures on the cost recovery method.  Included in other liabilities in the Company’s Consolidated Statements of Financial Condition as of December 31, 2017 and 2016 was $0.4 million and $0.9 million, respectively, of deferred gains associated with these land transfers.  During the years ended December 31, 2017, 2016 and 2015 the Company recognized $0.5 million, $2.3 million and $0 of deferred gains in net gains on sales of assets in the Company’s Statements of Operations, respectively, upon sales by joint ventures of single-family homes and a multifamily apartment facility. Basis Differences



DifferencesThe aggregate difference between the netCompany’s investments in unconsolidated real estate joint ventures and theits underlying equity in the net assets of the jointsuch ventures result from basis adjustments and the capitalization of interest. 

The aggregate amount of interest capitalized associated with land development activities of the real estate joint ventures for the years ended December 31, 2017, 2016 and 2015 was $0.3 million, $0.9$9.2 million and $0.5$11.9 million respectively. 

The aggregate amount of real estate joint venture basis adjustments as of December 31, 20172019 and 2016 was $5.52018, respectively, which includes $8.5 million and $7.6$10.3 million respectively.  Includedassociated with the Company’s investment in the Company’s Consolidated StatementAltman Companies and certain multifamily apartment developments which were acquired for cash consideration based on their estimated fair values as of Operationsthe acquisition date, as described below, and Comprehensive Income for the years ended December 31, 2017 and 2016 was $2.0$0.7 million and $1.5$1.6 million respectively, of equity earnings associated with basis adjustments from joint ventures arising from sales by jointthe capitalization of interest on real estate development projects.



F-33


venturesEquity in Net Earnings of single-family homes. There were no real estate joint venture basis adjustments in equity earnings for the year ended December 31, 2015.Unconsolidated Real Estate Joint Ventures



For the years ended December 31, 2019, 2018 and 2017, and 2016, the Company’s equity in net earnings of unconsolidated real estate joint ventures was $14.5$37.9 million, $14.2 million and $13.6$12.5 million, respectively, of which $12.1respectively.  

Equity earnings for the year ended December 31, 2019 includes $29.2 million and $9.5$5.0 million in equity earnings from the Altis at Bonterra and the Altis at Lakeline joint ventures, respectively, waswhich includes the Company’s share of gains recognized by the ventures upon the sale of their respective multifamily apartment communities. Equity earnings for the year ended December 31, 2018 includes $9.3 million in equity earnings from the Addison on Millenia joint venture, which includes the Company’s share of the gain recognized by the venture upon the sale of its multifamily apartment community. Equity earnings for the year ended December 31, 2017 includes $11.0 million in equity earnings from the Hialeah Communities real estate joint venture.  The condensed Statements of Financial Condition as of December 31, 2017 and 2016, and the condensed Statements of Operations for the years ended December 31, 2017, 2016 and 2015 for the Hialeah Communities joint venture, are as follows (in thousands):



 

 

 

 



 

 

 

 



 

December 31,



 

2017

 

2016

Assets

 

 

 

 

Cash

$

1,750 

 

2,719 

Real estate inventory

 

221 

 

28,246 

Properties and equipment

 

 -

 

439 

Other assets

 

137 

 

1,387 

Total assets

$

2,108 

 

32,791 

Liabilities and Equity

 

 

 

 

Notes payable

$

161 

 

16,278 

Other liabilities

 

1,347 

 

8,628 

Total liabilities

 

1,508 

 

24,906 

Total equity

 

600 

 

7,885 

Total liabilities and equity

$

2,108 

 

32,791 



 

 

 

 

 

 



 

 

 

 

 

 



 

For the Years Ended December 31,



 

2017

 

2016

 

2015

Total revenues

$

80,407 

 

84,860 

 

17 

Costs of sales

 

(51,072)

 

(62,315)

 

 -

Other expenses

 

(5,134)

 

(4,562)

 

(1,340)

Net earnings (losses)

$

24,201 

 

17,983 

 

(1,323)

Equity in net earnings (losses) of unconsolidated real estate joint venture - Hialeah Communities, LLC

$

12,067 

 

9,547 

 

(747)

which reflects the Company’s share of the profits recognized by the venture upon the sale of single-family homes in its master planned community.



11.    Property and EquipmentThe Altman Companies, LLC



PropertyIn November 2018, the Company acquired a 50% equity interest in the Altman Companies, a joint venture between the Company and equipment was comprisedJoel Altman (“JA”) engaged in the development, construction, and management of (in thousands):multifamily apartment communities, for cash consideration of $14.6 million, including $2.3 million in transaction costs.

The Altman Companies owns 100% of the membership interests in Altman Development Company and Altman Management Company and 60% of the membership interests in Altman-Glenewinkel Construction and generates revenues from the performance of development, general contractor, leasing, and property management services to joint ventures that are formed to invest in development projects originated by the Altman Companies. In addition, the Company and JA invest in the managing member of such joint ventures based on their relative ownership percentages in the Altman Companies.

Pursuant to the operating agreement of the Altman Companies, the Company will acquire an additional 40% equity interest in the Altman Companies from JA for a purchase price of $9.4 million in January 2023, and JA can also, at his option or in other predefined circumstances, require the Company to purchase his remaining 10% equity interest in the Altman Companies for $2.4 million. However, JA will retain his membership interests, including his decision making rights, in the managing member of any development joint ventures that are originated prior to the Company’s acquisition of additional equity interests in the Altman Companies. In addition, in certain circumstances, the Company may acquire the 40% membership interests in Altman-Glenewinkel Construction that are not owned by the Altman Companies for a purchase price based on prescribed formulas in the operating agreement of Altman-Glenewinkel Construction.







 

 

 

 

 



 

 

 

 

 



 

December 31,

 



 

2017

 

2016

 



 

 

 

 

 

Land, building and building improvements

$

67,538 

 

73,883 

 

Leasehold improvements

 

32,419 

 

11,912 

 

Office equipment, furniture and fixtures

 

76,186 

 

65,284 

 

Transportation

 

670 

 

453 

 



 

176,813 

 

151,532 

 

Accumulated depreciation

 

(63,955)

 

(55,534)

 

Property and equipment, net

$

112,858 

 

95,998 

 

 

F-3424

 


 

 

Under the terms of the operating agreement of the Altman Companies, the venture is being jointly managed by the Company and JA until the Company’s acquisition of the additional 40% equity interest from JA, with the partners sharing decision making authority for all significant operating and financing decisions. To the extent that the parties cannot reach consensus on a matter, the operating agreement generally provides that a third party will resolve such matter; however, for certain decisions, the operating agreement provides that the venture cannot proceed with such matters without approval from both parties.



IncludedIn connection with its investment in the Altman Companies, the Company acquired interests in the managing member of seven multifamily apartment developments, including four developments in which the Company had previously invested as a non-managing member, for aggregate cash consideration of $8.8 million. In addition, the Company and JA have each contributed $3.8 million to ABBX Guaranty, LLC, a joint venture established to provide guarantees on the indebtedness and construction cost overruns of new real estate joint ventures formed by the Altman Companies.

Summarized Financial Information of Certain Unconsolidated Real Estate Joint Ventures

The tables below set forth financial information, including condensed statements of financial condition and operations, related to Altis at Bonterra – Hialeah, LLC (in thousands):



 

 

 

 

 

 



 

 

 

 

 

 



 

December 31,



 

2019

 

2018

Assets

 

 

 

 

 

 

Cash

 

$

855 

 

 

3,777 

Restricted cash

 

 

559 

 

 

256 

Real estate

 

 

 —

 

 

55,734 

Other assets

 

 

 —

 

 

134 

Total assets

 

$

1,414 

 

 

59,901 

Liabilities and Equity

 

 

 

 

 

 

Notes payable

 

$

 —

 

 

38,641 

Other liabilities

 

 

751 

 

 

571 

Total liabilities

 

 

751 

 

 

39,212 

Total equity

 

 

663 

 

 

20,689 

Total liabilities and equity

 

$

1,414 

 

 

59,901 



 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2019

 

2018

 

2017

Total revenues

 

$

4,498 

 

 

6,510 

 

 

1,851 

Gain on sale of real estate

 

 

33,843 

 

 

 —

 

 

 —

Other expenses

 

 

(4,480)

 

 

(5,937)

 

 

(2,657)

Net earnings

 

$

33,861 

 

 

573 

 

 

(806)

Equity in net earnings of unconsolidated real estate joint venture - Altis at Bonterra - Hialeah, LLC

 

$

29,221 

 

 

544 

 

 

(766)

F-25


The tables below set forth financial information, including condensed statements of financial condition and operations, related Addison on Millenia joint venture (in thousands):



 

 

 

 

 

 



 

 

 

 

 

 



 

 

December 31,



 

 

2019

 

 

2018

Assets

 

 

 

 

 

 

Cash

 

$

 —

 

 

68 

Properties and equipment

 

 

 —

 

 

 —

Other assets

 

 

 —

 

 

86 

Total assets

 

$

 —

 

 

154 

Liabilities and Equity

 

 

 

 

 

 

Notes payable

 

$

 —

 

 

 —

Other liabilities

 

 

 —

 

 

12 

Total liabilities

 

 

 —

 

 

12 

Total equity

 

 

 —

 

 

142 

Total liabilities and equity

 

$

 —

 

 

154 



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

 

2019

 

 

2018

 

2017

Net gains on sales of real estate assets

 

$

 —

 

 

22,203 

 

 

 —

Other revenue

 

 

 —

 

 

3,858 

 

 

1,303 

Total revenues

 

$

 —

 

 

26,061 

 

 

1,303 

Total expenses

 

 

 —

 

 

(2,266)

 

 

(1,794)

Net earnings (losses)

 

 

 —

 

 

23,795 

 

 

(491)

Equity in net earnings of unconsolidated real estate joint venture - The Addison at Millenia Investment, LLC

 

$

 —

 

 

9,283 

 

 

(146)

The tables below set forth financial information, including condensed statements of financial condition and operations, related to Altis at Lakeline – Austin Investors, LLC (in thousands):



 

 

 

 

 

 



 

 

 

 

 

 



 

December 31,



 

2019

 

2018

Assets

 

 

 

 

 

 

Cash

 

$

628 

 

 

2,403 

Restricted cash

 

 

 

 

229 

Real estate

 

 

 —

 

 

42,940 

Other assets

 

 

144 

 

 

108 

Total assets

 

$

777 

 

 

45,680 

Liabilities and Equity

 

 

 

 

 

 

Notes payable

 

$

 —

 

 

33,467 

Other liabilities

 

 

 —

 

 

1,835 

Total liabilities

 

 

 —

 

 

35,302 

Total equity

 

 

777 

 

 

10,378 

Total liabilities and equity

 

$

777 

 

 

45,680 



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2019

 

2018

 

2017

Total revenues

 

$

1,458 

 

 

5,842 

 

 

3,528 

Gain on sale of real estate

 

 

17,178 

 

 

 —

 

 

 —

Other expenses

 

 

(1,801)

 

 

(6,746)

 

 

(6,028)

Net earnings

 

$

16,835 

 

 

(904)

 

 

(2,500)

F-26


Equity in net earnings of unconsolidated real estate joint venture - Altis at Lakeline - Austin Investors, LLC

$

5,029 

(312)

(862)

10.    Property and Equipment

The Company’s property and equipment consisted of the following (in thousands): 



 

 

 

 

 

 



 

December 31,



 

2019

 

2018

Land, building and building improvements

 

$  

70,647 

 

 

80,887 

Leasehold improvements

 

 

45,993 

 

 

41,278 

Office equipment, furniture, fixtures and software

 

 

86,941 

 

 

86,759 

Transportation

 

 

1,000 

 

 

3,097 



 

 

204,581 

 

 

212,021 

Accumulated depreciation

 

 

(74,895)

 

 

(72,393)

Property and equipment, net

 

$  

129,686 

 

 

139,628 

During the years ended December 31, 2019, 2018, and 2017, the Company recognized approximately $21.4 million, $20.2 million, and $15.6 million, respectively, of depreciation expense related to its property and equipment which is reflected in selling, general and administrative expenses and cost of trade sales in the Company’s Consolidated Statementsstatements of Operationsoperations and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015 was approximately $15.8 million, $12.4 million and $11.4 million, respectively, of depreciation expense. comprehensive income.

During the year ended December 31, 2017,2019, the Company recognized $0.7$6.7 million of impairmentsimpairment losses associated with its manufacturing facility in Utah.related to the disposal of seven MOD Pizza restaurant locations and the closure of two additional locations, which was primarily comprised of the write-off of leasehold improvements, furniture, and fixtures at the locations. See Note 1 for further discussion.



During the year ended December 31, 2019, Bluegreen conveyed the ski and golf operations and related property at one of its resorts to the HOA, which resulted in a loss on the disposal of approximately $5.6 million.

12.

11.    Goodwill and Intangible Assets



Goodwill



The following table presentsactivity in the balance of the Company’s goodwill activity for the years ended December 31, 2017, 2016 and 2015was as follows (in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

2017

 

2016

 

2015

 

2019

 

2018

 

2017

Balance, beginning of period

$

6,731 

 

7,601 

 

7,377 

 

$

37,248 

 

 

39,482 

 

 

6,731 

Acquisitions

 

35,164 

 

 -

 

224 

 

 

 —

 

 

1,727 

 

 

35,164 

Impairment losses

 

(2,413)

 

(870)

 

 -

 

 

 —

 

 

(3,961)

 

 

(2,413)

Balance, end of period

$

39,482 

 

6,731 

 

7,601 

 

$

37,248 

 

 

37,248 

 

 

39,482 



The Company’sCompany recognized $1.7 million of goodwill was recognized in connection with BBX Sweet Holdings’the acquisition of variousan operating businessesbusiness through a loan foreclosure during the yearsyear ended December 31, 2017, 2015,2018 and 2014, including$35.2 million of goodwill in connection with the acquisition of IT’SUGAR during the year ended December 31, 2017. The goodwill associated with IT’SUGAR is included in June 2017.the Company’s BBX Sweet Holdings reportable segment, while the remaining goodwill relates to an operating business included in the “Other” category for segment reporting. 



TheAs described in Note 2, the Company tests goodwill for potential impairment on an annual basis as of December 31st31 or during interim periods if impairment indicators exist. During the year ended December 31, 2019, the Company determined that its goodwill was not impaired. During the years ended December 31, 20172018 and 2016,2017, the Company determined that the fair values of certain of BBX Sweet Holdings’ reporting units were below their respective carrying values as of the applicable testing dates and recognized goodwill impairment losses of $4.0 million and $2.4 million, and $0.9 million, respectively. As a result of the adoption of ASU No. 2017-04, theThe goodwill impairment losslosses recognized during the yearyears ended December 31, 2018 and 2017 waswere measured based on the excess of the applicable reporting unit’s carrying value over its fair value, while the loss recognized during the year ended December 31, 2016 was measured based on the excess of the carrying amount of the reporting unit’s goodwill over its implied goodwill as of the testing date.value. 



The decline in the fair valuevalues of certain of BBX Sweet Holdings’these reporting units and the related recognition of goodwill impairment losses primarily resulted from declining profitsongoing losses in its Orlando manufacturingthese operations and various ongoing strategic initiatives related to such businesses, including the consolidation of BBX Sweet Holdings’ manufacturing facilities, a reduction in corporate personnel and infrastructure, and the elimination of various unprofitable brands. To the extent that BBX Sweet Holdings’ reporting units do not meet expectations, there is a downturn in the confectionery industry, or the Company otherwise decides to divest of or exit certain of these operations, the Company may recognize additional goodwill impairment losses in future periods.  

The process of evaluating goodwill for impairment involves the determination of the fair value of the Company’s reporting units. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such evaluations, actual results could differ materially from such estimates.



 

F-3527

 


 

 

Intangible Assets



IntangibleThe Company’s intangible assets are as followsconsisted of the following (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

Class

 

2017

 

2016

 

2019

 

2018

Intangible assets:

 

 

 

 

 

 

 

 

 

 

Management contracts

$

61,293 

 

61,293 

 

$

61,293 

 

 

61,293 

Trademarks

 

8,471 

 

5,215 

 

 

8,522 

 

8,522 

Customer relationships

 

70 

 

1,620 

 

 

70 

 

70 

Lease premium

 

2,313 

 

2,411 

 

 

 —

 

 

2,313 

Area development agreements

 

640 

 

660 

Franchise agreements

 

 

 —

 

 

740 

Other

 

777 

 

126 

 

 

721 

 

 

777 

 

73,564 

 

71,325 

 

 

70,606 

 

 

73,715 

Accumulated amortization

 

(3,115)

 

(2,870)

 

 

(2,420)

 

 

(4,005)

Total intangible assets

$

70,449 

 

68,455 

 

$

68,186 

 

 

69,710 



Management contracts are indefinite livedindefinite-lived intangible assets and are not amortized. 



Trademarks and customer relationships are amortized using the straight-line method over their expected useful lives, ofwhich range from 12 to 20 years and 12 years, respectively. 

During the year ended December 31, 2016, the Company entered into area development agreements with a franchisor, and the costs related to these agreements are amortized using the straight-line method over their expected lives of 7 years.



The off-market lease premiums areintangibles were amortized using the straight-line method over the remaining lease termterms following the acquisition date of the related lease agreements, which is 5 to 9 years. Upon the Company’s adoption of the new lease accounting standard on January 1, 2019, the unamortized balances of these intangibles were reclassified and included in the measurement of the right-of-use assets associated with the applicable lease agreements.

As discussed in Note 1, the Company previously entered into area development and franchise agreements with MOD Pizza related to the development of MOD Pizza franchised restaurant locations throughout Florida. The costs related to entering into these agreements were previously capitalized and being amortized using the straight-line method over their expected useful lives, which ranged from 7 to 10 years. As a result of the Company’s termination of these agreements in 2019, the unamortized balance of these costs was written off and included in impairment losses in the Company’s statement of operations and comprehensive income during the year ended December 31, 2019.



Amortization Expense

During the years ended December 31, 2019, 2018, and 2017, the Company recognized approximately $0.7 million,  $0.8 million and $0.9 million, respectively, of amortization expense ofrelated to its intangible assets includedwhich is reflected in selling, general and administrative expenses in the Company’s statements of operations and comprehensive income.

The table below sets forth the estimated aggregate amortization expense of intangible assets during each of the threefive years endedsubsequent to December 31, 2017 was approximately $0.9 million. 2019 (in thousands):



 

 

 



 

 

 

Years Ending December 31,

 

Total

2020

 

$

630

2021

 

 

609

2022

 

 

556

2023

 

 

500

2024

 

 

500

Impairment Testing



TheAs described in Note 2, the Company tests indefinite-lived intangible assets for impairment on at least an annual basis, or during interim periods if impairment indicators exist, and amortizable intangible assets for recoverability whenever events or changes in circumstances indicate that the carrying valueamount of an intangible asset, or an asset group which includes an intangible asset, may not be recoverable. Due to declining profits in BBX Sweet Holdings’ Orlando manufacturing operations and various ongoing strategic initiatives, including the consolidationlosses associated with certain of BBX Sweet Holdings’ manufacturing facilities,businesses in the elimination of unprofitable brands,confectionery industry and changes in management,strategic initiatives related to such businesses, as described above, the Company tested BBX Sweet Holdings’certain asset groups associated with these businesses for recoverability during the years ended December 31, 20172019, 2018, and 20162017 and determined that the carrying amounts of certain of BBX Sweet Holdings’ asset groups were belowexceeded the estimated undiscounted future cash flows expected to result from the use of such assets.assets during the year ended December 31, 2017. As a result, during the year ended December 31, 2017, the Company recognized intangible asset impairment losses

F-28


of $1.9 million and $1.5 million during the years ended December 31, 2017 and 2016, respectively.million. The intangible asset impairment losses were measured asbased on the amount by which the carrying amountamounts of the intangible assets exceeded their respective estimated fair values. There were noThe Company did not recognize any intangible asset impairment losses recognized during the yearyears ended December 31, 2015.2019 and 2018.  

Valuation Methods for Goodwill and Intangible Asset Impairment Testing



The Company utilizes a discounted cash flow methodology as well asand the guideline public company market approach method to determine the fair value of its goodwill and indefinite livedindefinite-lived intangible assets. The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from reporting units or asset groups. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. The Company generally used a five to nine-yearten-year period in computing discounted cash flow values. The most significant assumptions used in the discounted cash flow methodology are the discount rate, the terminal value, and the forecast of future cash flows. The guideline public company approach method determines fair value based upon the consideration of trading prices of publicly held stocks of comparable companies. The significant inputs are marketenterprise value of invested capital (“MVIC”) to revenue and MVICenterprise value to earnings before interest, taxes, depreciation and amortization (“EBITDA”). Based on the inputs, multiples of MVICrevenue and EBITDA are derived to approximate the fair value of the reporting unit.



F-36


To the extent that impairment testing was required, the Company estimated the fair values of certain of its trademark and customer relationship intangible assets. The relief from royalty valuation method, a form of the income approach, was used to estimate the fair value of the trademarks. TheUnder this method, the fair value of trademarks was determined by calculating the present valuingvalue using a risk-adjusted discount rate of the expectedestimated future estimated royalty payments that would have to be paid if the trademarks were not owned.  The fair value of the net royalties saved was estimated based on discounted cash flows at a risk adjusted discount rate. The multi-period excess earnings method, a form of the income approach, was used to estimate the fair value of the customer relationships. The multi-period excess earnings method isolates the expected cash flows attributable to the customer relationship intangible asset and discounts these cash flows at a risk adjusted discount rate.



The estimated aggregate amortization expenseInherent in the Company’s determinations of intangible assetsfair value are certain judgments and estimates relating to future cash flows, including the Company’s assessment of current economic indicators and market valuations and assumptions about the Company’s strategic plans with regard to its operating businesses. Due to the uncertainties associated with such evaluations, actual results could differ materially from such estimates.

12.    Leases

BBX Capital and its subsidiaries are lessees under various operating leases for eachretail stores, sales offices, call centers, office space, equipment, and vehicles. Many of the five succeedingCompany’s lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to seven years, and the exercise of such renewal options is generally at the Company’s discretion. Certain of the Company’s lease agreements include rental payments based on a percentage of sales generated at the leased location over contractually specified levels, and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.

The Company recognizes right-of-use assets and lease liabilities associated with lease agreements with an initial term of 12 months or greater, while lease agreements with an initial term of 12 months or less are not recorded in the Company’s statement of financial condition. The Company generally does not include lease payments associated with renewal options that are exercisable at its discretion in the measurement of its right-of-use assets and lease liabilities as followsit is not reasonably certain that such options will be exercised. The table below sets forth information regarding the Company’s lease agreements which had an initial term of greater than 12 months (dollars in thousands):

As of

December 31, 2019

Operating lease assets

$

109,351 

Operating lease liabilities

$

123,430 

Weighted average remaining lease term (years)

6.2 

Weighted average discount rate (1)

5.27 

%

(1)

As most of the Company’s lease agreements do not provide an implicit rate, the Company estimates incremental secured borrowing rates corresponding to the maturities of its lease agreements to determine the present value of future lease payments. To estimate incremental borrowing rates applicable to BBX Capital and its subsidiaries, the Company considers various factors, including the rates applicable to its recently issued debt and credit facilities and prevailing financial market conditions. The Company used the incremental borrowing rates applicable to BBX Capital and its subsidiaries on January 1, 2019 for operating leases that commenced prior to that date.

F-29


The Company generally recognizes lease costs associated with its operating leases on a straight-line basis over the lease term, while variable lease payments that do not depend on an index or rate are recognized as variable lease costs in the period in which the obligation for those payments is incurred. The table below sets forth information regarding the Company’s lease costs which are included in cost of trade sales and selling, general, and administrative expenses in the Company’s consolidated statements of operations (in thousands):





 

 



 

 

Years Ending December 31,

 

Total

2018

 

838

2019

 

789

2020

 

782

2021

 

768

2022

 

740

For the Year Ended

December 31, 2019

Fixed lease costs

$

28,745 

Short-term lease costs

5,266 

Variable lease costs

9,066 

Total operating lease costs

$

43,077 



Subsequent to December 31, 2017,The table below sets forth information regarding the Company commencedmaturity of the process of exiting BBX Sweet Holdings’ manufacturing facility in Utah, and it is anticipated that BBX Sweet Holdings will incur various costs in connection with this initiative, including severance costs for certain employees. In addition, BBX Sweet Holdings remains liable under itsCompany’s operating lease agreement for the manufacturing facility, which has estimated future minimum rental payments of $2.5 million, and expects that it will be required to recognize a lease liability when it ceases operations in the facility or will otherwise incur costs to terminate the lease agreement. The Company is also continuing to evaluate the operations of BBX Sweet Holdings’ wholesale business, including the potential divestiture of certain operations or acquired businesses. To the extent that the Company decides to divest of or otherwise exit certain of these operations, BBX Sweet Holdings may recognize additional impairment charges and incur additional costs in the first quarter of 2018 or in future periods. Asliabilities as of December 31, 2017, the net book value of the operations under evaluation was $9.3 million, and the total estimated future minimum rental payments for operating leases (excluding the $2.5 million above) was $1.1 million.2019 (in thousands):







 

 

 



 

 

 

Years Ending December 31,

 

 

 

2020

 

$

26,384 

2021

 

 

25,568 

2022

 

 

23,413 

2023

 

 

19,863 

2024

 

 

12,644 

After 2024

 

 

44,508 

Total lease payments

 

 

152,380 

Less: interest

 

 

28,950 

Present value of lease liabilities

 

$

123,430 

The above operating lease payments exclude $19.2 million of legally binding minimum lease payments for lease agreements executed but not yet commenced, as the Company has not received possession of the leased property. Included in the Company’s statement of cash flows under operating activities for the year ended December 31, 2019 was $27.6 million of cash paid for amounts included in the measurement of lease liabilities. During the year ended December 31, 2019, the Company obtained $26.2 million of right-of-use assets in exchange for operating lease liabilities.

The table below sets forth the approximate minimum future rental payments (excluding executory costs) under the Company’s lease agreements during periods subsequent to December 31, 2018 related to agreements that were executed as of December 31, 2018 (in thousands):



 

 

 



 

 

 

Years Ending December 31,

 

 

Amount

2019

 

$

26,871 

2020

 

 

24,525 

2021

 

 

23,022 

2022

 

 

20,682 

2023

 

 

17,564 

Thereafter

 

 

41,299 

Total

 

$

153,963 

During the years ended December 31, 2018 and 2017, the Company recognized rent expenses under its lease agreements of $41.1 million and $30.8 million, respectively, which are included in cost of trade sales and selling, general, and administrative expenses in the Company’s consolidated statements of operations.

F-30


13.     Debt



ContractualThe table below sets forth the contractual minimum principal payments of the Company’s debt outstanding forduring each of the five years subsequent to December 31, 20172019 and thereafter are shown below (in thousands):





 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

 

 

Recourse

 

Non-recourse

 

 

 

 



 

Notes

 

Receivable

 

Receivable

 

Junior

 

 



 

Payable and

 

Backed

 

Backed

 

Subordinated

 

 



 

Lines of Credit

 

Notes Payable

 

Notes Payable

 

Debentures

 

Total

2018

$

36,796 

 

 -

 

 -

 

 -

 

36,796 

2019

 

27,521 

 

 -

 

 -

 

 -

 

27,521 

2020

 

10,183 

 

24,989 

 

 -

 

 -

 

35,172 

2021

 

45,477 

 

21,955 

 

 -

 

 -

 

67,432 

2022

 

4,888 

 

11,326 

 

16,144 

 

 -

 

32,358 

Thereafter

 

21,829 

 

26,427 

 

326,425 

 

177,129 

 

551,810 



 

146,694 

 

84,697 

 

342,569 

 

177,129 

 

751,089 

Unamortized debt issuance costs

 

(2,580)

 

 -

 

(6,148)

 

(1,272)

 

(10,000)

Discount

 

 -

 

 -

 

 -

 

(40,443)

 

(40,443)

Total Debt

$

144,114 

 

84,697 

 

336,421 

 

135,414 

 

700,646 

The minimum contractual payments set forth in the table above may differ from actual payments due to the timing of principal payments required upon (1) the sale of real estate assets that serve as collateral on certain debt (release payments) and (2) cash collections of pledged or transferred notes receivable.

F-37




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Notes Payable and Other Borrowings

 

The table below sets forth information regarding the lines-of-credit and notes payable facilities (other than receivable-backed notes payable) of the Company as of December 31, 2017 and 2016Receivable Backed Notes Payable - Recourse

Receivable Backed Notes Payable - Non-recourse

Junior Subordinated Debentures

Total

2020

$

17,127 

 —

 —

 —

17,127 

2021

15,147 

4,861 

 —

 —

20,008 

2022

18,365 

8,263 

 —

 —

26,628 

2023

8,525 

34,537 

 —

 —

43,062 

2024

104,379 

36,136 

31,708 

 —

172,223 

Thereafter

27,422 

4,772 

307,663 

177,129 

516,986 

190,965 

88,569 

339,371 

177,129 

796,034 

Unamortized debt issuance costs

(2,234)

 —

(5,125)

(1,129)

(8,488)

Unamortized purchase discount

 —

 —

 —

(38,746)

(38,746)

Total Debt

$

188,731 

88,569 

334,246 

137,254 

748,800 

The minimum contractual payments set forth in the table above may differ from actual payments due to the timing of principal payments required upon (1) the sale of real estate assets that serve as collateral on certain debt (release payments) and (2) cash collections of pledged or transferred notes receivable.

Notes Payable and Other Borrowings

The table below sets forth information regarding the Company’s notes payable and other borrowings (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

December 31, 2017

 

December 31, 2016



 

 

 

 

 

Carrying

 

 

 

 

 

Carrying



 

 

 

 

 

Amount of

 

 

 

 

 

Amount of



 

Debt

 

Interest

 

Pledged

 

Debt

 

Interest

 

Pledged



 

Balance

 

Rate

 

Assets

 

Balance

 

Rate

 

Assets

Bluegreen:

 

 

 

 

 

 

 

 

 

 

 

 

2013 Notes Payable

$

46,500 

 

5.50%

$

29,403 

$

52,500 

 

5.50%

$

29,349 

Pacific Western Term Loan

 

2,715 

 

6.72%

 

9,884 

 

1,727 

 

6.02%

 

8,963 

Fifth Third Bank Note 

 

4,080 

 

4.36%

 

8,071 

 

4,326 

 

3.62%

 

9,157 

NBA Line of Credit

 

5,089 

 

4.75%

 

15,260 

 

2,006 

 

5.00%

 

8,230 

Fifth Third Syndicated

 

 

 

 

 

 

 

 

 

 

 

 

Line of Credit

 

20,000 

 

4.27%

 

75,662 

 

15,000 

 

3.46%

 

60,343 

Fifth Third Syndicated

 

 

 

 

 

 

 

 

 

 

 

 

Term Loan

 

23,750 

 

4.32%

 

23,960 

 

25,000 

 

3.46%

 

20,114 

Unamortized debt

 

 

 

 

 

 

 

 

 

 

 

 

issuance costs

 

(1,940)

 

 

 

 -

 

(2,177)

 

 

 

 -

Total Bluegreen

$

100,194 

 

 

$

162,240 

$

98,382 

 

 

$

136,156 



 

 

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

Community Development

 

 

 

 

 

 

 

 

 

 

 

 

District Obligations

$

21,435 

 

4.50-6.00%

$

26,803 

$

21,435 

 

4.50-6.00%

$

20,744 

TD Bank Term Loan and

 

 

 

 

 

 

 

 

 

 

 

 

Line of Credit

 

12,890 

 

4.02%

 

(2)

 

 -

 

-

 

 -

Wells Fargo Capital Finance

 

 -

 

 -

 

 -

 

9,692 

 

(1)

 

(2)

Seller Note

 

1,471 

 

5.00%

 

(2)

 

3,417 

 

5.00%

 

(2)

Iberia Line of Credit

 

3,820 

 

4.12%

 

(2)

 

 -

 

3.37%

 

(2)

Unsecured Note

 

3,400 

 

6.00%

 

(3)

 

 -

 

 -

 

 -

Other

 

1,544 

 

5.25%

$

1,993 

 

1,579 

 

5.25%

$

2,044 

Unamortized debt

 

 

 

 

 

 

 

 

 

 

 

 

issuance costs

 

(640)

 

 

 

 

 

(715)

 

 

 

 

Total Other

$

43,920 

 

 

 

 

$

35,408 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Total Notes Payable and

 

 

 

 

 

 

 

 

 

 

 

 

Other Borrowings

$

144,114 

 

 

 

 

$

133,790 

 

 

 

 



(1)

The term loan and revolving advance facility bear interest at the Bank Prime Interest Rate or the daily three month LIBOR interest rate plus a margin specified in the credit agreement ranging from 0.5% to 3.25% per annum.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

December 31, 2019

 

December 31, 2018



 

 

 

 

 

 

 

Carrying

 

 

 

 

 

 

 

Carrying



 

 

 

 

 

 

 

Amount of

 

 

 

 

 

 

 

Amount of



 

Debt

 

Interest

 

Pledged

 

Debt

 

Interest

 

Pledged



 

Balance

 

Rate

 

Assets

 

Balance

 

Rate

 

Assets

Bluegreen:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013 Notes Payable

 

$

 —

 

 

 —

 

$

 —

 

$

28,125 

 

 

5.50%

 

$

22,878 

Fifth Third Bank Note

 

 

 —

 

 

 —

 

 

 —

 

 

3,834 

 

 

5.34%

 

 

7,892 

NBA Éilan Loan

 

 

18,820 

 

 

4.95%

 

 

31,259 

 

 

25,603 

 

 

5.60%

 

 

35,615 

Fifth Third Syndicated Line of Credit

 

 

30,000 

 

 

3.85%

 

 

49,062 

 

 

55,000 

 

 

5.27%

 

 

92,415 

Fifth Third Syndicated Term Loan

 

 

98,750 

 

 

3.71%

 

 

161,497 

 

 

22,500 

 

 

5.37%

 

 

27,724 

Unamortized debt issuance costs

 

 

(1,410)

 

 

 

 

 

 

 

 

(1,671)

 

 

 

 

 

 

Total Bluegreen

 

$

146,160 

 

 

 

 

 

 

 

$

133,391 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Development District Obligations

 

$

29,287 

 

 

4.25-6.00%

 

$

49,352 

 

$

24,583 

 

 

4.25-6.00%

 

$

35,157 

TD Bank Term Loan and Line of Credit

 

 

6,826 

 

 

5.00%

 

 

(1)

 

 

8,117 

 

 

5.47%

 

 

(1)

Iberia $50.0 million Revolving Line of Credit

 

 

 —

 

 

 

 

(2)

 

 

30,000 

 

 

5.35%

 

 

(2)

Banc of America Leasing & Capital Equipment Note

 

 

355 

 

 

4.75%

 

 

(3)

 

 

555 

 

 

4.75%

 

 

(3)

Bank of America Revolving Line of Credit

 

 

2,000 

 

 

3.24%

 

 

 —

 

 

 —

 

 

 

 

 —

Unsecured Note (4)

 

 

3,400 

 

 

6.00%

 

 

 —

 

 

3,400 

 

 

6.00%

 

 

(4)

Centennial Bank Note (4)

 

 

1,469 

 

 

5.25%

 

 

1,892 

 

 

1,507 

 

 

5.25%

 

 

1,968 (4)

Other

 

 

58 

 

 

15.00%

 

 

 —

 

 

 —

 

 

 

 

 —

Unamortized debt issuance costs

 

 

(824)

 

 

 

 

 

 

 

 

(666)

 

 

 

 

 

 

Total other

 

$

42,571 

 

 

 

 

 

 

 

$

67,496 

 

 

 

 

 

 

Total notes payable and other borrowings

 

$

188,731 

 

 

 

 

 

 

 

$

200,887 

 

 

 

 

 

 

(1)

The collateral is a blanket lien on Renin’s assets.

(2)

The collateral is a blanket lien on the respective company’s assets.

(3)

BBX Capital is guarantor on the promissory note.

Bluegreen

2013 Notes PayableIn March 2013, Bluegreen issued $75.0 million of senior secured notes (the “2013 Notes Payable”) in a private financing transaction.  The 2013 Notes Payable are secured by certain of Bluegreen’s assets, including primarily the cash flows from the residual interests relating to certain term securitizations and the VOI inventory in the BG Club 36 resort in Las Vegas, Nevada.  Pursuant to the terms of the 2013 Notes Payable, Bluegreen is required to periodically pledge reacquired VOI inventory in the BG Club 36 resort.  Bluegreen may also pledge additional residual interests from other term securitizations. In September 2016, the 2013 Notes Payable were amended to reduce the interest rate from 8.05% to 5.50%.  The 2013 Notes Payable mature in March 2020.  The terms of the 2013 Notes Payable include certain covenants and events of default, which Bluegreen’s management considers to be customary for transactions of this type.  The proceeds from the 2013 Notes Payable were used to fund a portion of the

F-38


consideration paid to Bluegreen’s former shareholders in connection with BBX Capital’s acquisition of all of Bluegreen’s then-outstanding shares in April 2013.   

Pacific Western Term Loan -Bluegreen has a non-revolving $2.7 million term loan (the “Pacific Western Term Loan”) with Pacific Western Bank, as successor by merger to CapitalSource Bank, secured by unsold inventory and undeveloped land at the Bluegreen Odyssey Dells Resort.The Pacific Western Term Loan matures in June 2019 and bears interest at 30-day LIBOR plus 5.25%. Interest payments are paid monthly. Principal payments are effected through release payments upon sales of VOIs in the Bluegreen Odyssey Dells Resort that serve as collateral for the Pacific Western Term Loan, subject to mandatory principal reductions pursuant to the terms of the loan agreement.  The Pacific Western Term Loan is cross-collateralized and is subject to cross-default with the Pacific Western Facility described below.

Fifth Third Bank Note Payable  - In April 2008, Bluegreen entered into a note payable with Fifth Third Bank to finance an acquisition of real estate. The Fifth Third Bank Note Payable matures in August 2021.  Principal and interest on amounts outstanding under the Fifth Third Bank Note Payable are payable monthly through maturity.  The interest rate under the note equals the 30-day LIBOR plus 3.00%.  

NBA Line of Credit. Bluegreen/Big Cedar Vacations has a revolving line of credit (the “NBA Line of Credit”) with National Bank of Arizona (“NBA”).  The NBA Line of Credit allows for a maximum borrowing limit of $20 million (subject to decrease as described below in connection with any increase in the borrowing limit under the NBA Receivables Facility). The NBA Line of Credit provides for a revolving advance period expiring in September 2020 and maturity in September 2022, and is secured by unsold inventory and a building under construction at Bluegreen/Big Cedar Vacations’ the Cliffs at Long Creek Resort. Borrowings under the NBA Line of Credit accrue interest at a rate equal to the one month LIBOR plus 3.25% (with an interest rate floor of 4.75%). Interest payments are paid monthly. Principal payments are effected through release payments upon sales of VOIs in The Cliffs at Long Creek Resort that serve as collateral for the NBA Line of Credit, subject to mandatory principal reductions. The NBA Line of Credit is cross-collateralized and is subject to cross-default with the NBA Receivables Facility described below.

Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan - In November 2014, Bluegreen entered into a $25.0 million revolving credit facility with Fifth Third Bank as administrative agent and lead arranger and certain other bank participants as lenders.  In December 2016, Bluegreen amended and restated the credit and security agreement.  The amended and restated facility is a $100.0 million syndicated credit facility with Fifth Third, as administrative agent and lead arranger and certain other bank participants. The amended and restated facility includes a $25.0 million term loan (the “Fifth Third Syndicated Term Loan”) with quarterly amortization requirements and a $75.0 million revolving line of credit (the “Fifth Third Syndicated Line-of-Credit”).  Amounts borrowed under the facility generally bear interest at LIBOR plus 2.75% - 3.75% depending on Bluegreen’s leverage ratio, are collateralized by certain of Bluegreen’s VOI inventory, sales center buildings and short-term receivables, and will mature in December 2021. The facility contains covenants and conditions which Bluegreen considers to be customary for transactions of this type.  Borrowings are used by Bluegreen for general corporate purposes.  As of December 31, 2017, outstanding borrowings under the facility totaled $43.8 million, including $23.8 million outstanding under the Fifth Third Syndicated Term Loan and $20.0 million of borrowings under the Fifth Third Syndicated Line-of-Credit. 

Other Notes Payable 

Community Development District Obligations - A community development district or similar development authority (“CDD”) is a unit of local government created under various state and/or local statutes to encourage planned community development and allow for the construction of infrastructure improvements through alternative financing sources, including the tax-exempt bond markets. A CDD is generally created through the approval of the local city or county in which the CDD is located and is controlled by a Board of Supervisors representing the landowners within the CDD. In connection with the development of the Beacon Lakes Community,  The Meadow View at Twin Creeks CDD was formed by St. Johns County, Florida to use bond financing to fund construction of infrastructure improvements at the Beacon Lakes Community. The CDD assesses the property owners benefiting from the improvements financed by the bond offerings.

The obligation to pay principal and interest on the bonds issued by the CDD is assigned to each parcel within the CDD and the CDD has a lien on each parcel. If the owner of the parcel does not pay this obligation, the CDD can foreclose

F-39


on the lien. The CDD bond obligations, including interest and the associated lien on the property are typically payable, secured and satisfied by revenues, fees or assessments levied on the property benefited.

The total amount of CDD bond obligations outstanding with respect to the Beacon Lakes Community was $21.4 million as of December 31, 2017.  The assessments to be levied by the CDD are fixed or determinable amounts.  The CDD bond obligations outstanding as of December 31, 2017 have fixed interest rates ranging from 4.5% to 6.00% and mature at various times during the years 2026 through 2047.  The Company at its option has the ability to repay a specified portion of the bonds at the time of each lot closing.

The Company records an obligation for the CDD bond upon issuance with a corresponding increase in other assets. The CDD bonds are secured by a lien on the Beacon Lakes property which is included in “Real Estate” in the Company’s Consolidated Statement of Financial Condition with a carrying amount of $26.8 million as of December 31, 2017.  The Company relieves the CDD bond obligation associated with a particular parcel when the purchaser of the property assumes the obligation which occurs automatically upon such purchaser’s acquisition of the property or upon repayment by the Company.  Included in “Other Assets” in the Company’s Consolidated Statement of Financial Condition as of December 31, 2017 and 2016 was $9.5 million and $20.7 million, respectively, of funds that the Company does not have the right of setoff on the Company’s CDD bond obligations.  Construction funds receivable associated with the CDD bond obligations is reduced with a corresponding increase in real estate inventory when the CDD disburses the funds to contractors for the construction of infrastructure improvements.

Toronto-Dominion Commercial Bank (“TD Bank”) Term Loan and Line of CreditIn May 2017, Renin entered into a credit facility with TD Bank and in September 2017 the facility was amended.  Under the terms and conditions of the amended credit facility, TD Bank agreed to provide term loans for up to $1.7 million and loans under a revolving credit facility for up to approximately $16.3 million based on available collateral as defined in the facility and subject to Renin’s compliance with the terms and conditions of the facility, including certain specific financial covenants. The proceeds from the TD Bank credit facility were used to repay the Wells Fargo credit facility described below and for working capital.

Amounts outstanding under the revolving credit facility bear interest at the Canadian or United States Prime Rate plus a margin of 1.00% per annum or the three-month LIBOR rate plus a margin of 2.75% per annum.  Outstanding principal on the revolving credit facility is payable one-year from the date of the advance. As of December 31, 2017, the amount outstanding under the revolving credit facility was $11.3 million.

The term loans were funded in three tranches aggregating $1.6 million through July 2017 with $0.1 million of additional draws permitted.  Amounts outstanding under the term loans bear interest at fixed interest rates ranging from 3.85% to 4.35% for one-year from the date of the applicable drawdown for each loan.  Annually, the fixed interest rates adjust to a variable rate based on Canadian or United States Prime Rate plus a margin of 1.00% per annum or the three-month LIBOR rate plus a margin of 2.75% per annum.  The amounts outstanding under the term loans mature between June 2020 and June 2022.    

Amounts outstanding under the term loans and borrowings under the revolving credit facility require monthly interest payments.

Under the terms and conditions of the TD Bank credit facility, Renin is required to comply with certain financial covenants including a quarterly Debt Service Coverage Ratio and a quarterly Total Debt to Tangible Net Worth Ratio.  The facility also contains customary affirmative and negative covenants, including those that, among other things, limit the ability of Renin to incur liens or engage in certain asset dispositions, mergers or consolidations, dissolutions, liquidations or winding up of its businesses. The credit facility is collateralized by all of Renin’s assets.

Wells Fargo Capital Finance - In May 2017, Renin entered into a credit facility with TD Bank described above, with a portion of the proceeds from the TD Bank credit facility used to repay all amounts then outstanding under the Wells Fargo Credit Agreement (including accrued interest).

Seller Note - In October 2014, BBX Sweet Holdings acquired the outstanding common shares of Anastasia Confections, LLC (“Anastasia”).  A portion of the purchase consideration was a $7.5 million promissory note. The promissory note bears interest at 5% per annum, and the Company has made three annual principal payments of $2.0 million each on the promissory note plus accrued interest on October 1, 2017, 2016 and 2015.  The remaining $1.5 million balance of the promissory note plus accrued interest is payable on October 1, 2018.  The repayment of the promissory note is guaranteed by the Company and secured by the common stock of Anastasia.  The Anastasia note payable was recorded at a $0.3 million discount to reflect the fair value of the note payable at the acquisition date.

F-40


Unsecured Note – In October 2017, a wholly-owned subsidiary of the Company issued a $3.4 million unsecured note to the seller of real estate to the Chapel Trail joint venture, in which the subsidiary has a 46.75% equity interest.  The unsecured note was part of the subsidiary’s initial capital contribution to the BBX/Label Chapel Trail Development real estate joint venture. The note is not secured by the joint venture property and BBX Capital guarantees the repayment of the unsecured note.  The unsecured note accrues interest at a fixed rate of 6.0% per annum with monthly interest only payments and the entire outstanding principal maturing on October 12, 2022.

Iberia Line of Credit - On August 7, 2015, BBX Sweet Holdings entered into a Loan and Security Agreement and related agreements with Iberiabank, which provides for borrowings by BBX Sweet Holdings of up to $5.0 million on a revolving basis.  Amounts borrowed under this facility accrue interest at a floating rate of 30-day LIBOR plus 2.75%.  Payments of interest only are payable monthly.  The facility matured on August 4, 2017 and BBX Sweet Holdings exercised its twelve month renewal option and the maturity date was extended from August 4, 2017 to August 4, 2018. The loan documents include a number of covenants, including financial covenants relating to BBX Sweet Holdings’ debt service coverage ratio.  The facility is secured by the assets of BBX Sweet Holdings and its subsidiaries and is guaranteed by the Company.

Other –  Other notes payable includes a term loan to BBX Sweet Holdings with an outstanding balance of $1.5 million and $1.6 million as of December 31, 2017 and 2016, respectively, collateralized by land and buildings with a carrying value of $2.0 million on each of December 31, 2017 and 2016. The Company is the guarantor on this note payable.    

On March 6, 2018, BBX Capital, BBX Sweet Holdings, Food for Thought Restaurant Group-Florida, LLC, BBX Capital Florida LLC and Woodbridge, entered into a Loan and Security Agreement and related agreements with Iberiabank, as administrative agent and lender, and City National Bank of Florida, as lender, which provide for a $50 million revolving line of credit.  Amounts borrowed under the facility will accrue interest at a floating rate of 30-day LIBOR plus a margin of 3.0% to 3.75% or the Prime Rate plus a margin of 1.50% to 2.25%.  The applicable margin is based on BBX Capital’s debt to EBITDA ratio.  Payments of interest only will be payable monthly.  The facility matures, and all outstanding principal and interest will be payable, on March 6, 2020, with twelve month renewal options at BBX Capital’s request, subject to satisfaction of certain conditions.  The facility is secured by a pledge of a percentage of BBX Capital’s membership interests in Woodbridge having a value of not less than $100$100.0 million.  Borrowings under

(3)

The collateral is a security interest in the facility may be used for business acquisitions, real estate investments, stock repurchases, letters of credit and general corporate purposes.  Underequipment financed by the terms and conditions ofunderlying note.  Additionally, IT’SUGAR is guarantor on the Loan and Security Agreement, we are required to comply with certain financial covenants, including maintaining minimum unencumbered liquidity and complying with financial ratios related to fixed charge coverage and debt to EBITDA.  The Loan and Security Agreement also contains customary affirmative and negative covenants, including those that, among other things, limit the ability of note.

(4)

BBX Capital andis guarantor on the other borrowers to incur additional indebtedness and to make certain loans and investments.note.

F-41

F-31

 


 

 

Bluegreen

2013 Notes PayableIn March 2013, Bluegreen issued $75.0 million of senior secured notes (the “2013 Notes Payable”) in a private financing transaction. In September 2019, Bluegreen repaid in full the 2013 Notes Payable. Accordingly, the related unamortized debt issuance costs associated with the notes of $0.4 million were written off to interest expense in the Company’s consolidated statement of operations and comprehensive income for the year ended December 31, 2019. 

Fifth Third Syndicated Line of Credit and Fifth Third Syndicated Term Loan - In December 2016, Bluegreen entered into a $100.0 million syndicated credit facility with Fifth Third Bank as administrative agent and lead arranger and certain other bank participants as lenders. In October 2019, Bluegreen amended the facility and increased the facility to $225.0 million. The amended facility includes a $100.0 million term loan (the “Fifth Third Syndicated Term Loan”) with quarterly amortization requirements and a $125.0 million revolving line of credit (the “Fifth Third Syndicated Line of Credit”). Amounts borrowed under the amended facility generally bear interest at LIBOR plus 2.00% - 2.50%, depending on Bluegreen’s leverage ratio, are collateralized by certain of Bluegreen’s VOI inventories, sales center buildings, management fees, short-term receivables and cash flows from residual interests relating to certain term securitizations, and will mature in October 2024. At closing, Bluegreen borrowed the entire $100.0 million term loan and $30.0 million under the revolving line of credit. Proceeds were used to repay the outstanding balance on the existing Fifth Third syndicated credit facility, repay $3.6 million on the existing Fifth Third Bank Note Payable and pay expenses and fees associated with the amendment, with the remainder to be used for general corporate purposes.

NBA Éilan LoanIn April 2018, Bluegreen purchased the Éilan Hotel & Spa in San Antonio, Texas for approximately $34.3 million.  In connection with the acquisition, Bluegreen entered into a non-revolving acquisition loan with NBA (the “NBA Éilan Loan”). The NBA Éilan Loan provides for advances of up to $27.5 million, $24.3 million of which was used to fund the acquisition of the resort and $1.7 million of which was used to fund certain improvement costs. In addition, approximately $0.4 million was drawn upon through April 2019 to fund certain future improvement costs. The ability to borrow under the NBA Éilan Loan expired in April 2019. Principal payments on the loan are effected through release payments from sales of VOIs at the Éilan Hotel & Spa that serve as collateral for the loan, subject to a minimum amortization schedule, with the remaining balance due at maturity in April 2023. Borrowings under the NBA Éilan Loan bear interest at an annual rate equal to one-month LIBOR plus 3.25%, subject to a floor of 4.75%.

Other Notes Payable 

Community Development District Obligations - A community development district or similar development authority (“CDD”) is a unit of local government created under various state and/or local statutes to encourage planned community development and allow for the construction of infrastructure improvements through alternative financing sources, including the tax-exempt bond markets. A CDD is generally created through the approval of the local city or county in which the CDD is located and is controlled by a board of supervisors representing the landowners within the CDD. In connection with the Company’s development of the Beacon Lakes Community, The Meadow View at Twin Creeks CDD (the “Beacon Lakes CDD”) was formed by St. Johns County, Florida to use bond financing to fund the construction of infrastructure improvements at the Beacon Lakes Community. The Beacon Lakes CDD issues bonds periodically to fund ongoing construction of the Beacon Lakes Community, and in February 2019, November 2018. and November 2016, the Beacon Lakes CDD issued $8.1 million, $16.5 million, and $21.4 million, respectively, of bonds.  

The obligation to pay principal and interest on the bonds issued by the Beacon Lakes CDD is assigned to each parcel within the CDD, and the Beacon Lakes CDD has a lien on each parcel. If the owner of the parcel does not pay this obligation, the Beacon Lakes CDD can foreclose on the lien. The CDD bond obligations, including interest and the associated lien on the property, are typically payable, secured, and satisfied by revenues, fees, or assessments levied on the property benefited. The assessments to be levied by the CDD are fixed or determinable amounts.

The CDD bond obligations outstanding as of December 31, 2019 have fixed interest rates ranging from 4.25% to 6.00% and mature at various times during the years 2026 through 2049. The Company at its option has the ability to repay a specified portion of the bonds at the time that it sells developed lots in the Beacon Lakes Community.

Upon the issuance of CDD bond obligations by the Beacon Lakes CDD, the Company records an obligation for the CDD bond obligations with a corresponding increase in other assets. The CDD bonds are secured by a lien on the Beacon Lakes property, which is included in “Real Estate” in the Company’s consolidated statement of financial condition and has a carrying amount of $48.5 million as of December 31, 2019. The Company relieves the CDD bond obligation associated with a particular parcel when the purchaser of the property assumes the obligation, which occurs automatically upon such purchaser’s acquisition of the property, or upon repayment by the Company. Included in “Other Assets” in the Company’s consolidated statements of financial condition as of December 31, 2019 and 2018 was $0.8 million and $11.4 million, respectively, of funds that the Company does not have the right of setoff on the Company’s CDD bond obligations. Construction funds receivable associated with the CDD bond obligations is reduced with a corresponding increase in real estate inventory when the CDD disburses the funds to contractors for the construction of infrastructure improvements.

F-32


Toronto-Dominion Commercial Bank (“TD Bank”) Term Loan and Line of Credit - Renin maintains a credit facility with TD Bank. Under the terms and conditions of the credit facility, TD Bank provides term loans for up to $1.7 million and loans under a revolving credit facility for up to approximately $16.3 million based on available collateral, as defined in the facility, and subject to Renin’s compliance with the terms and conditions of the facility, including certain specific financial covenants.

Amounts outstanding under the revolving credit facility bear interest at the Canadian or United States Prime Rate plus a margin of 1.00% per annum or the three-month LIBOR rate plus a margin of 2.75% per annum. Outstanding principal on the revolving credit facility is payable one year from the date of the advance. As of December 31, 2019, the amount outstanding under the revolving credit facility was $6.1 million and is scheduled to mature in September 2020.

The term loans were funded in three tranches aggregating $1.6 million through July 2017. Amounts outstanding under the term loans bear interest at fixed interest rates ranging from 5.8% to 6.2% for one year from the date of the applicable drawdown for each loan. Annually, the fixed interest rates adjust to a variable rate based on Canadian or United States Prime Rate plus a margin of 1.00% per annum or the three-month LIBOR rate plus a margin of 2.75% per annum. The amounts outstanding under the term loans mature between June 2020 and July 2022.    

Amounts outstanding under the term loans and borrowings under the revolving credit facility require monthly interest payments.

Under the terms and conditions of the TD Bank credit facility, Renin is required to comply with certain financial covenants, including a quarterly debt service coverage ratio and a quarterly total debt to tangible net worth ratio, as defined in the facility. The facility also contains customary affirmative and negative covenants, including those that, among other things, limit the ability of Renin to incur liens or engage in certain asset dispositions, mergers or consolidations, dissolutions, liquidations, or winding up of its businesses. The credit facility is collateralized by all of Renin’s assets.

As of December 31, 2019, Renin was not in compliance with certain covenants under the TD Bank credit facility as a result of a breach of its quarterly debt service coverage ratio. During the first quarter of 2020, Renin received a waiver of the default from TD Bank, and the credit facility was amended to replace the existing debt service coverage ratio with an interest coverage ratio. In connection with the amendment to the credit facility, Renin repaid the outstanding balance of the term loans with borrowings from the revolving credit facility.

Iberia $50.0 million Revolving Line of Credit – In March 2018, BBX Capital, BCC, Woodbridge, and certain other wholly-owned subsidiaries of the Company entered into a $50.0 million revolving credit facility with Iberiabank (“Iberia”), as administrative agent and lender, and City National Bank of Florida, as lender, and in July 2019, the facility was amended to extend the term of the facility and remove certain financial covenants. Amounts borrowed under the facility accrue interest at a floating rate of 30-day LIBOR plus a margin of 3.0% to 3.75% or the Prime Rate plus a margin of 1.50% to 2.25%. The applicable margin is based on BBX Capital’s debt to EBITDA ratio. Payments of interest only are payable monthly. The facility matures, and all outstanding principal and interest will be payable, on June 30, 2021, with a twelve month renewal option at BBX Capital’s request, subject to the satisfaction of certain conditions. The facility is secured by a pledge of a percentage of BBX Capital’s membership interests in Woodbridge having a value of not less than $100 million. Borrowings under the facility may be used for business acquisitions, real estate investments, stock repurchases, letters of credit, and general corporate purposes.

Under the terms and conditions of the facility, BBX Capital is required to comply with certain financial covenants, including maintaining minimum unencumbered liquidity and complying with debt to EBITDA financial ratios. The Loan and Security Agreement also contains customary affirmative and negative covenants, including those that, among other things, limit the ability of BBX Capital and the other borrowers to incur additional indebtedness and to make certain loans and investments.

Banc of America Leasing & Capital Equipment Note – In September 2018, IT’SUGAR entered into a Master Loan and Security Agreement with Banc of America Leasing & Capital, LLC which sets forth the terms and conditions pursuant to which IT’SUGAR may borrow funds to purchase equipment under one or more equipment security notes. The agreement contains customary representations and covenants. Each equipment note constitutes a separate, distinct and independent financing of equipment, is secured by a security interest in the purchased equipment, and is an unconditional contractual obligation of IT’SUGAR. As of December 31, 2019, there was one equipment note outstanding with a balance of $0.4 million. The equipment note bears interest at a fixed rate of 4.75% per annum and is payable in 36 consecutive monthly principal and interest installments of $18,516 with a maturity date of September 2021. The equipment note is subject to a prepayment charge equal to one percent of the amount prepaid multiplied by the number of years or fraction thereof for the then remaining equipment note term.

Bank of America Revolving Line of Credit - In August 2018, IT’SUGAR entered into a revolving credit facility with Bank of America. Under the terms and conditions of the credit facility, Bank of America has agreed to provide a revolving line of credit to IT’SUGAR for up to $4.0 million based on available collateral, as defined by the credit facility, and subject to IT’SUGAR’s compliance with the terms and conditions of the credit facility, including certain specific financial covenants. The revolving credit facility is available through August 2021, and amounts outstanding bear interest at a LIBOR daily floating rate plus 1.50% or a monthly LIBOR rate subject to the

F-33


terms and conditions of the credit facility. Payments of interest only are payable monthly.

Under the terms and conditions of this revolving line of credit, IT’SUGAR is required to comply with certain financial covenants, including quarterly and annual debt service coverage ratios. The facility also contains various covenants, including those that, among other things, limit the ability of IT’SUGAR to incur liens, make certain investments, or engage in certain asset acquisitions or dispositions.

Unsecured Note – In October 2017, a wholly-owned subsidiary of BBX Capital Real Estate issued a $3.4 million unsecured note to the seller of real estate to the Chapel Trail real estate joint venture, in which the subsidiary has a 46.75% equity interest. The issuance of the unsecured note was part of the subsidiary’s initial capital contribution to the venture. The note was not secured by the Company’s equity interest in the joint venture or the venture’s underlying property, and BBX Capital guaranteed the repayment of the unsecured note. The unsecured note accrued interest at a fixed rate of 6.0% per annum, with monthly interest only payments, and was scheduled to mature in October 2022. In February 2020, the Company repaid in full the unsecured note.

Centennial Bank Note – In October 2014, Hoffman’s Chocolates issued a $1.7 million note payable to Centennial Bank. The note is secured by land and buildings owned by Hoffman’s Chocolates, and BBX Capital and BBX Sweet Holdings have guaranteed the repayment of the note. The note requires monthly principal and interest payments based upon a 25 year amortization schedule and matures in October 2024.     

Receivable-Backed Notes Payable



The table below sets forth information regarding Bluegreen’s receivable-backed notes payable facilities (dollars in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

December 31, 2016

 

 

December 31, 2019

 

December 31, 2018

 

 

 

 

 

Principal

 

 

 

 

 

Principal

 

 

 

 

 

 

Principal

 

 

 

 

 

 

Principal

 

 

 

 

 

Balance of

 

 

 

 

 

Balance of

 

 

 

 

 

 

Balance of

 

 

 

 

 

 

Balance of

 

 

 

 

 

Pledged/

 

 

 

 

 

Pledged/

 

 

 

 

 

 

Pledged/

 

 

 

 

 

 

Pledged/

 

Debt

 

Interest

 

Secured

 

Debt

 

Interest

 

Secured

 

Debt

 

Interest

 

Secured

 

Debt

 

Interest

 

Secured

 

Balance

 

Rate

 

Receivables

 

Balance

 

Rate

 

Receivables

 

Balance

 

Rate

 

Receivables

 

Balance

 

Rate

 

Receivables

Recourse receivable-backed

 

 

 

 

 

 

 

 

 

 

 

 

notes payable:

 

 

 

 

 

 

 

 

 

 

 

 

Receivable-backed notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

payable - recourse:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Bank Facility

$

24,990 

 

5.00%

$

30,472 

$

32,674 

 

4.25%

$

41,357 

 

$

25,860 

 

 

4.75%

 

$

31,681 

 

$

17,654 

 

 

5.25%

 

$

22,062 

NBA Receivables Facility

 

44,414 

 

4.10%

 

53,730 

 

34,164 

 

3.50 - 4.00%

 

40,763 

 

 

32,405 

 

4.55%

 

 

39,787 

 

 

48,414 

 

5.27%

 

 

57,805 

Pacific Western Facility

 

15,293 

 

6.00%

 

19,516 

 

20,793 

 

5.14%

 

27,712 

 

 

30,304 

 

 

4.68%

 

 

37,809 

 

 

10,606 

 

 

5.52%

 

 

13,730 

Total

$

84,697 

 

 

$

103,718 

$

87,631 

 

 

$

109,832 

 

$

88,569 

 

 

 

 

$

109,277 

 

$

76,674 

 

 

 

 

$

93,597 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse receivable-backed

 

 

 

 

 

 

 

 

 

 

 

 

notes payable:

 

 

 

 

 

 

 

 

 

 

 

 

Receivable-backed notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

payable - non-recourse:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KeyBank/DZ Purchase Facility

$

16,144 

 

4.31%

$

19,866 

$

31,417 

 

3.67%

$

41,388 

 

 

31,708 

 

 

3.99%

 

 

39,448 

 

 

 —

 

 

 —

 

 

 —

Quorum Purchase Facility

 

16,771 

 

4.75-6.90%

 

18,659 

 

23,981 

 

4.75-6.90%

 

26,855 

 

 

44,525 

 

 

4.75-5.50%

 

 

49,981 

 

 

40,074 

 

 

4.75-5.50%

 

 

45,283 

2010 Term Securitization

 

 -

 

-

 

 -

 

13,163 

 

5.54%

 

16,191 

2012 Term Securitization

 

23,227 

 

2.94%

 

25,986 

 

32,929 

 

2.94%

 

36,174 

 

 

8,638 

 

 

2.94%

 

 

9,878 

 

 

15,212 

 

 

2.94%

 

 

16,866 

2013 Term Securitization

 

37,163 

 

3.20%

 

39,510 

 

48,514 

 

3.20%

 

51,157 

 

 

18,219 

 

 

3.20%

 

 

19,995 

 

 

27,573 

 

 

3.20%

 

 

29,351 

2015 Term Securitization

 

58,498 

 

3.02%

 

61,705 

 

75,011 

 

3.02%

 

78,980 

 

 

31,188 

 

 

3.02%

 

 

33,765 

 

 

44,230 

 

 

3.02%

 

 

47,690 

2016 Term Securitization

 

83,142 

 

3.35%

 

91,348 

 

107,533 

 

3.35%

 

117,249 

 

 

48,529 

 

 

3.35%

 

 

54,067 

 

 

63,982 

 

 

3.35%

 

 

72,590 

2017 Term Securitization

 

107,624 

 

3.12%

 

119,582 

 

 -

 

-

 

 -

 

 

65,333 

 

 

3.12%

 

 

74,219 

 

 

83,513 

 

 

3.12%

 

 

95,877 

2018 Term Securitization

 

 

91,231 

 

 

4.02%

 

 

103,974 

 

 

114,480 

 

 

4.02%

 

 

125,916 

Unamortized debt issuance costs

 

(6,148)

 

 

 

 -

 

(5,190)

 

 

 

 -

 

 

(5,125)

 

 

 

 

 

 

 

 

(6,807)

 

 

 

 

 

 

Total

$

336,421 

 

 

$

376,656 

$

327,358 

 

 

$

367,994 

 

$

334,246 

 

 

 

 

$

385,327 

 

$

382,257 

 

 

 

 

$

433,573 

 

 

 

 

 

 

 

 

 

 

 

 

Total receivable-backed debt

$

421,118 

 

 

$

480,374 

$

414,989 

 

 

$

477,826 

 

$

422,815 

 

 

 

 

$

494,604 

 

$

458,931 

 

 

 

 

$

527,170 



Liberty Bank Facility - Since 2008, Bluegreen has maintained a revolving VOI notes receivable hypothecation facility with Liberty Bank (the “Liberty Bank Facility”) with Liberty Bank which provides for advances on eligible receivables pledged under the Liberty Bank Facility, subject to specified terms and conditions, during a revolving credit period. PursuantIn March 2018, the Liberty Bank Facility was amended and restated to the terms of the facility, the aggregate maximum outstanding borrowings are $50.0 million andextend the revolving credit period was due to expire on January 30, 2018; however, in Januaryfrom March 2018 an amendment to the agreement extended the expiration to March 31, 2018. Bluegreen has signed a non-binding term sheet for a renewal of2020, extend the maturity date from November 2020 until March 2023, and amend the interest rate on borrowings as described below. Subject to its terms and conditions, the Liberty Bank Facility and is negotiating the definitive legal documentation.  There can be no assurance that this renewal will be closed on acceptable terms, if at all. The Liberty Bank Facility allows futureprovides for advances of (i) 85% of the unpaid principal balance of Qualified Timeshare Loans assigned to agent and (ii) 60% of the unpaid principal balance of Non-Conforming Qualified Timeshare Loans assigned to agent allduring the revolving credit period of which bearthe facility. Maximum permitted outstanding borrowings under the Liberty Bank Facility are $50.0 million, subject to the terms of the facility. Through March 31, 2018, borrowings under the Liberty Bank Facility accrued interest at the WSJWall Street Journal (“WSJ”) Prime Rate plus 0.50% per annum, subject to a 4.00% floor. PrincipalPursuant to the March 2018 amendment to the facility, effective April 1, 2018, all borrowings outstanding under the facility accrue interest at the WSJ Prime Rate, subject to a 4.00% floor. Subject to the terms of the

F-34


facility, principal and interest under the Liberty Bank Facility are required to be paid as cash is collected on the pledged receivables, with all outstanding amountsthe remaining balance being due in Novemberby maturity. In February 2020, the Liberty Bank Facility was amended solely to extend the revolving credit period from March 2020 to June 2020.



NBA Receivables Facility. Bluegreen/Big Cedar Vacations has a revolving VOI hypothecation facility with National Bank of Arizona (the “NBA Receivables Facility”) with NBA.. The NBA Receivables Facility provides for advances at a rate of 85% on eligible receivables pledged under the facility, subject to eligible collateral and specified terms and conditions, during a revolving credit period expiring in September 2020 and allows for maximum borrowings of up to $50.0 million (inclusive of outstanding borrowings under the NBA Line of Credit).  The maximum borrowings may increase by up to an additional $20.0 million (to a total of $70.0 million, at our option); provided, however, that any such increase will result in a corresponding decrease in the maximum borrowings under the NBA Line of Credit.million. The maturity date for the facility is March 2025. The interest rate applicable to future borrowings under the NBA Receivables Facility is equal to the 30-day LIBOR plus 2.75% (with an interest rate floor of 3.50%). AllSubject to the terms of the facility, principal and interest payments

F-42


received on pledged receivables are applied to principal and interest due under the facility. The NBA Receivables Facility is cross-collateralized and is subject to cross-defaultfacility, with the NBA Line of Credit.remaining outstanding balance being due by maturity.



Pacific Western Facility - Bluegreen has a revolving VOI notes receivable hypothecation facility with Pacific Western Bank (the “Pacific Western Facility”) with Pacific Western Bank, which provides for advances on eligible VOI notes receivable pledged under the facility, subject to specified terms and conditions, during a revolving credit period. Maximum outstanding borrowings under the Pacific Western Facility are $40.0 million, (inclusive of outstanding borrowings under the Pacific Western Term Loan), subject to eligible collateral and customary terms and conditions. TheIn August 2018, the Pacific Western Facility was amended to extend the revolving advance period expirationfrom September 2018 through September 2021 and the maturity date isfrom September 2018,2021 until September 2024 (in each case, subject to an additional 12-month extension at the option of Pacific Western Bank.Bank). Eligible “A” VOI notes receivable that meet certain eligibility and FICO®FICO score requirements, which Bluegreen’s management believes are typically consistent with loans originated under Bluegreen’sits current credit underwriting standards, are subject to an 85% advance rate. The Pacific Western Facility also allows for certain eligible “B” VOI notes receivable (which have less stringent FICO score requirements) to be funded at a 53% advance rate. BorrowingsIn addition, pursuant to the August 2018 amendment to the facility, effective September 21, 2018, all borrowings outstanding under the facility bearaccrue interest at an annual rate equal to 30-day LIBOR plus 4.50%. However, on October 19, 2017 the Pacific Western Facility was amended to decrease the interest rate on3.00%; provided, however, that a portion of futurethe borrowings, to the extent such borrowings are in excess of established debt minimums, toaccrue interest at 30-day LIBOR plus 3.50%2.75%.  Subject to 4.00%.  Principalthe terms of the facility, principal repayments and interest on borrowings under the Pacific Western Facility are paid as cash is collected on the pledged VOI notes receivable, subject to future required decreases in the advance rates after the end of the revolving advance period, with the remaining outstanding balance maturing in September 2021, subject to an additional 12-month extension at the option of Pacific Western Bank. The Pacific Western Facility is cross-collateralized and is subject to cross-default with the Pacific Western Term Loan described above. being due by maturity.



KeyBank/DZ Purchase Facility.  Bluegreen has a VOI notes receivable purchase facility (the “KeyBank/DZ Purchase Facility”) with DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main (“DZ”), and KeyBank National Association (“KeyBank”) which permits maximum outstanding financings of $80.0 million with an advance period expiring in December 2019 and provides for an advance rate of 80%. with respect to VOI receivables securing amounts financed. In December 2019, Bluegreen amended the facility to extend the advance period from December 2019 to December 2022. The KeyBank/DZ Purchase Facilityamended facility will mature and all outstanding amounts will become due thirty-six24 months after the revolving advance period has expired, or earlier under certain circumstances set forth in the facility. Interest on amounts outstanding under the facility is tied to an applicable index rate of the LIBOR rate, in the case of amounts funded by KeyBank, and a cost of funds rate or commercial paper rates, in the case of amounts funded by or through DZ.  ThePursuant to the amendment, the interest rate payable under the facility is the applicable index rate plus 2.75%2.25% until the expiration of the revolving advance period (a decrease from 2.75% prior to the amendment) and thereafter will be the applicable index rate plus 3.25% (a decrease from 4.75% prior to the amendment). Subject to the terms of the facility, Bluegreen will receive the excess cash flows generated by the VOI notes receivable sold (excess meaning after payments of customary fees, interest and principal under the facility) until the expiration of the VOI notes receivable advance period, at which point all of the excess cash flow will be paid to the note holders until the outstanding balance is reduced to zero. While ownership of the VOI notes receivable included in the facility is transferred and sold for legal purposes, the transfer of these VOI notes receivable is accounted for as a secured borrowing for financial reporting purposes. The facility is nonrecourse.nonrecourse and is not guaranteed by Bluegreen.



Quorum Purchase Facility - Bluegreen and Bluegreen/Big Cedar Vacations havehas a timeshareVOI notes receivable purchase facility (the “Quorum Purchase Facility”) with Quorum Federal Credit Union (“Quorum”).  Pursuant pursuant to which Quorum agreed to purchase on a revolving basis through June 30, 2018, eligible timeshare receivablesVOI notes receivable in an amount of up to an aggregate $50.0 million purchase price, subject to certain conditions precedent and other terms of the facility. Amounts currently outstanding under the Quorum Purchase Facility accrue interest at interest rates ranging from 4.75% to 6.90% per annum.The revolving purchase period expires June 30, 2020. The interest rate on future advances made under the Quorum Purchase Facility will beeach advance is set at the time of funding based on rates mutually agreed upon by all parties.parties, and the loan purchase fee is applicable to future advances is 0.25%. The maturity of the Quorum Purchase Facility is December 2032. Of the amounts outstanding under the Quorum Purchase Facility at December 31, 2019,  $3.1  million accrues interest at a rate per annum of 4.75%, $21.3 million accrues interest at a fixed rate of 4.95%, $1.6 million accrues interest at a fixed rate of 5.0%, $17.2 million accrues interest at a fixed rate of 5.1%, and $1.3 million accrues interest at a fixed rate of 5.50%. The Quorum Purchase Facility provides for an 85% advance rate on eligible receivables sold under the facility.  Future advances are alsofacility; however Quorum can modify this advance rate on future purchases subject to a loan purchase feethe terms and conditions of 0.50%. The Quorum Purchase Facility becomes due in December 2030.the facility. Eligibility requirements for receivablesVOI notes receivable sold include, among others, that the obligors under the timeshareVOI notes receivable sold be members of Quorum at the time of the note sale. Subject to performance of the collateral, Bluegreen or Bluegreen/Big Cedar Vacations, as applicable, will receive any excess cash flows generated by the receivablesVOI notes receivable transferred to Quorum under the facility (excess meaning after paymentspayment of customary fees, interest and principal under the facility) on a pro-rata basis as borrowers make payments on their timeshare loans.VOI notes receivable. While ownership of the timeshare receivablesVOI notes receivable included in the Quorum Purchase Facility is transferred and sold for legal purposes, the transfer of these timeshare receivablesVOI notes receivable is accounted for as a secured borrowing for financial reporting purposes. The facility is nonrecourse and is not guaranteed by Bluegreen. As of December 31, 2017, $16.8 million was outstanding under the Quorum Purchase Facility, all of which relates to Bluegreen/Big Cedar Vacations.

2016 Term Securitization –On March 17, 2016, Bluegreen completed a private offering and sale of $130.5 million of investment-grade, timeshare receivable-backed notes (the “2016 Term Securitization”).  The 2016 Term Securitization consisted of the issuance of two tranches of timeshare receivable-backed notes (the “Notes”): $95.7 million of Class

 

F-4335

 


 

 

2018 Term Securitization - In October 2018, Bluegreen completed the 2018 Term Securitization, a private offering and sale of approximately $117.7 million of investment-grade, VOI receivable-backed notes (the "Notes"), including approximately $49.8 million of Class A Notes, approximately $33.1 million of Class B Notes, and approximately $34.8 million of Class B notesC Notes with note interest rates of 3.17%3.77%,  3.95% and 3.86%4.44%, respectively, which blendedblends to an overall weighted-average noteweighted average interest rate of 3.35%approximately 4.02%. The gross advance rate for this transaction was 90%87.2%. The Notes mature in July 2031.February 2034.



The amount of the timeshareVOI notes receivables sold to BXG ReceivableReceivables Note Trust 20162018 (the “2016 Trust”“Trust”) was $145.0approximately $135.0 million, $122.3approximately $109.0 million of which was sold to the 2016 Trust at closing, and $22.7approximately $23.9 million of which was subsequently sold to the 2016 Trust.2018 Trust in 2018, and the remainder of which was sold to the Trust in January 2019. The gross proceeds of such sales to the 2016 Trust were $130.5approximately $117.7 million. A portion of the proceeds werereceived at the closing was used to: repay KeyBank and DZ approximately $49.2 million, representing all amounts outstanding (including accrued interest) under the KeyBank/DZ Purchase Facility a total of $49.0 million, representing all amounts then outstanding under the facility (including accrued interest);at that time; repay $24.2Liberty Bank approximately $20.4 million under the Liberty Bank Facility, which includes accrued interest;Facility; repay Pacific Western Bank approximately $7.1 million under the Pacific Western Bank Facility; capitalize a reserve fund; and pay fees and expenses associated with the transaction. Prior to the closing of the 2016 Term Securitization, Bluegreen, as a servicer, funded $11.3 million in connection with the servicer redemption of the notes related to BXG Receivables Note Trust 2007-A, and certain of the timeshare loans in such trust were sold to the 2016 Trust in connection with the 2016 Term Securitization. In April 2016, Bluegreen, as a servicer, funded $6.1 million in connection with the servicer redemption of the notes related to BXG Receivables Note Trust 2008-A, and certain of the timeshare loans in such trust were sold to the 2016 Trust in connection with the 2016 Term Securitization.  The remainder of the net proceeds from the 20162018 Term Securitization of $36.0 million were used by Bluegreen for general corporate purposes.



While ownership of the timeshareVOI receivables included in the 20162018 Term Securitization wasis transferred and sold for legal purposes, the transfer of these timeshareVOI receivables wasis accounted for as a secured borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of thisthe transaction.

Subject to the performance of the collateral, Bluegreen will receive any excess cash flows generated by the receivables transferred under the 20162018 Term Securitization (excess meaning(meaning excess cash after payments of customary fees, interest, and principal under the 2016 Term Securitization) on a pro-rata basis as borrowers make payments on their timeshare loans.

2017 Term Securitization – On June 6, 2017, Bluegreen completed a private offering and sale of approximately $120.2 million of investment grade, VOI receivable-backed notes (the “2017 Term Securitization”). The 2017 Term Securitization consisted of the issuance of two tranches of VOI receivable-backed notes (the “Notes”): approximately $88.8 million of Class A notes and approximately $31.4 million of Class B notes with note interest rates of 2.95% and 3.59%, respectively, which blended to an overall weighted average note interest rate of approximately 3.12%.  The gross advance rate for this transaction was 88%.  The Notes mature in October 2032.

The amount of the VOI notes receivable sold to BXG Receivables Note Trust 2017 (the “2017 Trust”) was approximately $136.5 million, approximately $117.0 million of which was sold to the 2017 Trust at closing, and approximately $19.6 million of which was subsequently sold to the 2017 Trust.  The gross proceeds of such sales to the 2017 Trust were $120.2 million. A portion of the proceeds was used to repay KeyBank and DZ $32.3 million, representing all amounts outstanding (including accrued interest) under the KeyBank/DZ Purchase Facility, repay Liberty Bank approximately $26.8 million (including accrued interest) under Bluegreen’s existing facility with Liberty Bank, capitalize a reserve fund, and pay fees and expenses associated with the transaction.  In April 2017, Bluegreen, as servicer, redeemed the notes related to BXG Receivables Note Trust 2010-A for approximately $10.0 million, and certain of the VOI notes receivable in such trust were sold to the 2017 Trust in connection with the 2017 Term Securitization.  The remainder of the proceeds from the 2017 Term Securitization were used by Bluegreen for general corporate purposes.

While ownership of the VOI notes receivable included in the 2017 Term Securitization is transferred and sold for legal purposes, the transfer of these VOI notes receivables are accounted for as a secured borrowing for financial accounting purposes.  Accordingly, no gain or loss was recognized as a result of this transaction.  Subject to the performance of the collateral, Bluegreen will receive any excess cash flows generated by the VOI notes receivable transferred under the 2017 Term Securitization (excess meaning after payments of customary fees, interest, and principal under the 20172018 Term Securitization) on a pro-rata basis as borrowers make payments on their VOI notes receivable.loans.



Other Non-Recourse Receivable-Backed Notes Payable – In addition to the above described facilities, Bluegreen has a number of other nonrecourse receivable-backed notes payable facilities, as set forth in the table above. During 2017,2019 and 2018, Bluegreen repaid $62.0$62.6 million and $51.0 million, respectively, under these additional receivable-backed notes payable facilities, including the payment in full of the notes payable issued in connection with the 2010 Term Securitization. During 2017, Bluegreen wrote off the related unamortized debt issuance cost of $0.3 million.  During 2016, Bluegreen repaid $82.6 million under these additional receivable-backed notes payable facilities, including the payment in full of the notes payable issued in connection with the 2007 and 2008 Term Securitizations. During 2016, Bluegreen wrote off the related unamortized 2007 and 2008 Term Securitization debt issuance costs, totaling approximately $0.5 million.facilities.



F-44


Junior Subordinated Debentures 



JuniorThe table below sets forth information regarding the Company’s junior subordinated debentures outstanding at December 31, 2017 and 2016 were as follows (in(dollars in thousands):







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

December 31,

 

 

 

 

 

 



 

2017

 

2016

 

 

 

 

 

 



 

 

Effective

 

 

Effective

 

 

Initial

 

 

 



 

Carrying

Interest

 

Carrying

Interest

Interest

 

Equity in

 

Issue

Maturity

Junior Subordinated Debentures

 

Amount (1)

Rate

 

Amount (1)

Rate

Rate (2)

 

Trust (3)

 

Date

Date (4)

Levitt Capital Trust I

("LCT I")

$

23,196 

5.19%

$

23,196 

4.85%

LIBOR + 3.85%

$

696 

 

03/15/2005

03/01/2035

Levitt Capital Trust II

("LCT II")

 

19,878 

5.18%

 

30,928 

4.69%

LIBOR + 3.80%

 

928 

 

05/04/2005

06/30/2035

Levitt Capital Trust III

("LCT III")

 

7,764 

5.14%

 

15,464 

4.80%

LIBOR + 3.80%

 

464 

 

06/01/2006

06/30/2036

Levitt Capital Trust IV ("LCTIV")

 

15,464 

5.14%

 

15,464 

4.80%

LIBOR + 3.80%

 

464 

 

07/18/2006

09/30/2036

Total Woodbridge

$

66,302 

 

$

85,052 

 

 

$

2,552 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Bluegreen Statutory Trust I

$

14,703 

6.59%

$

14,422 

5.90%

LIBOR +4.90%

$

696 

 

03/15/2005

3/30/2035

Bluegreen Statutory Trust II

 

16,472 

6.23%

 

16,164 

5.74%

LIBOR +4.85%

 

774 

 

05/04/2005

7/30/2035

Bluegreen Statutory Trust III

 

6,670 

6.23%

 

6,550 

5.74%

LIBOR +4.85%

 

310 

 

05/10/2005

7/30/2035

Bluegreen Statutory Trust IV

 

9,802 

6.54%

 

9,614 

5.85%

LIBOR +4.85%

 

464 

 

04/24/2006

6/30/2036

Bluegreen Statutory Trust V

 

9,802 

6.54%

 

9,614 

5.85%

LIBOR +4.85%

 

464 

 

07/21/2006

9/30/2036

Bluegreen Statutory Trust VI

 

12,935 

6.18%

 

12,680 

5.69%

LIBOR +4.80%

 

619 

 

02/26/2007

4/30/2037

Total Bluegreen

$

70,384 

 

$

69,044 

 

 

$

3,327 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Unamortized debt

 

 

 

 

 

 

 

 

 

 

 

 

issuance costs

$

(1,272)

 

$

(1,729)

 

 

 

 

 

 

 

Total Junior

 

 

 

 

 

 

 

 

 

 

 

 

Subordinated Debentures

$

135,414 

 

$

152,367 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

December 31, 2019

 

December 31, 2018

 

 

 



 

 

 

 

Effective

 

 

 

Effective

 

 

 



 

Carrying

 

Interest

 

Carrying

 

Interest

 

Maturity



 

Amounts

 

Rates (1)

 

Amounts

 

Rates (1)

 

Years (2)

Woodbridge - Levitt Capital Trusts I - IV

 

$

66,302 

 

 

5.74 - 5.95%

 

$

66,302 

 

 

6.20 - 6.65%

 

 

2035 - 2036

Bluegreen Statutory Trusts I - VI

 

 

110,827 

 

 

6.74 - 6.86%

 

 

110,827 

 

 

7.32 - 7.70%

 

 

2035 - 2037

Unamortized debt issuance costs

 

 

(1,129)

 

 

 

 

 

(1,200)

 

 

 

 

 

 

Unamortized purchase discount

 

 

(38,746)

 

 

 

 

 

(39,504)

 

 

 

 

 

 

Total junior subordinated debentures

 

$

137,254 

 

 

 

 

$

136,425 

 

 

 

 

 

 



(1)

Amounts as of December 31, 2017 and 2016 include purchase accounting adjustments which reduced the carrying value by $40.4 million and $41.8 million, respectively.The Company’s junior subordinated debentures bear interest at three-month LIBOR (subject to quarterly adjustment) plus a spread ranging from 3.80% to 4.90%.  

(2)

LIBOR interest rates are indexed to three-month LIBOR and adjust quarterly.

(3)

Initial equity in the trust is recorded as part of other assets in the Consolidated Statements of Financial Condition.

(4)

All of the junior subordinated debentures arewere eligible for redemption by Woodbridge and Bluegreen, as applicable, as of December 31, 20172019 and 2016.2018.



Woodbridge and Bluegreen have each formed statutory business trusts (collectively, the “Trusts”), each of which issued trust preferred securities and invested the proceeds thereof in junior subordinated debentures of Woodbridge and Bluegreen, respectively. The Trusts are variable interest entitiesVIEs in which Woodbridge and Bluegreen, as applicable, are not the primary beneficiaries as defined by the accounting guidance for the consolidation of variable interest entities.beneficiaries. Accordingly, the Company and its subsidiaries do not consolidate the operations of these Trusts; instead, the beneficial interests in the Trusts are accounted for under the equity method of accounting. Included in other assets as of December 31, 2019 and 2018 was $2.1 million of equity in the Trusts. Interest on the junior subordinated debentures and distributions on the trust preferred securities are payable quarterly in arrears at the same interest rate.



F-36


During January 2017, Woodbridge purchased approximately $11.1 million of LCTIILevitt Capital Trust II (“LCTII”) trust preferred securities for $6.7 million and purchased approximately $7.7 million of LCTIIILevitt Capital Trust III (“LCTIII”) trust preferred securities for $4.7 million, and in February 2017, Woodbridge delivered suchthe purchased securities to the respective trusts in exchange for the cancellation of $11.1 million of Woodbridge’s junior subordinated debentures held by LCTII and $7.7 million of Woodbridge’s junior subordinated debentures held by LCTIII. As a result, in February 2017, Woodbridge recognized a $6.9 million gain associated with

F-45


the cancellation of the notes, which is included in “Netnet gains on cancellation of junior subordinated debentures”debentures in the Company’s Consolidated Statementsconsolidated statement of Operationsoperations for the year ended December 31, 2017.



Debt Compliance and Amounts Available under Credit Facilities

As of December 31, 2017 and 2016,2019, BBX Capital and its subsidiaries arewere in compliance with all financial debt covenants, under its debt instruments. Bluegreen had availabilityinstruments other than the default which occurred under Renin’s credit facility with TD Bank that was waived in the first quarter of approximately $219.6 million2020, as described above.

Amounts available under their receivable-backed purchase and credit facilities inventory linesfor BBX Capital and its subsidiaries as of December 31, 2019 were as follows (in thousands):

BBX Capital

$

50,000 

Bluegreen

220,200 

Renin

4,983 

IT'SUGAR

2,000 

Total credit availability

$

277,183 

The amounts available under the Company’s credit and corporate credit line,facilities are subject to eligible collateral and the terms of the facilities, as applicable, as of December 31, 2017.

applicable.

 

14.    Income Taxes



The Company’s United States and foreign components of income before income taxes are as follows (in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

 

 

 

 

 

2017

 

2016

 

2015

 

For the Years Ended December 31,

 

 

 

 

 

 

 

2019

 

2018

 

2017

U.S.

$

92,888 

 

77,629 

 

67,272 

 

$

49,414 

 

 

88,284 

 

 

92,115 

Foreign

 

                     486

 

                    407

 

(2,589)

 

 

(653)

 

 

(852)

 

 

486 

Total

$

93,374 

 

78,036 

 

64,683 

 

$

48,761 

 

 

87,432 

 

 

92,601 



The Company’s provision (benefit) for income taxes consisted of the following (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

2017

 

2016

 

2015

 

2019

 

2018

 

2017

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

$

1,211 

 

(339)

 

5,288 

 

$  

12,260 

 

676 

 

1,211 

State

 

1,767 

 

1,014 

 

2,445 

 

 

2,326 

 

 

3,519 

 

 

1,767 

 

2,978 

 

675 

 

7,733 

 

 

14,586 

 

 

4,195 

 

 

2,978 

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

(12,072)

 

36,393 

 

(74,189)

 

 

601 

 

22,824 

 

(14,368)

State

 

1,871 

 

(689)

 

(10,140)

 

 

1,471 

 

 

4,620 

 

 

1,688 

 

(10,201)

 

35,704 

 

(84,329)

 

 

2,072 

 

 

27,444 

 

 

(12,680)

(Benefit) provision for income taxes

 

(7,223)

 

36,379 

 

(76,596)

 

 

 

 

 

 

Provision (benefit) for income taxes

 

$  

16,658 

 

 

31,639 

 

 

(9,702)



 

F-4637

 


 

 

The table below sets forth a reconciliation of the Company's expected Federal income tax provision to the actual provision for income taxes differs from the expected Federal income tax provision as follows (dollars in thousands):





 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2017(1)

 

2016(1)

 

 

2015(1)

Income tax provision at expected

 

 

 

 

 

 

 

 

 

 

 

 

 

 

federal income tax rate of 35%

$

32,681 35.00 

%

 

$

27,313 35.00 

%

 

$

22,639 35.00 

%

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for state taxes,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

net of federal effect

 

3,637 3.90 

 

 

 

527 0.68 

 

 

 

9,029 13.96 

 

Effect of federal rate change-2017 tax reform

 

(43,089)(46.15)

 

 

 

 -

 -

 

 

 

 -

 -

 

Taxes related to subsidiaries not

 

 

 

 

 

 

 

 

 

 

 

 

 

 

consolidated for income tax purposes

 

(4,467)(4.78)

 

 

 

(3,432)(4.40)

 

 

 

(4,842)(7.49)

 

Nondeductible executive compensation

 

4,309 4.61 

 

 

 

7,301 7.47 

 

 

 

5,636 8.54 

 

Bluegreen settlement

 

 -

 -

 

 

 

 -

 -

 

 

 

12,820 19.82 

 

Bluegreen initial public offering

 

1,467 1.57 

 

 

 

 -

 -

 

 

 

 -

 -

 

SEC penalty

 

(1,593)(1.71)

 

 

 

 -

 -

 

 

 

1,243 1.92 

 

Increase/(decrease) in valuation allowance

 

25 0.03 

 

 

 

3,807 6.76 

 

 

 

(127,947)(197.63)

 

Other – net

 

(193)(0.21)

 

 

 

863 1.11 

 

 

 

4,826 7.46 

 

(Benefit) provision for income taxes

$

(7,223)(7.74)

%

 

$

36,379 46.62 

%

 

$

(76,596)(118.42)

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2019

 

2018

 

 

2017

Income tax provision at expected

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

federal income tax rate (1)

 

$

10,240 

 

 

21.00 

%

 

$

18,360 

 

 

21.00 

%

 

$

32,410 

 

 

35.00 

%

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for state taxes, net of federal effect

 

 

2,967 

 

 

6.08 

 

 

 

6,446 

 

 

7.37 

 

 

 

3,607 

 

 

3.90 

 

Effect of federal rate change-2017 tax reform

 

 

 —

 

 

 —

 

 

 

 —

 

 

 —

 

 

 

(45,267)

 

 

(48.88)

 

Taxes related to noncontrolling interests in subsidiaries not consolidated for income tax purposes

 

 

(2,306)

 

 

(4.73)

 

 

 

(2,519)

 

 

(2.88)

 

 

 

(4,467)

 

 

(4.82)

 

Nondeductible executive compensation

 

 

5,572 

 

 

11.43 

 

 

 

8,421 

 

 

9.63 

 

 

 

4,309 

 

 

4.65 

 

Bluegreen initial public offering

 

 

 —

 

 

 —

 

 

 

 —

 

 

 —

 

 

 

1,467 

 

 

1.58 

 

SEC penalty

 

 

 —

 

 

 —

 

 

 

 —

 

 

 —

 

 

 

(1,593)

 

 

(1.72)

 

Other – net

 

 

185 

 

 

0.38 

 

 

 

931 

 

 

1.06 

 

 

 

(168)

 

 

(0.18)

 

Provision (benefit) for income taxes

 

$

16,658 

 

 

34.16 

%

 

$

31,639 

 

 

36.18 

%

 

$

(9,702)

 

 

(10.47)

%



(1)

Expected tax is computed based upon income before income taxes.



The Company’s deferred income taxes consisted of the following significant components (in thousands):



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

December 31,



 

2019

 

2018

 

2017

Deferred tax assets:

 

 

 

 

 

 

 

 

 

Allowance for loan losses, tax certificate losses and

 

 

 

 

 

 

 

 

 

write-downs for financial statement purposes

 

$

30,644 

 

 

29,969 

 

 

25,604 

Federal and State NOL and tax credit carryforward

 

 

95,970 

 

 

97,102 

 

 

132,650 

Real estate valuation

 

 

6,575 

 

 

7,519 

 

 

9,117 

Property and equipment

 

 

 —

 

 

 —

 

 

1,642 

Expenses recognized for books and deferred for tax

 

 

7,827 

 

 

2,985 

 

 

3,868 

Other

 

 

6,261 

 

 

4,409 

 

 

3,521 

Total gross deferred tax assets

 

 

147,277 

 

 

141,984 

 

 

176,402 

Valuation allowance

 

 

(86,435)

 

 

(86,533)

 

 

(86,267)

Total deferred tax assets

 

 

60,842 

 

 

55,451 

 

 

90,135 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

 

Installment sales treatment of notes

 

 

107,551 

 

 

104,126 

 

 

100,717 

Intangible assets

 

 

14,760 

 

 

14,162 

 

 

14,322 

Junior subordinated debentures

 

 

9,124 

 

 

9,378 

 

 

9,144 

Deferral of VOI sales and costs under timeshare accounting

 

 

10,511 

 

 

8,654 

 

 

10,071 

Property and equipment

 

 

4,985 

 

 

3,351 

 

 

 —

Other

 

 

1,469 

 

 

2,143 

 

 

3,849 

Total gross deferred tax liabilities

 

 

148,400 

 

 

141,814 

 

 

138,103 

Net deferred tax liability

 

 

(87,558)

 

 

(86,363)

 

 

(47,968)

Less net deferred tax liability at beginning of period

 

 

86,363 

 

 

47,968 

 

 

51,674 

Reclassify alternative minimum tax credit to other assets

 

 

 —

 

 

11,169 

 

 

 —

Bluegreen initial public offering

 

 

 —

 

 

 —

 

 

11,988 

Cumulative effect for excess tax benefits recognized in

 

 

 

 

 

 

 

 

 

accumulated earnings associated with share based compensation

 

 

 —

 

 

 —

 

 

(3,054)

Cumulative effect for the adoption of ASU 2016-02

 

 

 

 

 

 

 

 

 

recognized in accumulated earnings

 

 

(874)

 

 

 —

 

 

 —

Other

 

 

(3)

 

 

(218)

 

 

40 

(Provision) benefit for deferred income taxes

 

$

(2,072)

 

 

(27,444)

 

 

12,680 

 

F-4738

 


 

 

The tax effects of temporary differences that give rise to significant portionsImpact of the deferred tax assets and tax liabilities were (in thousands):



 

 

 

 

 

 



 

 

 

 

 

 



 

December 31,



 

2017

 

2016

 

2015

Deferred tax assets:

 

 

 

 

 

 

Allowance for loan losses, tax certificate losses and

 

 

 

 

 

 

write-downs for financial statement purposes

$

26,825 

 

42,008 

 

41,832 

Federal and State NOL and tax credit carryforward

 

148,665 

 

218,609 

 

237,820 

Real estate valuation

 

9,117 

 

16,828 

 

33,505 

Share based compensation

 

24 

 

232 

 

1,171 

Property and equipment

 

1,642 

 

3,015 

 

588 

Other

 

7,363 

 

11,183 

 

6,631 

Total gross deferred tax assets

 

193,636 

 

291,875 

 

321,547 

Valuation allowance

 

(102,282)

 

(131,727)

 

(127,920)

Total deferred tax assets

 

91,354 

 

160,148 

 

193,627 

Deferred tax liabilities:

 

 

 

 

 

 

Installment sales treatment of notes

 

100,717 

 

152,074 

 

150,237 

Intangible assets

 

14,322 

 

24,501 

 

25,368 

Junior subordinated debentures

 

9,144 

 

16,349 

 

17,205 

Deferral of VOI sales and costs under timeshare accounting

 

7,535 

 

8,718 

 

9,222 

Other

 

2,729 

 

2,824 

 

189 

Total gross deferred tax liabilities

 

134,447 

 

204,466 

 

202,221 

Net deferred tax liability

 

(43,093)

 

(44,318)

 

(8,594)

Less net deferred tax liability at beginning of period

 

44,318 

 

8,594 

 

92,609 

Net deferred tax liabilities from acquisitions

 

 -

 

 -

 

329 

Bluegreen initial public offering

 

11,988 

 

 -

 

 -

Cumulative effect for excess tax benefits recognized in accumulated earnings associated with share based compensation

 

(3,054)

 

 -

 

 -

Less change in net deferred tax liability for amounts included

 

 

 

 

 

 

in other comprehensive income

 

42 

 

20 

 

(15)

Benefit (provision) for deferred income taxes

$

10,201 

 

(35,704)

 

84,329 



 

 

 

 

 

 

Tax Reform Act



On December 22, 2017, the “Tax Cuts and JobsTax Reform Act was signed into law. In addition to changes or limitations to certain tax deductions, including limitations on the deductibility of interest payable to related and unrelated lenders and further limiting deductible executive compensation, the Tax Cuts and JobsReform Act permanently lowered the federal corporate tax rate to 21% from the existingprevious maximum rate of 35%, effective for tax years commencing January 1, 2018. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”)As a result of the reduction of the corporate tax rate to address21%, the applicationCompany revalued its deferred tax assets and liabilities as of GAAP in situations whenthe date of enactment and recognized a registrant does not have$45.3 million provisional benefit for income taxes during the necessary information available, prepared, or analyzed in reasonable detail to completeyear ended December 31, 2017. During the accounting for certain incomeyear ended December 31, 2018, the Company completed its analysis of the tax effects of the Tax CutsReform Act and Jobs Act. SAB 118 allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. The Company recorded areduced the provisional tax benefit for the impact of the Tax Cuts and Jobs Act of approximately $43.1 million in its Consolidated Statement of Operationsrecognized for the year ended December 31, 2017.  The $43.12017 by $2.8 million tax benefit is netas a result of a decrease in the valuation allowance of $34.2 million.  This tax benefit is comprisedits analysis of the remeasurement of our federal net deferred tax liabilities resulting from the permanent reduction in the corporate tax rate from 35% to 21%.

The impact of the Tax CutsReform Act on the deductibility of certain compensation to covered employees. The $2.8 million adjustment recognized during the year ended December 31, 2018 is included in nondeductible executive compensation in the above table that reconciles the Company’s expected income tax provision to its actual income tax provision.

The Tax Reform Act also repealed the alternative minimum tax effective in 2018 and Jobs Act may differ, possible materially, from the provisional amounts due to among other things, additional analysis, changes in interpretations and assumptions made by the Company and additional regulatory guidance that may be issued. Any such revisions will be treated in accordanceallows credits associated with the measurement period guidance outlinedalternative minimum tax to be applied to fully offset regular income taxes. Any credits that are not used to reduce regular income taxes are 50% refundable for the years 2019 through 2020 and 100% refundable in SAB 118. As such,2021. The Company had alternative minimum tax credit carryforwards of $11.2 million as of December 31, 2018 that were reclassified from deferred tax liabilities to other assets in the Company expects to complete its analysis no later thanCompany’s consolidated statement of financial condition as of December 22,31, 2018. During the year ended December 31, 2019, this credit was fully utilized. 



F-48Valuation Allowance on Deferred Tax Assets




The Company evaluates its deferred tax assets to determine if valuation allowances are required. In the evaluation, management considers net operating loss (“NOL”) carry-backcarryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. ValuationValuation allowances are established based on the consideration of all available evidence using a more likely than not standard. Based on the Company’s evaluations, which are discussed in further detail below, the deferred tax valuation allowances increaseddecreased by $25,000 and $3.8$0.1 million for the yearsyear ended December 31, 20172019 and 2016, respectively, and decreasedincreased by $127.8$0.3 million for the yearsyear ended December 31, 2015. 2018. 



AtAs of December 31, 2014,2019, the Company had maintained a valuation allowance against deferred tax assets of $255.9 million as the Company, BCC and Bluegreen filed separate group federal and state tax returns.  A substantial portion of these deferred tax assets were attributable to federal and state net operating loss carry forwards. As a separate tax return filer, the Company maintained a full valuation allowance against certain deferred tax assets based on the Company’s determination that it was more likely than not that these deferred tax assets would not be realized. As a result of the increase in the company’s ownership interest in BCC completed on April 30, 2015, the Company currently files a consolidated group tax return with all of its U.S. subsidiaries from May 1, 2015 forward.  As a consequence, a substantial portion of the Company’s net operating losses and other deductible temporary differences were utilized in the Company’s consolidated tax returns without limitation subsequent to May 1, 2015.  

The Company will continue to evaluate the positive and negative evidence available in subsequent periods and adjust its remaining valuation allowance to reflect the amount of net deferred tax assets it determines are more likely than not to be realized.

The Company has established a valuation allowance of $102.2$86.2 million relating to the deferred tax asset of $148.7$96.0 million for federal and state NOL and tax credit carryforwards. Thecarryforwards, as the Company’s ability to utilize a portion of these carryforwards to reduce future tax liability income is subject to significant limitations. The following table summarizesbelow sets forth information regarding the federal and Statestate NOL and tax credit carryforwards and the applicable 2017 valuation allowance as of December 31, 2019 (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal and

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State

 

Gross

 

 

 

Deferred

 

 

 

Federal and State NOL and Credit Carryforward

 

Gross Deferred Tax Asset

 

Valuation Allowance

 

Net Deferred Tax Asset

 

Year Expires

 

NOL and Credit

 

Deferred Tax

 

Valuation

 

Tax

 

 

 

Carryforward

 

Asset

 

Allowance

 

Asset

 

Year Expires

Federal NOL

$

18,470 

 

3,879 

 

 -

 

3,879 

 

2032-2034

Florida NOL-BBX

 

73,504 

 

3,194 

 

 -

 

3,194 

 

2030-2034

Non-Florida State NOLs-Bluegreen

 

240,000 

 

11,001 

 

2,442 

 

8,559 

 

2018-2037

Alternative minimum tax credit

 

28,611 

 

28,611 

 

 -

 

28,611 

 

Refundable

Non-Florida State NOLs

 

$

227,700 

 

 

10,329 

 

 

2,458 

 

 

7,871 

 

 

2020-2039

Federal NOL SRLY Limitation

 

227,595 

 

47,795 

 

47,795 

 

 -

 

2026-2034

 

 

227,595 

 

 

47,795 

 

 

47,795 

 

 —

 

2026-2034

Florida NOL SRLY Limitation

 

749,212 

 

32,554 

 

32,554 

 

 -

 

2026-2034

 

 

750,987 

 

 

32,630 

 

 

32,630 

 

 —

 

2026-2034

Other Federal tax credits-SRLY Limitation

 

2,372 

 

2,372 

 

2,372 

 

 -

 

2025-2031

 

 

2,372 

 

 

2,372 

 

 

2,372 

 

 —

 

2025-2031

Federal NOL Section 382 Limitation

 

74,471 

 

15,473 

 

13,486 

 

1,987 

 

2023-2029

 

 

7,885 

 

 

1,656 

 

 

 —

 

1,656 

 

2023-2029

Florida NOL Section 382 Limitation

 

64,866 

 

2,796 

 

2,529 

 

267 

 

2024-2029

 

 

5,127 

 

 

209 

 

 

 —

 

209 

 

2024-2029

Canadian NOL

 

2,900 

 

713 

 

713 

 

 -

 

2033-2037

 

 

3,919 

 

 

794 

 

 

794 

 

 —

 

2033-2039

Canadian capital losses

 

2,220 

 

277 

 

277 

 

 -

 

Do not expire

 

 

738 

 

 

185 

 

 

185 

 

 

 —

 

Do not expire

Total

$

 

 

148,665 

 

102,168 

 

46,497 

 

 

 

$

 

 

 

95,970 

 

 

86,234 

 

 

9,736 

 

 

 

 

 

 

 

 

 

 

 

 



The Company evaluated all positive and negative evidence available as of the reporting date,including tax planning strategies, the ability to file a consolidated return with its subsidiaries, the expected future reversal of existing taxable temporary differences, and expected future taxable income (primarily from Bluegreen) exclusive of reversing temporary differences and carry forwards. Based on this evaluation, the Company has determined that it is more likely than not that it will be able to realize $46.5$9.7 million of the deferred tax asset that is attributed to the Company’s federal and state NOL and credit carryforwards.

F-49


As of December 31, 2017, the Company had estimated federal and Florida NOL carryforwards of approximately $18.5million and $73.5 million, respectively (which expire from 2030 through 2034) that are not subject to any limitation and can be applied to the taxable income of any subsidiary of the Company.  No valuation allowance is needed for these NOLs.



As of December 31, 2017,2019, Bluegreen had non-Florida state NOL carryforwards of $240.0$227.7 million which expire from 20182020 through 2037.2039. These NOLs can only be utilized against Bluegreen’s (or a subsidiary of Bluegreen) income allocable to the state thatin which the NOL was generated from.generated. A valuation allowance is maintained for those state NOLs where the NOL is not more likely than not realizable.



The

F-39


As of December 31, 2019, the Company had alternative minimum tax credit carryforwards of $28.6 million. The Tax Cuts and Jobs Act repealed the alternative minimum tax effective in 2018 and allows the credit to be applied to fully offset regular income taxes.  Any credits that are not used to reduce regular income tax is refundable at 50% for the years 2018 through 2020 and 100% refundable in 2021. No valuation allowance is needed for these credits.

The Company’s deferred tax asset at December 31, 2017 includes federal and Florida NOL carryforwards and federal tax credit carryforwards that can only be utilized if the separate entity that generated them has separate company taxable income (“SRLY NOL(the “SRLY Limitation”). These carryforwards cannot be utilized against most of the Company’s subsidiaries’ taxable income, including Bluegreen. As such, a full valuation allowance has been established for these carryforwards. 



In addition, as a result of the Company’s merger with Woodbridge in September 2009, the Company experienced a “change of ownership” as that term is defined in the Internal Revenue Code. This change of ownership resulted in a significant limitation of the amount of the Company’s pre-merger net operating lossesNOLs that can be utilized by the Company annually (the “Section 382 limitation”). The federal and Florida annual limit is approximately $788,000 and $513,000, respectively. As a result, a valuation allowance has been established for thesethe amounts in the table represent the NOLs to the extent that they may expire before theymore likely than not can be utilized.utilized before expiration. 



As of December 31, 2017,2019, BBX Capital’s Canadian subsidiaries had NOL carryforwards. As the Canadian operation havehas had cumulative taxable losses in recent years, a full valuation allowance has been applied to these NOL carryforwards. In addition, one of the Canadian subsidiaries has a capital loss carryforward that can only be used to reduce capital gains, and the tax on Canadian capital gains is 50% of the Canadian tax rate. Canadian capital loss carryforwards do not expire. A full valuation allowance is maintained for the Canadian capital loss carryforward as it is unlikely that the Canadian subsidiary will generate capital gains in the future.



Other

OnIn September 21, 2009, the Company adopted a shareholder rights agreement aimed at protectingdesigned to protect its ability to use available NOLs to offset

future taxable income.  See Note 19 for additional information regarding and deter shareholders from acquiring a 5% or greater ownership interest in BBX Capital’s common stock without the Company’sprior approval of the board of directors. During the year ended December 31, 2019, the shareholder rights agreement. agreement expired.



The Company evaluates its tax positions based upon guidelines of ASC 740-10, Income Tax,740, which clarifies the accounting for uncertainty in tax positions. Based on an evaluation of uncertain tax provisions, the Company is required to measure tax benefits based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement.  There were no  unrecognized tax benefits at December 31, 2017, 20162019, 2018, or 2015.2017. 



The Company is no longer subject to federal or Florida income tax examinations by tax authorities for tax years before 2014.2016. Several of the Company’s subsidiaries are no longer subject to income tax examinations in certain state, local, and non-U.S. jurisdictions for tax years before 2012.2015.



Certain of the Company’s state income tax filings are under routine examination. While there is no assurance as to the results of these audits, the Company does not currently anticipate any material adjustments in connection with these examinations.

 

15.    Revenue Recognition

The table below sets forth the Company’s revenue disaggregated by category (in thousands):



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

For the Years Ended December 31,



 

2019

 

2018

 

2017

Sales of VOIs

 

$

255,375 

 

 

254,225 

 

 

242,017 

Fee-based sales commissions

 

 

207,832 

 

 

216,422 

 

 

229,389 

Resort and club management revenue

 

 

103,470 

 

 

99,535 

 

 

91,080 

Cost reimbursements

 

 

63,889 

 

 

62,534 

 

 

52,639 

Resort title fees

 

 

14,246 

 

 

12,205 

 

 

14,742 

Trade sales - wholesale

 

 

80,197 

 

 

82,800 

 

 

89,223 

Trade sales - retail

 

 

106,140 

 

 

96,686 

 

 

52,862 

Sales of real estate inventory

 

 

5,049 

 

 

21,771 

 

 

 —

Other customer revenue

 

 

7,528 

 

 

6,284 

 

 

5,997 

Revenue from customers

 

 

843,726 

 

 

852,462 

 

 

777,949 

Interest income

 

 

86,326 

 

 

85,501 

 

 

83,708 

Net gains on sales of real estate assets

 

 

13,616 

 

 

4,563 

 

 

1,451 

Other revenue

 

 

3,203 

 

 

3,372 

 

 

5,661 

Total revenues

 

$

946,871 

 

 

945,898 

 

 

868,769 

 

F-5040

 


 

 

15.16.    Commitments and Contingencies



The Company and its subsidiaries are lessees under various operating leases for real estate and equipment. At December 31, 2017, the approximate minimum future rental payments under such leases for the periods shown are (in thousands):



 

 

 

 

 



 

 

 

 

 

Years Ending December 31,

 

Amount

 

 

 

2018 

$

26,736 

 

 

 

2019 

 

23,992 

 

 

 

2020 

 

22,096 

 

 

 

2021 

 

21,122 

 

 

 

2022 

 

18,207 

 

 

 

Thereafter

 

47,177 

 

 

 

Total

$

159,330 

 

 

 

Litigation Matters



Certain of the Company’s leases give the Company options to renew the lease at a stipulated rental amount for additional five to seven year periods. 

The Company incurred rent expense as follows (in thousands):



 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

For the Years Ended December 31,

 



 

2017

 

2016

 

2015

 

Rental expense for premises and equipment

$

30,832 

 

18,706 

 

16,645 

 

In the ordinary course of business, BBX Capital and its subsidiaries are parties to lawsuits as plaintiff or defendant involving its operations and activities. Bluegreen is subject to claims or proceedings from time to time relating to the purchase, sale, marketing, or financing of VOIs.  Bluegreen is also subject to certain matters relating to the Bluegreen Communities’VOIs and other business substantially all of the assets of which were sold by us on May 4, 2012.activities. Additionally, from time to time in the ordinary course of business, Bluegreenthe Company is involved in disputes with existing and former employees, vendors, taxing jurisdictions, and various other parties and Bluegreenalso receives individual consumer complaints as well asand complaints, received through regulatoryinquiries, and orders requiring compliance from governmental and consumer agencies, including Offices of State Attorneys General. BluegreenThe Company takes these matters seriously and attempts to resolve any such issues as they arise. 



Reserves are accrued for matters in which management believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. Management does not believe that the aggregate liability relating to known contingencies in excess of the aggregate amounts accrued will have a material impact on the Company’s results of operations or financial condition. However, litigation is inherently uncertain, and the actual costs of resolving legal claims, including awards of damages, may be substantially higher than the amounts accrued for these claims and may have a material adverse impact on the Company’s results of operations or financial condition.



Adverse judgements and the costs of defending or resolving legal claims may be substantial and may have a material adverse impact on the Company’Company’s financial statements. Management is not at this time able to estimate a range of reasonably possible losses with respect to matters in which it is reasonably possible that a loss will occur. In certain matters, management is unable to estimate the loss or reasonable range of loss until additional developments provide information sufficient to support an assessment of the loss or reasonable range of loss. Frequently in these matters, the claims are broad, and the plaintiffs have not quantified or factually supported their claim.



The following is a description of certain ongoing litigation matters:



BBX Capital Litigation



Securities and Exchange Commission Complaint

In 2012, the SEC brought an action in the United States District Court for the Southern District of FloridaThere were no material pending legal proceedings against BCC and Alan B. Levan, BCC’s Chairman and Chief Executive Officer. Following an initial trial in 2014 and the reversal on appeal of certain judgments of the district court by the Eleventh Circuit Court of Appeals, a second trial

F-51


was held in 2017, and on May 8, 2017, the jury rendered a verdict in favor of BCC and Mr. Levan and against the SEC on all counts.

In connection with the Eleventh Circuit Court of Appeals’ reversal of certain judgments in the first trial, which became final on January 31, 2017, and the resolution of the matter in favor of BCC and Mr. Levan in the second trial, BBX Capital received legal fees and costs reimbursements fromor its insurance carrier of approximately $8.6 million as well as the release of the $4.6 million penalty assessedsubsidiaries other than proceedings against BCC in the first trial. The legal fees and costs reimbursements and the release of the penalty are reflected in the Company’s Statement of Operations in “Litigation Costs and penalty reimbursements” for the year ended December 31, 2017.

In Re BCC Merger Shareholder Litigation

On August 10, 2016, Shiva Stein filed a lawsuit against the Company, BBX Merger Sub, LLC, BCC and the members of BCC’s board of directors, which seeks to establish a class of BCC’s shareholders and challenges the Merger.  The plaintiff asserts that the Merger consideration undervalues BCC and is unfair to BCC’s public shareholders, that the sales process was unfair and that BCC’s directors breached their fiduciary duties of care, loyalty and candor owed to the public shareholders of BCC because, among other reasons, they failed to take steps to maximize the value of BCC to its public shareholders and instead diverted consideration to themselves. The lawsuit also alleges that BBX Capital, as the controlling shareholder of BCC, breached its fiduciary duties of care, loyalty and candor owed to the public shareholders of BCC by utilizing confidential, non-public information to formulate the Merger consideration and not acting in the best interests of BCC’s public shareholders. In addition, the lawsuit includes a cause of action against BCC, the Company and Merger Sub for aiding and abetting the alleged breaches of fiduciary duties. The lawsuit requested that the court grant an injunction blocking the proposed Merger or, if the proposed Merger is completed, rescind the transaction or award damages as determined by the court.  On September 15, 2016, Defendants filed a Motion to Dismiss the amended complaint. On November 21, 2016, the Court issued an order granting the Motion to Dismiss with prejudice. Plaintiff appealed the Court’s order dismissing the amended complaint to the Fourth District Court of Appeals and on January 9, 2018, the Fourth District Court of Appeals held oral argument on the appeal. The Company believes that the appeal is without merit and intends to continue vigorously defending the action.

Bluegreen Litigation

Commencing in 2015, it came to Bluegreen’s attention that its collection efforts with respect to its VOI notes receivable were being impacted by a then emerging industry-wide trend involving the receipt of “cease and desist” letters from attorneys purporting to represent certain VOI owners. Following receipt of these letters, Bluegreen is unable to contact the owners unless allowed by law.  Bluegreen believes these attorneys have encouraged such owners to become delinquent and ultimately default on their obligations and that such actions and Bluegreen’s inability to contact the owners are a primary contributor to the increase in its annual default rates.  Bluegreen’s average annual default rates have increased from 6.9% in 2015 to 8.5% in 2017.  Bluegreen also estimates that approximately 9.3% of the total delinquencies on its VOI notes receivable as of December 31, 2017 related to VOI notes receivable subject to these letters.  2019.

Bluegreen has in a number of cases pursued, and may in the future pursue, legal action against the VOI owners.Litigation



On August 24, 2016, Whitney Paxton and Jeff Reeser filed a lawsuit against Bluegreen Vacations Unlimited, Inc. (“BVU”), a wholly-owned subsidiary of Bluegreen, and certain of its employees (collectively, the “Defendants”), seeking to establish a class action of former and current employees of BVU and alleging violations of plaintiffs’ rights under the Fair Labor Standards Act of 1938 (the “FLSA”) and breach of contract. The lawsuit also claims that the Defendants terminated plaintiff Whitney Paxton as retaliation for her complaints about alleged violations of the FLSA. The lawsuit seekssought damages in the amount of the unpaid compensation owed to the plaintiffs. During JulyThe court granted preliminary approval of class action in September 2017 a magistrate judge entered a report and recommendation that the plaintiffs’ motion to conditionally certify collective action and facilitate notice to potential class members be granted with respect to certain employees and denied as to others. During September 2017,In February 2019, the judge acceptedparties agreed to settle the recommendationmatter for an immaterial amount.  The court approved the settlement and granted preliminary approval of class certification. Bluegreen believes thatdismissed the lawsuit is without merit and intend to vigorously defend the action.case with prejudice on May 9, 2019. 



On September 22, 2017, Stephen Potje, Tamela Potje, Sharon Davis, Beafus Davis, Matthew Baldwin, Tammy Baldwin, Arnor Lee, Angela Lee, Gretchen Brown, Paul Brown, Jeremy Estrada, Emily Estrada, Guillermo Astorga Jr., Michael Oliver, Carrie Oliver, Russell Walters, Elaine Walters, and Mike Ericson, individually and on behalf of all other similarly situated, filed a purported class action lawsuit against Bluegreen which asserts claims for alleged violations of the Florida Deceptive and Unfair Trade Practices Act and the Florida False Advertising Law. In the complaint, the plaintiffs allegealleged the making of false representations in connection with Bluegreen’s sales of VOIs, including representations regardingVOIs. The purported class action lawsuit was dismissed without prejudice after mediation.However, on or about April 24, 2018, plaintiffs re-filed their individual claims in Palm Beach County Circuit Court. Subsequently on October 15, 2019, the abilityCourt entered an order granting summary judgment in favor of Bluegreen and dismissed all claims. Bluegreen has moved for their attorneys’ fees. Plaintiffs have filed a notice to use pointsappeal the summary judgment order.

On February 28, 2018, Oscar Hernandez and Estella Michael filed a purported class action litigation in San Bernardino Superior Court against BVU.  The central claims in the complaint, as amended during June 2018, include alleged failures to pay overtime and wages at termination and to provide meal and rest periods, as well as claims relating to non-compliant wage statements and unreimbursed business expenses; and a claim under the Private Attorney’s General Act. Plaintiffs sought to represent a class of approximately 660 hourly, non-exempt employees who worked in the state of California since March 1, 2014. In April 2019, the parties mediated and agreed to settle the matter for stays or other experiences with other vacation providers,an immaterial amount. It is expected that the ability to cancel VOI purchasescourt will approve the settlement and the dismissal of the lawsuit after the settlement documents are executed.

On June 28, 2018, Melissa S. Landon, Edward P. Landon, Shane Auxier and Mu Hpare, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against the Company and BVU asserting claims for alleged violations of the Wisconsin

 

F-5241

 


 

 

Timeshare Act, Wisconsin law prohibiting illegal referral selling, and receive a refundWisconsin law prohibiting illegal attorney’s fee provisions. Plaintiffs allegations include that Bluegreen failed to disclose the identity of the purchase price, the ability to roll over unused points and that annual maintenance fees would not increase. The complaint seeks to establish a classseller of consumers who, sincereal property at the beginning of Bluegreen’s initial contact with the applicable statutepurchaser; that Bluegreen misrepresented who the seller of limitations, havethe real property was; that Bluegreen misrepresented the buyer’s right to cancel; that Bluegreen included an illegal attorney’s fee provision in the sales document(s); that Bluegreen offered an illegal “today only” incentive to purchase; and that Bluegreen utilizes an illegal referral selling program to induce the sale of VOIs. Plaintiffs seek certification of a class consisting of all persons who, in Wisconsin, purchased VOIs from Bluegreen had their annual maintenance fees relating to Bluegreenone or more VOIs increased, or were unable to roll over their unused pointswithin six years prior to the next calendar year. The lawsuit alleges damages in excessfiling of $5.0 million and seeks damages in the amount alleged to have been improperly obtained by Bluegreen, as well as anythis lawsuit. Plaintiffs seek statutory enhanced damages, attorneys’ fees and costs, and equitable and injunctive relief. On November 20, 2017, Bluegreen moved to dismiss the complaintcase, and on November 27, 2019, the Court issued a ruling granting the motion in response,part. Bluegreen has answered the plaintiffs filed an amended complaint dropping the claims relating to the Florida Deceptive and Unfair Trade Practices Act and adding claims for fraud in the inducement and violation of the Florida Vacation Plan and Timesharing Act.remaining claims. Bluegreen filed a motion to dismiss the amended complaint which is currently pending before the court. Bluegreen’s management believes that the lawsuit is without merit and intends to vigorously defend the action.



On January 4, 2018, Gordon Siu, individually and on behalf of all others similarly situated,7, 2019, Shehan Wijesinha filed a purported class action lawsuit alleging violations of the Telephone Consumer Protection Act (the “TCPA”). It is alleged that Bluegreen VacationsBVU called plaintiff’s cell phone for telemarketing purposes using an automated dialing system and Choice Hotels violated California state privacy laws by recording and/or monitoring a telemarketing call to thethat plaintiff without his consent.  The plaintiff claims the individual making the call requested that the plaintiff provide personal and private information and did not disclose that the call was being recorded until after making such request.  The plaintiff seeksgive BVU his express written consent to do so. Plaintiffs seek certification of a class comprised of other persons in California whose telephone conversations were monitored, recorded and/the United States who, received similar calls from or eavesdropped uponon behalf of BVU without their consent by Bluegreen and/or Choice Hotelsthe person’s consent. Plaintiff seeks monetary damages, attorneys’ fees and damages of $5,000 per violation.injunctive relief. Bluegreen believes thatthe lawsuit is without merit and intend to vigorously defend the action. On July 15, 2019, the court entered an order staying this case pending a ruling from the Federal Communications Commission clarifying the definition of an automatic telephone dialing system under the TCPA and the decision of the Eleventh Circuit in a separate action brought against a VOI company by a plaintiff alleging violations of the TCPA.

On January 7, 2019, Debbie Adair and thirty-four other timeshare purchasers filed a lawsuit against BVU and Bass Pro alleging violations of the Tennessee Consumer Protection Act, the Tennessee Time-share Act, the California Time-Share Act, fraudulent misrepresentation for failure to make certain required disclosures, fraudulent inducement for inducing purchasers to remain under contract past rescission, unauthorized practice of law, civil conspiracy, unjust enrichment, and breach of contract. Plaintiffs seek rescission of their contracts, money damages, including statutory treble damages, or in the alternative, punitive damages in an amount not less than $0.5 million. Bluegreen has filed a motion to dismiss which is pending. Bluegreen has agreed to indemnify Bass Pro with respect to the claims brought against Bluegreen in this proceeding. Bluegreen believes the lawsuit is without merit and intends to vigorously defend the action.



On March 15, 2018,  BVU entered into an Agreement for Purchase and Sale of Assets with T. Park Central, LLC, O. Park Central, LLC, and New York Urban Ownership Management, LLC, (collectively “New York Urban”) (“Purchase and Sale Agreement”), which provides for the purchase of The Manhattan Club inventory over a number of years and the assumption of  the management contract with The Manhattan Club HOA  anticipated to occur in 2021.  On October 7, 2019, New York Urban initiated arbitration proceedings against BVU alleging that The Manhattan Club HOA (of which BVU is a member) was obligated to pay an increased management fee to a New York Urban affiliate and that this higher amount would be the benchmark for BVU’s purchase of the management contract under the parties’ Purchase and Sale Agreement.  New York Urban also sought damages in the arbitration proceedings in excess of $10 million for promissory estoppel and tortious interference.  BVU denied New York Urban’s claims and terminated the Purchase and Sale Agreement and the related Security Agreement for, among other things, prematurely initiating arbitration in violation of the Purchase and Sale Agreement. On November 25, 2019, New York Urban sent its own Notice of Termination and a separate letter containing an offer to compromise if BVU resigns its position on the Manhattan Club HOA board and permits New York Urban to enforce its rights under the Security Agreement. On November 29, 2019, BVU accepted the offer. BVU has provided New York Urban with resignations of its members on the Board of Directors consistent with the parties’ settlement agreement. BVU believes it has fulfilled all of its legal obligations under the settlement terms offered.

On July 18, 2019, Eddie Boyd, et al. filed an action alleging that BVU and co-defendants violated the Missouri Merchandise Practices Act for allegedly making false statements and misrepresentations with respect to the sale of VOIs. Plaintiffs further have filed a purported class action allegation that BVU’s charging of an administrative processing fee constitutes the unauthorized practice of law. Plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. Bluegreen has moved to dismiss the action. Bluegreen believes the lawsuit is without merit and intends to vigorously defend the action.

Commencing in 2015, it came to Bluegreen’s attention that its collection efforts with respect its VOI notes receivable were being impacted by a then emerging, industry-wide trend involving the receipt of  “cease and desist” letters from exit firms and their attorneys purporting to represent certain VOI owners. Following receipt of these letters, Bluegreen is unable to contact the owners unless allowed by law. Bluegreen believes these exit firms have encouraged such owners to become delinquent and ultimately default on their obligations and that such actions and Bluegreen’s inability to contact the owners are a primary contributor to the increase in its annual default rates. Bluegreen’s average annual default rates have increased from 6.9% in 2015 to 8.7% in 2019. Bluegreen also estimates that approximately 12.6% of the total delinquencies on its VOI notes receivable as of December 31, 2019 related to VOI notes receivable subject to this issue. Bluegreen has in a number of cases pursued, and may in the future pursue, legal action against the VOI owners, and in certain circumstances against the exit firms.

On December 21, 2018, Bluegreen filed a lawsuit against timeshare exit firm Totten Franqui and certain of its affiliates (“TPEs”). In the complaint, Bluegreen alleged that the TPEs, through various forms of deceptive advertising, as well as inappropriate direct contact with

F-42


VOI owners, made false statements about Bluegreen and provided misleading information to the VOI owners. The TPEs have encouraged nonpayment by consumers and exacted fees for doing so. Bluegreen believes the consumers are paying fees to the TPEs in exchange for illusory services. Bluegreen has asserted claims against the TPEs under the Lanham Act, as well as tortious interference with contractual relations, civil conspiracy to commit tortious interference and other claims.  During the course of the litigation, the TPEs and Totten Franqui filed for bankruptcy, which resulted in the litigation being stayed. The bankruptcy judge has appointed an independent trustee to handle the estate of the debtors and Bluegreen has been in discussions with the bankruptcy trustee about a possible settlement.  Bluegreen intends to assert all of its legal rights in the bankruptcy case.

On November 13, 2019, Bluegreen filed a lawsuit against timeshare exit firm The Montgomery Law Firm and certain of its affiliates (“also included in TPEs”). In the complaint, Bluegreen alleged that the TPEs, through various forms of deceptive advertising, as well as inappropriate direct contact with VOI owners, made false statements about Bluegreen and provided misleading information to the VOI owners. The TPEs have encouraged nonpayment by consumers and exacted fees for doing so. Bluegreen believes the consumers are paying fees to the TPEs in exchange for illusory services. Bluegreen has asserted claims against the TPEs under the Lanham Act, as well as tortious interference with contractual relations, civil conspiracy to commit tortious interference and other claims.

Other Commitments, Contingencies, and Guarantees

Bluegreen / Bass Pro Settlement

BVU has an exclusive marketing agreement with Bass Pro, a nationally-recognized retailer of fishing, marine, hunting, camping and sports gear, that provides Bluegreen with the right to market and sell vacation packages at kiosks in each of Bass Pro’s retail locations and through other means.

On May 24, 2019, Bluegreen received notice from Bass Pro and its affiliates that it was terminating the marketing agreement based on the failure to cure the alleged breaches, and Bluegreen was removed from all Bass Pro retail stores. BVU subsequently filed a counter claim against Bass Pro and Big Cedar LLC.

On June 13, 2019, Bluegreen entered into a settlement agreement which resolved the litigation and reinstated and amended the marketing agreement. Pursuant to the terms of the settlement agreement, Bass Pro agreed to reinstate BVU’s access to Bass Pro’s marketing channels, including Bass Pro and Cabela’s retail stores. Additionally, with no admission of any wrongdoing, Bluegreen paid Bass Pro $20.0 million in June 2019 and, among other things, agreed to make five annual payments to Bass Pro of $4.0 million each commencing in 2020. Bluegreen accrued for the net present value of the above amounts, plus attorneys’ fees and costs, totaling approximately $39.1 million, which is reflected in selling, general, and administrative expenses in the Company’s consolidated statement of operations for the year ended December 31, 2019. As of December 31, 2017,2019, $17.9 million was accrued for the remaining payments required by the settlement agreement, which is included in other liabilities in the Company’s consolidated statement of financial condition.

As of December 31, 2019, Bluegreen sold vacation packages in 68 of Bass Pro’s stores. In exchange, Bluegreen compensates Bass Pro based on VOI sales generated through the program. No compensation is paid to Bass Pro under the agreement on sales made at Bluegreen/Big Cedar Vacations’ resorts.retail stores and 15 Cabela’s retail stores.  During the years ended December 31, 2017, 20162019 and 2015,2018, VOI sales to prospects and leads generated by the agreement with Bass Pro accounted for approximately 15%, 16%13% and 20%14%, respectively, of Bluegreen’s VOI sales volume. On October 9, 2017, Bass Pro advised Bluegreen that it believes the amounts paid to it as VOI sales commissions should not have been adjusted for certain purchaser defaults. Bluegreen previously informed Bass Pro that the aggregate amount of such adjustments for defaults charged back to Bass Pro between January 2008 and June 2017 totaled approximately $4.8 million. Bluegreen believes these chargebacks were appropriate and consistent with the terms and intent of the agreements with Bass Pro, and Bluegreen is continuing to discuss the matter with Bass Pro. On October 20, 2017, in order to demonstrate good faith, Bluegreen paid this amount to Bass Pro pending a resolution of the matter in the ordinary course. Bluegreen recognized the $4.8 million payment as general and administrative expense during the fourth quarter of 2017. In addition, the resolution of the matter may adversely impact our future marketing expenses.



The following is a description of certain commitments and guarantees:Other



In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen provides subsidies tomay enter in subsidy agreements with certain homeowners’ associations to provide for funds necessary to operate and maintain vacation ownership properties in excess of assessments collected from owners of the VOIs.HOAs. During the years ended December 31, 2017, 20162019, 2018 and 2015,2017, Bluegreen made subsidy payments related to such subsidies of $24.9 million,  $12.6 million, and $12.6 million, respectively, which are included withinin cost of other fee-based services in connection with these arrangementsthe Company’s consolidated statements of $12.6 million, $13.9 million and $15.8 million, respectively.operations. As of December 31, 20172019 and 2016,2018, Bluegreen had no accrued liabilities for such subsidies. As

In December 2019, Bluegreen’s President and Chief Executive Officer resigned. In connection with his resignation, Bluegreen agreed to make payments to him totaling $3.5 million, over a period of 18 months, all of which remained payable as of December 31, 2017 and 2016, Bluegreen was providing subsidies to nine homeowners’ associations. 

In October 2013,2019. Additionally, during 2019, Bluegreen entered into an agreementcertain agreements with executives related to purchasetheir separation from an unaffiliated third party completed VOI inventory at the Lake Eve ResortBluegreen or a  change in Orlando, Florida over a five-year period. The total purchase commitment was $35.1 million, of which $8.9 million and $5.4 million of inventory was purchased in 2017 and 2016, respectively. As of December 31, 2017, $4.6 million of the Lake Eve Resort purchase commitment remained.

During August 2016, the Company entered into a severance arrangement with an executive. Under the terms of the arrangement, the executive will receive $3.7 million over a three year period ending in August 2019. As of December 31, 2017, $1.9 million was left to be paid under this agreement. 

In September 2017, Bluegreen entered into an agreement with an executive in connection with his retirement.position. Pursuant to the terms of the agreement,these agreements, Bluegreen agreed to make payments totaling approximately $2.9$2.5 million through March 2019. The amount payable under the agreement was accrued asNovember 2020. As of December 31, 2017 and is included in selling,2019, $2.3 million remained payable under these agreements.

 

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general and administrative expenses for the year ended December 31, 2017.  As of December 31, 2017, Bluegreen had a $2.6 million liability remaining under this agreement. Also, during the second half of 2017, Bluegreen implemented an initiative designed to streamline their operations in certain areas to facilitate future growth. Such initiative resulted in $5.8 million of severance expense for the year ended December 31, 2017, $1.9 million of which will be paid in 2018.

The CompanyBBX Capital guarantees certain obligations of its wholly-owned subsidiaries and unconsolidated real estate joint ventures, as follows:including the following:



·

During the year ended December 31, 2014, the Sunrise and Bayview Partners, LLC joint venture owned 50% by Procacci Bayview, LLC and 50% by a subsidiary of the Company refinanced its land acquisition loan with a financial institution. BBX Capital provided the financial institution withis a guaranteeguarantor of 50% of the outstanding balance of a third party loan to the Sunrise and Bayview Partners, LLC real estate joint venture’s loanventure, which had an outstanding balance of $5.0 million as of December 31, 2017.2019.

·

BBX Capital is a guarantor on a $1.5 million notecertain notes payable of Anastasia, aby its wholly-owned subsidiary of BBX Sweet Holdings, owed to the former owner of Anastasia.  The Anastasia note payable is collateralized by the common stock of Anastasia. 

·

BBX Sweet Holdings and BBX Capital are guarantors of a $1.5 million note payable of Hoffman’s Chocolates, a wholly-owned subsidiary of BBX Sweet Holdings, owed to Centennial Bank.  This note payable is collateralized by approximately $2.0 million of properties and equipment.

·

In October 2017, a wholly-owned subsidiary of the Company issued a $3.4 million unsecured note to the seller of real estate to the Chapel Grove joint venture in which the subsidiary has a 46.75% equity interest.  The unsecured note was part of the subsidiary’s initial capital contribution to the Chapel Trail real estate joint venture. The note is not secured by the joint venture property and BBX Capital guarantees the repayment of the unsecured note.

·

On August 7, 2015, BBX Sweet Holdings entered into a Loan and Security Agreement and related agreements with Iberiabank, which providessubsidiaries. See Note 13 for borrowings by BBX Sweet Holdings of up to $5.0 million on a revolving basis. The facility is secured by the assets of BBX Sweet Holdings and its subsidiaries and is guaranteed by BBX Capital.  

·

The Company’s wholly-owned subsidiary, Food for Thought Restaurant Group, LLC enters into lease agreements for MOD restaurant locations.  As of December 31, 2017, the Company is a guarantor on two of the lease agreements with an aggregate lease obligation of $1.3 million.additional information regarding these obligations.

 

16.17.    Stock Incentive Plans



Restricted Stock and Stock Options Plans



The Company has three share-based compensation plans as of December 31, 2017:BBX Capital maintains the BBX Capital Corporation Amended and Restated 2014 Incentive Plan, as previously amended (the “2014 Plan”), which allows for the issuance of restricted stock awards of the Company’s Class A Common Stock and Class B Common Stock, the grant of options to purchase shares of the Company’s Class A Common Stock and Class B Common Stock, and the grant of performance-based cash awards. BBX Capital also previously maintained the BBX Capital 2005 Restricted Stock and Option Plan and the BBX Capital 2014 Stock Incentive Plan.Plan, which BBX Capital assumed from BCC in December 2016. The BBX Capital 2005 Restricted Stock and Option Plan was terminated during 2018 when the last option previously granted under the plan was exercised, and the BBX Capital 2014 Stock Incentive Plan are collectively referred to aswas terminated during 2019 when the “BCC Equity Compensation Plans”. final stock-based award previously granted under the plan vested.



The Company assumed2014 Plan permits the BCC Equity Compensation Plans upon consummationissuance of the Merger with BCC on December 15, 2016 (see Note 3 – Acquisitions and Merger).  Pursuantawards for up to the Merger Agreement, awards outstanding under the BCC Equity Compensation Plan at December 15, 2016 continue to be outstanding and governed by the BCC Equity Compensation Plans, except that such awards were converted into awards that are eligible to be settled in3,300,000 shares of the Company’s Class A Common Stock resulting inand up to 10,700,000 shares of the issuanceCompany’s Class B Common Stock. Awards for up to 2,817,776 shares of 5,090,354Class A Common Stock and 0 shares of Class B Common Stock remained available for grant under the 2014 Plan as of December 31, 2019; however, as described below, awards of 2,442,503 restricted shares of the Company’s Class A  Common Stock and non-qualifying stock optionswere granted to acquire 35,716 shares of the Company’s Class A Common Stock at December 15, 2016.  No furtherexecutive officers under the 2014 Plan in January 2020. 

Vesting of awards will be granted under the BCC Equity2014 Plan is established by the Compensation Plans.

Committee of BBX Capital’s board of directors in connection with each grant of restricted stock awards or stock options. The maximum term of incentive and non-qualifying stock options issuable under the 2014 Plan is ten years. Vesting is established by the Compensation Committee of the board of directors in connection with each grant of options or restricted stock awards.  There were no stock options issued or outstanding under the 2014 Plan as of December 31, 2017.2019.



Compensation expensecost for restricted stock awards and stock options and restricted common stock awards is based on the fair value of the award on the measurement date, which is generally the grant date. The fair value of restricted stock awards is generally based on the market price of the Company’s common stock on the grant date, while the fair value of the Company’s stock options is estimated using the Black-Scholes option-pricing model. TheFor awards that are subject only to service conditions, the Company recognizes compensation costs on a straight-line basis over the requisite service period of the awards. Forfeituresawards, and the impact of forfeitures are recognized when they occur. 

Restricted Stock Activity



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There were no options granted to employees or non-employee directors duringThe table below sets forth information regarding the threeCompany’s unvested restricted stock award activity for the year period ended December 31, 2017.  As described below, the2019:



 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

Weighted



 

Unvested

 

Average



 

Restricted

 

Grant Date



 

Stock

 

Fair Value

Unvested balance outstanding, beginning of period

 

 

3,186,546 

 

$

5.32 

Granted

 

 

1,923,975 

 

 

6.12 

Vested

 

 

(2,468,115)

 

 

4.65 

Forfeited

 

 

 —

 

 

 —

Unvested balance outstanding, end of period

 

 

2,642,406 

 

$

6.53 

Available for grant at December 31, 2019

 

 

2,817,776 

 

 

 

The Company issued restricted stock awards to certain officers for each ofduring the years in the two year period ended December 31, 2016. There2019 and 2018, while there were no restricted stock awards issued during the year ended December 31, 2017. However,The table below sets forth information regarding the restricted stock awards granted during the years ended December 31, 2019 and 2018:

F-44




 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Per Share

 

 

 



 

 

 

 

Number of

 

Weighted Average

 

 

 



 

 

 

 

Shares Underlying

 

Grant Date

 

Requisite

Grant Date

 

 

Award Type

 

Awards Granted

 

Fair Value

 

Service Period (1)

1/9/2018

 

 

Class B Common Stock

 

 

1,487,051 

 

 

8.7

 

 

4 years

1/8/2019

 

 

Class B Common Stock

 

 

1,923,975 

 

 

6.12

 

 

4 years

(1)

The awards vest ratably in annual installments over the requisite service period.

In addition to the above awards, on  January 9, 2018,21, 2020, the Company’s Compensation Committee of theBBX Capital’s board of directors granted awards of 1,487,0512,442,503 restricted shares of the Company’sBBX Capital’s Class BA Common Stock to the Company’s executive officers under the 2014 Plan. The aggregate grant date fair value of the January 20182020 awards was $12.9$10.2 million, and the shares vest ratably in annual installments of approximately 372,000611,000 shares over four yearsperiods beginning on October 1, 20182020.



The following table sets forth information on outstanding options:



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

 

 

 

 

Weighted

 

 



 

 

 

Weighted

 

Average

 

 



 

 

 

Average

 

Remaining

 

Aggregate



 

Outstanding Options

 

Exercise

Price

 

Contractual Term

 

Intrinsic Value ($000)

Outstanding at December 31, 2016

 

186,791 

$

3.59 

 

1.24 

$

675 

Exercised

 

(151,075)

 

0.41 

 

 

 

881 

Forfeited

 

(8,370)

 

43.43 

 

 

 

 

Expired

 

 -

 

0.00 

 

 

 

 

Outstanding at December 31, 2017

 

27,346 

$

8.98 

 

0.43 

 

 

Exercisable at December 31, 2017

 

27,346 

$

8.98 

 

0.43 

 

 

Available for grant at December 31, 2017

 

2,228,802 

 

 

 

 

 

 

The 2014 Plan permits the issuanceIn October 2019, award recipients surrendered a total of awards for up to 500,000 shares of the Company’s Class A Common Stock and up to 9,500,000 shares of the Company’s Class B Common Stock.  Awards for up to 17,776222,848 shares of Class A Common Stock and 2,211,026 shares of Class B Common Stock remained available for grant under the 2014 Plan as of December 31, 2017, although on January 9, 2018, awards of 1,481,051 restricted shares of the Company’s Class B Common Stock were granted to the Company’s executive officers under the 2014 Plan.  

There was no unearned compensation cost related to the Company’s stock options as all options were vested as of December 31, 2017.

During the years ended December 31, 2017, 2016 and 2015, the Company received net proceeds of approximately $63,000, $10,000 and $10,000, respectively, upon the exercise of stock options. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was $881,000, $143,000 and $85,000, respectively. 

The following is a summary of the Company’s non-vested restricted stock and restricted stock units activity:



 

 

 



 

 

 



 

 

Weighted



Non-vested

 

Average



Restricted

 

Grant Date



Stock

 

Fair Value

Outstanding at December 31, 2016

11,131,996 

$

2.74 

Granted

 -

 

 -

Vested

(6,137,481)

 

2.22 

Forfeited

 -

 

 -

Outstanding at December 31, 2017

4,994,515 

$

3.39 

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The following table indicates the grant date, the number of restricted stock awards granted, the per share weighted average grant date fair value and the requisite service period for restricted stock awards granted during the years ended December 31, 2016 and 2015:



 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

Per Share

 

 



 

 

 

Weighted Average

 

 



 

Number of

 

Grant Date

 

Requisite

Grant Date

 

Awards Granted

 

Fair Value

 

Service Period (3)

9/1/2015

(1)

2,372,592 

$

3.16

 

4 years

12/15/2016

(2)

5,090,354 

 

2.74

 

1.63 Years

12/22/2016

(1)

1,823,565 

 

4.3

 

4 years

(1)

The awards are issuable in shares of  Class B Common Stock.

(2)

Pursuant to the Merger Agreement the Company assumed and adopted the BCC Equity Compensation Plans as of December 15, 2016 and 942,657 shares of BCC’s restricted stock units were retired in exchange for restricted stock units with respect to approximately 5.1 million shares of the Company's Class A Common Stock with a weighted average requisite service period of 1.63 years. 

(3)

The awards vest ratable in annual installments over the requisite service period.

Between September 30, 2017 through October 8, 2017, award recipients surrendered a total of 2,394,492 shares of Class A Common Stock and 176,132748,357 shares of Class B Common Stock to the Company to satisfy the $19.0$4.5 million tax withholding obligation associated with the vesting of 6,137,4812,468,115 restricted shares. The Company retired the surrendered shares.



The fair value of shares of BBX Capital’s restricted stock awards which vested during the years ended December 31, 2019, 2018, and 2017 2016was $11.5 million, $24.0 million and 2015 was $45.2 million, $10.3 million and $10.7 million, respectively.respectively, based on the fair value of BBX CapitalCapital’s common stock on the applicable vesting dates.

The Company recognized restricted stock compensation expense related to BBX Capital restricted stock awards of approximately $11.4 million, $12.9 million, and $12.3 million $6.4 millionduring the years ended December 31, 2019, 2018, and $5.6 million2017, respectively, and recognized tax benefits of $0.4 million $0.8 million and $0.6 million forduring the yearsyear ended December 31, 2017, 2016 and 2015, respectively.

The fair value of2017. There were no tax benefits recognized on restricted shares of BCC’s stock when vestedcompensation expense for these awards during the years ended December 31, 20162019 and 2015 was $10.0 million and $6.0 million, respectively. 2018.

Included in the Company’s Consolidated Statements of Operations and Comprehensive Income is $6.1 million and $5.5 million of share-based compensation expense related to BCC for the years ended December 31, 2016 and 2015, respectively. BCC recognized tax benefits of $0.7 million and $0.4 for the years ended December 31, 2016 and 2015, respectively.

 

As of December 31, 2017,2019, the total unrecognized compensation cost related to the Company’s non-vestedunvested restricted stock compensationawards was approximately $14.8$15.2  million. The cost is expected to be recognized over a weighted-average period of approximately 1.881.22 years.

Stock Option Activity



There were no options granted to employees or non-employee directors during the three-year period ended December 31, 2019.

17.

During the years ended December 31, 2018 and 2017, the Company received net proceeds of approximately $245,000 and $63,000, respectively, upon the exercise of stock options, and the total intrinsic value of exercised options during such periods was $6,000 and $881,000, respectively. There were no stock options issued or outstanding during the year ended December 31, 2019.

18.    Employee Benefit Plans and Incentive Compensation Program



Defined Contribution 401(k) Plan



BBX Capital and its subsidiaries sponsor threefour Employee Retirement Plans under Internal Revenue Code Section 401(k). Generally,Although there are variations in the eligibility requirements under such plans, employees who have completed 90 days of service and have reached the age of 21 are generally eligible to participate in the Company’s 401(k) plans. For the year ending December 31, 2017,2019, an eligible employee under the plan was entitled to contribute up to $18,000,$19,000, while an eligible employeeemployee over 50 years of age was entitled to contribute up to $24,000.$25,000. During the years ended December 31, 2017, 20162019, 2018, and 2015,2017, the Company generally matchesmatched 100% of the first 3% of employee contributions and 50% of the next 2% of employee contributions.  In general,contributions, and the match amounts vestgenerally vested immediately. Further, Bluegreen may make additional discretionary matching contributions to its 401(k) retirement plan not to exceed 4% of each participant’s compensation. For the years ended December 31, 2017, 20162019, 2018, and 2015,2017, the Company recorded expense for contributions to the 401(k) plans totaling approximately $6.2 million,  $5.6 million, and $5.7 million, $5.5 million and $5.3 million, respectively. 

 

F-56


18.19.    Common Stock and Redeemable 5% Cumulative Preferred Stock



The Company has outstanding 15,000 shares of 5% Cumulative Preferred Stock at a stated value of $1,000 per share. The shares of 5% Cumulative Preferred Stock are redeemable at the option of the Company, from time to time, at a redemption price of $1,000 per share. Shares of the 5% Cumulative Preferred Stock are also subject to mandatory redemption as described below. The 5% Cumulative Preferred Stock’s liquidation preference is equal to its stated value of $1,000 per share plus any accumulated and unpaid dividends or an amount equal to the applicable redemption price in a voluntary liquidation or winding up of the Company. Holders of the 5% Cumulative Preferred Stock have no voting rights, except as provided by Florida law, and are entitled to receive, when and as declared by the Company’s board of directors, cumulative quarterly cash dividends on each such share at a rate per annum of 5% of the stated value from the date of issuance. The Company pays regular quarterly cash dividends of $187,500 on its 5% Cumulative Preferred Stock.  The 5% Cumulative Preferred Stock is subject to mandatory redemption and accordingly is classified as a liability in the Company’s Consolidated Statements of Financial Condition.  The Company is required to redeem the preferred shares in $5.0 million annual payments in each of the years ending December 31, 2018, 2019 and 2020.  During December 2013, the Company made a $5.0 million loan to the holders of the 5% Cumulative Preferred Stock. The loan is secured by 5,000 shares of the 5% Cumulative Preferred Stock, has a term of five years, accrues interest at a rate of 5% per annum and provides for payments of interest only on a quarterly basis during the term of the loan, with all outstanding amounts being due and payable at maturity in December 2018.

For the years ended December 31, 2017, 2016 and 2015,  the Company recorded interest expense in its Consolidated Statements of Operations and Comprehensive Income of $1.2 million, $1.2 million and $1.1 million, respectively, of which $750,000 was paid during each of these three years as dividends on the 5% Cumulative Preferred Stock.

19.    Common Stock



The Company’sBBX Capital’s Articles of Incorporation authorize the Company to issue both Class A Common Stock, par value $.01 per share, and Class B Common Stock, par value $.01 per share. Under Florida law and the Company’s Articles of Incorporation, holders of the Company’s Class A Common Stock and Class B Common Stock vote together as a single class on most matters presented to a vote of the Company’s shareholders. On such matters, holders of the Company’s Class A Common Stock are entitled to one vote for each share held, with all holders of Class

F-45


A Common Stock possessing in the aggregate 22% of the total voting power.  Holderspower, while holders of Class B Common Stock possess the remaining 78% of the total voting power. If the number of shares of Class B Common Stock outstanding decreases to 1,800,000 shares, the Class A Common Stock’s aggregate voting power will increase to 40%, and the Class B Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53%, and the Class B Common Stock will have the remaining 47%. These relative voting percentages will remain fixed unless the number of shares of Class B Common Stock outstanding decreases to 500,000 shares or less, at which time the fixed voting percentages will be eliminated, and holders of Class A Common Stock and holders of Class B Common Stock would then each be entitled to one vote per share held. Each share of Class B Common Stock is convertible at the option of the holder thereof into one share of Class A Common Stock.

On September 21, 2009,Stock at any time at the Company adopted a rights agreement (“Rights Agreement”) designed to preserve shareholder value and protect our ability to use available net operating loss carryforwards to offset future taxable income.option of the holder. The Rights Agreement provides a deterrent to shareholders from acquiring a 5% or greater ownership interest in the Company’spercentage of total common equity represented by Class A Common Stock and Class B Common Stock, taken as a whole, without the prior approval of the board of directors. Shareholders of the Companycommon stock was 83% and 17%, respectively, at September 21, 2009 were not required to divest any shares.December 31, 2019.



OnShare Repurchase Program

In September 21, 2009, theBBX Capital’s board of directors approved a share repurchase program which authorizesauthorized the repurchase of up to 20,000,000 shares of the Company’sBBX Capital’s Class A and Class B Common Stock at an aggregate cost of no more than $10.0 million.

During April 2017, the Company purchased Under this program, BBX Capital repurchased 1.0 million shares of its Class A Common Stock for approximately $6.2 million.  Duringmillion  during April 2016, the Company repurchased 1.0 million shares of its Class A Common Stock for approximately $3.0 million. 2017.



OnIn June 13, 2017, theBBX Capital’s board of directors approved a share repurchase program which replaced the September 2009 share repurchase program and authorizes the repurchase of up to 5,000,000 shares of the Company’sBBX Capital’s Class A Common Stock and Class B Common Stock at an aggregate cost of up to $35.0 million. During the years ended December 31, 2019, 2018 and 2017, BBX Capital repurchased 3,228,890, 1,200,000 and 321,593 shares, respectively, of its Class A Common Stock for approximately $15.4 million, $7.6 million and $2.4 million, respectively. As of December 31, 2017, 321,593 

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2019,  249,517 shares of the Company’s Class A or Class B Common Stock have beenremain available to be repurchased for approximately $2.4 million under the June 2017 share repurchase program.



On September 4, 2015, the Company entered into Share Exchange Agreements with Alan B. Levan, John E. Abdo, Jarett S. LevanCash Tender Offer

In April 2018, BBX Capital completed a cash tender offer pursuant to which it purchased and Seth M. Wise as holdersretired 6,486,486 shares of restricted stock units ofits Class A Common Stock at a purchase price of BCC.  See Note 23$9.25 per share for information regardingan aggregate purchase price of approximately $60.1 million, inclusive of acquisition costs. As of April 19, 2018, the options exercised byshares purchased in the tender offer represented approximately 7.6% of the total number of outstanding shares of BBX Capital’s Class A Common Stock and 6.3% of BBX Capital’s total issued and outstanding equity (which includes the issued and outstanding shares of BBX Capital’s Class B Common Stock). 

Redeemable 5% Cumulative Preferred Stock

BBX Capital’s shares of mandatorily redeemable 5% Cumulative Preferred Stock were redeemable at its option at a redemption price of $1,000 per share and were classified as a liability in the Company’s consolidated statements of financial condition while such shares were outstanding due to the mandatory redemption feature.

In December 2013, the Company andmade a $5.0 million loan to the share exchanges consummated under the Share Exchange Agreements during 2016. Upon the Company’s adoptionholders of the BCC Equity Compensation Plans5% Cumulative Preferred Stock and in connection withMarch 2018, the Merger Agreement onCompany redeemed 5,000 shares of the 5% Cumulative Preferred Stock in exchange for the cancellation of the $5.0 million loan to the holders of the 5% Cumulative Preferred Stock. 

In December 15, 2016,2019, the Share Exchange Agreements were terminated.Company redeemed the remaining 10,000 shares of the 5% Cumulative Preferred Stock at their stated value of $10.0 million. 



For the years ended December 31, 2019, 2018, and 2017, the Company recorded interest expense related to the 5% Cumulative Preferred Stock of $1.0 million,  $1.1 million, and $1.2 million, respectively, in its consolidated statements of operations and comprehensive income.



20.    Noncontrolling Interests and Redeemable Noncontrolling Interest



The following table summarizes the noncontrollingNoncontrolling interests in the Company’s consolidated subsidiaries at December 31, 2017 and 2016consisted of the following (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

2017

 

2016

 

2019

 

2018

Bluegreen Vacations (1)

$

38,223 

 

 -

Bluegreen (1)

 

$  

39,740 

 

 

41,478 

Bluegreen / Big Cedar Vacations (2)

 

42,286 

 

40,773 

 

49,534 

 

45,611 

Joint ventures and other

 

(238)

 

77 

 

 

1,001 

 

 

899 

Total noncontrolling interests

$

80,271 

 

40,850 

 

$  

90,275 

 

 

87,988 



Included

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The redeemable noncontrolling interest included in the Company’s Consolidated Statementconsolidated statements of Financial Conditionfinancial condition as of December 31, 20172019 and 2018 was a $2.8$4.0 million redeemable noncontrolling interest associated withand $2.6 million, respectively, which is comprised of the IT’SUGAR acquisition.  The Company owns 90.4% of IT’SUGAR’s Class B Units and the remaining 9.6% of IT’SUGAR’s Class B Units representthat are held by a redeemable noncontrolling interest.interest and may be redeemed for cash at the holder’s option upon a contingent event that is outside of the Company’s control.



The following table summarizes the income recognized with respect to the Company’s subsidiariesIncome (loss) attributable to noncontrolling interests, forincluding redeemable noncontrolling interests, consisted of the years ended December 31, 2017, 2016 and 2015following (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

 

2019

 

2018

 

2017

 

2017

 

2016

 

2015

 

Bluegreen Vacations (1)

$

5,639 

 

 -

 

 -

 

Bluegreen (1)

 

$

3,363 

 

 

8,566 

 

 

5,639 

Bluegreen / Big Cedar Vacations (2)

 

12,784 

 

9,826 

 

11,705 

 

 

11,273 

 

12,390 

 

12,760 

BCC

 

 -

 

3,489 

 

4,964 

 

Joint ventures and other

 

(21)

 

(20)

 

2,136 

 

 

 

(224)

 

 

(265)

 

 

(21)

Net income attributable to noncontrolling interests

$

18,402 

 

13,295 

 

18,805 

 

 

$

14,412 

 

 

20,691 

 

 

18,378 

 

(1)

Subsequent toAs a result of Bluegreen’s IPO during the fourth quarter of 2017 and subsequent share repurchases in November 2017,2018 and 2019, the Company owns 90%90.5% of Bluegreen. Bluegreen was a wholly-owned subsidiary of the Company prior to the Bluegreen IPO.

(2)

Bluegreen Vacations has a joint venture arrangement pursuant to which Bluegreenit owns 51% of Bluegreen/Big Cedar Vacations.

 

F-58


21.    Earnings Per Common Share



The following table presentsbelow sets forth the computationcomputations of basic and diluted earnings per common share attributable to shareholders for the years ended December 31, 2017, 2016 and 2015 (in thousands, except per share data): 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

2017

 

2016

 

2015

 

 

2019

 

 

2018

 

 

2017

Basic earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

100,597 

 

41,657 

 

141,279 

 

$

32,103 

 

 

55,793 

 

 

102,303 

Less: Net income attributable to noncontrolling interests

 

18,402 

 

13,295 

 

18,805 

 

 

14,412 

 

 

20,691 

 

 

18,378 

 

 

 

 

 

 

Net income available to shareholders

$

82,195 

 

28,362 

 

122,474 

 

$

17,691 

 

 

35,102 

 

 

83,925 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of

 

 

 

 

 

 

of common shares outstanding

 

98,745 

 

86,902 

 

87,022 

 

 

 

 

 

 

Basic - weighted average number of common share outstanding

 

 

92,628 

 

 

95,298 

 

 

98,745 

Basic earnings per common share

 $

0.83 

 

0.33 

 

1.41 

 

$

0.19 

 

 

0.37 

 

 

0.85 

 

 

 

 

 

 

Diluted earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to shareholders

 $

82,195 

 

28,362 

 

122,474 

 

$

17,691 

 

 

35,102 

 

 

83,925 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of

 

 

 

 

 

 

common shares outstanding

 

98,745 

 

86,902 

 

87,022 

Effect of dilutive stock-based compensation

 

5,171 

 

590 

 

186 

Diluted weighted average number of

 

 

 

 

 

 

common shares outstanding

 

103,916 

 

87,492 

 

87,208 

 

 

 

 

 

 

Basic weighted average number of common shares outstanding

 

 

92,628 

 

 

95,298 

 

 

98,745 

Effect of dilutive restricted stock awards

 

 

1,026 

 

 

2,562 

 

 

5,171 

Diluted weighted average number of common shares outstanding

 

 

93,654 

 

 

97,860 

 

 

103,916 

Diluted earnings per common share

$

0.79 

 

0.32 

 

1.40 

 

$

0.19 

 

 

0.36 

 

 

0.81 



During the year ended December 31, 2019, approximately 2,506,876 shares of unvested restricted stock awards were not included in the computation of diluted earnings per share because such awards were assumed to be fully repurchased under the treasury stock method based on the unrecognized compensation cost associated with such awards. During the years ended December 31, 2018 and 2017, there were no unvested restricted stock awards that were anti-dilutive andexcluded from the computation of diluted earnings per share for such periods. During the year ended December 31, 2017, options to acquire 27,346 shares of Class A common stockCommon Stock were anti-dilutive.  During the year ended December 31, 2016, approximately 55,000 restricted stock awards and options to acquire 35,716 shares of Class A common stock were anti-dilutive.  During the year ended December 31, 2015, there were no restricted stock awards or options to acquire shares of common stock that were anti-dilutive.

 



22.    Fair Value Measurement 



Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

There are three main valuation techniques to measure the fair value of assets and liabilities: the market approach, the income approach and the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses financial models to convert future amounts to a single present amount and includes present value and option-pricing models. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset and is often referred to as current replacement cost.

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The accounting literature guidance for fair value measurements defines an input fair value hierarchy that has three broad levels and gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The valuation techniques are summarized below:

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The income approach uses financial models to convert future amounts to a single present amount. These valuation techniques include present value and option-pricing models.

The cost approach is based on the amount that currently would be required to replace the service capacity of an asset. This technique is often referred to as current replacement cost.

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The input fair value hierarchy is summarized below:



Level 1:

Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2:

Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

Level 3:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

Level 3: Unobservable inputs for the asset or liability

Assets and liabilities on a recurring basis



There were no material assets or liabilities measured at fair value on a recurring or nonrecurring basis in the Company’s consolidated financial statements as of December 31, 2017 or 2016.  

Assets on a non-recurring basis 

The following table presents major categories of assets measured at fair value on a non-recurring basis as of December 31, 2017 (in thousands):



 

 

 

 

 

 



 

 

 

 

 

 



 

 

Fair Value Measurements Using

 



 

Carrying

Quoted prices in

Significant

 

Total



 

Amount

Active Markets

Other

Significant

Impairments(1)



 

As of

for Identical

Observable

Unobservable

For the



 

December 31,

Assets

Inputs

Inputs

Year Ended

Description

 

2017

(Level 1)

(Level 2)

(Level 3)

December 31, 2017

Impaired real estate held-for-sale

$

6,346 

 -

 -

6,346 1,638 



 

 

 

 

 

 

(1)

Total impairments represent the amount of losses recognized during the year ended December 31, 2017 on assets that were held and measured at fair value as of December 31, 2017.

Quantitative information about significant unobservable inputs within Level 3 on major categories of assets measured at fair-value on a non-recurring basis is as follows (Fair Value in thousands):

As of December 31, 2017

Fair

Valuation

Unobservable

Description

Value

Technique

Inputs

Range (Average)(1)(2)

Real estate held-for-sale

$

6,346 

Fair Value of Property

Asset Purchase Agreements or Appraisals

$0.2 - $4.3 million

($1.2 million)

(1)

Range and average appraised values were reduced by estimated costs to sell.

(2)

Average was computed by dividing the aggregate appraisal amounts by the number of appraisals.

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The following table presents major categories of assets measured at fair value on a non-recurring basis as of December 31, 2016 (in thousands):



 

 

 

 

 

 



 

 

 

 

 

 



 

 

Fair Value Measurements Using

 



 

Carrying

Quoted prices in

Significant

 

Total



 

Amount

Active Markets

Other

Significant

Impairments(1)



 

As of

for Identical

Observable

Unobservable

For the



 

December 31,

Assets

Inputs

Inputs

Year Ended

Description

 

2016

(Level 1)

(Level 2)

(Level 3)

December 31, 2016

Loans measured for

 

 

 

 

 

 

impairment using the fair value

 

 

 

 

 

 

of the underlying collateral

$

5,759 

 -

 -

5,759 101 



 

 

 

 

 

 

 Impaired real estate held-for-sale

 

5,456 

 -

 -

5,456 3,271 

Total

$

11,215 

 -

 -

11,215 3,372 

(1)

Total impairments represent the amount of losses recognized during the year ended December 31, 2016 on assets that were held and measured at fair value as of December 31, 2016.

Quantitative information about significant unobservable inputs within Level 3 on major categories of assets measured at fair value on a non-recurring basis was as follows (Fair Value in thousands):

As of December 31, 2016

Fair

Valuation

Unobservable

Description

Value

Technique

Inputs

Range (Average)(1)(2)

Loans measured for impairment

Discount Rates and

using the fair value of the

Fair Value of

Appraised Value

$0.1 - $0.7 million

underlying collateral

$

5,759 

Collateral

less Cost to Sell

 ($0.3 million)

Fair Value of

Asset Purchase Agreements

$0.1 - $1.4 million

Impaired real estate held-for-sale

5,456 

Property

or Appraised Value less Cost to Sell

 ($0.5 million)

Total

$

11,215 

(1)

Range and average appraised values were reduced by costs to sell.

(2)

Average was computed by dividing the aggregate appraisal amounts by the number of appraisals.

Liabilities on a non-recurring basis

There were no liabilities measured at fair value on a non-recurring basis in the Company’s consolidated financial statements as of December 31, 2017 or 2016.  

Loans Measured For Impairment

Impaired loans are generally valued based on the fair value of the underlying collateral less cost to sell as the majority of the Company’s loans are collateral dependent. The fair value of the Company’s loans may significantly increase or decrease based on changes in property values as its loans are primarily secured by real estate. The Company primarily uses third party appraisals to assist in measuring non-homogenous impaired loans2019 and broker price opinions to assist in measuring homogeneous impaired loans. The appraisals generally use the market or income approach valuation technique and use market observable data to formulate an estimate of the fair value of the loan’s collateral. However, the appraiser uses professional judgment in determining the fair value of the collateral. As a consequence, the calculation of the fair value of the collateral is considered a Level 3 input. The Company generally recognizes impairment losses based on third party broker price opinions when impaired homogeneous loans become 120 days delinquent. These third party valuations from real estate professionals also use Level 3 inputs in determining fair values. The observable market inputs used to fair value loans include comparable property sales, rent rolls, market capitalization rates on income producing properties, risk adjusted discount rates and foreclosure time frames and exposure periods. 

F-61


Real Estate

Real estate is generally valued using third party appraisals or broker price opinions. These appraisals generally use the market approach valuation technique and use market observable data to formulate an estimate of the fair value of the properties. The market observable data typically consists of comparable property sales, rent rolls, market capitalization rates on income producing properties and risk adjusted discount rates. The above inputs are considered Level 3 inputs as the appraiser uses professional judgement in the calculation of the fair value of the properties.   2018.



Financial Disclosures about Fair Value of Financial Instruments



The following tables presentbelow set forth information forrelated to the Company’s consolidated financial instruments at December 31, 2017 and 2016 (in thousands):





 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

 

 

 

Fair Value Measurements Using



 

 

 

 

Quoted prices

 

 



 

Carrying

 

 

in Active

Significant

 



 

Amount

 

Fair Value

Markets

Other

Significant



 

As of

 

As of

for Identical

Observable

Unobservable



 

December 31,

 

December 31,

Assets

Inputs

Inputs



 

2017

 

2017

(Level 1)

(Level 2)

(Level 3)

Financial assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

362,526 

 

362,526 362,526 

 -

 -

Restricted cash

 

46,721 

 

46,721 46,721 

 -

 -

Loans receivable

 

19,454 

 

21,125 

 -

 -

21,125 

Notes receivable, net

 

431,801 

 

525,000 

 -

 -

525,000 

Notes receivable from preferred

 

 

 

 

 

 

 

shareholders (1)

 

5,000 

 

5,000 

 -

 -

5,000 



 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

Receivable-backed notes payable

$

421,118 

 

425,900 

 -

 -

425,900 

Notes payable and other borrowings

 

144,114 

 

149,438 

 -

 -

149,438 

Junior subordinated debentures

 

135,414 

 

132,000 

 -

 -

132,000 

Mandatorily redeemable cumulative preferred stock

 

13,974 

 

13,977 

 -

 -

13,977 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

 

 

Fair Value Measurements Using

 

 

 

 

Quoted prices

 

 

 

 

 

 

 

Quoted prices

 

 

 

 

 

Carrying

 

 

in Active

Significant

 

 

Carrying

 

 

 

in Active

 

Significant

 

 

 

Amount

 

Fair Value

Markets

Other

Significant

 

Amount

 

Fair Value

 

Markets

 

Other

 

Significant

 

As of

 

As of

for Identical

Observable

Unobservable

 

As of

 

As of

 

for Identical

 

Observable

 

Unobservable

 

December 31,

 

December 31,

Assets

Inputs

Inputs

 

December 31,

 

December 31,

 

Assets

 

Inputs

 

Inputs

 

2016

 

2016

(Level 1)

(Level 2)

(Level 3)

 

2019

 

2019

 

(Level 1)

 

(Level 2)

 

(Level 3)

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

299,861 

 

299,861 299,861 

 -

 -

 

$

356,604 

 

356,604 

 

356,604 

 

 —

 

 —

Restricted cash

 

46,456 

 

46,456 46,456 

 -

 -

 

50,266 

 

50,266 

 

50,266 

 

 —

 

 —

Loans receivable

 

25,521 

 

27,904 

 -

27,904 

Notes receivable, net

 

430,480 

 

545,000 

 -

545,000 

 

449,162 

 

 

587,000 

 

 —

 

 —

 

587,000 

Notes receivable from preferred

 

 

 

 

 

 

shareholders (1)

 

5,063 

 

4,900 

 -

4,900 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable-backed notes payable

$

414,989 

 

420,400 

 -

420,400 

 

$

422,815 

 

440,900 

 

 —

 

 —

 

440,900 

 

 

 

 

 

 

Notes payable and other borrowings

 

133,790 

 

135,404 

 -

135,404 

 

188,731 

 

194,069 

 

 —

 

 —

 

194,069 

Junior subordinated debentures

 

152,367 

 

149,200 

 -

149,200 

 

137,254 

 

146,000 

 

 —

 

 —

 

146,000 

Shares subject to mandatory redemption

 

13,517 

 

13,600 

 -

13,600 





(1)

Notes receivable from preferred shareholders is included in other assets in  the Company’s Consolidated Statements of Financial Condition as of December 31, 2017 and 2016.

F-62




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Fair Value Measurements Using



 

 

 

 

 

 

 

Quoted prices

 

 

 

 

 

 



 

Carrying

 

 

 

 

in Active

 

Significant

 

 

 



 

Amount

 

Fair Value

 

Markets

 

Other

 

Significant



 

As of

 

As of

 

for Identical

 

Observable

 

Unobservable



 

December 31,

 

December 31,

 

Assets

 

Inputs

 

Inputs



 

2018

 

2018

 

(Level 1)

 

(Level 2)

 

(Level 3)

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

366,305 

 

 

366,305 

 

 

366,305 

 

 

 —

 

 

 —

Restricted cash

 

 

54,792 

 

 

54,792 

 

 

54,792 

 

 

 —

 

 

 —

Notes receivable, net

 

 

439,167 

 

 

537,000 

 

 

 —

 

 

 —

 

 

537,000 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable-backed notes payable

 

$

458,931 

 

 

462,400 

 

 

 —

 

 

 —

 

 

462,400 

Notes payable and other borrowings

 

 

200,887 

 

 

203,547 

 

 

 —

 

 

 —

 

 

203,547 

Junior subordinated debentures

 

 

136,425 

 

 

132,400 

 

 

 —

 

 

 —

 

 

132,400 

Redeemable 5% cumulative preferred stock

 

 

9,472 

 

 

9,538 

 

 

 —

 

 

 —

 

 

9,538 



Management has made estimates of fair value that it believes to be reasonable. However, because there is no active market for many of these financial instruments, the fair valuevalues of these financial instruments hashave been derived using the income approach technique with Level 3 unobservable inputs. Estimates used in net present value financial models rely on assumptions and judgments regarding issues wherein which the outcome is unknown, and actual results or values may differ significantly from these estimates. These fair value estimates do not consider the tax effect that would be associated with the disposition of the assets or liabilities at their fair value estimates. As

F-48


such, the estimated value upon sale or disposition of the asset may not be received, and the estimated value upon disposition of the liability in advance of its scheduled maturity may not be paid.



The amounts reported in the consolidated statements of financial condition for cash and cash equivalents and restricted cash approximate fair value.



The fair valuevalues of the Company’s accruing loans is calculated using an income approach with Level 3 inputs by discounting forecasted cash flows using estimated market discount rates. The fair value of non-accruing collateral dependent loans is estimated using an income approach with Level 3 inputs utilizing the fair value of the collateral adjusted for operating and selling expenses and discounted over the estimated holding period based on the market risk inherent in the property. 

The fair value ofBluegreen’s notes receivable and note receivable from preferred shareholders are estimatedwere measured using Level 3 inputs and isare based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate. 



The fair value of the 5% Cumulative Preferred Stock, which is subject to mandatory redemption, is calculated using the income approach with Level 3 inputs by discounting the estimated cash flows at a market discount rate.

The amounts reported in the consolidated statements of financial condition relating to Bluegreen’s notes payable and other borrowings, includingas well as Bluegreen’s receivable-backed notes payable, approximate fair value for indebtedness that provides for variable interest rates. The fair valuevalues of Bluegreen’s fixed rate, receivable-backed notes payable was determinedwere measured using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt. These obligations are to be satisfied using the proceeds from the consumer loans that secure the obligations. 



The fair valuevalues of the Company’s Community Development Bonds, iswhich are included in notes payable and other borrowings above, were measured using the market approach with levelLevel 3 inputs obtained based on estimated market prices of similar financial instruments.  Community Development Bonds are included in notes payable and other borrowings in the above table.



The fair valuevalues of the Company’s notes payable and other borrowings (other than Bluegreen’s notes payable and other borrowings and Community Development Bonds above) iswere measured using the income approach with Level 3 inputs obtained by discounting the forecasted cash flows based onoutflows associated with the debt using estimated market discount rates. 



The fair valuevalues of the Company’s junior subordinated debentures is estimatedwere measured using the income approach with Level 3 inputs based onby discounting the contractual cash flows discounted at aoutflows associated with the debt using estimated market ratediscount rates or using the market approach based on market price quotes from the over-the-counter bond market.



The fair value of the Company’s 5% Cumulative Preferred Stock, which is subject to mandatory redemption, was measured using the income approach with Level 3 inputs by discounting the forecasted cash outflows using estimated market discount rates.

 

23.    Certain Relationships and Related Party Transactions



The Company may be deemed to be controlled by Alan B. Levan, the Company’s Chairman and Chief Executive Officer, and John E. Abdo, the Company’s Vice Chairman of the Company.Chairman. Together, Mr. Alan Levan and Mr. Abdo may be deemed to beneficially own shares of the Company’s Class A Common Stock and Class B Common Stock representing approximately 77%78% of the Company’s total voting power. Mr. Alan B. Levan servesand Mr. Abdo also serve as Chairman and Vice Chairman, respectively, of the BoardBluegreen’s board of directors, and effective January 1, 2020, Mr. John E. Abdo serves as Vice-Chairman of the Board for Bluegreen.Alan Levan also became Bluegreen’s President and Chief Executive Officer. Jarett S. Levan, isthe Company’s President of the Company, a Director of Bluegreen and son of Alan B. Levan.  Further,Levan, and Seth M. Wise, isthe Company’s Executive Vice President, and directoralso serve as directors of the Company and Bluegreen and Raymond S. Lopez is Chief Financial Officer of the Company. Bluegreen.



Currently, Woodbridge is a wholly-owned subsidiary of the CompanyBBX Capital and Woodbridge owns approximately 90%90.5% of Bluegreen as of December 31, 2017.2019. 



During the years ended December 31, 2019, 2018, and 2017, Bluegreen paid or reimbursed the Company $1.5$1.7 million,  $1.3$1.6 million, and $1.4$1.5 million, during 2017, 2016, and 2015, respectively, for management advisory, risk management, administrative, and other services.

F-63


The Company received $40.0 million, $70.0 million and $54.4 million of dividends from Bluegreen In addition, during the years ended December 31, 2017, 20162019, 2018, and 2015, respectively. Additionally, on January 23, 2018, Bluegreen paid2017, the Company $10.1received dividends from Bluegreen of $43.0 million,  of dividends.$40.4 million, and $40.0 million, respectively. These amounts are eliminated in consolidation in the Company’s consolidated financial statements.



In April 2015, pursuant to a Loan Agreement and Promissory Note, a wholly ownedwholly-owned subsidiary of Bluegreen provided an $80.0 million loan to BBX Capital. Amounts outstanding on the loan bore interest at a rate of 10% per annum until July 2017, when the interest rate was reduced to 6% per annum. Payments of interest are required on a quarterly basis, withand all outstanding amounts under the entire $80.0 million principal balance and accrued interest beingloan are due and payable in April 2020. BBX Capital is permitted to prepay the loan in whole or in part at any time, and prepayments will be required, to the extent necessary, in order for Bluegreen or its subsidiaries to remain in compliance with covenants under outstanding indebtedness. During the years ended December 31, 2017, 20162019, 2018, and 2015,2017, BBX Capital paid $6.4 million,  $8.0 million and $5.6 million, respectively, of interest expense on the loan to Bluegreen.of $4.8 million, $4.8 million, and $6.4 million, respectively. The interest expense wasis eliminated in consolidation in the Company’s consolidated financial statements.



OnIn May 8, 2015, the Company, BCC, Woodbridge, Bluegreen, Renin, and their respective subsidiaries entered into an Agreement to Allocate Consolidated Income Tax Liability and Benefits pursuant to which, among other customary terms and conditions, the parties agreed to file consolidated federal tax returns. TheUnder the agreement, the parties calculate their respective income tax liabilities and attributes as if each of them were a separate filer. If any tax attributes of one party to the agreement are used by another party to the agreement to offset itssuch other party’s tax liability, the party providing the benefit will receive an amount for the tax benefits realized. Bluegreen paid the Company $39.4  million, $26.2 million and $19.2 million duringDuring the years ended December 31, 2019, 2018, and 2017, 2016 and 2015, respectively, pursuant to this agreement.

On September 4, 2015,Bluegreen paid the Company entered into Share Exchange Agreements with Alan B. Levan, John E. Abdo, Jarett S. Levan$13.0 million,  $23.1 million, and Seth M. Wise (collectively, the “BCC  RSU Holders”) as holders of restricted stock units of Class A Common Stock of BCC (“BCC RSUs”). Pursuant to the Share Exchange Agreements, (a) each BCC RSU Holder granted the Company the option to acquire, simultaneously with the vesting of each BCC RSU, some or all of the shares of BCC’s Class A Common Stock which, absent the Share Exchange Agreement, would (after withholding) have been received by the BCC RSU Holder upon the vesting of the BCC RSUs and (b) the Company agreed to issue to the BCC RSU Holder shares of the Company’s Class A Common Stock or Class B Common Stock having an aggregate market value equal to the aggregate market value of the shares of BCC’s Class A Common Stock acquired by the Company upon the option exercise. Pursuant to the Share Exchange Agreements, the market value of the shares of the Company’s Class A Common Stock and Class B Common Stock and of BCC’s Class A Common Stock was calculated as the closing price of the applicable company’s class of stock on the trading day immediately preceding the date of closing of the share exchange. 

On September 12, 2016, the board of directors approved (a) the exercise in full of the Company’s options with respect to all of the BCC RSUs held by the BCC RSU Holders which were scheduled to vest between September 30, 2016 and October 4, 2016 and (b) the issuance of shares of the Company’s Class B Common Stock in exchange therefor. In addition, during September 2016, each BCC RSU Holder agreed, as a result of the Company’s entry into the Merger Agreement on July 27, 2016 and the 5.4 exchange ratio contemplated thereby, to receive no more than 5.4 shares of the Company’s Class A Common Stock or Class B Common Stock for each share of BCC’s Class A Common Stock subject to vested BCC RSUs with respect to any share exchanges effected during the pendency of the Merger Agreement. Between September 30, 2016 and October 4, 2016, the Company issued a total of 1,530,822 shares of its Class B Common Stock to the BCC RSU Holders and received a total of 283,486 shares of BCC’s Class A Common Stock in exchange therefor. Because the exchange ratio calculated by dividing the closing price of BCC’s Class A Common Stock on each relevant date by the closing price of the Company’s Class B Common Stock on each such date exceeded 5.4, the Company issued 5.4 shares of its Class B Common Stock for each share of BCC’s Class A Common Stock received by it between September 30, 2016 and October 4, 2016. Upon the Company’s adoption of the BCC Equity Compensation Plans on December 15, 2016, the share exchange agreements were terminated. See Note 3 – Acquisitions and Mergers for a description of the BCC Merger in which BCC merged with and into a wholly owned subsidiary of the Company.

$39.3 million,

 

F-6449

 


 

 

The following table sets forthrespectively, pursuant to this agreement. During the number of shares of the Company’s Class B Common Stock issued to the BCC RSU Holders and the number of shares of BCC’s Class A Common Stockyear ended December 31, 2019, BBX Capital received by the Company in exchange therefor during 2016$1.0 million from Renin pursuant to the share exchange transaction described above.



 

 

 

Individual Reporting Person

Date of Share Exchange

Number of Shares of the Company’s Class B Common Stock Issued to the BCC RSU Holder

Number of Shares of BCC’s Class A Common Stock Received by the Company

Alan B. Levan

9/30/2016

398,752

73,843



10/1/2016

107,800

19,963

John E. Abdo

9/30/2016

398,752

73,843



10/2/2016

107,800

19,963

Jarett S. Levan

9/30/2016

204,962

37,956



10/3/2016

53,897

9,981

Seth M. Wise

9/30/2016

204,962

37,956



10/4/2016

53,897

9,981

        Total

 

1,530,822

283,486

agreement. These amounts are eliminated in consolidation in the Company’s consolidated financial statements.



During each of the years ended December 31, 2017, 20162019, 2018 and 2015,2017, the Company paid Abdo Companies, Inc. approximately $306,000 in exchange for certain management services. John E. Abdo, the Company’s Vice Chairman, is the principal shareholder and Chief Executive Officer of Abdo Companies, Inc.



Certain of the Company’s affiliates, including its executive officers, have independently made investments with their own funds in investments that the Company has sponsored or in which the Company holds investments.

 

24.    Segment Reporting



Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker (“CODM”) in assessing performance and deciding how to allocate resources. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system or regulatory environment. 



The information provided for segment reporting is obtained from internal reports utilized by management of the Company. TheCompany’s CODM, and the presentation and allocation of assets and results of operations may not reflect the actual economic costs of the segments as standalone businesses. If a different basis of allocation were utilized, the relative contributions of the segments might differ, but the relative trends in the segments’ operating results would, in management’s view, likely not be impacted.



In June 2017,During the fourth quarter of 2019, the Company reorganized its operating businesses in the confectionery industry under BBX Sweet Holdings, acquired IT’SUGAR, for cash considerationincluding the centralization of approximately $58.4 million. Additionally,various management and back office activities. In connection with these organizational changes, the Company’s CODM determined that he would manage the operations of the Company’s investments in 2017, the Company commenced a reorganizationconfectionery industry, including making decisions related to the allocation of resources to such investments, based on the consolidated activities and results of BBX Sweet Holdings’ businesses includingHoldings, and the consolidation of manufacturing facilities and integration of operating entities. As a result of these activities,Company’s internal management reports were modified andto present the CODM began utilizingconsolidated performance of BBX Sweet Holdings to the new reporting structure to manage operations and allocate resources.Company’s CODM. As a consequence,result, the Company determined that it was appropriate to report the operations of BBX Sweet Holdings as a separate reportable segment together with the Company’s three other reportable segments as follows: Bluegreen, BBX Capital Real Estate, Renin, and BBX Sweet Holdings.  SegmentHoldings and Renin. The Company’s segment information for the years ended December 31, 20162018 and 20152017 has been updated retrospectively to conform to 2017the current presentation.

See Note 1 for a description of the Company’s reportable segments.



In the tablesegment information for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, amounts set forth in the column entitled “Corporate Expenses & Other”“Other” include the Company’s investments in various operating businesses, including its pizza restaurant operations as a franchisee of MOD Pizza and a controlling financial interest in a restaurant acquired in connection with a loan receivable default. As described in Note 1, the Company exited its pizza restaurant operations as a franchisee of MOD Pizza in September 2019. The amounts set forth in the column entitled “Reconciling Items and Eliminations” include unallocated corporate general and administrative expenses, interest expense associated with Woodbridge’s trust preferred securities (“TruPs”), corporate overheadjunior subordinated debentures and for the 2016BBX Capital’s $50.0 million revolving line of credit, and 2017 periods, start-up expenses for the Company’s MOD Super-Fast Pizza franchise restaurants.  The Company opened two MOD Super-Fast Pizza franchise restaurants during the fourth quarter of 2017 and a third location during the first quarter of 2018. As of December 31, 2017, management determined that the operations of MOD did not warrant separate presentation as a reportable segment.elimination entries. 



F-65


The Company evaluates segment performance based on segment income before income taxes.



Set

F-50


The table below sets forth below is summary information regarding the Company’s reportable segments:

Bluegreen

Bluegreen markets, sellssegment information as of and manages real estate-based VOIs in resorts generally located in popular, high-volume, “drive-to” vacation destinations, which were developed or acquired by Bluegreen or are owned by others in which case Bluegreen earns fees for providing these services. Bluegreen earns fees by providing VOI title services, club and homeowners’ association management services, mortgage servicing, reservation services, services related to the Traveler-Plus program, food and beverage and other retail operations, and construction design and development services. In addition, Bluegreen provides financing to qualified individual purchasers of VOIs, which provides significant interest income.

BBX Capital Real Estate

BBX Capital Real Estate activities include the acquisition, ownership and management of real estate, real estate development projects, and investments in real estate joint ventures. BBX Capital Real Estate also manages the legacy assets acquired in connection with the sale of BankAtlantic to BB&T Corporation in July 2012.  The legacy assets include portfolios of loans receivable, real estate properties and previously charged-off BankAtlantic loans.

Renin

Renin manufactures interior closet doors, wall décor, hardware and fabricated glass products and operates through its headquarters in Canada and two manufacturing, assembly and distribution facilities in Canada and the United States. During 2017, total revenues for the Renin reportable segment include $34.0 million of trade sales to two major customers and their affiliates. Renin’s revenues generated outside the United States totaled $10.6 million for the year ended December 31, 2017.  Renin’s properties and equipment located outside the United States totaled $3.1 million as of December 31, 2017.  2019 (in thousands):



BBX Sweet Holdings

BBX Sweet Holdings consists of IT’SUGAR, Hoffman’s Chocolates, and manufacturing facilities in the chocolate and confection industries serving wholesalers such as boutique retailers, big box chains, department stores, national resort properties, corporate customers, and private label brands.  IT’SUGAR is a specialty candy retailer with 95 retail locations in 26 states and Washington, DC.  Hoffman’s Chocolates is a manufacturer of gourmet chocolates with retail locations in South Florida.    



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Bluegreen

 

 

BBX Capital Real Estate

 

BBX Sweet Holdings

 

Renin

 

Other

 

Reconciling Items and Eliminations

 

Segment Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of VOIs

 

$

255,375 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

255,375 

Fee-based sales commissions

 

 

207,832 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

207,832 

Other fee-based services

 

 

125,244 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

125,244 

Cost reimbursements

 

 

63,889 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

63,889 

Trade sales

 

 

 —

 

 

 —

 

 

105,406 

 

 

67,537 

 

 

13,420 

 

 

(26)

 

 

186,337 

Sales of real estate inventory

 

 

 —

 

 

5,049 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

5,049 

Interest income

 

 

87,902 

 

 

750 

 

 

56 

 

 

 —

 

 

104 

 

 

(2,486)

 

 

86,326 

Net gains on sales of real estate assets

 

 

 —

 

 

13,616 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

13,616 

Other revenue

 

 

 —

 

 

1,619 

 

 

324 

 

 

 —

 

 

2,233 

 

 

(973)

 

 

3,203 

Total revenues

 

 

740,242 

 

 

21,034 

 

 

105,786 

 

 

67,537 

 

 

15,757 

 

 

(3,485)

 

 

946,871 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of VOIs sold

 

 

21,845 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

21,845 

Cost of other fee-based services

 

 

86,940 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

86,940 

Cost reimbursements

 

 

63,889 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

63,889 

Cost of trade sales

 

 

 —

 

 

 —

 

 

67,703 

 

 

54,243 

 

 

5,800 

 

 

(26)

 

 

127,720 

Cost of real estate inventory sold

 

 

 —

 

 

2,643 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

2,643 

Interest expense

 

 

39,538 

 

 

 —

 

 

196 

 

 

498 

 

 

27 

 

 

5,523 

 

 

45,782 

Recoveries from loan losses, net

 

 

 —

 

 

(5,428)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(5,428)

Impairment losses

 

 

 —

 

 

47 

 

 

142 

 

 

 —

 

 

6,749 

 

 

 —

 

 

6,938 

Selling, general and administrative expenses

 

 

468,856 

 

 

9,144 

 

 

43,203 

 

 

11,066 

 

 

12,282 

 

 

41,135 

 

 

585,686 

Total costs and expenses

 

 

681,068 

 

 

6,406 

 

 

111,244 

 

 

65,807 

 

 

24,858 

 

 

46,632 

 

 

936,015 

Equity in net earnings of unconsolidated real estate joint ventures

 

 

 —

 

 

37,898 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

37,898 

Other (expense) income

 

 

(910)

 

 

170 

 

 

336 

 

 

153 

 

 

15 

 

 

318 

 

 

82 

Foreign exchange loss

 

 

 —

 

 

 —

 

 

 —

 

 

(75)

 

 

 —

 

 

 —

 

 

(75)

Income (loss) before income taxes

 

$

58,264 

 

 

52,696 

 

 

(5,122)

 

 

1,808 

 

 

(9,086)

 

 

(49,799)

 

 

48,761 

Total assets

 

$

1,360,018 

 

 

145,891 

 

 

167,284 

 

 

32,320 

 

 

10,768 

 

 

74,690 

 

 

1,790,971 

Expenditures for property and equipment

 

$

24,475 

 

 

 

 

9,441 

 

 

517 

 

 

1,129 

 

 

22 

 

 

35,588 

Depreciation and amortization

 

$

14,114 

 

 

93 

 

 

5,565 

 

 

1,202 

 

 

770 

 

 

421 

 

 

22,165 

Debt accretion and amortization

 

$

4,878 

 

 

125 

 

 

226 

 

 

27 

 

 

 —

 

 

299 

 

 

5,555 

Cash and cash equivalents

 

$

190,009 

 

 

13,776 

 

 

6,314 

 

 

 —

 

 

668 

 

 

145,837 

 

 

356,604 

Equity method investments

 

$

 —

 

 

57,330 

 

 

 —

 

 

 —

 

 

 

 

 

 —

 

 

57,330 

Goodwill

 

$

 —

 

 

 —

 

 

35,521 

 

 

 —

 

 

1,727 

 

 

 —

 

 

37,248 

Receivable-backed notes payable

 

$

422,815 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

422,815 

Notes payable and other borrowings

 

$

146,160 

 

 

31,877 

 

 

3,810 

 

 

6,825 

 

 

224 

 

 

(165)

 

 

188,731 

Junior subordinated debentures

 

$

72,081 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

65,173 

 

 

137,254 



 

F-6651

 


 

 

The table below sets forth the Company’s segment information as of and for the year ended December 31, 2018 (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Bluegreen

 

BBX Capital Real Estate

 

BBX Sweet Holdings

 

Renin

 

Other

 

Reconciling Items and Eliminations

 

Segment Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of VOIs

 

$

254,225 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

254,225 

Fee-based sales commissions

 

 

216,422 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

216,422 

Other fee-based services

 

 

118,024 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

118,024 

Cost reimbursements

 

 

62,534 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

62,534 

Trade sales

 

 

 —

 

 

 —

 

 

101,187 

 

 

68,417 

 

 

9,903 

 

 

(21)

 

 

179,486 

Sales of real estate inventory

 

 

 —

 

 

21,771 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

21,771 

Interest income

 

 

85,914 

 

 

2,277 

 

 

61 

 

 

 —

 

 

87 

 

 

(2,838)

 

 

85,501 

Net gains on sales of real estate assets

 

 

 —

 

 

4,563 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

4,563 

Other revenue

 

 

 —

 

 

2,541 

 

 

10 

 

 

 —

 

 

1,869 

 

 

(1,048)

 

 

3,372 

Total revenues

 

 

737,119 

 

 

31,152 

 

 

101,258 

 

 

68,417 

 

 

11,859 

 

 

(3,907)

 

 

945,898 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of VOIs sold

 

 

23,813 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

23,813 

Cost of other fee-based services

 

 

72,968 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

72,968 

Cost reimbursements

 

 

62,534 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

62,534 

Cost of trade sales

 

 

 —

 

 

 —

 

 

65,829 

 

 

55,483 

 

 

4,349 

 

 

(21)

 

 

125,640 

Cost of real estate inventory sold

 

 

 —

 

 

14,116 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

14,116 

Interest expense

 

 

34,709 

 

 

 —

 

 

308 

 

 

638 

 

 

 

 

6,413 

 

 

42,075 

Recoveries from loan losses, net

 

 

 —

 

 

(8,653)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(8,653)

Impairment losses

 

 

 —

 

 

571 

 

 

4,147 

 

 

 —

 

 

 —

 

 

 —

 

 

4,718 

Reimbursements of litigation costs and penalty

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(600)

 

 

(600)

Selling, general and administrative expenses

 

 

415,403 

 

 

9,210 

 

 

46,130 

 

 

9,903 

 

 

11,680 

 

 

45,486 

 

 

537,812 

Total costs and expenses

 

 

609,427 

 

 

15,244 

 

 

116,414 

 

 

66,024 

 

 

16,036 

 

 

51,278 

 

 

874,423 

Equity in net earnings of unconsolidated real estate joint ventures

 

 

 —

 

 

14,194 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

14,194 

Other income (expense)

 

 

1,201 

 

 

112 

 

 

170 

 

 

 —

 

 

(1)

 

 

213 

 

 

1,695 

Foreign exchange gain

 

 

 —

 

 

 —

 

 

 —

 

 

68 

 

 

 —

 

 

 —

 

 

68 

Income (loss) before income taxes

 

$

128,893 

 

 

30,214 

 

 

(14,986)

 

 

2,461 

 

 

(4,178)

 

 

(54,972)

 

 

87,432 

Total assets

 

$

1,346,467 

 

 

165,109 

 

 

83,618 

 

 

32,354 

 

 

20,187 

 

 

57,285 

 

 

1,705,020 

Expenditures for property and equipment

 

$

32,539 

 

 

318 

 

 

6,254 

 

 

796 

 

 

5,428 

 

 

215 

 

 

45,550 

Depreciation and amortization

 

$

12,392 

 

 

374 

 

 

5,897 

 

 

1,159 

 

 

671 

 

 

501 

 

 

20,994 

Debt accretion and amortization

 

$

4,212 

 

 

 

 

201 

 

 

17 

 

 

 —

 

 

312 

 

 

4,745 

Cash and cash equivalents

 

$

219,408 

 

 

16,103 

 

 

5,328 

 

 

 —

 

 

7,681 

 

 

117,785 

 

 

366,305 

Equity method investments

 

$

 —

 

 

64,738 

 

 

 —

 

 

 —

 

 

 

 

 

 —

 

 

64,738 

Goodwill

 

$

 —

 

 

 —

 

 

35,521 

 

 

 —

 

 

1,727 

 

 

 —

 

 

37,248 

Receivable-backed notes payable

 

$

458,931 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

458,931 

Notes payable and other borrowings

 

$

133,391 

 

 

27,333 

 

 

2,046 

 

 

8,117 

 

 

 —

 

 

30,000 

 

 

200,887 

Junior subordinated debentures

 

$

71,323 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

65,102 

 

 

136,425 

F-52


The table below sets forth the Company’s segment information as of and for the year ended December 31, 2017 (in thousands):







 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Reportable Segments

 

 

 

 

 

 



 

 

 

BBX Capital

 

 

 

 

 

Corporate

 

 

 

 



 

 

 

Real

 

 

 

BBX Sweet

 

Expenses &

 

 

 

Segment



 

Bluegreen

 

Estate

 

Renin

 

Holdings

 

Other

 

Eliminations

 

Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of VOIs

$

239,662 

 

 -

 

 -

 

 -

 

 -

 

 -

 

239,662 

Fee-based sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commission revenue

 

229,389 

 

 -

 

 -

 

 -

 

 -

 

 -

 

229,389 

Other fee-based services revenue

 

111,819 

 

 -

 

 -

 

 -

 

 -

 

 -

 

111,819 

Trade sales

 

 -

 

 -

 

69,648 

 

72,905 

 

245 

 

 -

 

142,798 

Interest income

 

86,876 

 

2,225 

 

 -

 

38 

 

969 

 

(6,400)

 

83,708 

Net gains on sales of assets

 

 -

 

2,442 

 

 -

 

 -

 

 -

 

 -

 

2,442 

Other revenue

 

312 

 

4,647 

 

 -

 

74 

 

1,480 

 

(549)

 

5,964 

Total revenues

 

668,058 

 

9,314 

 

69,648 

 

73,017 

 

2,694 

 

(6,949)

 

815,782 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales of VOIs

 

17,439 

 

 -

 

 -

 

 -

 

 -

 

 -

 

17,439 

Cost of other fee-based services

 

68,336 

 

 -

 

 -

 

 -

 

 -

 

 -

 

68,336 

Cost of trade sales

 

 -

 

 -

 

49,358 

 

48,306 

 

91 

 

 -

 

97,755 

Interest expense

 

29,977 

 

 

509 

 

335 

 

10,784 

 

(6,400)

 

35,205 

Recoveries from loan losses, net

 

 -

 

(7,495)

 

 -

 

 -

 

 -

 

 -

 

(7,495)

Asset impairments, net

 

 -

 

1,646 

 

 -

 

5,785 

 

 -

 

 -

 

7,431 

Net gains on cancellation of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

junior subordinated debentures

 

 -

 

 -

 

 -

 

 -

 

(6,929)

 

 -

 

(6,929)

Litigation costs and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

penalty reimbursements

 

 -

 

 -

 

 -

 

 -

 

(13,169)

 

 -

 

(13,169)

Selling, general and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

administrative expenses

 

416,970 

 

11,113 

 

17,408 

 

35,374 

 

57,809 

 

(549)

 

538,125 

Total costs and expenses

 

532,722 

 

5,264 

 

67,275 

 

89,800 

 

48,586 

 

(6,949)

 

736,698 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in net earnings of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unconsolidated real

 

 

 

 

 

 

 

 

 

 

 

 

 

 

estate joint ventures

 

 -

 

14,483 

 

 -

 

 -

 

 -

 

 -

 

14,483 

Foreign exchange loss

 

 -

 

 -

 

(193)

 

 -

 

 -

 

 -

 

(193)

Income (loss) before income taxes

$

135,336 

 

18,533 

 

2,180 

 

(16,783)

 

(45,892)

 

 -

 

93,374 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

1,236,424 

 

162,214 

 

36,134 

 

92,588 

 

161,340 

 

(82,035)

 

1,606,665 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures for property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and equipment

$

14,115 

 

308 

 

2,786 

 

2,246 

 

2,590 

 

 -

 

22,045 

Depreciation and amortization

$

9,632 

 

581 

 

1,713 

 

4,080 

 

756 

 

 -

 

16,762 

Debt accretion and amortization

$

4,478 

 

 -

 

 -

 

55 

 

149 

 

 -

 

4,682 

Cash and cash equivalents

$

197,337 

 

8,636 

 

863 

 

10,160 

 

145,530 

 

 -

 

362,526 

Equity method investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

included in total assets

$

 -

 

47,275 

 

 -

 

 -

 

 -

 

 -

 

47,275 

Goodwill

$

 -

 

 -

 

 -

 

39,482 

 

 -

 

 -

 

39,482 

Notes payable and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other borrowings

$

521,312 

 

24,215 

 

12,890 

 

6,815 

 

80,000 

 

(80,000)

 

565,232 

Junior subordinated debentures

$

70,384 

 

 -

 

 -

 

 -

 

65,030 

 

 -

 

135,414 

F-67


The table below sets forth the Company’s segment information as of and for the year ended December 31, 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reportable Segments

 

 

 

 

 

 

 

 

 

BBX Capital

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

Real

 

 

 

BBX Sweet

 

Expenses &

 

 

 

Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bluegreen

 

Estate

 

Renin

 

Holdings

 

Other

 

Eliminations

 

Total

 

Bluegreen

 

BBX Capital Real Estate

 

BBX Sweet Holdings

 

Renin

 

Other

 

Reconciling Items and Eliminations

 

Segment Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of VOIs

$

266,142 

 

 -

 

 -

 

 -

 

 -

 

 -

 

266,142 

 

$

242,017 

 

 —

 

 —

 

 —

 

 —

 

 —

 

242,017 

Fee-based sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commission revenue

 

201,829 

 

 -

 

 -

 

 -

 

 -

 

 -

 

201,829 

Other fee-based services revenue

 

103,448 

 

 -

 

 -

 

 -

 

 -

 

 -

 

103,448 

Fee-based sales commissions

 

 

229,389 

 

 —

 

 —

 

 —

 

 —

 

 —

 

229,389 

Other fee-based services

 

 

111,819 

 

 —

 

 —

 

 —

 

 —

 

 —

 

111,819 

Cost reimbursements

 

 

52,639 

 

 —

 

 —

 

 —

 

 —

 

 —

 

52,639 

Trade sales

 

 -

 

 -

 

65,225 

 

30,771 

 

 -

 

 -

 

95,996 

 

 

 —

 

 —

 

72,899 

 

68,935 

 

251 

 

 —

 

142,085 

Interest income

 

89,510 

 

3,606 

 

 -

 

10 

 

620 

 

(8,000)

 

85,746 

 

 

86,876 

 

2,225 

 

40 

 

 —

 

36 

 

(5,469)

 

83,708 

Net gains on sales of assets

 

 -

 

6,076 

 

 -

 

 -

 

 -

 

 -

 

6,076 

Net gains on sales of real estate assets

 

 

 —

 

1,451 

 

 —

 

 —

 

 —

 

 —

 

1,451 

Other revenue

 

1,724 

 

5,067 

 

 -

 

 

2,230 

 

(971)

 

8,058 

 

 

 —

 

 

4,997 

 

 

 

 

 —

 

 

1,256 

 

 

(599)

 

 

5,661 

Total revenues

 

662,653 

 

14,749 

 

65,225 

 

30,789 

 

2,850 

 

(8,971)

 

767,295 

 

 

722,740 

 

 

8,673 

 

 

72,946 

 

 

68,935 

 

 

1,543 

 

 

(6,068)

 

 

868,769 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales of VOIs

 

27,346 

 

 -

 

 -

 

 -

 

 -

 

 -

 

27,346 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of VOIs sold

 

 

17,679 

 

 —

 

 —

 

 —

 

 —

 

 —

 

17,679 

Cost of other fee-based services

 

64,479 

 

 -

 

 -

 

 -

 

 -

 

 -

 

64,479 

 

 

64,560 

 

 —

 

 —

 

 —

 

 —

 

 —

 

64,560 

Cost reimbursements

 

 

52,639 

 

 —

 

 —

 

 —

 

 —

 

 —

 

52,639 

Cost of trade sales

 

 -

 

 -

 

47,088 

 

27,253 

 

 -

 

 -

 

74,341 

 

 

 —

 

 —

 

51,975 

 

54,941 

 

419 

 

 —

 

107,335 

Interest expense

 

30,853 

 

 -

 

313 

 

409 

 

12,462 

 

(8,000)

 

36,037 

 

 

29,977 

 

 —

 

335 

 

509 

 

 —

 

4,384 

 

35,205 

Recoveries from loan losses, net

 

 -

 

(20,508)

 

 -

 

 -

 

 -

 

 -

 

(20,508)

 

 

 —

 

(7,546)

 

 —

 

 —

 

 —

 

 —

 

(7,546)

Asset impairments, net

 

 

 

2,304 

 

 -

 

2,352 

 

 -

 

 -

 

4,656 

Selling, general and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

administrative expenses

 

415,027 

 

11,864 

 

17,186 

 

15,720 

 

57,931 

 

(971)

 

516,757 

Impairment losses

 

 

 —

 

1,696 

 

5,786 

 

 —

 

 —

 

 —

 

7,482 

Net gains on cancellation of junior subordinated debentures

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

(6,929)

 

(6,929)

Reimbursements of litigation costs and penalty

 

 

 —

 

 —

 

 —

 

 —

 

 

 

(13,169)

 

(13,169)

Selling, general and administrative expenses

 

 

421,199 

 

 

11,127 

 

 

31,703 

 

 

11,112 

 

 

4,065 

 

 

52,855 

 

 

532,061 

Total costs and expenses

 

537,705 

 

(6,340)

 

64,587 

 

45,734 

 

70,393 

 

(8,971)

 

703,108 

 

 

586,054 

 

 

5,277 

 

 

89,799 

 

 

66,562 

 

 

4,484 

 

 

37,141 

 

 

789,317 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in net earnings of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unconsolidated real

 

 

 

 

 

 

 

 

 

 

 

 

 

 

estate joint ventures

 

 -

 

13,630 

 

 -

 

 -

 

 -

 

 -

 

13,630 

Foreign exchange gain

 

 -

 

 -

 

219 

 

 -

 

 -

 

 -

 

219 

Equity in net earnings of unconsolidated real estate joint ventures

 

 

 —

 

 

12,541 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12,541 

Other income

 

 

312 

 

148 

 

72 

 

 —

 

269 

 

 —

 

801 

Foreign exchange loss

 

 

 —

 

 

 —

 

 

 —

 

 

(193)

 

 

 —

 

 

 —

 

 

(193)

Income (loss) before income taxes

$

124,948 

 

34,719 

 

857 

 

(14,945)

 

(67,543)

 

 -

 

78,036 

 

$

136,998 

 

 

16,085 

 

 

(16,781)

 

 

2,180 

 

 

(2,672)

 

 

(43,209)

 

 

92,601 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

1,128,630 

 

179,856 

 

28,913 

 

34,356 

 

146,702 

 

(82,389)

 

1,436,068 

 

$

1,231,481 

 

 

166,548 

 

 

92,587 

 

 

36,189 

 

 

11,940 

 

 

66,936 

 

 

1,605,681 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures for property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and equipment

$

9,605 

 

266 

 

1,718 

 

834 

 

516 

 

 -

 

12,939 

Expenditures for property and equipment

 

$

14,115 

 

 

308 

 

 

2,246 

 

 

2,786 

 

 

2,518 

 

 

72 

 

 

22,045 

Depreciation and amortization

$

9,536 

 

603 

 

818 

 

1,437 

 

512 

 

 -

 

12,906 

 

$

9,632 

 

 

581 

 

 

4,080 

 

 

1,000 

 

 

112 

 

 

644 

 

 

16,049 

Debt accretion and amortization

$

4,736 

 

 -

 

83 

 

102 

 

 -

 

 -

 

4,921 

 

$

4,478 

 

 

 —

 

 

55 

 

 

 —

 

 

 —

 

 

149 

 

 

4,682 

Cash and cash equivalents

$

144,120 

 

13,628 

 

(288)

 

8,627 

 

133,774 

 

 -

 

299,861 

 

$

197,337 

 

 

8,636 

 

 

10,160 

 

 

863 

 

 

7,099 

 

 

138,431 

 

 

362,526 

Equity method investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 —

 

 

51,234 

 

 

 —

 

 

 —

 

 

 

 

 

 —

 

 

51,234 

included in total assets

$

 -

 

43,491 

 

 -

 

 -

 

 -

 

 -

 

43,491 

Goodwill

$

 -

 

 -

 

 -

 

6,731 

 

 -

 

 -

 

6,731 

 

$

 —

 

 

 —

 

 

39,482 

 

 

 —

 

 

 —

 

 

 —

 

 

39,482 

Notes payable and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other borrowings

$

513,371 

 

20,743 

 

9,692 

 

4,973 

 

80,000 

 

(80,000)

 

548,779 

Receivable-backed notes payable

 

$

421,118 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

421,118 

Notes payable and other borrowings

 

$

100,194 

 

 

24,215 

 

 

6,815 

 

 

12,890 

 

 

 —

 

 

 —

 

 

144,114 

Junior subordinated debentures

$

69,044 

 

 -

 

 -

 

 -

 

83,323 

 

 -

 

152,367 

 

$

70,384 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

65,030 

 

 

135,414 

 



 

F-6853

 


 

 

The table below sets forth the Company’s segment information as of and for the year ended December 31, 2015 (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Reportable Segments

 

 

 

 

 

 



 

 

 

BBX Capital

 

 

 

 

 

Corporate

 

 

 

 



 

 

 

Real

 

 

 

BBX Sweet

 

Expenses &

 

 

 

Segment



 

Bluegreen

 

Estate

 

Renin

 

Holdings

 

Other

 

Eliminations

 

Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of VOIs

$

259,236 

 

 -

 

 -

 

 -

 

 -

 

 -

 

259,236 

Fee-based sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

commission revenue

 

173,659 

 

 -

 

 -

 

 -

 

 -

 

 -

 

173,659 

Other fee-based services revenue

 

97,539 

 

 -

 

 -

 

 -

 

 -

 

 -

 

97,539 

Trade sales

 

 -

 

 -

 

56,461 

 

27,823 

 

 -

 

 -

 

84,284 

Interest income

 

84,331 

 

9,921 

 

 -

 

 -

 

859 

 

(6,040)

 

89,071 

Net gains (losses) on sales of assets

 

 -

 

31,181 

 

 -

 

 -

 

(89)

 

 -

 

31,092 

Other revenue

 

2,883 

 

5,540 

 

 -

 

14 

 

1,999 

 

(1,060)

 

9,376 

Total revenues

 

617,648 

 

46,642 

 

56,461 

 

27,837 

 

2,769 

 

(7,100)

 

744,257 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales of VOIs

 

22,884 

 

 -

 

 -

 

 -

 

 -

 

 -

 

22,884 

Cost of other fee-based services

 

60,942 

 

 -

 

 -

 

 -

 

 -

 

 -

 

60,942 

Cost of trade sales

 

 -

 

 -

 

42,123 

 

20,584 

 

 -

 

 -

 

62,707 

Interest expense

 

35,698 

 

 -

 

309 

 

950 

 

9,491 

 

(6,040)

 

40,408 

Recoveries from loan losses, net

 

 -

 

(13,457)

 

 -

 

 -

 

 -

 

 -

 

(13,457)

Asset impairments, net

 

 -

 

287 

 

 -

 

 -

 

 -

 

 -

 

287 

Litigation settlement

 

 -

 

 -

 

 -

 

 -

 

36,500 

 

 -

 

36,500 

Selling, general and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

administrative expenses

 

373,804 

 

12,773 

 

15,049 

 

15,071 

 

51,063 

 

(1,060)

 

466,700 

Total costs and expenses

 

493,328 

 

(397)

 

57,481 

 

36,605 

 

97,054 

 

(7,100)

 

676,971 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in net earnings of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unconsolidated real

 

 

 

 

 

 

 

 

 

 

 

 

 

 

estate joint ventures

 

 -

 

(1,565)

 

 -

 

 -

 

 -

 

 -

 

(1,565)

Foreign exchange loss

 

 -

 

 -

 

(1,038)

 

 

 

 -

 

 -

 

(1,038)

Income (loss) before income taxes

$

124,320 

 

45,474 

 

(2,058)

 

(8,768)

 

(94,285)

 

 -

 

64,683 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

1,083,151 

 

204,787 

 

22,778 

 

33,836 

 

78,839 

 

(82,431)

 

1,340,960 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures for property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and equipment

$

9,176 

 

 

92 

 

2,003 

 

1,535 

 

 -

 

12,810 

Depreciation and amortization

$

9,181 

 

810 

 

546 

 

1,628 

 

263 

 

 -

 

12,428 

Debt accretion and amortization

$

5,681 

 

 -

 

97 

 

135 

 

92 

 

 -

 

6,005 

Cash and cash equivalents

$

115,524 

 

18,130 

 

632 

 

1,069 

 

63,550 

 

 -

 

198,905 

Equity method investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

included in total assets

$

 -

 

42,962 

 

 -

 

 -

 

 -

 

 -

 

42,962 

Goodwill

$

 -

 

 -

 

 -

 

7,601 

 

 -

 

 -

 

7,601 

Notes payable and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other borrowings

$

503,521 

 

 -

 

8,071 

 

13,314 

 

80,000 

 

(80,000)

 

524,906 

Junior subordinated debentures

$

67,255 

 

 -

 

 -

 

 -

 

83,230 

 

 -

 

150,485 

F-69


25.    Selected Quarterly Results (Unaudited)



The following tables summarize the results of operations for each fiscal quarter during the years ended December 31, 20172019 and 20162018 (in thousands except for per share data): 







 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

First

 

Second

 

Third

 

Fourth

 

 

2017

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total



 

 

 

 

 

 

 

 

 

 

Revenues

$

171,651 

 

203,192 

 

226,192 

 

214,747 

 

815,782 

Costs and expenses

 

141,831 

 

181,974 

 

208,852 

 

204,041 

 

736,698 



 

29,820 

 

21,218 

 

17,340 

 

10,706 

 

79,084 

Equity in net earnings of unconsolidated

 

 

 

 

 

 

 

 

 

 

real estate joint ventures

 

3,714 

 

3,455 

 

2,451 

 

4,863 

 

14,483 

Foreign exchange gains (losses)

 

191 

 

(398)

 

(105)

 

119 

 

(193)

Income before income taxes

 

33,725 

 

24,275 

 

19,686 

 

15,688 

 

93,374 

(Provision) benefit for income taxes

 

(13,054)

 

(8,779)

 

(8,195)

 

37,251 

 

7,223 

Net income

 

20,671 

 

15,496 

 

11,491 

 

52,939 

 

100,597 

Less: Net income attributable to

 

 

 

 

 

 

 

 

 

 

noncontrolling interests

 

2,796 

 

3,415 

 

3,256 

 

8,935 

 

18,402 

Net income to common shareholders

 

17,875 

 

12,081 

 

8,235 

 

44,004 

 

82,195 



 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.18 

 

0.12 

 

0.08 

 

0.44 

 

0.83 



 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.17 

 

0.11 

 

0.08 

 

0.43 

 

0.79 



 

 

 

 

 

 

 

 

 

 

Basic weighted average number of common shares outstanding

 

98,921 

 

98,240 

 

98,073 

 

99,744 

 

98,745 



 

 

 

 

 

 

 

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

 

105,866 

 

106,173 

 

106,021 

 

102,440 

 

103,916 



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

First

 

Second

 

Third

 

Fourth

 

 

 

2019

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total

Revenues (1)

 

$  

217,352 

 

 

245,693 

 

 

249,613 

 

 

234,213 

 

 

946,871 

Costs and expenses (1)

 

 

211,491 

 

 

265,674 

 

 

239,237 

 

 

219,613 

 

 

936,015 



 

 

5,861 

 

 

(19,981)

 

 

10,376 

 

 

14,600 

 

 

10,856 

Equity in net (loss) earnings of unconsolidated real estate joint ventures

 

 

(17)

 

 

8,759 

 

 

28,534 

 

 

622 

 

 

37,898 

Other income (expense)

 

 

513 

 

 

2,289 

 

 

2,272 

 

 

(4,992)

 

 

82 

Foreign exchange gains (losses)

 

 

 

 

(29)

 

 

 —

 

 

(51)

 

 

(75)

Income (loss) before income taxes

 

 

6,362 

 

 

(8,962)

 

 

41,182 

 

 

10,179 

 

 

48,761 

(Provision) benefit for income taxes

 

 

(1,724)

 

 

1,338 

 

 

(14,682)

 

 

(1,590)

 

 

(16,658)

Net income (loss)

 

 

4,638 

 

 

(7,624)

 

 

26,500 

 

 

8,589 

 

 

32,103 

Less: Net income attributable to noncontrolling interests

 

 

3,139 

 

 

4,024 

 

 

4,112 

 

 

3,137 

 

 

14,412 

Net income (loss) attributable to shareholders

 

 

1,499 

 

 

(11,648)

 

 

22,388 

 

 

5,452 

 

 

17,691 

Basic earnings (loss) per common share

 

$

0.02 

 

 

(0.12)

 

 

0.24 

 

 

0.06 

 

 

0.19 

Diluted earnings (loss) per common share

 

$

0.02 

 

 

(0.12)

 

 

0.24 

 

 

0.06 

 

 

0.19 

Basic weighted average number of common shares outstanding

 

 

93,220 

 

 

93,207 

 

 

92,587 

 

 

91,497 

 

 

92,628 

Diluted weighted average number of common and common equivalent shares outstanding

 

 

94,487 

 

 

93,207 

 

 

94,059 

 

 

91,572 

 

 

93,654 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

First

 

Second

 

Third

 

Fourth

 

 

 

2018

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total

Revenues

 

$  

217,771 

 

 

242,410 

 

 

253,873 

 

 

231,844 

 

 

945,898 

Costs and expenses

 

 

197,072 

 

 

221,607 

 

 

236,125 

 

 

219,619 

 

 

874,423 



 

 

20,699 

 

 

20,803 

 

 

17,748 

 

 

12,225 

 

 

71,475 

Equity in net earnings (loss) of unconsolidated real estate joint ventures

 

 

1,280 

 

 

(488)

 

 

373 

 

 

13,029 

 

 

14,194 

Other income

 

 

271 

 

 

816 

 

 

530 

 

 

78 

 

 

1,695 

Foreign exchange gains (losses)

 

 

52 

 

 

(37)

 

 

76 

 

 

(23)

 

 

68 

Income before income taxes

 

 

22,302 

 

 

21,094 

 

 

18,727 

 

 

25,309 

 

 

87,432 

Provision for income taxes

 

 

(6,600)

 

 

(8,655)

 

 

(6,742)

 

 

(9,642)

 

 

(31,639)

Net income

 

 

15,702 

 

 

12,439 

 

 

11,985 

 

 

15,667 

 

 

55,793 

Less: Net income attributable to noncontrolling interests

 

 

4,560 

 

 

5,958 

 

 

5,806 

 

 

4,367 

 

 

20,691 

Net income attributable to shareholders

 

 

11,142 

 

 

6,481 

 

 

6,179 

 

 

11,300 

 

 

35,102 

Basic earnings per common share

 

$

0.11 

 

 

0.07 

 

 

0.07 

 

 

0.12 

 

 

0.37 

Diluted earnings per common share

 

$

0.11 

 

 

0.07 

 

 

0.06 

 

 

0.12 

 

 

0.36 

Basic weighted average number of common shares outstanding

 

 

99,652 

 

 

94,390 

 

 

93,193 

 

 

94,042 

 

 

95,298 

Diluted weighted average number of common and common equivalent shares outstanding

 

 

102,628 

 

 

97,779 

 

 

96,576 

 

 

95,041 

 

 

97,860 

(1) During the fourth quarter of 2019, the prior 2019 quarterly revenue and operating expense amounts were reclassified for consistency to conform to the fourth quarter 2019 presentation.

 

F-7054

 


 

 

26.   Subsequent Events



Subsequent events have been evaluated through the date the financial statements were available to be issued.  As of such date, other than described elsewhere herein, there were no subsequent events identified that required recognition or disclosure.



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

First

 

Second

 

Third

 

Fourth

 

 

2016

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total



 

 

 

 

 

 

 

 

 

 

Revenues

$

165,902 

 

193,154 

 

209,695 

 

198,544 

 

767,295 

Costs and expenses

 

153,310 

 

192,616 

 

171,685 

 

185,497 

 

703,108 



 

12,592 

 

538 

 

38,010 

 

13,047 

 

64,187 

Equity in net (losses) earnings of

 

 

 

 

 

 

 

 

 

 

unconsolidated real estate joint ventures

 

(342)

 

1,655 

 

4,480 

 

7,837 

 

13,630 

Foreign exchange gains (losses)

 

210 

 

110 

 

 

(106)

 

219 

Income before income taxes

 

12,460 

 

2,303 

 

42,495 

 

20,778 

 

78,036 

(Provision) benefit for income taxes

 

(5,107)

 

368 

 

(19,118)

 

(12,522)

 

(36,379)

Net income

 

7,353 

 

2,671 

 

23,377 

 

8,256 

 

41,657 

Less: Net income attributable to

 

 

 

 

 

 

 

 

 

 

noncontrolling interests

 

1,871 

 

2,427 

 

5,602 

 

3,395 

 

13,295 

Net income to common shareholders

 

5,482 

 

244 

 

17,775 

 

4,861 

 

28,362 



 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.06 

 

0.00 

 

0.21 

 

0.05 

 

0.33 



 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.06 

 

0.00 

 

0.21 

 

0.05 

 

0.32 



 

 

 

 

 

 

 

 

 

 

Basic weighted average number of common shares outstanding

 

86,839 

 

85,946 

 

85,864 

 

88,949 

 

86,902 



 

 

 

 

 

 

 

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

 

87,013 

 

86,145 

 

86,573 

 

89,961 

 

87,492 



 

 

 

 

 

 

 

 

 

 







 



 

 

F-7155

 


 

 

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.



ITEM 9A.  CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures



We have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) to make known material information concerning the Company, including its subsidiaries, to those officers who certify our financial reports and to other members of our senior management. As of December 31, 2017,2019, our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017,2019, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. 



Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors and all improper conduct. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of any control system is based in part upon assumptions about the likelihood of future events, and there can be no assurance that any such design will succeed in achieving its stated goals under all potential future conditions.



Management’s Report on Internal Control Over Financial Reporting



Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. As of December 31, 2017,2019, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework – 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2017.2019. 

Management has excluded IT’SUGAR, LLC from its assessment of internal control over financial reporting as of December 31, 2017.  We acquired this business during the second quarter of 2017 and our management has not conducted an assessment of the acquired business’ internal control over financial reporting.  Total assets and revenues

91


of IT’SUGAR, LLC represent 4% and 6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Grant Thornton LLP, our independent registered public accounting firm, has audited our internal control over financial reporting as of December 31, 2019 and has issued an attestation report on our internal control over financial reporting, which is included below.

9282

 


 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors and Shareholders

BBX Capital Corporation

Opinion on internal control over financial reporting

93We have audited the internal control over financial reporting of BBX Capital Corporation (a Florida corporation) and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.




We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2019, and our report dated March 13, 2020 expressed an unqualified opinion on those financial statements.



Basis for opinion

Board of Directors and Shareholders

BBX Capital Corporation

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of BBX Capital Corporation (a Florida corporation) and subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2017, and our report dated March 9, 2018 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting (“Management’s Report”).

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of the Company’s subsidiary, IT’SUGAR, LLC, whose financial statements reflect total assets and revenues constituting 4 and 6 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017. As indicated in Management’s Report, IT’SUGAR, LLC was acquired during 2017. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of IT’SUGAR, LLC.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

94


/s/ GRANT THORNTON LLP



Fort Lauderdale, Florida

March 9, 201813, 2020



9583

 


 

 

Changes in Internal Control Over Financial Reporting



There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 20172019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



ITEM 9B. OTHER INFORMATION



On March 6, 2018, BBX Capital, BBX Sweet Holdings, Food for Thought Restaurant Group-Florida, LLC, BBX Capital Florida LLC and Woodbridge, entered into a Loan and Security Agreement and related agreements with Iberiabank, as administrative agent and lender, and City National Bank of Florida, as lender, which provide for a $50 million revolving line of credit.  Amounts borrowed under the facility will accrue interest at a floating rate of 30-day LIBOR plus a margin of 3.0% to 3.75% or the Prime Rate plus a margin of 1.50% to 2.25%.  The applicable margin is based on BBX Capital’s debt to EBITDA ratio.  Payments of interest only will be payable monthly.  The facility matures, and all outstanding principal and interest will be payable, on March 6, 2020, with twelve month renewal options at BBX Capital’s request, subject to satisfaction of certain conditions.  The facility is secured by a pledge of a percentage of BBX Capital’s membership interests in Woodbridge having a value of not less than $100 million.  Borrowings under the facility may be used for business acquisitions, real estate investments, stock repurchases, letters of credit and general corporate purposes.  Under the terms and conditions of the Loan and Security Agreement, we are required to comply with certain financial covenants, including maintaining minimum unencumbered liquidity and complying with financial ratios related to fixed charge coverage and debt to EBITDA.  The Loan and Security Agreement also contains customary affirmative and negative covenants, including those that, among other things, limit the ability of BBX Capital and the other borrowers to incur additional indebtedness and to make certain loans and investments.

The foregoing description of the Loan and Security Agreement is only a summary and is qualified in its entirety by reference to the full text of the agreements, which are filed as Exhibits 10.66 in Item 15 to this Annual Report.

None

 

 

9684

 


 

 

PART III



The remaining information required by Items 10 through 14 of Part III of Form 10-K will be provided by incorporating such information by reference to our Definitive Proxy Statement on Schedule 14A relating to our 20182020 Annual Meeting of Shareholders in the event it is filed with the Securities and Exchange Commission by no later than 120 days after December 31, 2017.2019. Alternatively, we may provide the information required by Items 10 through 14 of Part III of Form 10-K in an amendment to this Annual Report on Form 10-K under cover of Form 10-K/A, in which case such amendment will be filed with the Securities and Exchange Commission by the end of such 120 day period.

 

9785

 


 

 

PART IV



ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES



a)

Documents Filed as Part of this Report:



1)

Financial Statements



The following consolidated financial statements of BBX Capital Corporation and its subsidiaries are included herein under Part II, Item 8 of this Report.



Reports of Independent Registered Public Accounting Firm.



Consolidated Statements of Financial Condition as of December 31, 20172019 and 2016.2018.



Consolidated Statements of Operations and Comprehensive Income for each of the years in the three year period ended December 31, 2017.2019.



Consolidated Statements of Changes in Equity for each of the years in the three year period ended December 31, 2017.2019.



Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 2017.2019.



Notes to Consolidated Financial Statements.



2)

Financial Statement Schedules



Schedule III – Real estate and accumulated depreciation for BBX Capital Corporation

Schedule IV – Mortgage loans on real estate for BBX Capital Corporation

All other schedules are omitted as the required information is either not applicable or presented in the financial statements or related notes.



3)

Exhibits



The following exhibits are either filed as a part of or furnished with this report or are incorporated herein by reference to documents previously filed as indicated below:

86

 






 

 

 



 

 

 

Exhibit

 

 

 

Number

Description

 

Reference

2.1

Agreement and Plan of Merger, dated July 27, 2016, by and among the Company, BBX Merger Subsidiary LLC and BBX Capital Corporation

 

Exhibit 2.1 to Registrant's Current Report on Form 8-K filed on July 28, 2016

2.2

Letter Agreement, dated October 20, 2016, amending the Agreement and Plan of the Merger, dated as of July 27, 2016 by and among the Company, BBX Merger Subsidiary LLC and BBX Capital Corporation

 

Exhibit 2.1 to Registrant's Current Report on Form 8-K filed on October 20, 2016

3.1

Amended and Restated Articles of Incorporation, effective October 8, 1997

 

Exhibit 3.1 of Registrant’s Registration Statement on Form 8-A filed October 16, 1997

3.2

Amendment to the Amended and Restated Articles of Incorporation, effective June 18, 2002

 

Exhibit 4 of Registrant’s Current Report on Form 8-K filed June 27, 2002

98


3.3

Amendment to the Amended and Restated Articles of Incorporation, effective April 15, 2003

 

Appendix B of Registrant’s Definitive Proxy Statement on Schedule 14A filed April 18, 2003

3.4

Amendment to the Amended and Restated Articles of Incorporation, effective February 7, 2005

 

Appendix A of Registrant’s Definitive Information Statement on Schedule 14C filed January 18, 2005

3.5

Amendment to the Amended and Restated Articles of Incorporation, effective June 22, 2004, as amended on December 17, 2008

 

Exhibit 3.1 of Registrant’s Current Report on Form 8-K filed December 18, 2008

3.6

Amendment to the Amended and Restated Articles of Incorporation, effective May 19, 2009

 

Appendix A of Registrant’s Definitive Proxy Statement on Schedule 14A filed April 29, 2009

3.7

Amendment to the Amended and Restated Articles of Incorporation, effective September 21, 2009

 

Annex D of the Joint Proxy Statement/Prospectus that forms a part of Amendment No. 1 to Registrant’s Registration Statement on Form S-4 filed August 14, 2009

3.8

Amendment to the Amended and Restated Articles of Incorporation, effective September 21, 2009

 

Exhibit 3.8 of Registrant’s Current Report on Form 8-K filed September 25, 2009

3.9

Amendment to the Amended and Restated Articles of Incorporation, effective December 19, 2013

 

Exhibit 3.1 of Registrant’s Current Report on Form 8-K filed December 23, 2013

3.10

Amendment to the Amended and Restated Articles of Incorporation, effective January 30, 2017

 

Exhibit A of the Registrant’s Definitive Information Statement on Schedule 14C filed January 9, 2017

3.11

Bylaws, as amended

 

Exhibit 3.1 of Registrant’s Current Report on Form 8-K filed February 12, 2015

4.1

Specimen Class A Common Stock Certificate

 

Exhibit 4.1 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

4.2

Specimen Class B Common Stock Certificate

 

Exhibit 4.2 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

4.3

Rights Agreement dated asDescription of September 21, 2009 by and between BFC Financial Corporation and American Stock Transfer and Trust Company, LLC as Rights Agent.Registrant’s Securities

 

Exhibit 4.1 of Registrant’s CurrentFiled with this Report on Form 8-K, filed September 25, 2009

10.1

BFC Financial Corporation 2014 Stock Incentive Plan, as amended

 

Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed April 24, 2015

10.2

BFC Financial Corporation 2005 Stock Incentive Plan, as amended

 

Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed November 21, 2012

10.3

BBX Capital 2005 Restricted Stock and Option Plan, as amended

 

Exhibit 10.3 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

10.4

BBX Capital 2014 Stock Incentive Plan, as amended

 

Exhibit 10.4 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

10.5

BBX Capital 2014 Incentive Plan, as amended

 

Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed April 21, 2017

10.6

BBX Capital 2014 Incentive Plan, as amended

Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 16, 2018

10.61

BBX Capital 2014 Incentive Plan, as amended

Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 15, 2019

10.7

Employment agreement between Alan B. Levan and BFC Financial Corporation

 

Exhibit 10.1 of Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 14, 2012

10.710.8

Employment agreement between John E. Abdo and BFC Financial Corporation

 

Exhibit 10.2 of Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 14, 2012

10.810.9

Employment agreement between Seth M. Wise and BFC Financial Corporation

 

Exhibit 10.3 of Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 15, 2012

10.910.10

Employment agreement between Jarett S. Levan and BFC Financial Corporation

 

Exhibit 10.5 of Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 15, 2012

99


10.1010.11

Employment agreement between Ray S. Lopez and BFC Financial Corporation

 

Exhibit 10.1 of Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 filed on May 8, 2015

87


10.11

10.12

Employment agreement between Alan B. Levan and BBX Capital Corporation

 

Exhibit 10.10 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

10.1210.13

Employment agreement between John E. Abdo and BBX Capital Corporation

 

Exhibit 10.11 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

10.1310.14

Employment agreement between Jarett S. Levan and BBX Capital Corporation

 

Exhibit 10.12 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

10.1410.15

Employment agreement between Seth M. Wise and BBX Capital Corporation

 

Exhibit 10.13 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

10.1510.16

Employment agreement between Ray S. Lopez and BBX Capital Corporation

 

Exhibit 10.14 of Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 filed on March 15, 2017

10.1610.17

Tax Sharing Agreement dated as of May 8, 2015, by and among BFC Financial Corporation, BBX Capital and Bluegreen

 

Exhibit 10.2 of Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 filed on May 8, 2015

10.1710.18

Loan Agreement and Promissory Note, dated April 17, 2015, between BFC Financial Corporation and Bluegreen Specialty Finance, LLC

 

Exhibit (b)(1) to Amendment No. 2 of the Schedule TO-T filed by Registrant with the Securities and Exchange Commission on April 17, 2015

10.1810.19

Underwriting Agreement, dated November 16, 2017, by and between Bluegreen Vacations Corporation, Woodbridge Holdings, LLC, and Stifel, Nicolaus & Company, Incorporated and Credit Suisse Securities (USA) LLC, as representatives of the several underwriters named in Schedule I thereto

 

Exhibit 1.1 of Registrant's Current Report on Form 8-K filed with the SEC on November 21, 2017

10.1910.20

Indenture between BXG Receivables Note Trust 2012-A as Issuer, Bluegreen Corporation as Servicer, Vacation Trust, Inc. as Club Trustee, Concord Servicing Corporation as Backup Servicer and U.S. Bank National Association, as Indenture Trustee, Paying Agent and Custodian, dated as of August 15, 2012.

 

Exhibit 10.101 of Bluegreen Corporation's Form 8-K filed with the SEC on September 14, 2012

10.2010.21

Sale Agreement by and among BRFC 2012-A LLC as Depositor and BXG Receivables Note Trust 2012-A as Issuer dated as of August 15, 2012

 

Exhibit 10.102 of Bluegreen Corporation's Form 8-K filed with the SEC on September 14, 2012

10.2110.22

Transfer Agreement by and among Bluegreen Corporation, BXG Timeshare Trust I as Seller and BRFC 2012-A LLC as Depositor, dated as of August 15, 2012

 

Exhibit 10.103 of Bluegreen Corporation's Form 8-K filed with the SEC on September 14, 2012

10.2210.23

Purchase and Contribution Agreement by and among Bluegreen Corporation, as Seller and BRFC 2012-A LLC as Depositor, dated as of August 15, 2012

 

Exhibit 10.104 of Bluegreen Corporation's Form 8-K filed with the SEC on September 14, 2012

10.2310.24

Note Purchase and Collateral Trust and Security Agreement by and among Bluegreen Corporation, Bluegreen Vacations Unlimited, Inc., Bluegreen Resorts Managements, Inc., and TFRI 2013-1 LLC as Obligors, Bluegreen Nevada, LLC as Guarantor, and US National Bank as Collateral Agent, Note Registrar and Paying Agent, and AIG Asset Management (U.S.) LLC as Designated Representative, dated March 26, 2013

 

Exhibit 10.1 of Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed on May 15, 2013

10.2410.25

BXG Receivables Note Trust 2013-A, Standard Definitions

 

Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on October 2, 2013

100


10.2510.26

Indenture between BXG Receivables Note Trust 2013-A, as Issuer, Bluegreen Corporation, as Servicer, Vacation Trust, Inc. as Club Trustee, Concord Servicing Corporation, as Backup Servicer, and U.S. Bank National Association, as Indenture Trustee, Paying Agent and Custodian, dated as of September 15, 2013

 

Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on October 2, 2013

10.2610.27

Sale Agreement by and among BRFC 2013-A LLC, as Depositor, and BXG Receivables Note Trust 2013-A, as Issuer, dated as of September 15, 2013

 

Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on October 2, 2013

10.2710.28

Transfer Agreement by and among Bluegreen Corporation, BXG Timeshare Trust I, as Seller, and BRFC 2013-A LLC, as Depositor, dated as of September 15, 2013

 

Exhibit 10.4 of Registrant's Current Report on Form 8-K filed on October 2, 2013

10.2810.29

Purchase and Contribution Agreement by and among Bluegreen Corporation, as Seller and BRFC 2013-A LLC as Depositor, dated as of September 15, 2013

 

Exhibit 10.5 of Registrant's Current Report on Form 8-K filed on October 2, 2013

10.2910.30

Second Amended and Restated Purchase and Contribution Agreement, dated as of May 1, 2017, between Bluegreen Corporation and Bluegreen Timeshare Finance I

 

Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on May 24, 2017

10.3010.31

Second Amended and Restated Sale Agreement, dated as of May 1, 2017, between Bluegreen Timeshare Finance I and BXG Timeshare Trust I

 

Exhibit 10.2 to Registrant's Current Report on Form 8-K filed on May 24, 2017

88


10.31

10.32

Sixth Amended and Restated Indenture, dated as of May 1, 2017, among BXG Timeshare Trust I, Bluegreen Corporation, Vacation Trust, Inc., Concord Servicing Corporation, U.S. Bank National Association, KeyBank National Association and DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main

 

Exhibit 10.3 to Registrant's Current Report on Form 8-K filed on May 24, 2017

10.3210.33

Sixth Amended and Restated Note Funding Agreement, dated as of May 1, 2017, by and among Bluegreen Corporation, BXG Timeshare Trust I, Bluegreen Timeshare Finance Corporation I, the purchasers from time to time parties thereto and KeyBank National Association and DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main

 

Exhibit 10.4 to Registrant's Current Report on Form 8-K filed on May 24, 2017

10.3310.34

Second Amended and Restated Trust Agreement, dated as of May 19, 2017, by and among Bluegreen Timeshare Finance I, GSS Holdings, Inc. and Wilmington Trust Company

 

Exhibit 10.5 to Registrant's Current Report on Form 8-K filed on May 24, 2017

10.3410.35

Seventh Amended and Restated Standard Definitions to the Transaction Documents filed as Exhibit 10.1 through 10.5 to Registrant's Current Report on Form 8-K filed May 19, 2017

 

Exhibit 10.6 to Registrant's Current Report on Form 8-K filed on May 24, 2017

10.3510.36

Credit Agreement dated November 5, 2014, among Bluegreen Corporation, as Borrower, Fifth Third Bank, as Administrative Agent and L/C Issuer, and Guarantors and Lenders party thereto

 

Exhibit 10.1 of Registrant's Quarterly Report on Form 10-Q filed on November 10, 2014

10.3610.37

Indenture, dated as of January 15, 2015, between BXG Receivables Note Trust 2015-A, as Issuer, Bluegreen Corporation, as Servicer, Vacation Trust, Inc. as Club Trustee, Concord Servicing Corporation, as Backup Servicer, and U.S. Bank National Association, as Indenture Trustee, Paying Agent and Custodian

 

Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on February 3, 2015

10.3710.38

Sale Agreement, dated as of January 15, 2015, by and among BRFC 2015-A LLC, as Depositor, and BXG Receivables Note Trust 2015-A, as Issuer

 

Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on February 3, 2015

10.3810.39

Transfer Agreement, dated as of January 15, 2015, by and among Bluegreen Corporation, BXG Timeshare Trust I, as Seller, and BRFC 2015-A LLC, as Depositor

 

Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on February 3, 2015

101


10.3910.40

Purchase and Contribution Agreement, dated as of January 15, 2015, by and among Bluegreen Corporation, as Seller, and BRFC 2015-A LLC, as Depositor

 

Exhibit 10.4 of Registrant's Current Report on Form 8-K filed on February 3, 2015

10.4010.41

BXG Receivables Note Trust 2015-A, Standard Definitions

 

Exhibit 10.5 of Registrant's Current Report on Form 8-K filed on February 3, 2015

10.4110.42

Second Amended and Restated Secured Promissory Note dated June 25, 2015, by and among Bluegreen Vacations Unlimited, Inc., as Borrower, and Pacific Western Bank, as Lender

 

Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on June 30, 2015

10.4210.43

Second Amendment to Amended and Restated Loan and Security Agreement dated June 25, 2015, by and among Bluegreen Corporation, as Borrower, and Pacific Western Bank, as Lender

 

Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on June 30, 2015

10.4310.44

Third Amended and Restated Revolving Promissory Note (Hypothecation Facility) dated June 30, 2015, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and National Bank of Arizona, as Lender

 

Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on July 7, 2015

10.4410.45

First Amended and Restated Loan and Security Agreement (Hypothecation Facility) dated June 30, 2015, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower and National Bank of Arizona, as Lender

 

Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on July 7, 2015

10.5110.46

First Amended and Restated Promissory Note (Inventory Loan) dated June 30, 2015, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and National Bank of Arizona, as Lender

 

Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on July 7, 2015

10.4510.47

First Amended and Restated Loan Agreement (Inventory Loan) dated June 30, 2015, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and National Bank of Arizona, as Lender

 

Exhibit 10.4 of Registrant's Current Report on Form 8-K filed on July 7, 2015

10.4610.48

Fourth Amended and Restated Revolving Promissory Note (Hypothecation Facility) dated September 28, 2017, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank of Arizona, as Lender

 

Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on October 4, 2017

10.4710.49

Second Amended and Restated Loan and Security Agreement (Hypothecation Facility) dated September 28, 2017, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank of Arizona, as Lender

 

Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on October 4, 2017

89


10.48

10.50

Second Amended and Restated Promissory Note (Inventory Loan) dated September 28, 2017, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank of Arizona, as Lender

 

Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on October 4, 2017

10.4910.51

Second Amended and Restated Loan Agreement (Inventory Loan) dated September 28, 2017, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank of Arizona, as Lender

 

Exhibit 10.4 of Registrant's Current Report on Form 8-K filed on October 4, 2017

10.5010.52

Full Guaranty (Hypothecation Facility) dated September 30, 2010, by Bluegreen Corporation, as Guarantor, in favor of National Bank of Arizona, as Lender (incorporated by reference to Exhibit 10.102 to Bluegreen’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, filed with the SEC on November 10, 2010)

 

Exhibit 10.6 of Registrant's Current Report on Form 8-K filed on October 4, 2017

10.5110.53

Guarantor Consent and Ratification and Confirmation of and Amendment to Full Guaranty (Hypothecation Facility) dated September 28, 2017, by Bluegreen Vacations Corporation, as Guarantor, in favor of Z.B., National Bank of Arizona, as Lender

 

Exhibit 10.6 of Registrant's Current Report on Form 8-K filed on October 4, 2017

102


10.5910.54

Full Guaranty (Inventory Loan) dated December 13, 2013, by Bluegreen Corporation, as Guarantor, in favor of National Bank of Arizona, as Lender

 

Exhibit 10.7 of Registrant's Current Report on Form 8-K filed on October 4, 2017

10.5310.55

Guarantor Consent and Ratification and Confirmation of and Amendment to Full Guaranty (Inventory Loan) dated September 28, 2017, by Bluegreen Vacations Corporation, as Guarantor, in favor of Z.B., National Bank of Arizona, as Lender

 

Exhibit 10.8 of Registrant's Current Report on Form 8-K filed on October 4, 2017

10.5410.56

Indenture dated as of March 17, 2016, between BXG Receivables Note Trust 2016-A, as Issuer, Bluegreen Corporation, as Servicer, Vacation Trust, Inc., as Club Trustee, Concord Servicing Corporation, as Backup Servicer, and U.S. Bank National Association, as Indenture Trustee, Paying Agent and Custodian

 

Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on March 23, 2016

10.5510.57

Sale Agreement, dated as of March 17, 2016, by and among BRFC 2016-A LLC, as Depositor, and BXG Receivables Note Trust 2016-A, as Issuer

 

Exhibit 10.2 to Registrant's Current Report on Form 8-K filed on March 23, 2016

10.5610.58

Transfer Agreement, dated as of March 17, 2016, by and among Bluegreen Corporation, BXG Timeshare Trust I, as Seller, and BRFC 2016-A LLC, as Depositor

 

Exhibit 10.3 to Registrant's Current Report on Form 8-K filed on March 23, 2016

10.5710.59

Purchase and Contribution Agreement, dated as of March 17, 2016, by and among Bluegreen Corporation, as Seller, and BRFC 2016-A LLC, as Depositor

 

Exhibit 10.4 to Registrant's Current Report on Form 8-K filed on March 23, 2016

10.5810.60

BXG Receivables Note Trust 2016-A, Standard Definitions

 

Exhibit 10.5 to Registrant's Current Report on Form 8-K filed on March 23, 2016

10.5910.61

Amended and Restated Credit Agreement dated as of December 16, 2016, by and among Bluegreen Corporation, as Borrower and Fifth Third Bank, as Administrative Agent and L/C Issuer

 

Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on December 22, 2016

10.6010.62

Amended and Restated Security Agreement, dated as of December 16, 2016, by and among Bluegreen Corporation, as Borrower, Bluegreen Vacations Unlimited, Inc. and Bluegreen Resorts Management, Inc. as Grantors, and Fifth Third Bank, as Administrative Agent

 

Exhibit 10.2 to Registrant's Current Report on Form 8-K filed on December 22, 2016

10.6110.63

Indenture, dated as of June 6, 2017, between BXG Receivables Note Trust 2017-A, as Issuer, Bluegreen Corporation, as Servicer, Vacation Trust, Inc. as Club Trustee, Concord Servicing Corporation, as Backup Servicer, and U.S. Bank National Association, as Indenture Trustee, Paying Agent and Custodian

 

Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on June 9, 2017

10.6210.64

Sale Agreement, dated as of June 6, 2017, by and among BRFC 2017-A LLC, as Depositor, and BXG Receivables Note Trust 2017-A, as Issuer

 

Exhibit 10.2 to Registrant's Current Report on Form 8-K filed on June 9, 2017

10.6310.65

Transfer Agreement, dated as of June 6, 2017, by and among Bluegreen Corporation, BXG Timeshare Trust I, as Seller, and BRFC 2017-A LLC, as Depositor

 

Exhibit 10.3 to Registrant's Current Report on Form 8-K filed on June 9, 2017

10.6410.66

Purchase and Contribution Agreement, dated as of June 6, 2017, by and among Bluegreen Corporation, as Seller, and BRFC 2017-A LLC, as Depositor

 

Exhibit 10.4 to Registrant's Current Report on Form 8-K filed on June 9, 2017

10.6510.67

BXG Receivables Note Trust 2017-A, Standard Definitions

 

Exhibit 10.5 to Registrant's Current Report on Form 8-K filed on June 9, 2017

90




 

 

 



 

 

 

103


10.6610.68

Loan and Security Agreement, dated March 6, 2018, by and among BBX Capital, BBX Sweet Holdings, Food for Thought Restaurant Group-Florida, LLC, BBX Capital Florida, LLC and Woodbridge, collectively, as borrowers, and Iberiabank, as administrative agent and lender

 

Filed with this reportExhibit 10.66 to Registrant’s Annual Report on Form 10-K filed on March 9, 2018

12.110.69

RatioSecond Amended and Restated Receivables Loan Agreement, dated as of Earnings to Fixed ChargesMarch 12, 2018, by and among Bluegreen Vacations Corporation, as Borrower, and Liberty Bank, as Lender and Administrative and Collateral Agent

 

Filed with thisExhibit 10.1 to Registrant’s Current Report on Form 8-K filed on March 16, 2018

10.70

Second Amended and Restated Receivables Loan Note, dated as of March 12, 2018, by Bluegreen Vacations Corporation in favor of Liberty Bank

Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on March 16, 2018

10.71

Eighth Commitment Amendment to Loan Sale and Servicing Agreement, dated as of April 6, 2018, by and among BBCV Receivables-Q 2010 LLC, as Seller, Quorum Federal Credit Union, as Buyer, Vacation Trust, Inc., as Club Trustee, U.S. Bank National Association, as Custodian, Bluegreen Vacations Corporation, as Servicer, and Concord Servicing Corporation as Backup Servicer.

Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on April 12, 2018

10.72

Commitment Purchase Period Terms Letter, dated as of April 6, 2018, by BBCV Receivables-Q 2010 LLC, as Seller, and Quorum Federal Credit Union, as Buyer.

Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on April 12, 2018

10.73

Eighth Commitment Amendment to Loan Sale and Servicing Agreement, dated as of April 6, 2018, by and among BRFC-Q 2010 LLC, as Seller, Quorum Federal Credit Union, as Buyer, Vacation Trust, Inc., as Club Trustee, U.S. Bank National Association, as Custodian, Bluegreen Vacations Corporation, as Servicer, and Concord Servicing Corporation as Backup Servicer.

Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed on April 12, 2018

10.74

Commitment Purchase Period Terms Letter, dated as of April 6, 2018, by BRFC-Q 2010 LLC, as Seller, and Quorum Federal Credit Union, as Buyer.

Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed on April 12, 2018

10.75

Promissory Note, dated as of April 17, 2018, by Bluegreen Vacations Corporation and Bluegreen Vacations Unlimited, Inc., jointly and severally, in favor of ZB, N.A.

Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on April 23, 2018

10.76

Fifth Amendment to Amended and Restated Loan and Security Agreement, dated as of August 15, 2018, by and among Bluegreen Vacations Corporation, the Borrower, each of the financial institutions from time to time party thereto, and Pacific Western Bank, as Agent.

Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on August 21, 2018

10.77

Indenture, dated as of October 15, 2018, among BXG Receivables Note Trust 2018-A, as Issuer, Bluegreen Vacations Corporation, as Servicer, Vacation Trust, Inc. as Club Trustee, Concord Servicing Corporation, as Backup Servicer, and U.S. Bank National Association, as Indenture Trustee, Paying Agent and Custodian 

Exhibit 10.1 to Registrant’s Current Report on Form 8-K files on October 29, 2018

10.78

Sale Agreement, dated as of October 15, 2018, by and between BRFC 2018-A LLC, as Depositor, and BXG Receivables Note Trust 2018-A, as Issuer 

Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on October 29, 2018

10.79

Transfer Agreement, dated as of October 15, 2018, by and among Bluegreen Vacations Corporation, BXG Timeshare Trust I, as Seller, and BRFC 2018-A LLC, as Depositor 

Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed on October 29, 2018

10.80

Purchase and Contribution Agreement, dated as of October 15, 2018, by and between Bluegreen Vacations Corporation, as Seller, and BRFC 2018-A LLC, as Depositor 

Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed on October 29, 2018

10.81

BXG Receivables Note Trust 2018-A, Standard Definitions 

Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed on October 29, 2018

10.82

Acquisition Loan Agreement, dated as of April 17, 2018, by and among Bluegreen Vacations Corporation and Bluegreen Vacations Unlimited, Inc., jointly and severally as Borrower, and ZB, N.A, as Lender

Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on April 23, 2018

10.83

Second Amended and Restated Credit Agreement dated as of October 23, 2019, by and among Bluegreen Vacations Corporation, as Borrower, the Guarantors from time to time party, the Lenders from time to time party, and Fifth Third Bank, as Administrative Agent and L/C Issuer.

Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on October  29, 2019

91


10.84

Second Amended and Restated Security Agreement, dated as of October 23, 2019, by and among Bluegreen Vacations Corporation, as Borrower, Bluegreen Vacations Unlimited, Inc., Bluegreen Resorts Management, Inc., Bluegreen Nevada, LLC, Bluegreen Louisiana, LLC, Bluegreen New Jersey, LLC and TFRI 2013-1 LLC and each other guarantor party from time to time, as Grantors, and Fifth Third Bank, as Administrative Agent

Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on October  29, 2019

10.85

Pledge Agreement, dated as of October 23, 2019, by and among Bluegreen Vacations Corporation, as Pledgor, in favor of Fifth Third Bank, as Administrative Agent

Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed on October  29, 2019

10.86

Omnibus Amendment No. 2, dated as of December 27, 2019, by and among BXG Timeshare Trust I, Bluegreen Vacations Corporation, Vacation Trust, Inc., Concord Servicing Corporation, U.S. Bank National Association, KeyBank National Association and DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main

Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on January 3, 2020

10.87

Loan Extension and Modification Agreement by and among BBX Capital, BBX Sweet Holdings, Food for Thought Restaurant Group-Florida, LLC, BBX Capital Florida, LLC and Woodbridge, collectively, as borrowers, and Iberiabank, as administrative agent and lender

Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on July 19, 2019

10.88

Amended and Restated Marketing and Promotions Agreement by and among Bass Pro and affiliates and Bluegreen and affiliates, dated as of December 31, 2007

Exhibit 10.1 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on August 7, 2019

10.89

First Amendment to Amended and Restated Marketing and Promotions Agreement by and among Bass Pro and affiliates and Bluegreen and affiliates, dated as of June 26, 2010

Exhibit 10.2 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on August 7, 2019

10.90

Second Amendment to Amended and Restated Marketing and Promotions Agreement by and among Bass Pro and affiliates and Bluegreen and affiliates, dated as of October 1, 2010

Exhibit 10.3 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on August 7, 2019

10.91

Amended and Restated Operating Agreement of Bluegreen/Big Cedar Vacations, LLC, dated as of December 31, 2007

Exhibit 10.4 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on August 7, 2019

10.92

First Amendment to Amended and Restated Operating Agreement of Bluegreen/Big Cedar Vacations, LLC, dated as of October 1, 2010

Exhibit 10.5 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on August 7, 2019

10.93

Amendment No. 2 to Amended and Restated Operating Agreement of Bluegreen/Big Cedar Vacations, LLC, dated as of August 31, 2016

Exhibit 10.6 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on August 7, 2019

10.94

Settlement Agreement and Amendment No. 3 to the Amended and Restated Marketing and Promotions Agreement, dated as of June 13, 2019, by and among Bluegreen Vacations Unlimited, Inc., Bass Pro, Inc., Big Cedar, L.L.C., and Bluegreen/Big Cedar Vacations, LLC

Exhibit 10.7 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on August 7, 2019

21.1

Subsidiaries of the Registrant

 

Filed with this Report

23.1

Consent of Grant Thornton LLP

 

Filed with this Report

23.2

Consent of Berkowitz Pollack Brant Advisors and CPAs

Filed with this Report

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed with this Report

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed with this Report

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Furnished with this Report

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Furnished with this Report

99.1

Audited Consolidated Financial Statements of Altis at Bonterra – Hialeah, LLC and Subsidiary

Furnished with this Report

101.INS

XBRL Instance Document

 

Filed with this Report

101.SCH

XBRL Taxonomy Extension Schema Document

 

Filed with this Report

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

 

Filed with this Report

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

 

Filed with this Report

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document

 

Filed with this Report

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

 

Filed with this Report

92

 


10493

 


 

 

 Item 16.    Form 10-K Summary



Schedule III – Real Estate Investments and Accumulated Depreciation

BBX Capital Corporation

As of December 31, 2017

(Dollars in thousands)None

  



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

Capitalized

 

 

 

 

 

 

 

 

 

 

 

 



 

Initial Costs

 

Costs

 

 

 

 

 

 

 

 

 

 

 

Depreciable



 

 

 

Building and

 

Subsequent to

 

 

 

Total

 

Accumulated

 

Year of

 

Foreclosure

 

Lives

Property

 

Land

 

Improvements

 

Acquisition

 

Other

 

Cost (1)

 

Depreciation

 

Construction

 

Month/Year

 

(Years)

RoboVault

$

1,590 

 

6,310 

 

581 

 

 -

 

8,481 

 

1,546 

 

2009

 

4/2013

 

40 

(1)

The aggregate cost for federal income tax purposes is $7.4 million.

The following table presents the changes in BBX Capital’s real estate investments for the year ended December 31, 2017 (in thousands):



 

 

 

 



 

 

 

 



 

Total

 

Accumulated



 

Costs

 

Depreciation

Balance at December 31, 2016

$

14,040 

 

1,322 

Depreciation

 

 -

 

465 

Subsequent additions

 

581 

 

 -

Transfer to real estate held-for-sale

 

(6,140)

 

(241)

Balance at December 31, 2017

$

8,481 

 

1,546 

10594

 


 

 

Schedule IV – Mortgage Loans on Real Estate

BBX Capital Corporation

As of December 31, 2017

(Dollars in thousands)



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Principal



 

 

 

 

 

 

 

 

 

Amount of



 

 

 

 

 

 

 

 

 

Loans Subject

Number

 

 

 

Final

Periodic

 

 

Face

Carrying

to Delinquent

of

 

 

Interest

Maturity

Payment

 

Prior

Amount

Amount of

Principal

Loans

Description

 

Rate(1)

Date(2)

Terms

 

Liens

of Loans

Loans(3)

or Interest



 

 

 

 

 

 

 

 

 

 

53 

First-lien 1-4 Family (4)

 

5.76% 

10/31/2033

Monthly

$

 -

18,219 11,678 13,627 



 

 

 

 

 

 

 

 

 

 

19 

Second lien -Consumer

 

4.08% 

7/2/2018

Monthly

 

4,441 2,224 787 566 



 

 

 

 

 

 

 

 

 

 

Small Business Real Estate

 

6.66% 

8/22/2023

Monthly

 

 -

1,775 1,425 

 -



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



Large Balance Commercial Real Estate Loans

 

 

 

 

 

 

 

 

 

Marina

 

3.23% 

1/1/2018

Monthly

 

 -

3,913 1,619 

 -

Land

 

4.00% 

12/31/2017

Maturity

 

 -

2,995 2,995 2,995 



Total Mortgage Loans

 

 

 

 

$

4,441 29,126 18,504 17,188 

(1)

Represents weighted average interest rates for mortgage loans grouped by category when there is more than one loan in the category.

(2)

Represents weighted average maturity dates for mortgage loans grouped by category when there is more than one loan in the category.

(3)

The aggregate cost for federal income tax purposes was $20.3 million.

(4)

The Company does not own the servicing on these loans.

The following table presents the changes in the Company’s mortgage loans for the year ended December 31, 2017 (in thousands):

Balance at December 31, 2016

$

24,130 

Advances on existing mortgages

 -

Collections of principal

(3,232)

Foreclosures

(1,365)

Costs of mortgages sold

(1,029)

Balance at December 31, 2017

$

18,504 

106


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.



BBX CAPITAL CORPORATION

March 13, 2020

By:

/s/ Alan B. Levan

BBX CAPITAL CORPORATION

March 9, 2018By: /s/ Alan B. Levan

Alan  B. Levan, Chairman of the Board

and Chief Executive 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 and on the dates indicated.





 

 

 

 



 

 

 

 

Signature

 

Title

 

Date



 

 

 

 

/s/ Alan B. Levan

 

 

 

March 9, 201813, 2020

Alan B. Levan

 

Chairman of the Board and Chief Executive Officer

 

 



 

 

 

 

/s/ John E. Abdo

 

 

 

March 9, 201813, 2020

John E. Abdo

 

Vice Chairman of the Board

 

 



 

 

 

 

/s/ Jarett S. Levan

 

 

 

March 9, 201813, 2020

Jarett S. Levan

 

President and Director

 

 



 

 

 

 

/s/ Seth M. Wise

 

 

 

March 9, 201813, 2020

Seth M. Wise

 

Executive Vice President and Director

 

 



 

 

 

 

/s/ Raymond S. Lopez

 

 

 

March 9, 201813, 2020

Raymond S. Lopez

 

Executive Vice President and Chief Financial Officer

/s/Brett Sheppard

March 13, 2020

Brett Sheppard

Chief Accounting Officer and Risk Officer

 

 



 

 

 

 

/s/Norman H. Becker

 

 

 

March 9, 201813, 2020

Norman H. Becker

Director

/s/Andrew R. Cagnetta, Jr

March 13, 2020

Andrew R. Cagnetta, Jr

 

Director

 

 



 

 

 

 

/s/Steven M. Coldren

 

 

 

March 9, 201813, 2020

Steven M. Coldren

 

Director

 

 



 

 

 

 

/s/ Darwin Dornbush

 

 

 

March 9, 201813, 2020

Darwin Dornbush

 

Director

 

 



 

 

 

 

/s/Willis N. Holcombe

 

 

 

March 9, 201813, 2020

Willis N. Holcombe

Director

/s/ Oscar J. Holzmann

March 9, 2018

Oscar J. Holzmann

Director

107


/s/ Alan Levy

March 9, 2018

Alan Levy

 

Director

 

 



 

 

 

 

/s/ Joel Levy

 

 

 

March 9, 201813, 2020

Joel Levy

 

Director

 

 



 

 

 

 

/s/ William Nicholson

 

 

 

March 9, 201813, 2020

William Nicholson

 

Director

 

 



 

 

 

 

/s/Tony P. Segreto

 

 

 

March 9, 201813, 2020

Tony P. Segreto

 

Director

 

 



 

 

 

 

/s/ Neil A. Sterling

 

 

 

March 9, 201813, 2020

Neil A. Sterling

 

Director

 

 



 

 

 

 

/s/Charlie C. Winningham, IIGregory A. Haile

 

 

 

March 9, 201813, 2020

Charlie C. Winningham, IIGregory A. Haile

 

Director

 

 



10895