UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended ~~March 31,~~June 30, 2020

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 001-19292

BLUEGREEN VACATIONS CORPORATION

(Exact name of registrant as specified in its charter)


	Florida		03-0300793
	(State or other jurisdiction of		(I.R.S. Employer
	incorporation or organization)		Identification No.)

4960 Conference Way North, Suite 100, Boca Raton, Florida 33431

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (561) 912-8000

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

~~Ding~~

Title of each class

Trading Symbol(s)

Name of each exchange on which

registered

Common Stock, $0.01 par value

BXG

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to bebe 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 every Interactive Data File required to be submitted 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 such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 x

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. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

As of ~~May 11,~~August 3, 2020, there were 72,484,293 shares of the registrant’s common stock, $.01 par value, outstanding.

BLUEGREEN VACATIONS CORPORATION

FORM 10-Q TABLE OF CONTENTS


		Page
PART I
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets (Unaudited) ~~(Unaudited)~~	3
	Consolidated Statements of Operations and Comprehensive Income (Unaudited) ~~(Unaudited)~~	4
	Consolidated Statements of Shareholders’ Equity (Unaudited) ~~(Unaudited)~~	6
	Consolidated Statements of Cash Flows (Unaudited) ~~(Unaudited)~~	7
	Notes to Consolidated Financial Statements (Unaudited) ~~(Unaudited)~~	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2628
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4852
Item 4.	Controls and Procedures	4852

PART II
Item 1.	Legal Proceedings	4953
Item 1A.	Risk Factors	49
~~Item 2~~	~~Unrestricted Sales of Equity Securities and Use of Proceeds~~	5053
Item 6.	Exhibits	5155

SIGNATURES		5256

‎

PART I—I - FINANCIAL INFORMATION

Item 1. Financial Statements.

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)



	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
ASSETS
Cash and cash equivalents	$	241,525	$	190,009	$	209,427	$	190,009
Restricted cash ($17,456 and $22,534 in VIEs at March 31, 2020
Restricted cash ($16,372 and $22,534 in VIEs at June 30, 2020
and December 31, 2019, respectively)		34,090		49,637		24,829		49,637
Notes receivable		585,159		589,198		551,861		589,198
Less: Allowance for loan losses		(155,166)		(140,630)		(147,629)		(140,630)
Notes receivable, net ($288,435 and $292,590 in VIEs
at March 31, 2020 and December 31, 2019, respectively)		429,993		448,568
Notes receivable, net ($288,358 and $292,590 in VIEs
at June 30, 2020 and December 31, 2019, respectively)						404,232		448,568
Inventory		347,293		346,937		350,270		346,937
Prepaid expenses		27,805		10,501		18,823		10,501
Other assets		43,674		52,731		28,633		52,731
Operating lease assets		22,329		20,858		20,834		20,858
Intangible assets, net		61,494		61,515		61,473		61,515
Loan to related party		80,000		80,000		80,000		80,000
Property and equipment, net		98,248		99,262		95,849		99,262
Total assets	$	1,386,451	$	1,360,018	$	1,294,370	$	1,360,018

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable	$	14,664	$	16,653	$	12,641	$	16,653
Accrued liabilities and other		79,553		103,948		67,297		103,948
Operating lease liabilities		23,608		22,124		22,325		22,124
Deferred income		15,343		18,074		13,783		18,074
Deferred income taxes		92,328		92,504		87,118		92,504
Receivable-backed notes payable - recourse		80,473		88,569		74,599		88,569
Receivable-backed notes payable - non-recourse (in VIEs)		339,224		334,246		325,206		334,246
Lines-of-credit and notes payable		223,785		146,160		181,908		146,160
Junior subordinated debentures		72,285		72,081		72,494		72,081
Total liabilities		941,263		894,359		857,371		894,359

Commitments and Contingencies - See Note 9

Shareholders' Equity
Common stock, $0.01 par value, 100,000,000 shares authorized; 72,484,293
shares issued and outstanding at March 31, 2020 and 74,362,693 shares
shares issued and outstanding at June 30, 2020 and 74,362,693 shares						725		744
issued and outstanding at December 31, 2019		725		744
Additional paid-in capital		257,812		269,534		257,812		269,534
Retained earnings		136,381		145,847		127,551		145,847
Total Bluegreen Vacations Corporation shareholders' equity		394,918		416,125		386,088		416,125
Non-controlling interest		50,270		49,534		50,911		49,534
Total shareholders' equity		445,188		465,659		436,999		465,659
Total liabilities and shareholders' equity	$	1,386,451	$	1,360,018	$	1,294,370	$	1,360,018

See accompanying Notes to Consolidated Financial Statements - Unaudited
‎

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (UNAUDITED)

(In thousands, except per share data)


	For the Three Months Ended				For the Three Months Ended				For the Six Months Ended
	March 31,				June 30,				June 30,
	2020		2019		2020		2019		2020		2019
Revenue:
Gross sales of VOIs	$	75,481	$	62,884	$	10,900	$	80,221	$	86,381	$	143,105
Provision for loan losses		(30,353)		(11,153)
Estimated uncollectible VOI notes receivable						(1,846)		(11,919)		(32,199)		(23,072)
Sales of VOIs		45,128		51,731		9,054		68,302		54,182		120,033

Fee-based sales commission revenue		41,365		45,212		1,135		55,343		42,500		100,555
Other fee-based services revenue		29,314		29,568		26,413		30,703		55,727		60,271
Cost reimbursements		19,120		17,044		11,850		14,007		30,970		31,051
Interest income		21,866		22,008		20,108		21,875		41,974		43,883
Other income, net		133		89		273		1,993		406		2,082
Total revenue		156,926		165,652		68,833		192,223		225,759		357,875

Costs and expenses:
Cost of VOIs sold		4,099		3,848		1,038		10,572		5,137		14,420
Cost of other fee-based services		22,711		22,868		18,535		19,049		40,246		41,042
Cost reimbursements		19,120		17,044		11,850		14,007		30,970		31,051
Selling, general and administrative expenses		101,197		90,214		40,880		148,543		143,077		239,632
Interest expense		8,818		9,506		8,540		10,061		17,358		19,567
Total costs and expenses		155,945		143,480		80,843		202,232		236,788		345,712

Income before non-controlling interest and
provision for income taxes		981		22,172
Provision for income taxes		44		5,303
Net income		937		16,869
(Loss) Income before non-controlling interest
and (benefit) provision for income taxes						(12,010)		(10,009)		(11,029)		12,163
(Benefit) provision for income taxes						(3,821)		(3,957)		(3,777)		1,346
Net (loss) income						(8,189)		(6,052)		(7,252)		10,817
Less: Net income attributable to ‎ non-controlling interest		736		1,716		641		5,131		1,377		6,847
Net income attributable to Bluegreen
Net (loss) income attributable to Bluegreen
Vacations Corporation shareholders	$	201	$	15,153	$	(8,830)	$	(11,183)	$	(8,629)	$	3,970

Comprehensive income attributable to
Comprehensive (loss) income attributable to
Bluegreen Vacations Corporation
shareholders	$	201	$	15,153	$	(8,830)	$	(11,183)	$	(8,629)	$	3,970

‎

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (UNAUDITED)

(In thousands, except per share data)


	For the Three Months Ended				For the Three Months Ended				For the Six Months Ended
	March 31,				June 30,				June 30,
	2020		2019		2020		2019		2020		2019
Earnings per share attributable to ‎ Bluegreen Vacations Corporation ‎ shareholders - Basic and diluted	$	0.00	$	0.20
(Loss) Earnings per share attributable to ‎ Bluegreen Vacations Corporation ‎ shareholders - Basic and diluted					$	(0.12)	$	(0.15)	$	(0.12)	$	0.05

Weighted average number of common shares ‎ outstanding:
Basic and diluted		74,066		74,446		72,485		74,446		73,275		74,446

Cash dividends declared per share	$	0.13	$	0.17	$	—	$	0.17	$	0.13	$	0.34

See accompanying Notes to Consolidated Financial Statements - ~~Unaudited.~~Unaudited

‎

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(In thousands, except share data)


				Equity Attributable ‎to Bluegreen Vacations Corporation Shareholders											Equity Attributable ‎to Bluegreen Vacations Corporation ‎Shareholders
Common ‎Shares ‎Issued		Total		Common ‎Stock		Additional ‎Paid-in- ‎Capital		Retained ‎Earnings		Equity ‎ Attributable to ‎Non-Controlling ‎Interest			Total		Common ‎Stock		Additional ‎Paid-in- ‎Capital		Retained ‎Earnings		Equity ‎ Attributable to ‎Non-Controlling ‎Interest
74,362,693	Balance at December 31, 2019	$	465,659	$	744	$	269,534	$	145,847	$	49,534	Balance at December 31, 2019	$	465,659	$	744	$	269,534	$	145,847	$	49,534
—	Net income		937		—		—		201		736	Net income		937		—		—		201		736
—	Dividends to shareholders		(9,667)		—		—		(9,667)		—	Dividends to shareholders		(9,667)		—		—		(9,667)		—
(1,878,400)	Stock repurchase		(11,741)		(19)		(11,722)		—		—	Stock repurchase		(11,741)		(19)		(11,722)		—		—
72,484,293	Balance at March 31, 2020	$	445,188	$	725	$	257,812	$	136,381	$	50,270	Balance at March 31, 2020		445,188		725		257,812		136,381		50,270
—												Net loss		(8,189)		—		—		(8,830)		641
72,484,293												Balance at June 30, 2020	$	436,999	$	725	$	257,812	$	127,551	$	50,911

Equity Attributable
‎to Bluegreen Vacations Corporation Shareholders
Common
‎Shares
‎Issued

Total
Common
‎Stock
Additional
‎Paid-in-
‎Capital
Retained
‎Earnings
Equity
‎ Attributable to
‎Non-Controlling
‎Interest
74,445,923
Balance at December 31, 2018
$
475,365
$
744
$
270,369
$
158,641
$
45,611
—
Net income
16,869
—
—
15,153
1,716
—
Dividends to shareholders
(12,655)
—
—
(12,655)
—
74,445,923
Balance at March 31, 2019
$
479,579
$
744
$
270,369
$
161,139
$
47,327


				Equity Attributable ‎to Bluegreen Vacations Corporation ‎Shareholders
Common ‎Shares ‎Issued		Total		Common ‎Stock		Additional ‎Paid-in- ‎Capital		Retained ‎Earnings		Equity ‎ Attributable to ‎Non-Controlling ‎Interest
74,445,923	Balance at December 31, 2018	$	475,365	$	744	$	270,369	$	158,641	$	45,611
—	Net income		16,869		—		—		15,153		1,716
—	Dividends to shareholders		(12,655)		—		—		(12,655)		—
74,445,923	Balance at March 31, 2019		479,579		744		270,369		161,139		47,327
—	Net loss		(6,052)		—		—		(11,183)		5,131
—	Dividends to shareholders		(12,657)		—		—		(12,657)		—
74,445,923	Balance at June 30, 2019	$	460,870	$	744	$	270,369	$	137,299	$	52,458

See accompanying Notes to Consolidated Financial Statements - ~~Unaudited.~~Unaudited

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)



	For the Three Months Ended				For the Six Months Ended
	March 31,				June 30,
	2020		2019		2020		2019
Operating activities:
Net income	$	937	$	16,869
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Net (loss) income					$	(7,252)	$	10,817
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		4,792		4,486		9,535		9,056
(Gain) Loss on disposal of property and equipment		(44)		10
Loss (gain) on disposal of property and equipment						43		(1,945)
Provision for loan losses		30,353		11,153		32,199		23,072
(Benefit) Provision for deferred income taxes		(176)		2,281
Benefit for deferred income taxes						(5,386)		(10,041)
Changes in operating assets and liabilities:
Notes receivable		(11,778)		(7,698)		12,137		(24,905)
Prepaid expenses and other assets		(8,452)		(9,048)		15,783		(11,528)
Inventory		(356)		(8,237)		(3,333)		(8,071)
Accounts payable, accrued liabilities and other, and
deferred income		(29,102)		1,126		(44,729)		25,157
Net cash (used in) provided by operating activities		(13,826)		10,942
Net cash provided by operating activities						8,997		11,612

Investing activities:
Purchases of property and equipment		(2,966)		(7,507)		(4,542)		(14,516)
Proceeds from sale of property and equipment		147		—		165		1,820
Net cash used in investing activities		(2,819)		(7,507)		(4,377)		(12,696)

Financing activities:
Proceeds from borrowings collateralized
by notes receivable		32,568		13,487		42,418		45,095
Payments on borrowings collateralized by notes receivable		(36,059)		(34,968)		(66,115)		(66,769)
Proceeds from borrowings collateralized
by line-of-credit facilities and notes payable		80,000		—		80,000		20,386
Payments under line-of-credit facilities and notes payable		(2,411)		(8,168)		(44,324)		(17,407)
Payments of debt issuance costs		(76)		(105)		(581)		(132)
Repurchase and retirement of common stock		(11,741)		—		(11,741)		—
Dividends paid		(9,667)		(12,655)		(9,667)		(25,312)
Net cash provided by (used in) financing activities		52,614		(42,409)
Net increase (decrease) in cash and cash equivalents
Net cash used in financing activities						(10,010)		(44,139)
Net decrease in cash and cash equivalents
and restricted cash		35,969		(38,974)		(5,390)		(45,223)
Cash, cash equivalents and restricted cash at beginning of period		239,646		273,134		239,646		273,134
Cash, cash equivalents and restricted cash at end of period	$	275,615	$	234,160	$	234,256	$	227,911

‎

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)



	For the Three Months Ended				For the Six Months Ended
	March 31,				June 30,
	2020		2019		2020		2019

Supplemental schedule of operating cash flow information:
Interest paid, net of amounts capitalized	$	8,317	$	8,271	$	16,423	$	16,871
Income taxes paid	$	199	$	812	$	241	$	14,357

See accompanying Notes to Consolidated Financial Statements - ~~Unaudited.~~Unaudited

‎

BLUEGREEN VACATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

1. Organization and Basis of Financial Statement Presentation

Bluegreen Vacations Corporation is referred to in this report together with its consolidated subsidiaries as “Bluegreen Vacations”, “Bluegreen”, “the Company”, “we”, “us” and “our”. Bluegreen has prepared the accompanying unaudited consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In our opinion, the financial information furnished herein reflects all adjustments consisting of normal recurring items necessary for a fair presentation of our financial position, results of operations, and cash flows for the interim periods reported in this Quarterly Report on Form 10-Q. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, actual results could differ from those estimates. Due to ~~among other things,~~ the unprecedented impact and potential current and future impact of the Coronavirus Disease 2019 (“COVID-19”) pandemic ~~(which is highly uncertain)~~ and other factors, ~~including, without limitation, seasonality,~~ the results of operations for the three and six months ended ~~March 31,~~June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or any other future interim or annual periods. The accompanying financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the SEC on March 12, 2020 (the “2019 Annual Report on Form 10-K”).

Our Business

We are a leading vacation ownership company that markets and sells vacation ownership interests (“VOIs”) and manages resorts in popular leisure and urban destinations. Our resort network includes 45 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 23 Club Associate Resorts (resorts in which owners in our Vacation Club have the right to use a limited number of units in connection with their VOI ownership). Our Club Resorts and Club Associate Resorts are primarily located in high-volume, “drive-to” vacation locations, including Orlando, Las Vegas, Myrtle Beach, Charleston and ~~Charleston,~~New Orleans, among others. Through our points-based system, the approximately ~~221,000~~219,000 owners in our Vacation Club have the flexibility to stay at units available at any of our resorts and have access to ~~over 11,350~~almost 11,400 other hotels and resorts through partnerships and exchange networks. The resorts in which we market, sell or manage VOIs were either developed or acquired by us, or were developed and are owned by third parties. We earn fees for providing sales and marketing services to third party developers. We also earn fees for providing management services to the Vacation Club and homeowners’ associations (“HOAs”), mortgage servicing, VOI title services, reservation services, and construction design and development services. In addition, we provide financing to qualified VOI purchasers, which ~~generates~~has historically generated significant interest income.

WeWhile we currently intend to increase our focus on sales of developed VOIs, we derive a significant portion of our revenue from our capital-light business model, which utilizes our 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. Our capital-light business activities include sales of VOIs owned by third-party developers pursuant to which we are paid a commission (“fee-based sales”) and sales of VOIs that we purchase under just-in-time (“JIT”) arrangements with third-party developers or from secondary market sources. In addition, as described above, we provide other fee-based services, including resort management, mortgage servicing, title services and construction management, and generate income through financing provided to qualified VOI purchasers in connection with VOI sales.

All of our operations and activities have been materially adversely impacted by the COVID-19 pandemic as discussed further herein.

Impact of the COVID-9 Pandemic

The COVID-19 pandemic has caused and continues to cause, an unprecedented disruption in the U.S. economy and the travel, hospitality and vacation ownership industries due to, among other things, resort closures, travel restrictions and restrictions on business operations including government guidance with respect to travel, public accommodations, social gatherings and

related matters. The disruptions arising from the pandemic had a significant adverse impact on our financial condition and operations during the three and six months ended June 30, 2020. The duration and severity of the pandemic and related disruptions, as well as the adverse impact on the economic and market conditions, are uncertain; however, given the nature of these circumstances, the adverse impact of the pandemic on our consolidated results of operations, cash flows and financial condition in 2020 has been, and is expected to continue to be, material. Furthermore, the duration and the severity of the effects of the pandemic are uncertain and we cannot predict if or when our industry will return to pre-pandemic levels.

On March 23, 2020 we temporarily closed all of our VOI sales centers; our retail marketing operations at Bass Pro Shops and Cabela’s stores and outlet malls; and our Choice Hotels call transfer program. In connection with these actions we canceled existing owner reservations through May 15, 2020 and new prospect guest tours through June 30, 2020. Further, some of our Club and Club Associate Resorts were closed in accordance with government mandates and advisories. Beginning mid-May 2020, we started the process of recommencing our sales and marketing operations and our closed resorts began to welcome guests as government mandates were lifted. By June 30, 2020, 64 Bass Pro Shops and Cabela’s stores (out of the 89 that were open in March 2020) were open, we reactivated our Choice Hotels call transfer program, virtually all of our resorts were open, and 21 of our 26 VOI sales centers were open for sales to existing owners and 1 sale center was selling to new prospects. As of July 31, 2020, 23 VOI sales centers were open for sales to existing owners, 17 of which were open for sales to new prospects. System-wide sales of VOIs were $30.9 million in July 2020. In addition, as of July 31, 2020, we were marketing vacation packages at 85 Bass Pro and Cabela’s stores. However, increased COVID-19 cases in certain markets in July resulted in increases in cancelations of marketing guest stays (and consequently, new owner prospects) and it is impossible to predict whether this trend will continue or worsen or the extent of the adverse impact this may have on Bluegreen.

As a result of the effect of the pandemic, we implemented several cost mitigating activities beginning in March 2020, including reductions in workforce of over 1,600 positions and the placement of another approximate 3,200 of our associates on temporary furlough or reduced work hours. As of June 30, 2020, approximately 2,300 associates had returned to work on a full-time basis. In July 2020, approximately 600 additional associates returned to work on a full-time basis for a total of approximately 4,250 full-time associates as of July 31, 2020 compared to approximately 6,050 full-time associates as of July 31, 2019. However, as a result of the slowdown discussed above or otherwise, additional employees may be terminated or furloughed in the future. As a result of the effect of the COVID-19 pandemic, during the three and six months ended June 30, 2020, we incurred $2.2 million and $6.7 million in severance, respectively, and $10.7 million and $11.6 million, respectively, of payroll and payroll benefit expense relating to employees on temporary furlough or reduced work hours. These payments and expenses are included in selling, general and administrative expenses in our unaudited consolidated statement of operations for the three and six months ended June 30, 2020. Also, in March 2020 we drew down $60 million under our lines-of-credit and pledged or sold receivables under our various receivable backed facilities to increase our cash position. In June 2020, we repaid $40 million under our syndicated line-of-credit and amended the agreements to modify the definition of certain customary covenants. We also suspended our regular quarterly cash dividends on our common stock. As of June 30, 2020, our unrestricted cash balance was $209.4 million.

Principles of Consolidation and Basis of Presentation

Our unaudited consolidated financial statements include the accounts of all of our ~~wholly owned~~wholly-owned subsidiaries, entities in which we hold a controlling financial interest, including Bluegreen/Big Cedar Vacations, LLC (a joint venture in

which we are deemed to hold a controlling financial interest based on our 51% equity interest, our active role as the day-to-day manager of its activities, and our majority voting control of its management committee, (“Bluegreen/Big Cedar Vacations”), and variable interest entities (sometimes referred to herein as “VIEs”) of which we are the primary beneficiary, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ~~Consolidations~~Consolidation (Topic 810). We do not consolidate the statutory business trusts formed by us to issue trust preferred securities as these entities represent VIEs in which we are not the primary beneficiary. The statutory business trusts are accounted for under the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Our financial statements are prepared in conformity with GAAP, which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in our financial statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect

our results of operations and financial position. In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. As a result, our accounting estimates and assumptions may change over time in response to the impact of COVID-19. Such changes could result in, among other adjustments, future impairments of intangibles and long-lived assets, incremental credit losses on VOI notes receivable, a decrease in the carrying amount of our tax assets, or an increase in other obligations as of the time of a relevant measurement event.

Reclassification of Prior Period Presentation

Certain prior period balances were reclassified to conform to current period presentation. The reclassification had no impact on our statements of operations and comprehensive income or statements of cash flows.

2. Recently Issued Accounting Pronouncements

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” (“ASU 2016-13”), which introduces an approach of estimating credit losses on certain types of financial instruments based on expected losses. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan losses. Further, the standard requires that public entities 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 became effective for us on January 1, 2020. We adopted this standard on January 1, 2020 using a modified retrospective method, which did not have a material impact on our consolidated financial statements and related disclosures and no cumulative adjustment was recorded primarily as our VOI notes receivable are recorded net of an allowance that is calculated in accordance with ASC 606, Revenue from Contracts with Customers. We also elected the practical expedient to not measure an allowance for credit losses for accrued interest receivables, as our interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due.

In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal–Use Software (Subtopic 350-40)” (“ASU 2018-15”), which requires a customer in a cloud computing arrangement that is a service contract (“CCA”) to follow internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. ASU 2018-15 also requires companies to present implementation costs related to a CCA in the same financial statement line items as the CCA service fees. We adopted this standard on January 1, 2020 and are applying the transition guidance as of the date of adoption prospectively, under the current period adjustment method. Upon adoption of the standard, we reclassified $1.9 million of capitalized implementation costs related to a CCA that was in the implementation phase as of January 1, 2020 from property and equipment to prepaid expenses.

‎

Accounting Standards Not Yet Adopted

The FASB has issued the following accounting pronouncement and guidance relevant to our operations which had not yet been adopted as of ~~March 31,~~June 30, 2020:

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides relief for companies preparing for discontinuation of LIBOR in response to the Financial Conduct Authority (the regulatory authority over LIBOR) 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. Although our VOIs notes receivable from our borrowers are not indexed to LIBOR, we currently have $110.8 million of LIBOR indexed junior subordinated debentures, ~~$87.7~~$85.5 million of LIBOR indexed receivable-backed notes payable and lines of credit, and ~~$225.2~~$183.2 million of LIBOR indexed lines of credit and notes payable (which are not receivable-backed) that mature after 2021. Companies can apply ASU 2020-04 immediately. However, the guidance will only be available for a limited time,

generally through December 31, 2022. We are evaluating the potential impact that the eventual replacement of the LIBOR benchmark interest rate could have on our results of operations, liquidity and consolidated financial statements.

In June

2016, the FASB issued ASU 2013-13, “Financial Instruments—Credit Losses (Topic 326)” (“ASU 2016-13”), which introduces an approach of estimating credit losses on certain types of financial instruments based on expected losses. ASU 2016-13 also expands the disclosure requirements regarding an Entitiey’s assumptions, models, and methods for estimating the allowance for loan losses. Further, public entities will be required 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 be effective In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” (“ASU 2016-13”), which introduces an approach of estimating credit losses on certain types of financial instruments based on expected losses. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan losses. Further, public entities will be required 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 be effective for us on January 1, 2020. Early adoption is permitted. We are currently evaluating the impact that ASU 2016-13 may have on our consolidated financial statements.

3. Revenue From Contracts with Customers

We operate our business in the following 2two segments: (i) Sales of VOIs and financing; and (ii) Resort operations and club management. The table below sets forth our disaggregated revenue by segment from contracts with customers (in thousands).


	For the Three Months Ended				For the Three Months Ended				For the Six Months Ended
	March 31,				June 30,				June 30,
	2020		2019		2020		2019		2020		2019

Sales of VOIs ⁽¹⁾	$	45,128	$	51,731	$	9,054	$	68,302	$	54,182	$	120,033
Fee-based sales commission revenue ⁽¹⁾		41,365		45,212		1,135		55,343		42,500		100,555
Resort and club management revenue ⁽²⁾		25,029		25,436		24,224		25,603		49,253		51,039
Cost reimbursements ⁽²⁾		19,120		17,044		11,850		14,007		30,970		31,051
Title fees and other ⁽¹⁾		2,723		2,728		1,349		3,040		4,072		5,768
Other revenue ⁽²⁾		1,562		1,404		840		2,060		2,402		3,464
Revenue from customers		134,927		143,555		48,452		168,355		183,379		311,910
Interest income ⁽³⁾		21,866		22,008		20,108		21,875		41,974		43,883
Other income, net		133		89		273		1,993		406		2,082
Total revenue	$	156,926	$	165,652	$	68,833	$	192,223	$	225,759	$	357,875

(1) Included in our ~~sales~~Sales of VOIs and financing segment described in Note 12.

(2) Included in our ~~resort~~Resort operations and club management segment described in Note 12.

(3) Interest income of ~~$20.1~~$19.1 million and ~~$20.0~~$19.9 million for three months ended June 30, 2020 and 2019, respectively, and $39.2 million and $39.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, respectively, is included in our ~~sales~~Sales of VOIs and financing segment described in Note 12.

Please refer to Note 12: Segment Reporting below for ~~more details~~additional information related to our segments.

4. Notes Receivable

The table below provides information relating to our notes receivable and our allowance for loan losses (dollars in thousands):



	As of				As of
	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
Notes receivable secured by VOIs:
VOI notes receivable - non-securitized	$	190,051	$	203,872	$	167,638	$	203,872
VOI notes receivable - securitized		395,108		385,326		384,223		385,326
Gross VOI notes receivable		585,159		589,198		551,861		589,198
Allowance for loan losses - non-securitized		(48,493)		(47,894)		(51,764)		(47,894)
Allowance for loan losses - securitized		(106,673)		(92,736)		(95,865)		(92,736)
Allowance for loan losses		(155,166)		(140,630)		(147,629)		(140,630)
VOI notes receivable, net	$	429,993	$	448,568	$	404,232	$	448,568
Allowance as a % of Gross VOI notes receivable		27%		24%
Allowance as a % of VOI notes receivable						27%		24%

The weighted-average interest rate charged on our notes receivable secured by VOIs was ~~14.8% and~~ 14.9% ~~at March 31,~~as of June 30, 2020 and December 31, ~~2019, respectively.~~2019. All of our VOI loans bear interest at fixed rates. Our VOI notes receivable are generally secured by property located in Florida, Missouri, Nevada, South Carolina, Tennessee, and Wisconsin.

Allowance for Loan Losses

The activity in our allowance for loan losses was as follows (in thousands):



	For the Three Months Ended				For the Six Months Ended
	March 31,				June 30,
		2020		2019		2020		2019
Balance, beginning of period	$	140,630	$	134,133	$	140,630	$	134,133
Provision for loan losses		30,353		11,153		32,199		23,072
Less: Write-offs of uncollectible receivables		(15,817)		(8,460)		(25,200)		(23,719)
Balance, end of period	$	155,166	$	136,826	$	147,629	$	133,486

We monitor the credit quality of our receivables on an ongoing basis. We hold large amounts of homogeneous VOI notes receivable and assess uncollectibility based on pools of receivables as we do not believe that there are significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating loan losses, we do not use a single primary indicator of credit quality but instead evaluate our 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.

While it is still too early to realize the full impact of COVID- 19 ~~pandemic~~ on ~~our borrowers had not yet been reflected in~~ our default or delinquency rates as of ~~March 31,~~June 30, 2020, we believe that the COVID-19 pandemic will have a significant impact on our VOI notes receivable. Accordingly, ~~as of March 31,~~during the six months ended June 30, 2020, we recorded an additional allowance for loan losses of $12.0 million, which includes our estimate of customer defaults as a result of the COVID – 19 pandemic based on our historical experience, forbearance requests received from our customers, and other factors, including but not limited to, the seasoning of the notes receivable and FICO scores of the customers.

‎

Additional information about our VOI notes receivable by year of origination is as follows as of ~~March 31,~~June 30, 2020 (in thousands):


	Year of Origination														Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Total		2020		2019		2018		2017		2016		2015 and Prior		Total

701+	$	29,174	$	107,298	$	70,649	$	46,077	$	34,472	$	47,243	$	334,913	$	29,419	$	99,830	$	66,310	$	43,027	$	32,118	$	42,784	$	313,488
601-700		13,575		53,165		42,097		30,816		28,094		45,316		213,063		13,504		50,438		39,403		28,705		26,256		41,312		199,618
<601⁽¹⁾		1,124		5,300		3,747		2,482		2,934		5,258		20,845		1,266		5,061		3,473		2,358		2,692		4,836		19,686
Other ⁽²⁾		—		1,161		3,603		3,289		2,831		5,454		16,338		—		1,728		4,045		3,866		3,156		6,274		19,069
Total by FICO score	$	43,873	$	166,924	$	120,096	$	82,664	$	68,331	$	103,271	$	585,159	$	44,189	$	157,057	$	113,231	$	77,956	$	64,222	$	95,206	$	551,861

Defaults	$	—	$	2,703		4,174	$	2,773	$	2,269	$	3,898	$	15,817	$	35	$	5,602		7,198	$	4,990	$	3,941	$	3,434	$	25,200
Allowance for loan loss	$	9,674	$	48,428	$	34,740	$	21,760	$	19,057	$	21,507	$	155,166	$	11,137	$	45,863	$	31,939	$	19,924	$	18,662	$	20,104	$	147,629

Delinquency status:
Current	$	43,810	$	162,227	$	113,764	$	77,586	$	64,054	$	95,334	$	556,775	$	43,501	$	151,466	$	106,788	$	72,848	$	60,126	$	87,203	$	521,932
31-60 days		63		1,196		1,190		1,073		708		1,192		5,422		311		1,430		1,117		894		652		723		5,127
61-90 days		—		1,333		1,319		852		541		905		4,950		197		1,437		1,213		775		683		826		5,131
Over 91 days ⁽²⁾		—		2,168		3,823		3,153		3,028		5,840		18,012		180		2,724		4,113		3,439		2,761		6,454		19,671
Total	$	43,873	$	166,924	$	120,096	$	82,664	$	68,331	$	103,271	$	585,159	$	44,189	$	157,057	$	113,231	$	77,956	$	64,222	$	95,206	$	551,861

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

(2)Includes ~~$10.3~~$12.1 million related to VOI notes receivable that, as of ~~March 31,~~June 30, 2020, had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of our receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.

The percentage of gross notes receivable outstanding by FICO score of the borrower at the time of origination, were as follows:


	As of

As of
March 31,
December 31,
2020
2019
FICO Score
701+
59
%
59
%
601-700
37
37
<601
3
3
Other⁽¹⁾
1
1
Total
100
%
100
%

	June 30,		December 31,
	2020		2019
FICO Score
701+	59	%	59	%
601-700	37		37
<601⁽¹⁾	4		4
Total	100	%	100	%

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

Our notes receivable are carried at amortized cost less an allowance for loan losses. Interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due. As of ~~March 31,~~June 30, 2020 and December 31, 2019, ~~$18.0~~$19.7 million and $19.3 million, respectively, of our VOI notes receivable were more than 90 days past due, and accordingly, consistent with our policy, were not accruing interest income. After approximately 127 days, our VOI notes receivable are generally written off against the allowance for loan loss. Accrued interest was ~~$5.2~~$4.7 million and $5.3 million as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively, and is included within other assets in our unaudited consolidated balance sheets herein.

The following table shows the delinquency status of our VOI notes receivable as of ~~March 31,~~June 30, 2020 and December 31, 2019 (in thousands):



	As of				As of
	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019
Current	$	556,775	$	557,849	$	521,932	$	557,849
31-60 days		5,422		6,794		5,127		6,794
61-90 days		4,950		5,288		5,131		5,288
Over 91 days ⁽¹⁾		18,012		19,267		19,671		19,267
Total	$	585,159	$	589,198	$	551,861	$	589,198

(1)Includes ~~$10.3~~$12.1 million and $10.6 million of VOI notes receivable as of ~~March 31,~~June 30, 2020 and December 31, 2019, 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 our receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.

5. Variable Interest Entities

We sell VOI notes receivable through special purpose finance entities. These transactions are generally structured as non-recourse to us and are designed to provide liquidity for us 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. We service 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.

In these securitizations, we generally retain a portion of the securities and continue 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 us; however, to the extent the portfolio of receivables fails to satisfy specified performance criteria (as 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 ~~March 31,~~June 30, 2020, we were in compliance with all material terms under our securitization transactions, and no trigger events had occurred but there is no assurance that compliance will be maintained in the future.

In accordance with applicable accounting guidance for the consolidation of VIEs, we analyze our variable interests, which may consist of loans, servicing rights, guarantees, and equity investments, to determine if an entity in which we have a variable interest is a VIE. The analysis includes a review of both quantitative and qualitative factors. We base our quantitative analysis on the forecasted cash flows of the entity and ~~we base~~ our qualitative analysis on the structure of the entity, including our decision-making ability and authority with respect to the entity, and relevant financial agreements. We also use a qualitative analysis to determine if we must consolidate a VIE as the primary beneficiary. In accordance with applicable accounting guidance, we have determined these securitization entities to be VIEs of which we are the primary beneficiary and, therefore, we consolidate the entities into our financial statements.

Under the terms of certain of our VOI note sales, we have the right to repurchase or substitute a limited amount of defaulted notes for new notes at the outstanding principal balance plus accrued interest. Voluntary repurchases and substitutions by us of defaulted notes for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019 were ~~$4.3~~$7.6 million and ~~$2.1~~$4.5 million, respectively. Our maximum exposure to loss relating to our 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.

The assets and liabilities of our consolidated VIEs are as follows (in thousands):



	As of				As of
	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019

Restricted cash	$	17,456	$	22,534	$	16,372	$	22,534
Securitized notes receivable, net		288,435		292,590		288,358		292,590
Receivable backed notes payable - non-recourse		339,224		334,246		325,206		334,246

The restricted cash and the securitized notes receivable balances disclosed in the table above are restricted to satisfy obligations of the VIEs.

6. Inventory

Our VOI inventory consists of the following (in thousands):



	As of				As of
	March 31,		December 31,		June 30,		December 31,
	2020		2019		2020		2019

Completed VOI units	$	273,868	$	269,847	$	274,622	$	269,847
Construction-in-progress		—		3,946		—		3,946
Real estate held for future development		73,425		73,144		75,648		73,144
Total	$	347,293	$	346,937	$	350,270	$	346,937

‎

7. Debt

Lines-of-Credit and Notes Payable

We have outstanding borrowings with various financial institutions and other lenders. Financial data related to our lines of credit and notes payable (other than receivable-backed notes payable, which are discussed below) as of ~~March 31,~~June 30, 2020 and December 31, 2019, ~~were~~was as follows (dollars in thousands):



	As of										As of
	March 31, 2020					December 31, 2019					June 30, 2020					December 31, 2019
	Balance		Interest ‎Rate	Carrying ‎Amount of ‎Pledged ‎Assets		Balance		Interest ‎Rate	Carrying ‎Amount of ‎Pledged ‎Assets		Balance		Interest ‎Rate	Carrying ‎Amount of ‎Pledged ‎Assets		Balance		Interest ‎Rate	Carrying ‎Amount of ‎Pledged ‎Assets

NBA Éilan Loan		17,659	4.77%		28,625		18,820	4.95%		31,259		16,996	4.75%		28,649		18,820	4.95%		31,259
Fifth Third Syndicated LOC		110,000	3.32%		119,848		30,000	3.85%		49,062		70,000	2.49%		86,753		30,000	3.85%		49,062
Fifth Third Syndicated Term		97,500	3.61%		106,229		98,750	3.71.%		161,497		96,250	3.71%		119,285		98,750	3.71%		161,497
Unamortized debt issuance costs		(1,374)	—		—		(1,410)	—		—		(1,338)	—		—		(1,410)	—		—
Total	$	223,785		$	254,702	$	146,160		$	241,818	$	181,908		$	234,687	$	146,160		$	241,818

Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan. During March 2020, in an effort to ensure adequate liquidity for a sustained period due to the effect of the COVID-19 pandemic, we drew down $60 million under our ~~lines-of-credit~~line-of-credit. In June 2020, we repaid $40 million under our syndicated line-of-credit and amended the agreements to ~~increase our cash position.~~modify the definition of certain customary covenants. As of ~~March 31,~~June 30, 2020, outstanding borrowings under the facility totaled ~~$207.5~~$166.3 million, including ~~$97.5~~$96.3 million under the Fifth Third Syndicated Term Loan with an interest rate of ~~3.61%~~3.71%, and ~~$110.0~~$70.0 million under the Fifth Third Syndicated Line of Credit with an interest rate of ~~3.32%~~2.49%.

~~There~~Except as described above, there were 0no new debt issuances or significant changes related to the above listed lines-of-credit or notes payable during the ~~three~~six ended months ~~March 31,~~June 30, 2020. See Note 10 to our Consolidated Financial Statements included in our 2019 Annual Report on Form 10-K for additional information regarding ~~these~~the lines-of-credit and notes payable.

Receivable-Backed Notes Payable

Financial data related to our receivable-backed notes payable facilities was as follows (dollars in thousands):



	As of										As of
	March 31, 2020					December 31, 2019					June 30, 2020					December 31, 2019
	Debt ‎Balance		Interest ‎Rate	Principal ‎Balance of ‎Pledged/ ‎Secured ‎Receivables		Debt ‎Balance		Interest ‎Rate	Principal ‎Balance of ‎Pledged/ ‎Secured ‎Receivables		Debt ‎Balance		Interest ‎Rate	Principal ‎Balance of ‎Pledged/ ‎Secured ‎Receivables		Debt ‎Balance		Interest ‎Rate	Principal ‎Balance of ‎Pledged/ ‎Secured ‎Receivables

Receivable-backed notes ‎ payable - recourse:
Liberty Bank Facility(1)	$	23,184	4.75%	$	28,663	$	25,860	4.75%	$	31,681	$	21,663	4.00%	$	26,630	$	25,860	4.75%	$	31,681
NBA Receivables Facility		29,033	3.74%		35,584		32,405	4.55%		39,787		26,484	3.50%		32,870		32,405	4.55%		39,787
Pacific Western Facility(1)		28,256	3.87%		34,965		30,304	4.68%		37,809		26,452	3.06%		32,747		30,304	4.68%		37,809
Total		80,473			99,212		88,569			109,277		74,599			92,247		88,569			109,277

Receivable-backed notes ‎ payable - non-recourse:
KeyBank/DZ Purchase Facility	$	60,899	3.29%	$	75,346	$	31,708	3.99%	$	39,448	$	65,159	2.50%	$	81,522	$	31,708	3.99%	$	39,448
Quorum Purchase Facility		39,092	4.75-5.50%		45,280		44,525	4.75-5.50%		49,981		36,759	4.75-5.50%		42,836		44,525	4.75-5.50%		49,981
2012 Term Securitization		7,352	2.94%		8,237		8,638	2.94%		9,878		6,093	2.94%		7,167		8,638	2.94%		9,878
2013 Term Securitization		16,523	3.20%		17,896		18,219	3.20%		19,995		14,811	3.20%		16,581		18,219	3.20%		19,995
2015 Term Securitization		28,750	3.02%		30,809		31,188	3.02%		33,765		26,426	3.02%		28,707		31,188	3.02%		33,765
2016 Term Securitization		44,217	3.35%		49,286		48,529	3.35%		54,067		40,897	3.35%		46,375		48,529	3.35%		54,067
2017 Term Securitization		60,846	3.12%		69,703		65,333	3.12%		74,219		57,641	3.12%		66,280		65,333	3.12%		74,219
2018 Term Securitization		86,297	4.02%		98,550		91,231	4.02%		103,974		81,858	4.02%		94,755		91,231	4.02%		103,974
Unamortized debt issuance costs		(4,752)	---		—		(5,125)	---		—		(4,438)	---		—		(5,125)	---		—
Total		339,224			395,107		334,246			385,327		325,206			384,223		334,246			385,327
Total receivable-backed debt	$	419,697		$	494,319	$	422,815		$	494,604	$	399,805		$	476,470	$	422,815		$	494,604

16(1)

Recourse on these facilities are each limited to $10 million, subject to certain exceptions.

Liberty Bank Facility. Since 2008, we have 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 athe revolving credit period. ~~During March 2018,~~On June 25, 2020, we amended the Liberty Bank Facility ~~was amended and restated~~ to extend the revolving credit period from ~~March 2018~~June 2020 to ~~March 2020 (which was subsequently further extended as described below), extend~~June 2021, and the maturity ~~date~~ from ~~November 2020 until~~ March 2023 ~~and amend~~to June 2024. In addition, the ~~interest~~amendment decreased the advance rate ~~on borrowings as described below. Subject~~with respect to ~~its terms and conditions, the Liberty Bank Facility provides for advances of (i)~~Qualified Timeshare Loans from 85% to 80% of the unpaid principal balance of the Qualified Timeshare Loans ~~assigned to agent, and (ii)~~by September 2020. The advance rate is 60% of the unpaid principal balance of Non-Conforming Qualified Timeshare ~~Loans assigned to agent, during~~Loans. The amendment also reduced the ~~revolving credit period of the facility. Maximum~~maximum permitted outstanding borrowings ~~under the Liberty Bank Facility are~~from $50.0 million to $40.0 million, subject to the terms of the ~~facility. Through March 31, 2018, borrowings under~~facility and commencing on July 1, 2020 decreased the ~~Liberty Bank Facility accrued~~ interest atrate to the Wall Street Journal (“WSJ”) Prime Rate ~~plus 0.50% per annum, subject~~minus 0.10% with a floor of 3.40% from the Prime Rate with a floor of 4.00%. In addition, recourse to ~~a 4.00% floor. Pursuant to the March 2018 amendment to the Liberty Bank Facility, effective April 1, 2018, all borrowings outstanding~~Bluegreen under the restructured facility ~~accrue interest at~~was reduced to $10 million, with certain exceptions set forth in the ~~WSJ Prime Rate subject to a 4.00% floor.~~facility. Subject to the terms of the facility, principal and interest due under the Liberty Bank Facility are paid as cash is collected on the pledged receivables, with the remaining balance being due byat maturity. ~~On February 11, 2020, the Liberty Bank Facility was amended solely to extend the revolving credit period from March 12, 2020 to June 10, 2020.~~

advance period to December 2020 from June 2020. The interest rate on each advance is set at the time of funding based on rates mutually agreed upon by all parties. The maturity of the Quorum Purchase Facility is December 2032. The Quorum Purchase Facility provides for an 85% advance rate on eligible receivables sold under the facility, however Quorum can modify this advance rate on future purchases subject to the terms and conditions of the Quorum Purchase Facility.

Except as described above, there were 0 new debt issuances or significant changes related to the above listed facilities during the ~~three~~six months ended ~~March 31,~~June 30, 2020. See Note 10 to our Consolidated Financial Statements included in our 2019 Annual Report on Form 10-K for additional information regarding the receivable-backed notes payable facilities.

Junior Subordinated Debentures

Financial data relating to our junior subordinated debentures was as follows (dollars in thousands):



Trust	Carrying Value ‎ as of March 31, 2020 ⁽¹⁾		Initial ‎Equity In ‎ Trust ⁽²⁾		Issue ‎Date	Interest Rate ‎	Interest ‎Rate at ‎March 31, ‎2020	Maturity ‎Date	Carrying Value ‎ as of December 31, 2019 ⁽¹⁾		Carrying Value ‎ as of June 30, 2020 ⁽¹⁾		Initial ‎Equity In ‎ Trust ⁽²⁾		Issue ‎Date	Interest ‎Rate	Interest ‎Rate at ‎June 30, ‎2020	Maturity ‎Date	Carrying Value ‎ as of December 31, 2019 ⁽¹⁾

BST I	$	15,102	$	355	3/15/2005	3-month LIBOR ‎+ 4.90%	6.27%	3/30/2035	$	15,059	$	15,146	$	355	3/15/2005	3-month LIBOR ‎+ 4.90%	6.27%	3/30/2035	$	15,059
BST II		16,909		401	5/4/2005	3-month LIBOR ‎ + 4.85%	6.62%	7/30/2035		16,862		16,957		401	5/4/2005	3-month LIBOR ‎ + 4.85%	5.61%	7/30/2035		16,862
BST III		6,841		164	5/10/2005	3-month LIBOR ‎ + 4.85%	6.62%	7/30/2035		6,823		6,860		164	5/10/2005	3-month LIBOR ‎ + 4.85%	5.61%	7/30/2035		6,823
BST IV		10,068		237	4/24/2006	3-month LIBOR ‎+ 4.85%	6.22%	6/30/2036		10,040		10,097		237	4/24/2006	3-month LIBOR ‎+ 4.85%	6.22%	6/30/2036		10,040
BST V		10,068		237	7/21/2006	3-month LIBOR ‎+ 4.85%	6.22%	9/30/2036		10,040		10,097		237	7/21/2006	3-month LIBOR ‎+ 4.85%	6.22%	9/30/2036		10,040
BST VI		13,297		311	2/26/2007	3-month LIBOR ‎+ 4.80%	6.57%	4/30/2037		13,257		13,337		311	2/26/2007	3-month LIBOR ‎+ 4.80%	5.56%	4/30/2037		13,257
	$	72,285	$	1,705					$	72,081	$	72,494	$	1,705					$	72,081

(1)~~Amounts include~~Outstanding balance is reduced by purchase accounting adjustments ~~which reduced the total carrying value by $38.5~~totaling $38.3 million and $38.7 million as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

(2)Initial Equity in Trust is recorded as part of other assets in the unaudited Consolidated Balance Sheets.

As of ~~March 31,~~June 30, 2020, we were in compliance with all financial debt covenants under our debt instruments. As of ~~March 31,~~June 30, 2020, we had availability of approximately ~~$124.5~~$158.5 million under our receivable-backed purchase and credit facilities, ~~inventory lines of credit~~ and corporate credit line, subject to eligible collateral and the terms of the facilities, as applicable.

8. Fair Value of Financial Instruments

ASC 820 Fair Value Measurements and Disclosures (Topic 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:


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

The carrying amounts of financial instruments included in the consolidated financial statements and their estimated fair values are as follows (in thousands):



	As of March 31, 2020				As of December 31, 2019				As of June 30, 2020				As of December 31, 2019
	Carrying ‎ Amount		Estimated ‎Fair Value		Carrying ‎ Amount		Estimated ‎Fair Value		Carrying ‎ Amount		Estimated ‎Fair Value		Carrying ‎ Amount		Estimated ‎Fair Value

Cash and cash equivalents	$	241,525	$	241,525	$	190,009	$	190,009	$	209,427	$	209,427	$	190,009	$	190,009
Restricted cash	$	34,090	$	34,090	$	49,637	$	49,637		24,829		24,829		49,637		49,637
Notes receivable, net	$	429,993	$	535,513	$	448,568	$	587,000		404,232		520,331		448,568		587,000
Lines-of-credit, notes payable, and receivable-
backed notes payable	$	643,482	$	601,400	$	568,975	$	589,300		581,713		569,600		568,975		589,300
Junior subordinated debentures	$	72,285	$	36,500	$	72,081	$	98,500		72,494		58,500		72,081		98,500

Cash and cash equivalents. The amounts reported in the unaudited consolidated balance sheets for cash and cash equivalents approximate fair value.

Restricted cash. The amounts reported in the unaudited consolidated balance sheets for restricted cash approximate fair value.

Notes receivable, net. The fair value of our notes receivable is estimated using Level 3 inputs and is based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate.

Lines-of-credit, notes payable, and receivable-backed notes payable. The amounts reported in the unaudited consolidated balance sheets for our lines of credit, notes payable, and receivable-backed notes payable approximate fair value for indebtedness that provides for variable interest rates. The fair value of our fixed-rate, receivable-backed notes payable was determined 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.

Junior subordinated debentures. The fair value of our junior subordinated debentures is estimated using Level 3 inputs based on the contractual cash flows discounted at a market rate or based on market price quotes from the over-the-counter bond market.

9. Commitments and Contingencies

Bluegreen Vacations Unlimited (“BVU”), our 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 us with the right to market and sell vacation packages at kiosks in each of certain Bass ~~Pro’s~~Pro and Cabela’s retail locations and through other means. Pursuant to a settlement agreement we entered into with Bass Pro and its affiliates during June 2019, we paid Bass Pro $20.0 million during June 2019 and agreed to, among other things, make 5 annual payments to Bass Pro of $4.0 million in January of each year, commencing in 2020. In June 2019, we accrued for the net present value of the settlement, plus attorney’s fees and costs, totaling approximately $39.1 million. The first $4.0 million annual payment was made during January 2020. As of ~~March 31,~~June 30, 2020, ~~$14.7~~$14.3 million was accrued for the remaining payments required by the settlement agreement, which are included in accrued liabilities and other in the consolidated balance sheet as of ~~March 31,~~June 30, 2020.

During ~~most~~both of the ~~quarter ending March 31, 2020, Bluegreen was actively selling vacation packages in 68 of Bass Pro’s stores and 21 Cabela’s retail stores. During the three~~six months ended ~~March 31,~~June 30, 2020 and 2019, VOI sales to prospects and leads generated by the agreement with Bass Pro accounted for approximately 10% ~~and 12%, respectively,~~ of our VOI sales volume. In March 2020 as a result of the COVID-19 pandemic, we temporarily closed our retail marketing operations at Bass Pro Shops and Cabela’s stores. ~~We are currently developing a plan to reopen these operations.~~Beginning in mid-May 2020 we resumed our retail marketing operations at certain Bass Pro Shops and Cabela’s stores. By June 30, 2020, marketing operations at 49 Bass Pro Shops and 15 Cabela’s stores (out of the 89 total Bass Pro and Cabela’s stores that were open in March 2020) had reopened.

In December 2019, our then-serving President and Chief Executive Officer resigned. In connection with his resignation, we agreed to make payments to him or on his behalf totaling $3.5 million over a period of 18 months, ~~$2.9~~$2.4 million of which

remained payable as of ~~March 31,~~June 30, 2020. Additionally, during 2019, we entered into certain agreements with other executives related to their separation from Bluegreen or change in position. Pursuant to the terms of these agreements, we agreed to make payments totaling $2.5 million through November 2020. As of ~~March 31,~~June 30, 2020, ~~$1.0~~$0.4 million remained payable under these agreements.

In lieu of paying maintenance fees for unsold VOI inventory, we may enter into subsidy agreements with certain HOAs. WeDuring the six months ended June 30, 2020 and 2019, we paid ~~$1.9~~$4.6 million and $4.8 million in subsidy payments in connection with these ~~arrangements during both of the three months ended March 31, 2020 and 2019.~~arrangements. As of ~~March 31,~~June 30, 2020, we had ~~$3.3~~$7.0 million accrued for such subsidies, which is included in accrued liabilities and other in the unaudited Consolidated Balance Sheet as of such date. As of December 31, 2019, we had 0 accrued liabilities for such subsidies.

In the ordinary course of business, we become subject to claims or proceedings from time to time relating to the purchase, sale, marketing, or financing of VOIs or our other business activities. We are also subject to certain matters relating to the Bluegreen Communities’ business, substantially all of the assets of which were sold by us on May 4, 2012. Additionally, from time to time in the ordinary course of business, we become involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties, and we also receive individual consumer complaints, as well as complaints received through regulatory and consumer agencies, including Offices of State Attorneys General. We take these matters seriously and attempt to resolve any such issues as they arise. We may also become subject to litigation related to the COVID-19 pandemic, including with respect to any actions we take or may be required to take or may be required to take as a result thereof.

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 our 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 our results of operations or financial condition.

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 range of loss. Frequently in these matters, the claims are broad, and the plaintiffs have not quantified or factually supported their claim.

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 situated, filed a purported class action lawsuit against us 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 alleged the making of false representations in connection with our sales of VOIs. 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 summary judgment in our favor ~~of Bluegreen~~ and dismissed all claims. We have moved for reimbursement of our attorneys’ fees. Plaintiffs have appealed the summary judgment order.

On February 28, 2018, Oscar Hernandez and Estella Michael filed 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 seek 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 an immaterial amount. The parties have executed the settlement documents. It is expected that the court will approve the settlement and the dismissal of the ~~lawsuit after the settlement documents are executed.~~lawsuit.

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 we failed to disclose the identity of the seller of real property at the beginning of our initial contact with the purchaser; that we misrepresented who the seller of the real property

was; that we misrepresented the buyer’s right to cancel; that we included an illegal attorney’s fee provision in the sales document(s); that we offered an illegal “today only” incentive to purchase; and that we utilize 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 from us one or more VOIs within six years prior to the filing of this lawsuit. Plaintiffs seek statutory damages, attorneys’ fees and injunctive relief. We moved to dismiss the case, and on November 27, 2019, the Court issued a ruling granting the motion in part. We have answered the remaining claims. We believe the lawsuit is without merit and intend to vigorously defend the action.

On January 7, 2019, Shehan Wijesinha filed a purported class action lawsuit alleging violations of the Telephone Consumer Protection Act (the “TCPA”). It is alleged that BVU called plaintiff’s cell phone for telemarketing purposes using an automated dialing system, and that plaintiff did not give BVU his express written consent to do so. Plaintiff seeks certification of a class comprised of other persons in the United States who received similar calls from or on behalf of BVU without the person’s consent. Plaintiff seeks monetary damages, attorneys’ fees and injunctive relief. We believe the 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 (“FCC”) 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, 2020, the Eleventh Circuit issued a ruling consistent with BVU’s position, ~~but~~and on June 26, 2020, the FCC also issued a favorable ruling. The case currently remains stayed.

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. We agreed to indemnify Bass Pro with respect to the claims brought against us in this proceeding. We filed a motion to dismiss. On April 6, 2020, the court granted our motion to dismiss, and on April 29, 2020, the court entered final judgment in our favor.

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.~~law, and have also asserted that we and our outside counsel engaged in abuse of process by filing a lawsuit against plaintiffs’ counsel (The Montgomery Law Firm). Plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. We have moved to dismiss the action. We believe the lawsuit is without merit and intend to vigorously defend the action.

On July 7, 2020, Robert Barban and approximately 172 other plaintiffs filed an action against Bluegreen Resorts Management, Inc. (“BRM”) and Vacation Trust, Inc. (“VTI”) seeking an accounting, specifically: (i) a copy of the independent accounting firm’s report regarding a variety of VTI matters; and (ii) a copy of the management agreement between VTI and BRM. Plaintiffs further allege that the allocation system does not allow them to freely and easily use, occupy, and enjoy the accommodations and facilities. Finally, they allege that BRM has unreasonably escalated operating costs and that VTI failed to protect the plaintiffs from these costs. We intend to vigorously defend the action.

On July 14, 2020, Kenneth Johansen, individually and on behalf of all others similarly situated, filed a purported class action against BVU for alleged violations of the Telephone Consumer Protection Act (“TCPA”). Specifically, the named plaintiff alleges that he received at least nine (9) telemarketing calls from BVU while he was on the National Do Not Call Registry. He seeks to certify a class of similarly situated plaintiffs. We intend to vigorously defend the action.

Commencing in 2015, it came to our attention that our collection efforts with respect to our 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, we are unable to contact the owners unless allowed by law. We believe these exit firms have encouraged such owners to become delinquent and ultimately default on their obligations and that such actions and our inability to contact the owners are a primary contributor to the increase in our annual default rates. Our average annual default rates have increased from 6.9% in 2015 to ~~9.3%~~9.5% in 2020. We also estimate that approximately ~~10.0%~~10.1% of the total delinquencies on our VOI notes receivable as of ~~March 31,~~June 30, 2020 related to VOI notes receivable subject to this issue. We have in a number of cases pursued, and we may in the future pursue, legal action against the VOI owners, and as described below, against the exit firms.

On December 21, 2018, we filed a lawsuit against timeshare exit firm Totten Franqui and certain of its affiliates (“TPEs”). In the complaint, we alleged that the TPEs, through various forms of deceptive advertising, as well as inappropriate direct contact with VOI owners, made false statements about us and provided misleading information to the VOI owners. The TPEs have encouraged nonpayment by consumers and exacted fees for doing so. We believe the consumers are paying fees to the TPEs in exchange for illusory services. We have 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. We have reached favorable settlements with the TPE principals and are negotiating a potential settlement with the bankruptcy ~~trustee, and the paperwork is being finalized.~~trustee. The ~~contemplated~~ settlement includes findings of fact against the defendants regarding their business practices and a permanent injunction prohibiting the principals of the TPE from working again in the ~~VOI~~timeshare exit space.

On November 13, 2019, we filed a lawsuit against timeshare exit firm The Montgomery Law Firm and certain of its affiliates (also included in “TPEs”). In the complaint, we alleged as discussed above, that the TPEs, through various forms of deceptive advertising, as well as inappropriate direct contact with VOI owners, made false statements about us, provided misleading information to the VOI owners and encouraged nonpayment by consumers. We believe the consumers are paying fees to the TPEs in exchange for illusory services. We have 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.

10. Income Taxes

We file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With certain exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016 for federal returns and 2015 for state returns.

Our effective income tax rate was approximately ~~18%~~30% and ~~26%~~25% during the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, respectively. Effective income tax rates for interim periods are based upon our current estimated annual rate. Our effective income tax rate varies based upon the estimate of taxable earnings as well as on the mix of taxable earnings in the various states in which we operate. As such, our effective income tax rate for the ~~three~~six months ended ~~March 31,~~June 30, 2020 reflects our current estimate of the COVID-19 pandemic on our 2020 annual taxable earnings, state taxes, non-deductible items and changes in valuation allowances on deferred tax assets.

The Coronavirus Aid, Relief, and Economic Securities Act (“CARES Act”) was signed into law on March 27, 2020 in response to the COVID-19 ~~pandemic providing for economic support and stimulus.~~pandemic. As of ~~March 31,~~June 30, 2020, we evaluated the income tax provisions of the CARES Act and determined ~~there is~~that they have no significant effect on either the ~~March 31,~~June 30, 2020 tax rate or the computation of effective tax rate for the ~~year. Subsequent to March~~year ended December 31, ~~2020,~~2020. However, we ~~will continue to review the relevant provisions of the CARES Act and intend to take~~have taken advantage of ~~certain provisions, including, but not limited to,~~ the deferral of the ~~employer~~employee portion of the tax withholding amounts and the employee retention tax ~~credits.~~credits provided for in the CARES Act. As of June 30, 2020, we recorded a tax withholding deferral of $2.0 million and employee retention tax credits of $6.9 million, which is included in selling, general and administrative expenses in our unaudited consolidated statements of operations for the three and six months ended June 30, 2020.

Certain of our state filings are under routine examination. While there is no assurance as to the results of these audits, we do not currently anticipate any material adjustments in connection with these examinations.

We are party to an Agreement to Allocate Consolidated Income Tax Liability and Benefits with BBX Capital Corporation (“BBX Capital”), which owns approximately 93% of our outstanding common stock, and its other subsidiaries pursuant to which, among other customary terms and conditions, the parties agreed to file consolidated federal tax returns. Under the agreement, the parties calculate their respective income tax liabilities and attributes as if each of them was a separate filer. If any tax attributes are used by another party to the agreement to offset its tax liability, the party providing the benefit will receive an amount for the tax benefits realized. Pursuant to this agreement, we paid BBX Capital or its affiliated entities ~~$2.3~~$10.7 million ~~in April 2019.~~and $13.0 million during the three and six months ended June 30, 2019, respectively. We did 0t make or receive any payments under the agreement during the three or six months ended ~~March 31, 2020 and do not anticipate any such payments during~~June 30, 2020.

As of ~~March 31, 2019,~~June 30, 2020, we did 0t have any significant amounts accrued for interest and penalties or recorded for uncertain tax positions.

11. Related Party Transactions

BBX Capital may be deemed to be controlled by Alan B. Levan, Chairman and Chief Executive Officer of BBX Capital, and John E. Abdo, Vice Chairman of BBX Capital. Together, Messrs. Levan and Abdo may be deemed to beneficially own shares of BBX Capital’s Class A Common Stock and Class B Common Stock representing

approximately 78% of BBX Capital’s total voting power. ~~Mr. Levan serves as our Chairman and Chief Executive Officer and Mr. Abdo serves as our Vice Chairman.~~ Mr. Levan was appointed our President and Chief Executive Officer effective January 1, 2020. During 2019, we accrued $2.0 million of compensation for Mr. Levan for the performance of certain services for us in a non-executive capacity, all of which was paid during March 2020. In addition, Raymond S. Lopez serves as our Chief Financial Officer and Chief Operating Officer and as BBX Capital’s Chief Financial Officer. Mr. Levan and Mr. Lopez receive compensation from us and BBX Capital for their respective services to us and to BBX ~~Capital, respectively.~~Capital.

In April 2015, pursuant to a Loan Agreement and Promissory Note, our wholly owned subsidiary provided an $80.0 million loan to BBX Capital. Amounts outstanding bore interest at a rate of 6% per annum until March 2020 when the loan was amended to reduce the interest rate to 4% per annum effective April 2020. Payments of interest are required on a quarterly basis, with all outstanding amounts being due and payable on April 17, ~~2021, effective with the latest amendment.~~2021. 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 us or our subsidiaries to remain in compliance with covenants under outstanding indebtedness. During ~~both of~~ the three months ended ~~March 31,~~June 30, 2020 and 2019, we recognized $0.9 million and $1.2 million of interest income on the loan to BBX ~~Capital.~~Capital, respectively. During the six months ended June 30, 2020 and 2019, we recognized $2.1 million and $2.4 million of interest income on the loan to BBX Capital, respectively. During July 2020, we declared a special cash dividend of $1.19 per share of our common stock, which is payable August 21, 2020 to shareholders of record as of the close of business on August 6, 2020. In connection with the declaration of the dividend we obtained an undertaking by BBX Capital that it will utilize the proceeds of this special cash dividend to repay the outstanding $80.0 million BBX Capital owes to Bluegreen.

We paid or reimbursed BBX Capital or its affiliated entities ~~$0.4~~$0.3 million and $0.6 million during ~~both of~~ the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $0.5 and $0.9 million during the three and six months ended June 30, 2019, respectively, for management advisory, risk management, administrative and other services. We had accrued ~~$0.3~~$0.4 million and $0.2 million for the services described above as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively. BBX Capital or its affiliates paid or reimbursed us $0.1 million during ~~both~~the six months ended June 30, 2020 and $0.1 million during the three and six months ended June 30, 2019 for certain shared services. We did 0t receive any payments or reimbursements for shared services from BBX Capital or its affiliates during the three months ended ~~March 31, 2020 and 2019 for other shared services.~~June 30, 2020. As of both ~~March 31,~~June 30, 2020 and December 31, 2019, $0.1 million was due to us from BBX Capital for these services.

See also the description of the Agreement to Allocate Consolidated Income Tax Liability and Benefits under Note 10: Income Taxes above.

12. 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 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.

We report our results of operations through 2 reportable segments: (i) ~~sales~~Sales of VOIs and financing; and (ii) ~~resort~~Resort operations and club management.

Our ~~sales~~Sales of VOIs and financing segment includes our marketing and sales activities related to the VOIs that we own, our VOIs we acquire under just-in-time and secondary market inventory arrangements, our sales of VOIs through fee-for-service arrangements with third-party developers, our consumer financing activities in connection with sales of VOIs that we own, and our title services operations through a ~~wholly owned~~wholly-owned subsidiary.

Our ~~resort~~Resort operations and club management segment includes our provision of management services activities for our Vacation Club and for a majority of the HOAs of the resorts within our Vacation Club. In connection with those services, we also provide club reservation services, services to owners and billing and collections services to our Vacation Club and certain HOAs. Additionally, we generate revenue within our resort operations and club management segment from our Traveler Plus

program, food and beverage and other retail operations, our rental services activities, and management of construction activities for certain of our fee-based developer clients.

The information provided for segment reporting is obtained from internal reports utilized by management. The presentation and allocation of results of operations may not reflect the actual economic costs of the segments as standalone businesses. Due to the nature of our business, assets are not allocated to a particular segment, and therefore management does not evaluate the balance sheet by segment. 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 materially impacted.

The table below sets forth our segment information for the three months ended ~~March 31,~~June 30, 2020 (in thousands):



Revenue:	Sales of ‎VOIs and ‎financing		Resort ‎operations ‎and club ‎management		Corporate ‎and other		Elimination		‎Total		Sales of ‎VOIs and ‎financing		Resort ‎operations ‎and club ‎management		Corporate ‎and other		Elimination		‎Total

Sales of VOIs	$	45,128	$	—	$	—	$	—	$	45,128	$	9,054	$	—	$	—	$	—	$	9,054
Fee-based sales commission revenue		41,365		—		—		—		41,365		1,135		—		—		—		1,135
Other fee-based services revenue		2,723		26,591		—		—		29,314		1,349		25,064		—		—		26,413
Cost reimbursements		—		19,120		—		—		19,120		—		11,850		—		—		11,850
Mortgage servicing revenue		1,595		—		—		(1,595)		—		1,510		—		—		(1,510)		—
Interest income		20,148		—		1,718		—		21,866		19,061		—		1,047		—		20,108
Other income, net		—		—		133		—		133		—		—		273		—		273
Total revenue		110,959		45,711		1,851		(1,595)		156,926		32,109		36,914		1,320		(1,510)		68,833

Costs and expenses:

Cost of VOIs sold		4,099		—		—		—		4,099		1,038		—		—		—		1,038
Net carrying cost of VOI inventory		7,914		—		—		(7,914)		—		10,913		—		—		(10,913)		—
Cost of other fee-based services		1,470		13,327		—		7,914		22,711		719		6,903		—		10,913		18,535
Cost reimbursements		—		19,120		—		—		19,120		—		11,850		—		—		11,850
Selling, general and administrative expenses		82,138		—		19,234		(175)		101,197		32,329		—		9,115		(564)		40,880
Mortgage servicing expense		1,420		—		—		(1,420)		—		946		—		—		(946)		—
Interest expense		4,664		—		4,154		—		8,818		4,171		—		4,369		—		8,540
Total costs and expenses		101,705		32,447		23,388		(1,595)		155,945		50,116		18,753		13,484		(1,510)		80,843
Income (loss) before non-controlling
interest and provision for income taxes	$	9,254	$	13,264	$	(21,537)	$	—	$	981
(Loss) Income before non-controlling interest ‎ and (benefit) provision for income taxes											$	(18,007)	$	18,161	$	(12,164)	$	—	$	(12,010)

Add: Depreciation and amortization		1,559		190								1,483		190
Add: Severance		2,563		1,134								1,206		99
Segment Adjusted EBITDA ⁽¹⁾	$	13,376	$	14,588							$	(15,318)	$	18,450

(1)See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted EBITDA, including how we define Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

‎

The table below sets forth our segment information for the three months ended ~~March 31,~~June 30, 2019 (in thousands):



Revenue:	Sales of ‎VOIs and ‎financing		Resort ‎operations ‎and club ‎management		Corporate ‎and other		Elimination		‎Total

Sales of VOIs	$	68,302	$	—	$	—	$	—	$	68,302
Fee-based sales commission revenue		55,343		—		—		—		55,343
Other fee-based services revenue		3,040		27,663		—		—		30,703
Cost reimbursements		—		14,007		—		—		14,007
Mortgage servicing revenue		1,544		—		—		(1,544)		—
Interest income		19,925		—		1,950		—		21,875
Other income, net		—		—		1,993		—		1,993
Total revenue		148,154		41,670		3,943		(1,544)		192,223

Costs and expenses:

Cost of VOIs sold		10,572		—		—		—		10,572
Net carrying cost of VOI inventory		5,288		—		—		(5,288)		—
Cost of other fee-based services		1,099		12,662		—		5,288		19,049
Cost reimbursements		—		14,007		—		—		14,007
Selling, general and administrative expenses		130,284		—		18,629		(370)		148,543
Mortgage servicing expense		1,174		—		—		(1,174)		—
Interest expense		5,070		—		4,991		—		10,061
Total costs and expenses		153,487		26,669		23,620		(1,544)		202,232
(Loss) Income before non-controlling interest and (benefit) provision for income taxes	$	(5,333)	$	15,001	$	(19,677)	$	—	$	(10,009)

Add: Depreciation and amortization		1,534		364
Add: Bass Pro Settlement		39,121		—
Segment Adjusted EBITDA ⁽¹⁾	$	35,322	$	15,365

‎

The table below sets forth our segment information for the six months ended June 30, 2020 (in thousands):


Revenue:	Sales of ‎VOIs and ‎financing		Resort ‎operations ‎and club ‎management		Corporate ‎and other		Elimination		‎Total

Sales of VOIs	$	54,182	$	—	$	—	$	—	$	54,182
Fee-based sales commission revenue		42,500		—		—		—		42,500
Other fee-based services revenue		4,072		51,655		—		—		55,727
Cost reimbursements		—		30,970		—		—		30,970
Mortgage servicing revenue		3,105		—		—		(3,105)		—
Interest income		39,209		—		2,765		—		41,974
Other income, net		—		—		406		—		406
Total revenue		143,068		82,625		3,171		(3,105)		225,759

Costs and expenses:

Cost of VOIs sold		5,137		—		—		—		5,137
Net carrying cost of VOI inventory		18,827		—		—		(18,827)		—
Cost of other fee-based services		2,189		19,230		—		18,827		40,246
Cost reimbursements		—		30,970		—		—		30,970
Selling, general and administrative expenses		115,467		—		28,349		(739)		143,077
Mortgage servicing expense		2,366		—		—		(2,366)		—
Interest expense		8,835		—		8,523		—		17,358
Total costs and expenses		152,821		50,200		36,872		(3,105)		236,788
(Loss) Income before non-controlling interest ‎ and (benefit) provision for income taxes	$	(9,753)	$	32,425	$	(33,701)	$	—	$	(11,029)

Add: Depreciation and amortization		3,042		380
Add: Severance		3,769		1,233
Segment Adjusted EBITDA ⁽¹⁾	$	(2,942)	$	34,038

‎

The table below sets forth our segment information for the six months ended June 30, 2019 (in thousands):


Revenue:	Sales of ‎VOIs and ‎financing		Resort ‎operations ‎and club ‎management		Corporate ‎and other		Elimination		‎Total		Sales of ‎VOIs and ‎financing		Resort ‎operations ‎and club ‎management		Corporate ‎and other		Elimination		‎Total

Sales of VOIs	$	51,731	$	—	$	—	$	—	$	51,731	$	120,033	$	—	$	—	$	—	$	120,033
Fee-based sales commission revenue		45,212		—		—		—		45,212		100,555		—		—		—		100,555
Other fee-based services revenue		2,728		26,840		—		—		29,568		5,768		54,503		—		—		60,271
Cost reimbursements		—		17,044		—		—		17,044		—		31,051		—		—		31,051
Mortgage servicing revenue		1,490		—		—		(1,490)		—		3,034		—		—		(3,034)		—
Interest income		20,017		—		1,991		—		22,008		39,942		—		3,941		—		43,883
Other income, net		—		—		89		—		89		—		—		2,082		—		2,082
Total revenue		121,178		43,884		2,080		(1,490)		165,652		269,332		85,554		6,023		(3,034)		357,875

Costs and expenses:

Cost of VOIs sold		3,848		—		—		—		3,848		14,420		—		—		—		14,420
Net carrying cost of VOI inventory		7,687		—		—		(7,687)		—		12,976		—		—		(12,976)		—
Cost of other fee-based services		1,210		13,971		—		7,687		22,868		2,309		25,757		—		12,976		41,042
Cost reimbursements		—		17,044		—		—		17,044		—		31,051		—		—		31,051
Selling, general and administrative expenses		72,196		—		18,128		(110)		90,214		203,355		—		36,757		(480)		239,632
Mortgage servicing expense		1,380		—		—		(1,380)		—		2,554		—		—		(2,554)		—
Interest expense		5,262		—		4,244		—		9,506		10,332		—		9,235		—		19,567
Total costs and expenses		91,583		31,015		22,372		(1,490)		143,480		245,946		56,808		45,992		(3,034)		345,712
Income (loss) before non-controlling
interest and provision for income taxes	$	29,595	$	12,869	$	(20,292)	$	—	$	22,172
Income (loss) before non-controlling interest ‎ and provision (benefit) for income taxes											$	23,386	$	28,746	$	(39,969)	$	—	$	12,163

Add: Depreciation and amortization		1,536		365								3,070		730
Add: Bass Pro Settlement												39,121		—
Segment Adjusted EBITDA ⁽¹⁾	$	31,131	$	13,234							$	65,577	$	29,476

13. Subsequent Events

~~The COVID-19 pandemic has been, and continues~~During July 2020, we declared a special cash dividend of $1.19 per share of our common stock, which is payable August 21, 2020 to ~~be, an unprecedented disruption in the U.S. economy generally and in the travel, hospitality and vacation ownership industries in particular. The impacts~~shareholders of record as of the ~~pandemic have included, among other things, government ordered travel restrictions and restrictions~~close of business on business operations. Some of our Club and Club Associate Resorts were closed in accordance with government mandates and advisories. As a result, we temporarily closed all of our VOI sales centers, our retail marketing operations at Bass Pro Shops, Cabela’s stores and outlet malls and our Choice Hotels call transfer program.August 6, 2020. In connection with ~~these closures and~~ the impact on our operations, we took steps to mitigate our costs, including a reduction in workforce of over 970 positions and placed another 3,700 of our associates on temporary furlough and reduced work hours. We also suspended the payment of regular quarterly dividends, reduced our new inventory acquisition and development expenditures and drew down $60 million under our lines-of-credit and various receivable backed facilities. We will continue to monitor the coursedeclaration of the ~~COVID-19 pandemic and plan~~dividend we obtained an undertaking by BBX Capital that it will utilize the proceeds of this special cash dividend to ~~pursue~~repay the ~~reopening of our resorts on May 16, 2020 and VOI sales centers and marketing operations beginning in June 2020 on a phased schedule subject~~outstanding $80.0 million BBX Capital owes to ~~the restrictions of applicable government orders and the safety of our owners, guests and employees. Sustained adverse~~Bluegreen.

‎

impact on our revenues, net income or other operating results due to the COVID-19 pandemic could result in failures to comply with various loan covenants in our outstanding indebtedness. While there is no assurance that we will be successful, we will seek waivers from our lenders where necessary.

‎

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2019.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains 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”).

Forward-looking statements include all statements that do not relate strictly to historical or current facts and can be identified by the use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans,” “believes,” “projects,” “predicts,” “seeks,” “will,” “should,” “would,” “may,” “could,” “outlook,” “potential,” and similar expressions or words and phrases of similar import. Forward-looking statements include, among others, statements relating to our future financial performance, our business prospects, strategy and relationships, our anticipated financial position, liquidity and capital needs, economic and industry conditions and their impact on our business and future financial performance, and other similar matters. These statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those expressed in, or implied by, the forward-looking statements as a result of various factors, including, among others:

adverse trends or disruptions in economic conditions generally or in the vacation ownership, vacation rental and travel industries;

risks relating to public health issues, including in particular the COVID-19 pandemic and the effects of the pandemic. These include ~~required~~ resort closures, travel and business restrictions, volatility in the international and national economy and credit markets, worker absenteeism, quarantines and other health-related restrictions; the length and severity of the COVID-19 pandemic and our ability to successfully resume full business operations thereafter; governmental and agency orders, mandates and guidance in response to the COVID-19 pandemic and the duration thereof, which is uncertain and will impact our ability to fully utilize resorts, ~~and re-open~~ sales centers and other marketing activities; the pace of recovery following the COVID-19 pandemic; competitive conditions; our liquidity and the availability of capital; our ability to successfully implement our strategic plans and initiatives to navigate the COVID-19 pandemic; risks that our current or future marketing alliances may not be available to us in the future; risks that default rates may increase and exceed the Company’s expectations; risks related to our indebtedness, including the potential for accelerated maturities and debt covenant violations; the risk of heightened litigation as a result of actions taken in response to the COVID-19 pandemic; the impact of the COVID-19 pandemic on our ability to pay dividends, including the risk that future dividends may not be paid at historical rates or at all; the impact of the CARES Act and our ability to obtain certain of the relief provided thereof; the impact of the COVID-19 pandemic on consumers, including their income, their level of discretionary spending both during and after the pandemic, and their views towards travel and the vacation ownership industries; and the risk that our resort management fees and finance operations may not continue to generate recurring sources of cash during or following the pandemic to the extent anticipated or at all;

adverse changes to, expirations or terminations of, or interruptions in, business and strategic relationships, management contracts, exchange networks or other strategic marketing alliances, and the risk that our business relationship with Bass Pro under the revised terms of our marketing agreement and our relationship with Choice Hotels may not be as profitable as anticipated, or at all, or otherwise result in the benefits anticipated;

there are risks associated with our strategic partnerships and arrangements, including those with Bass Pro, Choice and others;

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;

decreased demand from prospective purchasers of vacation ownership interests (“VOIs”);

our ability to maintain inventory of VOIs for sale;

the availability of financing, ~~and~~ our ability to sell, securitize or borrow against our ~~consumer loans~~VOI notes receivable at acceptable terms; and our ability to successfully increase our credit facility capacity or enter into capital market transactions or other alternatives to provide for sufficient available cash for a sustained period of time;

adverse events or trends in vacation destinations and regions where the resorts in our network are located, including weather-related ~~events;~~events and adverse conditions related to the COVID-19 pandemic;

our indebtedness may impact our financial condition and results of operations, and the terms of our indebtedness may limit, among other things, our activities and ability to pay dividends, and we may not comply with the terms of our indebtedness;

changes in our senior management;

our ability to comply with regulations applicable to the vacation ownership industry or our other activities, and the costs of compliance efforts or a failure to comply;

our ability to successfully implement our market strategies and plans and the impact they may have on our results and financial ~~conditions,~~condition, including that ~~any increase in our~~ efforts to increase our VOI sales, to the extent pursued, may not be successful and may impact our cash flow;

our ability to compete effectively in the highly competitive vacation ownership industry and against hotel and other hospitality and lodging alternatives;

our ability to offer or further enhance the Vacation Club experience for our Vacation Club owners and risks related to our efforts and expenses in connection therewith, including that expenses may be greater than anticipated;

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

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

changes in our business model and marketing efforts, plans or strategies, which may cause marketing expenses to increase or adversely impact our revenue, operating results and financial condition, and such expenses as well as our investments, including investments in new and expanded sales ~~offices,~~centers, 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 our telemarketing efforts, including new cell phone technologies that identify or block marketing ~~vendor~~ calls;

the impact of the resale market for VOIs on our business, operating results and financial condition;

risks associated with our relationships with third-party developers, including that third-party developers who provide VOIs to be sold by us 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 us or to the homeowners associations that maintain the resorts they developed;

risks associated with legal proceedings and regulatory proceedings, examinations or audits of our operations, including claims of noncompliance with applicable regulations or for development related defects, and the impact they may have on our financial condition and operating results;

audits of our or our subsidiaries’ 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 our financial condition and operating results;

risks that public health issues and natural disasters, including hurricanes, earthquakes, fires, floods and windstorms may adversely impact our business and operating results, including due to any damage to physical assets or interruption of access to physical assets or operations resulting therefrom, and the frequency and severity of natural disasters may increase due to climate change or other factors;

our 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 related to potential business expansion or other opportunities that we may pursue, including that they may involve significant costs and the incurrence of significant indebtedness and may not be successful;

the 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 the risk that our information technology expenditures may not result in the expected benefits;

the impact on our consolidated financial statements and internal control over financial reporting of the adoption of new accounting standards; and

other risks and uncertainties inherent to our business, the vacation ownership industry and ownership of our common stock, including those discussed in the “Risk Factors” section of, and elsewhere in, our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2019 and the “Risk Factors” section of this Quarterly Report on Form 10-Q.

Terms Used in this Quarterly Report on Form 10-Q

Except as otherwise noted or where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Bluegreen Vacations,” “Bluegreen,” “the Company,” “we,” “us” and “our” refer to Bluegreen Vacations Corporation, together with its consolidated subsidiaries.

Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q includes discussions of terms that are not recognized terms under generally accepted accounting principles in the United States (“GAAP”), and financial measures that are not calculated in accordance with GAAP, including system-wide sales of VOIs, guest tours, sale to tour conversion ratio, average sales volume per guest, Adjusted EBITDA, and Segment Adjusted EBITDA. Refer to “Key Business and Financial Metrics and Terms Used by Management” below for further discussion of these financial metrics. In addition, see “Results of Operations” below for a reconciliation of Adjusted EBITDA to net income and system-wide sales of VOIs to gross sales of ~~VOIs.~~VOIs, which in each case, is the most comparable GAAP financial measure.

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Critical Accounting Policies and Estimates

For a discussion of critical accounting policies, see “Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2019.

New Accounting Pronouncements

See Note 2 to our unaudited consolidated financial statements included in Item 1 of this report for a discussion of new accounting pronouncements applicable to us.

Executive Overview

We are a leading vacation ownership company that markets and sells VOIs and manages resorts in popular leisure and urban destinations. Our resort network includes 45 Club Resorts (resorts in which owners in our Vacation Club have the right to use most of the units in connection with their VOI ownership) and 23 Club Associate Resorts (resorts in which owners in our Vacation Club have the right to use a limited number of units in connection with their VOI ownership). Our 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 our points-based system, the approximately ~~221,000~~219,000 ownersin our Vacation Club have the flexibility to stay at units available at any of our resorts and have access to ~~over 11,350~~nearly 11,400 other hotels and resorts through partnerships and exchange networks. We also have a sales and marketing platform supported by marketing relationships, such as with Bass Pro and Choice Hotels. These marketing relationships have historically generated sales within our core demographic.

The COVID-19 pandemic has ~~been,~~caused and continues to ~~be,~~cause, an unprecedented disruption in the U.S. economy and the travel, hospitality and vacation ownership industries due to, among other things, ~~government ordered~~resort closures, travel restrictions and restrictions on business operations including ~~required resort closures.~~government guidance with respect to travel, public accommodations, social gatherings and related matters. On March 23, 2020 we temporarily closed all of our VOI sales centers; our retail marketing operations at Bass Pro Shops and Cabela’s stores and outlet malls; and our Choice Hotels call transfer program. In connection with these actions we canceled existing owner reservations through May 15, 2020 and new prospect guest tours through June 30, 2020. Further, some of our Club and Club Associate Resorts were closed in accordance with government mandates and advisories. ~~We are currently developing a plan~~Beginning mid-May 2020, we started the process of recommencing our sales and marketing operations and our closed resorts began to ~~reopen these operations including accepting~~welcome guests as government mandates were lifted. By June 30, 2020, 64 Bass Pro Shops and Cabela’s stores (out of ~~May 16~~the 89 that were open in March 2020) were open, we reactivated our Choice Hotels call transfer program, virtually all of our resorts were open, and 21 of our 26 VOI sales centers were open for sales to existing owners and ~~marketing operations beginning June~~one sale center was selling to new prospects. As of July 31, 2020, ~~on a phased schedule. Prior~~23 VOI sales centers were open for sales to ~~the COVID-19 pandemic, the Company started the year off strong and with system-side~~existing owners, 17 of which were open for sales to new prospects. System-wide sales of VOIs were $30.9 million in July 2020. In addition, as of July 31, 2020, we were marketing vacation ~~ownership interests up 16.5% through February 29, 2020.~~packages at 85 Bass Pro and Cabela’s stores. However, increased COVID-19 cases in certain markets in July resulted in increases in cancelations of marketing guest stays (and consequently, new owner prospects) and it is impossible to predict whether this trend will continue or worsen or the extent of the adverse impact this may have on Bluegreen.

As a result of the effect of the pandemic, we implemented several cost mitigating activities beginning in March 2020, including ~~a reduction~~reductions in workforce of over ~~970~~1,600 positions and ~~placed~~the placement of another ~~3,700~~approximate 3,200 of our associates on temporary furlough ~~and~~or reduced work hours. As of ~~March~~June 30, 2020, 2,300 associates had returned to work on a full-time basis. In July 2020, approximately 600 additional associates returned to work on a full-time basis for a total of approximately 4,250 full-time associates as of July 31, 2020 compared to approximately 6,050 full-time associates as of July 31, 2019. However, as a result of the slowdown discussed above or otherwise, additional employees may be terminated or furloughed in the future. As a result of the effect of the COVID-19 pandemic, during the three and six months ended June 30, 2020, we incurred ~~$2.5~~$2.2 million and $6.7 million in severance, respectively, and ~~$0.8~~$10.7 million and $11.6 million, respectively, of payroll and payroll benefit expense relating to employees on temporary furlough or reduced work hours. These payments and expenses are included in selling, general and administrative expenses onin our unaudited consolidated statement of operations for the three and six months ended ~~March 31,~~June 30, 2020.

As a precautionary measure designed to provide ~~us with~~ additional liquidity if needed, in March 2020 we drew down $60 million under our lines-of-credit and pledged or sold receivables under our various receivable backed facilities to increase our cash position. In June 2020, we repaid $40 million under our syndicated line-of-credit and amended the agreements to modify the

definition of certain customary covenants. We also suspended our regular quarterly cash dividends on our common stock. Also in June 2020, we amended our Liberty Bank Facility to extend the advance period and maturity date, reduce the outstanding borrowings from $50.0 million to $40.0 million, decrease the advance rate from 85% for qualified confirming receivables to 80% by September 2020 and, commencing July 1, 2020, change the interest rate from the Prime Rate with a floor of 4.00% to the Prime Rate minus 0.10% with a floor of 3.40%. We continue to actively pursue additional credit facility capacity, capital market transactions, and other alternatives and we hope that the steps we are taking will provide us with sufficient available cash for a sustained period of time. In addition, while there is no assurance this will be the case, we expect that our resorts management and finance operations will continue to generate recurring cash sources of income.transactions. For more detailed information see “Liquidity and Capital Resources” below.

We have historically financed a majority of our sales of VOIs, and accordingly, are subject to the risk of defaults by our customers. GAAP requires that we reduce sales of VOIs by our estimate of uncollectible VOI notes receivable. The COVID-19 pandemic has had a material adverse impact on unemployment in the United States and economic conditions in general and the impact may continue for some time.

While it is still too early to know the full impact of ~~the~~ COVID- 19 ~~pandemic through March 31, 2020 was not yet reflected in~~on our default or delinquency rates as of June 30, 2020, we believe that the COVID-19 pandemic will have a significant impact on our VOI notes receivable. Accordingly, during the six months ended June 30, 2020, we recorded an additional

allowance for loan losses of ~~$12~~$12.0 million, ~~as of March 31, 2020,~~ which includes our customary estimate of customer defaults as a result of the ~~COVID –~~ COVID–19 pandemic, based on our historical experience, forbearance requests received from our customers, and other factors, including but not limited to, the seasoning of the ~~note~~notes receivable and FICO scores of the customers.

The Coronavirus Aid, Relief, and Economic Securities Act (“CARES Act”) was signed into law on March 27, 2020 in response to the COVID-19 ~~pandemic in order to provide for economic support and stimulus. We will continue to review~~pandemic. As of June 30, 2020, we evaluated the ~~relevant~~income tax provisions of the CARES Act and ~~intend~~determined there to ~~take~~be no significant effect on either our June 30, 2020 income tax rate or the computation of our estimated effective tax rate for the year ended December 31, 2020. However, we have taken advantage of ~~certain provisions, including, but not limited to,~~ the deferral of the employer portion of the tax withholding amounts and the employee retention tax ~~credits.~~credits provided for in the CARES Act. As of June 30, 2020, we recorded a tax withholding deferral of $2.0 million and employee retention tax credits of $6.9 million, which is included in selling, general and administrative expenses in our unaudited consolidated statements of operations for the three and six months ended June 30, 2020.

VOI Sales and Financing

Our primary business is the marketing and selling of deeded VOIs, developed either by us or third parties. Customers who purchase these VOIs receive an annual allotment of points, which can be redeemed for stays at one of our resorts or at ~~11,350~~nearly 11,400 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 financing. In 2009, we began selling VOIs on behalf of third-party developers and have successfully diversified from a business focused on capital-intensive resort development to a more flexible model with a mix of developed and capital-light inventory as determined by management to be appropriate from time to time based on market factors, economic conditions, available cash, and other conditions. Our relationships with third-party developers enable us 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 a greater contribution to Adjusted EBITDA contribution, fee-based sales typically do not require an initial investment or involve 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 our Vacation Club and new resort management contracts. Fee-Based Sales comprised ~~45%~~17% and ~~52%~~43% of system-wide sales of VOIs during the three month and six months ended ~~March 31,~~June 30, 2020, respectively, and ~~2019, respectively.~~51% for each of the three and six months ended June 30, 2019. We expect this rate to continue to decrease ~~upon the~~as we continue reopening ofactivities at VOI sales ~~centers planned to begin in June 2020 as we intend to focus on selling Bluegreen owned inventory, including developed VOI inventory. However,~~centers. While we intend to remain flexible with respect to our sales of the different categories of our VOI inventory in the future based on economic conditions, business initiatives and other considerations ~~and accordingly these trends may differ from current expectations.~~we currently expect that our mix of fee-based inventory will decrease over time. In conjunction with our VOI sales, we also generate interest income by originating loans to qualified purchasers. Collateralized by the underlying VOIs, our loans are generally structured as 10-year, fully-amortizing loans with a fixed interest rate ranging from approximately 12% to 18% per annum. As of ~~March 31,~~June 30, 2020, the weighted-average interest rate on our VOI notes receivable was ~~14.8%~~14.9%. In addition, we earn fees for various other services, including title and escrow services in connection with the closing of VOI sales, and we generate fees for mortgage servicing. ~~As described in further detail above, on March 23, 2020, we temporarily closed all of~~However there is no assurance that our VOI sales centers ~~and took other actions~~will remain open as a result of an increase in ~~response to~~ the COVID-19 ~~pandemic.~~cases.

Resort Operations and Club Management

We enter into management agreements with the HOAs that maintain most of the resorts in our Vacation Club and earn fees for providing management services to those HOAs and our approximately ~~221,000~~219,000 Vacation Club owners. These resort management services include oversight of housekeeping services, maintenance, and certain accounting and administration functions. Our management contracts generally yield recurring cash flows and do not have the traditional risks associated with hotel management contracts that are generally linked to daily rate or occupancy. Our management contracts are typically structured as “cost-plus,” with an initial term of three years and automatic one-year renewals. In connection with the management services provided to the Vacation Club, we manage the reservation system and provide owner, billing and collection services. In addition to resort and club management services, we earn fees for various other services that generally produce recurring, predictable and long term-revenue, including construction management services for third-party developers. As described in further detail above, some of our Club and Club Associate Resorts were closed during March 2020 in ~~accordance with government mandates~~response to the COVID-19 pandemic, all of which were reopened in June and ~~advisories.~~

July 2020. However there is no assurance that the resorts will remain open and while resort reservations initially exceeded expectations, a significant number of the July reservations were cancelled. While many of these reservations were rebooked for August and September there is no assurance that existing owners and new prospects will visit the resorts or attend sales presentations.

Principal Components Affecting our Results of Operations

Principal Components of Revenues

Fee-Based Sales. Represent sales of third-party VOIs where we are paid a commission.

JIT Sales. Represent sales of VOIs acquired from third parties in close proximity to when we intend 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 us for sale as part of our JIT sales activities.

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

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

Resort Operations and Club Management Revenue. Represents recurring fees from managing the Vacation Club and transaction fees for Traveler Plus and other member services. We also earn recurring management fees under our management agreements with HOAs for day-to-day management services, including oversight of housekeeping services, maintenance, and certain accounting and administrative functions.

Other Fee-Based Services. Represents revenue earned from various other services that generally produce recurring, predictable and long-term revenue, such as title services.

Principal Components of Expenses

Cost of VOIs Sold. Represents the cost at which our owned VOIs sold during the period were relieved from inventory. In addition to inventory from our VOI business, our owned VOIs also include those that were acquired by us under JIT and secondary market arrangements. Compared to the cost of our 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 or actual defaults and equity trades are higher and the resulting change in estimate is recognized. While we believe that there is additional inventory that can be obtained through the secondary market at favorable prices to us 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. We attempt to offset this expense, to the extent possible, by generating revenue from renting our VOIs and through utilizing them in our sampler programs. We net 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.

Financing Expense. Represents financing interest expense related to our receivable-backed debt, amortization of the related debt issuance costs and expenses incurred in providing financing and servicing loans, including administrative costs associated with mortgage servicing activities for our loans and the loans of certain third-party developers. Mortgage servicing activities include, amongst other things, payment processing, reporting and collection services.

Resort Operations and Club Management Expense. 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.

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

~~Key Business and Financial Metrics and Terms Used by Management~~

Sales of VOIs. Represent sales of our 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 (as described below), sales of VOIs are impacted by the proportion of system-wide sales of VOIs sold on behalf of third-parties on a commission basis, which are not included in sales of VOIs.

System-wide Sales of VOIs. Represents all sales of VOIs, whether owned by us or a third party immediately prior to the sale. Sales of VOIs owned by third parties are transacted as sales of VOIs in our Vacation Club through the same selling and marketing process we use to sell our VOI inventory. We consider system-wide sales of VOIs to be an important operating measure because it reflects all sales of VOIs by our sales and marketing operations without regard to whether we or a third party owned such VOI inventory at the time of sale. System-wide sales of VOIs 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 our 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 the number of VOI sales transactions.

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

Adjusted EBITDA. We define Adjusted 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 our VOI notes receivable), income and franchise taxes, loss (gain) on assets held for sale, depreciation and amortization, amounts attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations (in which we own a 51% interest), and items that we believe are not representative of ongoing operating ~~results, including~~results. Accordingly, severance charges ~~severance plus~~net of employee retention tax credits, and incremental costs associated with ~~COVID-19.~~the COVID-19 pandemic, and amounts paid, accrued or incurred in connection with the Bass Pro settlement in June 2019 are excluded in the computation of Adjusted EBITDA. For purposes

of the Adjusted EBITDA calculation for each period presented, no adjustments were made for interest income earned on our 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 ordinary operations of our business.

We consider our total Adjusted EBITDA and our Segment Adjusted EBITDA to be an indicator of our operating performance, and it is used by us to measure our ability to service debt, fund capital expenditures and expand our business. Adjusted 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. Adjusted 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.

Adjusted EBITDA is not a recognized term 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 our results as reported under GAAP. The limitations of using Adjusted EBITDA as an analytical tool include, without limitation, that Adjusted EBITDA does not reflect (i) changes in, or cash requirements for, our working capital needs; (ii) our interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness (other than as noted above); (iii) our tax expense or the cash requirements to pay our 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 we consider not to be indicative of our 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 Adjusted EBITDA does not reflect any cash requirements for such replacements. In addition, our definition of Adjusted EBITDA may not be comparable to definitions of Adjusted EBITDA or other similarly titled measures used by other companies.

Results of Operations

Adjusted EBITDA for the three and six months ended ~~March 31,~~June 30, 2020 and 2019:

We consider Segment Adjusted EBITDA in connection with our evaluation of the operating performance of our business segments as described in Note 12: Segment Reporting to our unaudited consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. See above for a discussion of our definition of Adjusted EBITDA, how management uses it to manage our business and material limitations on its usefulness. The following tables set forth Segment Adjusted EBITDA, total Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP financial measure:


	For the Three Months Ended ‎March 31,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019		2020		2019
Adjusted EBITDA - sales of VOIs ‎ and financing	$	13,376	$	31,131	$	(15,318)	$	35,322	$	(2,942)	$	65,577
Adjusted EBITDA - resort operations ‎ and club management		14,588		13,234		18,450		15,365		34,038		29,476
Total Segment Adjusted EBITDA		27,964		44,365		3,132		50,687		31,096		95,053
Less: Corporate and other		(16,979)		(18,168)
Less: corporate and other						(7,223)		(22,029)		(24,202)		(40,196)
Total Adjusted EBITDA	$	10,985	$	26,197	$	(4,091)	$	28,658	$	6,894	$	54,857

3435


	For the Three Months Ended ‎March 31,				For the Three Months Ended ‎June 30,				For the Six Months Ended ‎June 30,
(in thousands)	2020		2019		2020		2019		2020		2019
Net income attributable to shareholders	$	201	$	15,153	$	(8,830)	$	(11,183)	$	(8,629)	$	3,970
Net income attributable to the ‎ non-controlling interest in ‎ Bluegreen/Big Cedar Vacations		736		1,716		641		5,131		1,377		6,847
Adjusted EBITDA attributable to the ‎ non-controlling interest ‎ in Bluegreen/Big Cedar Vacations		(906)		(1,781)		(775)		(5,193)		(1,681)		(6,974)
(Gain) loss on assets held for sale		(44)		9
Loss (gain) on assets held for sale						87		(1,989)		43		(1,980)
Add: Depreciation and amortization		3,899		3,365		3,890		3,504		7,789		6,870
Less: Interest income (other than interest ‎ earned on VOI notes receivable)		(1,718)		(1,846)		(1,047)		(1,792)		(2,765)		(3,638)
Add: Interest expense - corporate and other		4,154		4,244		4,369		4,991		8,523		9,235
Add: Franchise taxes		17		34		—		25		17		60
Add: Provision for income taxes		44		5,303
Add: (Benefit) provision for income taxes						(3,821)		(3,957)		(3,777)		1,346
Add: Severance		4,496		—		2,229		—		6,725		—
Less: Employee Retention credit related to severance						(2,202)		—		(2,202)		—
Add: COVID-19 incremental costs		106		—		1,368		—		1,474		—
Add: Bass Pro Settlement						—		39,121		—		39,121
Total Adjusted EBITDA	$	10,985	$	26,197	$	(4,091)	$	28,658	$	6,894	$	54,857

The following table reconciles system-wide sales of VOIs to gross sales of VOIs, the most comparable GAAP financial measure.


	For the Three Months Ended ‎March 31,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019		2020		2019
Gross sales of VOIs	$	75,481	$	62,884	$	10,900	$	80,221	$	86,381	$	143,105
Add: Fee-Based sales		61,908		66,794		2,199		83,352		64,107		150,146
System-wide sales of VOIs	$	137,389	$	129,678	$	13,099	$	163,573	$	150,488	$	293,251


	As of and for the ‎Three Months Ended ‎March 31,				As of and for the Three Months Ended June 30,				As of and for the Six Months Ended June 30,
	2020		2019		2020		2019		2020		2019
Other Financial Data:
(in thousands)
System-wide sales of VOIs	$	137,389	$	129,678	$	13,099	$	163,573	$	150,488	$	293,251
Total Adjusted EBITDA	$	10,985	$	26,197	$	(4,091)	$	28,658	$	6,894	$	54,857
Adjusted EBITDA - sales of VOIs and ‎ financing	$	13,376	$	31,131	$	(15,318)	$	35,322	$	(2,942)	$	65,577
Adjusted EBITDA - resort operations
and club management	$	14,588	$	13,234	$	18,450	$	15,365	$	34,038	$	29,476
Number of Bluegreen Vacation Club /
Vacation Club Associate resorts
at period end		68		69		68		69		68		69
Total number of sale transactions		8,686		8,243		841		10,674		9,527		18,917
Average sales volume per guest	$	3,390	$	2,705	$	2,122	$	2,528	$	3,225	$	2,603

3536

For the three and six months ended ~~March 31,~~June 30, 2020 compared to the three and six months ended ~~March 31,~~June 30, 2019

Sales of VOIs and Financing



	For the Three Months Ended March 31,						For the Three Months Ended June 30,
	2020			2019			2020			2019
	Amount		% of ‎System- ‎wide sales ‎ of VOIs ⁽⁵⁾	Amount		% of ‎System- ‎wide sales ‎ of VOIs ⁽⁵⁾	Amount		% of ‎System- ‎wide sales ‎ of VOIs ⁽⁵⁾	Amount		% of ‎System- ‎wide sales ‎ of VOIs ⁽⁵⁾
(in thousands)
Developed VOI sales ⁽¹⁾	$	87,577	64%	$	68,153	53%	$	3,505	27%	$	99,271	61%
Secondary Market sales		67,916	49		59,153	45		6,584	50		53,337	33
Fee-Based sales		61,908	45		66,794	52		2,199	17		83,352	51
JIT sales		3,100	2		2,234	2		2,508	19		2,418	1
Less: Equity trade allowances ⁽⁶⁾		(83,112)	(60)		(66,656)	(52)		(1,697)	(13)		(74,805)	(46)
System-wide sales of VOIs		137,389	100%		129,678	100%		13,099	100%		163,573	100%
Less: Fee-Based sales		(61,908)	(45)		(66,794)	(52)		(2,199)	(17)		(83,352)	(51)
Gross sales of VOIs		75,481	55		62,884	48		10,900	83		80,221	49
Provision for loan losses ⁽²⁾		(30,353)	(40)		(11,153)	(18)		(1,846)	(17)		(11,919)	(15)
Sales of VOIs		45,128	33		51,731	40		9,054	69		68,302	42
Cost of VOIs sold ⁽³⁾		(4,099)	(9)		(3,848)	(7)		(1,038)	(11)		(10,572)	(15)
Gross profit ⁽³⁾		41,029	91		47,883	93		8,016	89		57,730	85
Fee-Based sales commission revenue⁽⁴⁾		41,365	67		45,212	68		1,135	52		55,343	66
Financing revenue, net of financing expense		15,659	11		14,865	11		15,454	118		15,225	9
Other fee-based services - title operations, net		1,253	1		1,518	1
Other fee-based services, title operations and other, net								630	5		1,941	1
Net carrying cost of VOI inventory		(7,914)	(6)		(7,687)	(6)		(10,913)	(83)		(5,288)	(3)
Selling and marketing expenses		(74,140)	(54)		(65,222)	(50)		(26,844)	(205)		(83,876)	(51)
General and administrative expenses - sales and ‎ marketing		(7,998)	(6)		(6,974)	(5)		(5,485)	(42)		(46,408)	(28)
Operating profit - sales of VOIs and financing		9,254	7%		29,595	23%		(18,007)	-137%		(5,333)	-3%
Add: Depreciation and amortization		1,559			1,536			1,483			1,534
Add: Severance		2,563			—			1,206			—
Adjusted EBITDA - sales of VOIs and financing	$	13,376		$	31,131
Add: Bass Pro Settlement								—			39,121
Adjusted EBITDA - sales of VOI and financing							$	(15,318)		$	35,322

(1)Developed VOI sales represent sales of VOIs acquired or developed by ~~us.~~us as part of our developed VOI business. Developed VOI sales do not include Secondary Market sales, Fee-Based sales or JIT sales.

(2)Percentages for provision for loan losses are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not as a percentage of system-wide sales of VOIs).

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

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

(5)Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, 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. Equity trade allowances were generally eliminated in June 2020 with certain exceptions.

‎


	For the Six Months Ended June 30,
	2020			2019
	Amount		% of ‎System- ‎wide sales ‎ of VOIs ⁽⁵⁾	Amount		% of ‎System- ‎wide sales ‎ of VOIs ⁽⁵⁾
(in thousands)
Developed VOI sales ⁽¹⁾	$	91,082	60%	$	167,424	57%
Secondary Market sales		74,500	49		112,490	38
Fee-Based sales		64,107	43		150,146	51
JIT sales		5,608	4		4,652	2
Less: Equity trade allowances ⁽⁶⁾		(84,809)	(56)		(141,461)	(48)
System-wide sales of VOIs		150,488	100%		293,251	100%
Less: Fee-Based sales		(64,107)	(43)		(150,146)	(51)
Gross sales of VOIs		86,381	57		143,105	49
Provision for loan losses ⁽²⁾		(32,199)	(37)		(23,072)	(16)
Sales of VOIs		54,182	36		120,033	41
Cost of VOIs sold ⁽³⁾		(5,137)	(9)		(14,420)	(12)
Gross profit ⁽³⁾		49,045	91		105,613	88
Fee-Based sales commission revenue⁽⁴⁾		42,500	66		100,555	67
Financing revenue, net of financing expense		31,113	21		30,090	10
Other fee-based services, title operations and other, net		1,883	1		3,459	1
Net carrying cost of VOI inventory		(18,827)	(13)		(12,976)	(4)
Selling and marketing expenses		(101,984)	(68)		(149,973)	(51)
General and administrative expenses - sales and ‎ marketing		(13,483)	(9)		(53,382)	(18)
Operating profit - sales of VOIs and financing		(9,753)	-6%		23,386	8%
Add: Depreciation and amortization		3,042			3,070
Add: Severance		3,769			—
Add: Bass Pro Settlement		—			39,121
Adjusted EBITDA - sales of VOIs and financing	$	(2,942)		$	65,577

(1)Developed VOI sales represent sales of VOIs acquired or developed by us as part of our developed VOI business. Developed VOI sales do not include Secondary Market sales, Fee-Based sales or JIT sales.

(2)Percentages for provision for loan losses are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not as a percentage of system-wide sales of VOIs).

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

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

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

Sales of VOIs. Sales of VOIs were ~~$45.1~~$9.1 million and ~~$51.7~~$54.2 million during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $68.3 million and $120.0 million during the three and six months ended June 30, 2019, respectively. Sales of VOIs were impacted by the factors described below in system-wide sales of ~~VOIs.~~VOIs, including primarily the adverse impact of the COVID-19 pandemic. Gross sales of VOIs were reduced by ~~$30.4~~$1.8 million and ~~$11.2~~$32.2 million during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $11.9 million and $23.1 million during the three and six months ended June 30, 2019, respectively, for the provision for loan losses. The provision for loan losses varies based on the amount of financed, non-fee based sales during the period and changes in our estimates of future notes receivable performance for existing and newly originated loans. Our provision for loan losses as a percentage of gross sales of VOIs was ~~40%~~17% and ~~18%~~37% during the

three and six months ended June 30, 2020, respectively, and 15% and 16% for the three and six months ended ~~March 31, 2020 and~~June 30, 2019, respectively. The percentage of our sales which

were realized in cash within 30 days from sale was ~~43% during the three months ended March 31, 2020~~approximately 33% and 44% during the three months ended ~~March 31, 2019.~~June 30, 2020 and June 30, 2019, respectively, and 40% and 44% during the six months ended June 30, 2020 and June 30, 2019, respectively.

While it is still too early to know the full impact of ~~COVID- 19 pandemic~~COVID-19 on ~~our borrowers had not yet been reflected in~~ our default or delinquency rates as of ~~March 31,~~June 30, 2020, we believe that the COVID-19 pandemic will have a significant impact on our VOI notes receivable. Accordingly, ~~as of March 31,~~during the six months ended June 30, 2020, we recorded an additional allowance for loan losses of $12.0 million, which includes our customary estimate of customer defaults as a result of the ~~COVID – 19~~COVID-19 pandemic, based on our historical experience, forbearance requests received from our customers, and other factors, including but not limited to, the seasoning of the notes receivable and FICO scores of the customers. In March 2020, we began receiving requests from borrowers requesting a modification of their VOI note receivable due to financial hardship resulting from the economic impacts of the COVID-19 pandemic. As of June 30, 2020, 4.1% of our portfolio was granted up to a three-month deferral or extension of payments, of which 71% have subsequently resumed payments under the newly modified terms. Hardship requests declined in June 2020 and the program was discontinued on June 30, 2020. In addition to the COVID-19 pandemic impact discussed above, the provision for loan losses was impacted by an increase in the average annual default rates, which we believe was due in large part to the receipt of letters from third parties and 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 induring the six months ended 2020, ~~period~~ increased ~~51.9%~~by 16% compared to the same period of 2019. See Note 9: Commitments and Contingencies to our unaudited consolidated financial statements included in Item 1 of this report for additional information regarding such letters and actions we have taken by us in connection with such letters. The impact of the COVID-19 pandemic is highly ~~uncertain.~~uncertain and there is no assurance that our steps taken to mitigate the impact on the pandemic or the timeshare exit firm will be successful. As a result, actual defaults may differ from our estimates and the allowance for loan losses may not prove to be adequate.

In addition to the factors described below impacting system-wide sales of VOIs, sales of VOIs are impacted by the proportion of system-wide sales of VOIs 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 our VOI notes receivable were as follows:



	For the Twelve Months Ended March 31,		For the Twelve Months Ended June 30,
	2020	2019	2020	2019

Average annual default rates	9.31%	8.18%	9.50%	8.14%

	As of March 31,		As of June 30,
	2020	2019	2020	2019

Delinquency rates	3.19%	2.89%	3.36%	3.20%

System-wide sales of VOIs. System-wide sales of VOIs were ~~$137.4~~$13.1 million and ~~$129.7~~$150.5 million during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $163.6 million and $293.3 million during the three and six months ended June 30, 2019, respectively. System-wide sales of ~~VOIs~~vacation ownership interests increased ~~during the three months ended March 31,~~by 16.5% through February 29, 2020 compared to the ~~comparable~~same period in ~~2019 due to an increase in the sale-to-tour conversion ratio and higher average sales volume per guest. Prior to~~2019. However, as previously described, on March 23, 2020, as a result of the COVID-19 pandemic, ~~the Company~~we temporarily closed all of our VOI sales centers; our retail marketing operations at Bass Pro Shops and Cabela’s stores and outlet malls; and our Choice Hotels call transfer program. Beginning in mid-May 2020, we started the ~~year off strong~~process of recommencing our sales and marketing operations, except for marketing operations at outlet malls due to our determination that traffic to the malls did not justify reopening. By June 30, 2020, 64 Bass Pro Shops and Cabela’s stores (out of the 89 that were open in March 2020 prior to closures) were open, we reactivated our Choice Hotels call transfer program, and 21 of our 26 VOI sales centers were open for sales to existing owners with ~~system-side~~ sales to new prospects open at one of ~~vacation ownership interests up 16.5% through February 29, 2020.~~ these sales centers. The ~~closures~~temporary closure and subsequent reopening of all marketing operations and VOI sales centers as a result of the COVID-19 pandemic significantly impacted system-wide sales of VOIs during the three months ended June 30, 2020 and is expected

to continue to significantly impact system-wide sales of VOIs ~~during~~for the foreseeable future, including the remainder of ~~2020, however~~2020. However, the ~~actual~~ultimate impact, including the extent and duration of the impact, cannot be predicted at this time.

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. We manage which VOIs are sold based on several factors, including the needs of fee-based clients, our debt service requirements and default resale requirements under term securitizations and similar transactions. These factors and business initiatives contribute to fluctuations in the amount of sales by category from period to period. Fee-Based Sales comprised ~~45%~~17% and ~~52%~~43% of system-wide sales of VOIs during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and 51% during both of the three and six months ended June 30, 2019, respectively. ~~We expect this rate~~The decrease in system-wide sales was due in part to ~~continue to decrease upon~~ the ~~reopening~~temporary closure of our VOI sales centers ~~planned~~in response to ~~begin June 2020~~the COVID-19 pandemic, as ~~we intend to focus on selling Bluegreen owned~~described above. We currently expect that our mix of fee-based inventory ~~including developed~~will decrease over time, as VOI ~~inventory.~~sales centers reopen. However, we intend to remain flexible with respect to our sales of the different categories of our VOI inventory based on economic conditions, business initiatives and other considerations, and accordingly these trends may differ from current expectations.

The following table sets forth certain information for system-wide sales of VOIs for the three and six months ended ~~March 31,~~June 30, 2020 and 2019:


	For the Three Months Ended ‎March 31,						For the Three Months Ended ‎June 30,						For the Six Months Ended ‎June 30,
	2020		2019		Change		2020		2019		Change		2020		2019		Change
(dollars in thousands)
Number of sales offices at period-end ⁽¹⁾		26		26	—	%

Number of sales centers at period-end⁽¹⁾								26		26	—	%		26		26	—	%
Number of active sales arrangements ‎ with third-party clients at period-end		15		15	—	%		15		15	—	%		15		15	—	%
Total number of VOI sales transactions		8,686		8,243	5	%		841		10,674	(92)	%		9,527		18,917	(50)	%
Average sales price per transaction	$	15,873	$	15,796	—	%	$	15,367	$	15,432	—	%	$	15,829	$	15,591	2	%
Number of total guest tours		40,665		48,138	(16)	%		6,089		65,167	(91)	%		46,754		113,305	(59)	%
Sale-to-tour conversion ratio– ‎ total marketing guests		21.4%		17.1%	430	bp		13.8%		16.4%	(260)	bp		20.4%		16.7%	370	bp
Number of new guest tours		22,136		28,064	(21)	%		1,043		40,473	(97)	%		23,179		68,537	(66)	%
Sale-to-tour conversion ratio– ‎ new marketing guests		17.3%		13.9%	340	bp		14.2%		13.6%	60	bp		17.1%		13.7%	340	bp
Percentage of sales to existing owners		59.7%		56.9%	280	bp		85.8%		53.0%	3,280	bp		61.9%		54.7%	720	bp
Average sales volume per guest	$	3,390	$	2,705	25	%	$	2,122	$	2,528	(16)	%	$	3,225	$	2,603	24	%

(1)As previously described, during the last week of March 2020 we temporarily closed all of our VOI sales centers in response to the ~~COVID- 19~~COVID-19 pandemic.

As of June 30, 2020, 21 of our 26 sales centers were open.

Cost of VOIs Sold. During the three months ended ~~March 31,~~June 30, 2020 and 2019, cost of VOIs sold was ~~$4.1~~$1.0 million and ~~$3.8~~$10.6 million, respectively, and represented 11% and 15%, respectively, of sales of VOIs. During the six months ended June 30, 2020 and 2019, cost of VOIs sold was $5.1 million and $14.4 million, respectively, and represented 9% and 7%12%, respectively, of sales of VOIs. 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 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 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. Cost of VOIs sold as a percentage of sales of VOIs ~~increased~~decreased during the three and six months ended ~~March 31,~~June 30, 2020 as compared to ~~March 31, 2019 period,~~the prior year periods, primarily due to the ~~increase in the provision for loan losses as a result~~impact of ~~the COVID-19 pandemic described above.~~lower cost secondary market purchases.

Fee-Based Sales Commission Revenue. During the three months ended ~~March 31,~~June 30, 2020 and 2019, we sold ~~$61.9~~$2.2 million and ~~$66.8~~$83.4 million, respectively, of third-party VOI inventory under commission arrangements and earned sales and marketing

commissions of $1.1 million and $55.3 million, respectively, in connection with those sales. During the six months ended June 30, 2020 and 2019, we sold $64.1 million and $150.1 million, respectively, of third-party VOI inventory under commission arrangements and earned sales and marketing commissions of ~~$41.4~~$42.5 million and ~~$45.2~~$100.6 million, respectively, in connection with those sales. The decreases in sales of third-party developer inventory on a commission basis during the 2020 periods was due primarily to the temporary closure of VOI sales centers as a result of the COVID-19 pandemic and other factors described above. We earned an average sales and marketing commission of ~~67%~~52% and ~~68%~~66% during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and 66% and 67% during the three and six months ended June 30, 2019, respectively, which is net of a reserve for commission refunds in connection with early defaults and cancellations, pursuant to the terms of certain of our fee-based service arrangements. The decrease in sales ~~of third-party developer inventory on a commission basis during the 2020 period was due primarily to a decision to focus on sales of Bluegreen owned VOIs. The decrease in sales~~ and marketing commissions as a percentage of fee-based sales for the three months ended June 30, 2020 ~~period~~ as compared to ~~the~~June 30, 2019 ~~period~~ is primarily related to ~~the mix~~an increase in our reserve for cancelations coupled with a period of ~~developer sales at higher commission rates in the 2019 period as well as higher reserves for early defaults in the 2020 period, which we refund to the third-party developers in certain circumstances.~~fewer fee-based sales.

Financing Revenue, Net of Financing Expense — Sales of VOIs. Interest income on ~~VOIs~~VOI notes receivable was ~~$20.1~~$19.1 million and ~~$20.0~~$19.9 million during the three months ended ~~March 31,~~June 30, 2020 and 2019, respectively, which was partially offset by interest expense on receivable-backed debt of ~~$4.7~~$4.2 million and ~~$5.3~~$5.1 million, respectively. Interest income on VOI notes receivable was $39.2 million and $39.9 million during the six months ended June 30, 2020 and 2019, respectively, which was partially offset by interest expense on receivable-backed debt of $8.8 million and $10.3 million, respectively. The increase in finance revenue net of finance expense induring the 2020 ~~period~~periods as compared to the 2019 ~~period~~periods is primarily due to lower outstanding ~~receivable backed~~receivable-backed debt balances ~~coupled with higher notes receivable balances.~~and lower weighted-average cost of borrowings due to declining interest rates. Revenues from mortgage servicing of $1.5 million and $3.1 million, during the three and six months ended ~~March 31,~~June 30, 2020, ~~and 2019 of $1.6 million~~respectively, and $1.5 million and $3.0 million during the three and six months ended June 30, 2019, respectively, are

included in financing revenue, net of mortgage servicing expenses of ~~$1.4~~$0.1 million and $2.4 million during ~~each of~~ the three and six months ended ~~March 31,~~June 30, 2020, respectively, and ~~2019.~~$1.2 million and $2.6 million during the three and six months ended June 30, 2019, respectively.

Other Fee-Based Services — Title Operations, net. During ~~each of~~ the three months ended ~~March 31,~~June 30, 2020 and 2019, revenue from our title operations was ~~$2.7~~$1.3 million and $3.0 million, respectively, which was partially offset by expenses directly related to our title operations of ~~$1.5~~$0.7 million inand $1.1 million, respectively. During the six months ended June 30, 2020 ~~period~~ and ~~$1.2~~2019, revenue from our title operations was $4.1 million ~~in the 2019 period.~~and $5.8 million, respectively, which was partially offset by expenses directly related to our title operations of $2.2 million and $2.3 million, respectively. Resort title fee revenue varies based on sales volumes as well as the relative title costs in the jurisdictions where the inventory being sold is located. The decrease in the 2020 periods is due to the temporary closure of VOI sales centers as a result of the COVID-19 pandemic and other factors described above.

Net Carrying Cost of VOI Inventory. The carrying cost of our VOI inventory was ~~$9.8~~$10.7 million and ~~$9.3~~$8.1 million during the three months ended ~~March 31,~~June 30, 2020 and 2019, respectively, which was partially offset by rental and sampler (expenses) revenues of ($0.2) million and $2.8 million, respectively. The carrying cost of our VOI inventory was $20.5 million and $17.4 million during the six months ended June 30, 2020 and 2019, respectively, which was partially offset by rental and sampler revenues of ~~$1.9~~$1.7 million and ~~$1.6~~$4.4 million, respectively. The increase in net carrying costs of VOI inventory was primarily related to decreased rentals of developer inventory and decreased sampler stays due to, among other things, government ordered travel restrictions and temporary resort closures in accordance with government mandates and advisories associated with the COVID-19 pandemic and increased maintenance fees ~~and developer subsidies~~ associated with our increase in VOI ~~inventory partially offset by increased rentals of developer~~ inventory. In certain circumstances, we offset marketing costs by using inventory for marketing guest stays.

Selling and Marketing Expenses. Selling and marketing expenses were ~~$74.1~~$26.8 million and ~~$65.2~~$102.0 million during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $83.9 million and $150.0 million during the three and six months ended June 30, 2019, respectively. As a percentage of system-wide sales of VOIs, selling and marketing expenses increased to ~~54%~~205% and 68% during the three and six months ended ~~March 31,~~June 30, 2020, respectively, from ~~50%~~51% during both the three and six months ended ~~March 31, 2019,~~June 30, 2019. The increase in selling and marketing expenses as a percentage of system-wide sales of VOIs is primarily attributable to ~~higher~~certain fixed costs ~~per guest tour, higher fees to Bass Pro as well as a change~~inherent in ~~the timing of expense recognition under the settlement agreement with Bass Pro discussed below, additional costs related to our~~Bluegreen’s sales and marketing operations ~~in 21 new Cabela’s stores~~ and ~~additional~~the costs of maintaining certain sales and marketing associates on furlough despite the temporary closure of our VOI sales sites and marketing operations during April and May 2020 as discussed above. In addition, during the month of June we incurred costs associated with the ~~COVID-19 pandemic.~~

~~As previously described, due~~reopening of 64 Bass Pro and Cabela’s store locations. We utilize these stores to sell mini-vacation packages to customers for future travel which require the ~~COVID- 19 pandemic, on March 23,~~customers to attend a timeshare presentation. During the three and six months ended June 30, 2020, we ~~temporarily closed all of our marketing operations~~incurred $1.2 million and VOI sales centers. Further, we implemented several cost mitigating activities including terminating certain marketing employees and placing a significant number of our sales, sales support and corporate associates on temporary furlough and reduced work hours. As of March 31, 2020, we had incurred $1.9$3.8 million, respectively, in severance and ~~$0.7~~$10.2 million and $10.9 million, respectively, of payroll and benefits expenses relating to ~~sales and marketing~~ employees on temporary furlough or reduced work hours as a result of the impact of the COVID-19 pandemic.

Our 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 previously disclosed, pursuant to the settlement agreement and amended marketing arrangement with Bass Pro entered into during June 2019, 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.~~agreement, including reduced sales as a result of the temporary closure of our sales operations due to the COVID-19 pandemic. If our amended agreement with Bass Pro does not generate a sufficient number of prospects and leads or is terminated or limited, we may not be able to successfully market and sell our products and services at anticipated levels or at levels required in order to offset the costs associated with our marketing efforts. In addition, the amended arrangement with Bass Pro is expected to result in an ~~annual 9%~~ increase in our marketing costs as a percentage of sales from the program, based on increases in program fixed costs and anticipated VOI sales volumes from this marketing channel. ~~Should our VOI~~In light of the decrease in sales ~~volumes be below expectations,~~due to the COVID-19 pandemic, the increase in cost of this marketing program ~~would~~has adversely ~~impact~~impacted our results of operations and cash ~~flow.~~flow and may continue to have an adverse impact if sales continue to be below expected levels.

General and Administrative Expenses — Sales and Marketing Operations. General and administrative expenses ~~representing expenses directly~~ attributable to sales and marketing operations were ~~$8.0~~$5.5 million and ~~$7.0~~$13.5 million during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $46.4 million and $53.4 million during the three and six months ended June 30, 2019, respectively. As a percentage of system-wide sales of VOIs, general and administrative expenses ~~directly~~ attributable to sales and marketing operations ~~were 6%~~was 42% and 5%9% during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and 28% and 18% during the three and six months ended June 30, 2019, ~~respectively.~~respectively, reflecting fixed costs including costs of maintaining certain sales associates on furlough. Included in general and administrative expenses attributable to sales and marketing operations for the 2019 periods was approximately $39.1 million related to the settlement of the dispute with Bass Pro in June 2019. See Note 9: Commitments and Contingencies to our unaudited consolidated financial statements included in Item 1 of this report for additional information regarding the Bass Pro settlement.

‎

Resort Operations and Club Management

For the Three Months Ended
‎March 31,
(dollars in thousands)
2020
2019
Resort operations and club management revenue
$
45,711
$
43,884
Resort operations and club management expense
(32,447)
(31,015)
Operating profit - resort operations and club
‎management
13,264
29%
12,869
29%
Add: Depreciation and amortization
190
365
Add: Severance
1,134
—
Adjusted EBITDA - resort operations and
‎ club management
$
14,588
$
13,234


	For the Three Months Ended ‎June 30,						For the Six Months Ended ‎June 30,
(in thousands)	2020			2019			2020			2019
Resort operations and ‎ club management revenue	$	36,914		$	41,670		$	82,625		$	85,554
Resort operations and club management expense		(18,753)			(26,669)			(50,200)			(56,808)
Operating profit - resort ‎ operations and club management		18,161	49%		15,001	36%		32,425	39%		28,746	34%
Add: Depreciation and amortization		190			364			380			730
Add: Severance		99			—			1,233			—
Adjusted EBITDA - resort operations ‎ and club management	$	18,450		$	15,365		$	34,038		$	29,476

Resort Operations and Club Management Revenue. Resort operations and club management revenue ~~increased 4% during~~decreased 11% and 3% for the three and six months ended ~~March 31,~~June 30, 2020, as compared to the three and six months ended ~~March 31, 2019.~~June 30, 2019, respectively. Cost reimbursement revenue, which primarily consists of payroll and payroll related expenses for management of the HOAs and other services we provide where we are the employer, ~~increased 12%~~decreased 15% during the three months ended ~~March 31,~~June 30, 2020 as compared to the three months ended ~~March 31,~~June 30, 2019 reflecting the temporary closure of many resorts. Cost reimbursement revenue for the six months ended June 30,2020 remained relatively flat as compared to six months ended June 30, 2019. Net of cost reimbursement revenue, resort operations and club management revenues decreased 1%9% and 5% during the three and six months ~~March 31,~~ended June 30, 2020 as compared to three and six months ended ~~March 31,~~June 30, 2019, respectively, primarily as a result of decreases in revenues from our Traveler Plus program, lower food and beverage and other retail operations revenue and lower third-party rental commissions ~~due to lower occupancy~~ as a result of the COVID-19 pandemic. We managed 49 resort properties as of both ~~March 31,~~June 30, 2020 and ~~March 31,~~June 30, 2019.

Resort Operations and Club Management Expense. During the three and six months ended ~~March 31,~~June 30, 2020, resort operations and club management expense ~~increased 5%~~decreased 30% and 12%, respectively, compared to the three and six months ended ~~March 31, 2019. This increase~~June 30, 2019, respectively. The decrease was primarily due to ~~higher reimbursement~~cost mitigation activities implemented in the first quarter of 2020 in addition to lower Traveler Plus program costs and lower food and beverage and other retail operations in the 2020 ~~period~~periods as compared to the 2019 ~~period.~~periods, in each case, as a result of the COVID-19 pandemic.

Corporate and Other

For the Three Months Ended
‎March 31,
(dollars in thousands)
2020
2019
General and administrative expenses -
‎  corporate and other
$
(19,234)
$
(17,983)
Adjusted EBITDA attributable to the
‎  non-controlling interest
‎  in Bluegreen/Big Cedar Vacations
(906)
(1,781)
Other income, net
133
89
Franchise taxes
17
34
(Gain) loss on assets held for sale
(44)
9
Add: Depreciation and amortization
2,150
1,464
Add: Severance
799
—
Add: COVID-19 incremental costs
106
—
Adjusted EBITDA - Corporate and other
$
(16,979)
$
(18,168)


	For the Three Months Ended ‎June 30,				For the Six Months Ended ‎June 30,
(dollars in thousands)	2020		2019		2020		2019
General and administrative expenses - ‎ corporate and other	$	(9,115)	$	(18,471)	$	(28,349)	$	(36,454)
Adjusted EBITDA attributable to the ‎ non-controlling interest ‎ in Bluegreen/Big Cedar Vacations		(775)		(5,193)		(1,681)		(6,974)
Other income, net		273		1,993		406		2,082
Franchise taxes		—		25		17		60
Loss (gain) on assets held for sale		87		(1,989)		43		(1,980)
Add: Depreciation and amortization		2,217		1,606		4,367		3,070
Add: Severance		924		—		1,723		—
Less: Employee Retention credit related to severance		(2,202)		—		(2,202)		—
Add: COVID-19 incremental costs		1,368		—		1,474		—
Adjusted EBITDA - Corporate and other	$	(7,223)	$	(22,029)	$	(24,202)	$	(40,196)

General and Administrative Expenses — Corporate and Other. General and administrative expenses ~~directly~~ attributable to corporate overhead were ~~$19.2~~$9.1 million and ~~$18.0~~$28.3 million during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $18.5 million and $36.5 million during the three and six months ended June 30, 2019, respectively. The ~~increase in the 2020 period was~~decreases were primarily due to ~~approximately $0.8~~a $6.9 million in ~~increased severance costs,~~employee retention credit earned in June 2020 under the CARES Act ($2.2 million of which ~~$0.2~~was earned on severance). This credit was partially offset by $0.9 million and $1.7 million in severance cost for corporate employees, during the three and six months ended June 30, 2020, respectively, of which $0.9 million and $1.1 million, respectively, was due to severance related to cost mitigation efforts attributable to the COVID-19 pandemic.

Adjusted EBITDA Attributable to Non-Controlling Interest in Bluegreen/Big Cedar Vacations. We include in our consolidated financial statements the results of operations and financial condition of Bluegreen/Big Cedar Vacations, our 51% owned subsidiary. The non-controlling interest in Adjusted EBITDA of Bluegreen/Big Cedar Vacations is

the portion of Bluegreen/Big Cedar Vacations’ Adjusted EBITDA that is attributable to Big Cedar LLC, which holds the remaining 49% interest in Bluegreen/Big Cedar Vacations. Adjusted EBITDA attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations was ~~$0.9~~$0.8 million and ~~$1.8~~$1.7 million during the three and six months ended ~~March 31,~~June 30, 2020, respectively, and $5.2 million and $7.0 million during the three and six months ended June 30, 2019, respectively. The decrease in Adjusted EBITDA attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations for the three and six months ended June 30, 2020 was primarily related to the impact of the temporary closure of our VOI sales centers in connection with the COVID-19 pandemic as described above.

Interest ~~Expense~~Expense.. Interest expense not related to receivable-backed debt was ~~$4.2~~$4.4 million and $8.5 million during ~~both of~~ the three and six months ended ~~March 31,~~June 30, 2020, respectively, and ~~2019.~~ $5.0 million and $9.2 million during the three and six months ended June 30, 2019, respectively. The decrease in interest expense during the three and six months ended June 30, 2020 was primarily due to a lower weighted-average cost of borrowing, partially offset by higher outstanding debt balances during the 2020 periods.

Other Income, net. Other income, net was $0.3 million and $0.4 million during the three and six months ended June 30, 2020, respectively, and $2.0 million and $2.1 million during the three and six months ended June 30, 2019, respectively. These decreases were primarily related to the sale of land resulting in a gain of approximately $2.0 million during the 2019 periods.

Provision for Income ~~Taxes~~Taxes.. Our effective income tax rate was approximately ~~18%~~30% and ~~26% during~~25% for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, respectively. Effective income tax rates for interim periods are based upon our current estimated annual rate. Our effective income tax rate varies based upon the estimate of taxable earnings as well as on the mix of taxable earnings in the various states in which we operate. As such, our effective income tax rate for the ~~three~~six months ended ~~March 31,~~June 30, 2020 reflects our current estimate of the effect of the COVID-19 pandemic on our 2020 annual taxable earnings, state taxes, non-deductible items and changes in valuation allowances on deferred tax assets. For further information, see Note 10: Income Taxes to our unaudited ~~Consolidated Financial Statements~~consolidated financial statements included in Item 1 of this report.

Changes in Financial Condition

The following table summarizes our cash flows for the periods indicated (in thousands):

For the Three Months Ended
‎March 31,
2020
2019
Net cash (used in) provided by operating activities
$
(13,826)
$
10,942
Net cash used in investing activities
(2,819)
(7,507)
Net cash provided by (used in) financing activities
52,614
(42,409)
Net increase (decrease) in cash, cash equivalents, and restricted cash
$
35,969
$
(38,974)



	For the Six Months Ended ‎June 30,
	2020		2019

Net cash provided by operating activities	$	8,997	$	11,612
Net cash used in investing activities		(4,377)		(12,696)
Net cash used in financing activities		(10,010)		(44,139)
Net decrease in cash, cash equivalents, and restricted cash	$	(5,390)	$	(45,223)

Cash Flows from Operating Activities

~~Our~~The decrease of $2.6 million to $9.0 million of operating cash flow ~~decreased $24.8 million~~ during the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to the ~~three~~six months ended ~~March 31,~~June 30, 2019 ~~due primarily~~reflects the following:

decreases in cash sales and down payments from customers reflecting the closure of VOI sales centers in response to ~~decreased net~~the COVID-19 pandemic,

a reduction in working capital,

a $14.1 million reduction in income ~~the $4.0~~tax payments,

$16.0 million ~~payment~~less in settlement payments made to Bass Pro ~~in January 2020~~ pursuant to the settlement agreement entered into in June 2019 ~~an increase~~which did not recur in ~~the amount and changes in timing of certain incentive bonuses paid to certain associates during the~~ 2020, ~~period compared to the 2019 period~~ and decreases in escrow deposits from customers reflecting the closure of VOI sales centers resulting from the COVID-19 pandemic. These decreases were partially offset by a reduction in income tax payments and $3.5

$15.8 million in decreased spending on the acquisition and development of inventory during the 2020 period as compared to the 2019 period.

Cash Flows from Investing Activities

Cash used in investing activities decreased ~~$4.7~~$8.3 million during the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to the same period in 2019, reflecting decreased expenditures for property and equipment in the 2020 period.

Cash Flows from Financing Activities

Cash ~~provided by~~used in financing activities ~~increased $95.0~~decreased $34.1 million during the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to the same period ofin 2019 primarily due to the ~~$80.0~~$32.7 million increase in net borrowings on lines-of-credit and notes payable, ~~including, $60~~which included $20 million in net borrowings on our ~~lines-of-credit and various receivable backed facilities~~line-of-credit to increase our cash position ~~in connection with the COVID-19 pandemic in an effort~~intended to ensure adequate liquidity for a sustained ~~period. Additionally,~~period in connection with the COVID-19 pandemic and decreased dividend payments ~~decreased by $3.0~~of $15.6 million as a result of the suspension of regular quarterly cash dividends during the ~~2020 period as compared to the 2019 period.~~second quarter of 2020. These increases in cash provided by financing activities during the 2020 period compared to the

2019 period were partially offset by $11.7 million of repurchases of our common stock in a private transaction during the 2020 period.

For additional information on the availability of cash from existing credit facilities, as well as repayment obligations, see “Liquidity and Capital Resources” below.

As previously disclosed, during July 2020, we declared a special dividend of $1.19 per share of our common stock which is payable on August 21, 2020 to shareholders of record as of the close of business on August 6, 2020. In connection with the special dividend, Bluegreen obtained an undertaking by BBX Capital that it would use the proceeds of this special cash dividend to repay its outstanding $80.0 million indebtedness to us.

Seasonality

We have historically, and expect to continue to experience, seasonal fluctuations in our revenues and results of operations. This seasonality has resulted, and may continue to result, in fluctuations in our quarterly operating results. Due to consumer travel patterns, we typically have seen more tours and experience higher VOI sales during the second and third quarters. However, due to the impact of the COVID-19 pandemic, including the temporary closures of ~~all~~our marketing operations and VOI sales centers as ~~a result of the COVID-19 pandemic,~~described in more detail above, we ~~anticipate~~experienced significantly decreased sales of VOIs in the second ~~and third quarters~~quarter of 2020 as compared to prior years and expect such decrease as compared to prior periods to continue for the ~~same quarters in prior years.~~remainder of 2020 and periods subsequent thereto.

Liquidity and Capital Resources

Our 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 resort management operations.

While the vacation business has historically been capital intensive and we may from time to time pursue transactions or activities which may require significant capital investment and adversely impact cash flows, we have for some time generally sought to focus on the generation of “free cash flow” (defined as cash flow from operating activities, less capital expenditures) by: (i) incentivizing our 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 efficient marketing channels; (iii) limiting our 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 less up-front capital investment and have the potential to produce incremental cash flows; and (v) more recently, by selling VOIs obtained through secondary market or JIT arrangements. We consider free cash flow to be a measure of cash generated by operating activities that can be used for future investing and financing activities, however, there is no assurance that we will generate free cash flow or that any generated will be used for such purposes. While we intend to remain flexible with our sales of different categories of VOI inventory in the future, we currently expect that our mix of fee-based inventory will decrease over time.

The COVID-19 pandemic has ~~been~~caused, and continues to because an unprecedented disruption in the U.S. economy and the ~~timeshare industry~~travel, hospitality and vacation ownership industries due to, ~~government ordered~~among other things, resort closures, travel restrictions and restrictions on business ~~operations. While we are currently developing plans~~operations including government guidance with respect to ~~reopen VOI sales centers~~travel, public accommodations, social gatherings, and ~~marketing operations beginning June 2020, on~~related matters. On March 23, 2020 we temporarily closed all of our VOI sales centers; our retail marketing operations at Bass Pro Shops and Cabela’s stores and outlet malls; and our Choice Hotels call transfer program. In connection with these actions we canceled existing owner reservations through May 15, 2020 and new prospect guest tours were canceled through June 30, 2020. ~~We also implemented several mitigating activities~~Further, some of our Club and Club Associate Resorts were closed in ~~an attempt~~accordance with government mandates and advisories. Beginning mid-May 2020, we started the process of recommencing our sales and marketing operations and our closed resorts began to ~~better position our operations for the impact~~welcome guests as government mandates were lifted. By June 30, 2020, 64 Bass Pro Shops and Cabela’s stores (out of the ~~COVID-19 pandemic. We anticipate~~89 that ~~as a result of these and other initiatives,~~were open in March 2020) were open, we reactivated our ~~sales of VOIs for 2020 will be materially less than our 2019 sales of VOIs. We intend to continue to adjust our business to conditions as they change over the remainder of 2020. The ongoing goals~~Choice Hotels call transfer program, virtually all of our ~~mitigating activities are designed~~resorts were open, and 21 of our 26 VOI sales centers were open for sales to ~~preserve cash~~existing owners and ~~reduce expenses by:~~one was also selling to new prospects. As of July 31, 2020, 23 VOI sales centers were open for existing owners with sales to new prospects open at 17 VOI sales centers. In addition, as of July 31, 2020, 85 Bass Pro and Cabela’s stores were open. The performance of our retail marketing of our vacation packages in the locations we have reopened and our VOI sales at the sales centers reopened through June 30, 2020 exceeded our expectations. However, increased COVID-19 cases in certain markets in July resulted in increased cancelation of marketing guest stays (and consequently, new owner prospects) and it is impossible to predict whether this trend will continue or worsen or the extent of the adverse impact this may have on Bluegreen.

~~Significantly reducing our workforce.~~

~~Reducing overhead and increasing efficiency.~~

~~Minimizing capital spending.~~

~~Maintaining compliance under our outstanding indebtedness.~~

~~While there can be no assurance that these goals will be achieved, initial actions taken to date include the following:~~

~~We temporarily ceased marketing programs.~~

~~We reduced inventory acquisition and development expenditures.~~

4245

WeAs a result of the effect of the pandemic, we implemented ~~a reduction~~several cost mitigating activities beginning in March 2020, including reductions in workforce of over ~~970~~1,600 positions and placed another ~~3,700~~approximate 3,200 of our associates on temporary furlough ~~and~~or reduced work hours.

 As of June 30, 2020, approximately 2,300 of these associates have returned to work on a full-time basis. In ~~an effort~~July 2020, approximately 600 additional associates returned to ~~ensure adequate liquidity~~work on a full-time basis for a ~~sustained period, we~~total of approximately 4,250 full-time associates as of July 31, 2020 compared to approximately 6,050 full-time associates as of July 31, 2019. However, as a result of the slowdown discussed above or otherwise, additional employees may be terminated or furloughed in the future. We also reduced our new inventory acquisition and development expenditures and drew down $60 million under our lines-of-credit, ~~and various receivable backed facilities to increase our cash position.~~

~~We suspended the payment~~ of ~~dividends~~which $40 million was repaid in June 2020.

We have ~~$20.8~~$23.0 million of required contractual obligations coming due within one year, as well as certain facilities for which the advance period will expire inprior to the end of 2020. While there is no assurance that we will be successful, we intend to seek ~~renewal~~to renew or extend our debt and we believe that the implementation of our mitigating activities will best position us to address these matters with our lenders.

The ability to sell and/or borrow against notes receivable from VOI buyers has been critical to our continued liquidity. A financed VOI buyer is generally only required to pay a minimum of 10% to 20% of the purchase price in cash 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 our VOI notes receivable has been critical to our ability to meet our short and long-term cash needs. We have attempted to maintain a number of diverse financing facilities. Historically, we have relied on our ability to sell receivables in the term securitization market in order to generate liquidity and create capacity in our receivable facilities. We have historically financed a majority of our sales of VOIs, and accordingly, are subject to the risk of defaults by our customers. While it is still too early to know the full impact of ~~the~~ COVID- 19 ~~pandemic had not yet been reflected in~~on our default or delinquency rates, ~~as of March 31, 2020,~~ we believe that the COVID-19 pandemic will have a significant impact on our VOI notes receivable. Accordingly, during the six months ended June 30, 2020, we recorded an additional allowance for loan losses of ~~$12~~$12.0 million, ~~as of March 31, 2020,~~ which includes our estimate of customer defaults as a result of the ~~COVID – 19~~COVID-19 pandemic based on our historical experience, forbearance requests received from our customers, and other factors, including but not limited to, the seasoning of the ~~note~~notes receivable and FICO scores of the customers. The impact of the COVID-19 pandemic is rapidly changing and highly uncertain. Accordingly, and due to other risks and uncertainties associated with assumptions and changing market conditions, our allowance may not prove to be accurate and may be increased in future periods, which would adversely impact our operating results for those periods.

Further, the COVID-19 pandemic has resulted in instability and volatility in the financial markets. Our ability to borrow against or sell our VOI notes receivable has historically been a critical factor in our liquidity. If we are unable to renew credit facilities or obtain new credit facilities, our business, results of operations, liquidity, or financial condition may be materially, adversely impacted.

In connection with our capital-light business activities, we have entered into agreements with third-party developers that allow us to buy VOI inventory, typically on a non-committed basis, prior to when we intend to sell such VOIs, although there is no assurance that these third party developers will be in a position to deliver that inventory in the future. Our capital-light business strategy also includes secondary market sales, pursuant to which we enter into secondary market arrangements with certain HOAs and others on a non-committed basis, which allows us 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. Acquisitions of JIT and secondary market inventory during the remainder of 2020 is expected to be reduced to a range ~~from~~of $3.0 million to $5.0 million.

During the ~~three months ended March 31,~~first quarter of 2020, we paid a cash dividend of $0.13 per share on our common stock orwhich totaled $9.7 ~~million in~~million. On April 22, 2020, our board of directors suspended regular quarterly cash dividends on our common stock due to the ~~aggregate.~~impact of the COVID-19 pandemic. During each of the ~~three months ended March 31,~~first and second quarter of 2019, we paid a cash dividend of $0.17 per share on our common stock, orwhich totaled $12.7 million each quarter and $25.3 million in the aggregate. On ~~April~~July 22, 2020, ~~our board~~we declared a special cash dividend of ~~directors suspended quarterly cash dividends~~$1.19 per share on our common stock, ~~due~~or $86.3 million in the aggregate, which is payable on August 21, 2020 to ~~the impact~~shareholders of record as of the ~~COVID-19 pandemic.~~close of trading on August 6, 2020. There is no assurance that regular or any other special cash dividend will be paid in the future.

In April 2015, one of our wholly owned subsidiaries provided an $80.0 million loan to BBX Capital. Amounts outstanding bore interest at a rate of 6% per annum, until April 17, 2020, at which time the interest rate was reduced to 4% per annum.

Payments of interest are required on a quarterly basis, with all outstanding amounts being due and payable at maturity. During March 2020, the loan was amended to extend the maturity date until April 17, ~~2021 and reduce the interest rate to 4% per annum, effective April 17, 2020, as described above.~~2021. 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

us to remain in compliance with covenants under our outstanding indebtedness. During ~~each of~~ the three months ended ~~March 31,~~June 30, 2020 and 2019, we recognized $0.9 million and $1.2 million, respectively, of interest income on the loan to BBX Capital. During the six months ended June 30, 2020 and 2019, we recognized $2.1 million and $2.4 million, respectively of interest income on the loan to BBX Capital. As described above, BBX Capital has agreed to use the proceeds of the special cash dividend declared during July 2020 to repay this $80.0 million loan.

Our level of debt and debt service requirements have several important effects on our operations, including the following: (i) significant debt service cash requirements reduce the funds available for operations and future business opportunities and increase our vulnerability to adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii) our leverage position increases our vulnerability to economic and competitive pressures; (iii) the financial covenants and other restrictions contained in indentures, credit agreements and other agreements relating to our indebtedness require us to meet certain financial tests and may restrict our ability to, among other things, pay dividends, borrow additional funds, dispose of assets or make investments; and (iv) our leverage position may limit funds available for acquisitions, working capital, capital expenditures, dividends and other general corporate purposes. Certain of our competitors operate on a less leveraged basis and have greater operating and financial flexibility than we do.

Credit Facilities for Receivables with Future Availability

We maintain various credit facilities with financial institutions which allow us to borrow against or sell our VOI notes receivable. As of ~~March 31,~~June 30, 2020, we had the following credit facilities with future availability, 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 in each case to compliance with covenants, eligible collateral and applicable terms and conditions during the advance period (dollars in thousands):



	Borrowing ‎Limit as of ‎March 31, 2020		Outstanding ‎Balance as of ‎March 31, ‎2020		Availability ‎as of ‎ March 31, ‎2020		Advance Period ‎Expiration; ‎Borrowing ‎Maturity as of ‎March 31, 2020	Borrowing Rate; ‎Rate as of ‎March 31, 2020	Borrowing ‎Limit as of ‎June 30, ‎2020		Outstanding ‎Balance as of ‎June 30, ‎2020		Availability ‎as of ‎ June 30, ‎2020		Advance Period ‎Expiration; ‎Borrowing ‎Maturity as of ‎June 30, 2020	Borrowing Rate; ‎Rate as of ‎June 30, 2020
Liberty Bank Facility	$	50,000	$	23,184	$	26,816	June 2020; ‎March 2023	Prime Rate; floor of 4.00%; 4.75%	$	40,000	$	21,663	$	18,337	June 2021; ‎June 2024	Prime Rate; floor of 4.00%; 4.00%
NBA Receivables Facility		70,000		29,033		40,967	September 2020; ‎March 2025	30 day LIBOR+2.75%; floor of 3.50%; 3.74%		70,000		26,484		43,516	September 2020; ‎March 2025	30 day LIBOR+2.75%; floor of 3.50%; 3.50%
Pacific Western Facility		40,000		28,256		11,744	September 2021; ‎September 2024	30 day LIBOR+2.75% to 3.00%; 3.87%		40,000		26,452		13,548	September 2021; ‎September 2024	30 day LIBOR+2.75% to 3.00%; 3.06%
KeyBank/DZ Purchase Facility		80,000		60,899		19,101	December 2022; ‎December 2024	30 day LIBOR or CP +2.25%; 3.29% ⁽¹⁾		80,000		65,159		14,841	December 2022; ‎December 2024	30 day LIBOR or CP +2.25%; 2.50% ⁽¹⁾
Quorum Purchase Facility		50,000		39,092		10,908	December 2020; ‎December 2032	⁽²⁾		50,000		36,759		13,241	December 2020; ‎December 2032	⁽²⁾
	$	290,000	$	180,464	$	109,536			$	280,000	$	176,517	$	103,483

(1)Borrowings accrue interest at a rate equal to either LIBOR, a “Cost of Funds” rate or commercial paper (“CP”) rates plus 2.25%. As described in further detail below, 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 ~~March 31,~~June 30, 2020, ~~$2.7~~$2.6 million accrues interest at a rate per annum of 4.75%, ~~$18.5~~$17.5 million accrues interest at a fixed rate of 4.95%, ~~$1.5~~$1.4 million accrues interest at a fixed rate of ~~5.0%~~5.00%, ~~$15.2~~$14.2 million accrues interest at a fixed rate of 5.10%, and ~~$1.1~~$1.0 million accrues interest at a fixed rate of 5.50%.

Liberty Bank Facility. Since 2008, we have maintained a revolving VOI notes receivable hypothecation facility (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 the revolving credit ~~period through~~period. On June ~~2020. The Liberty Bank Facility matures in March 2023. Subject to its terms and conditions,~~25, 2020, we amended the Liberty Bank Facility ~~provides for advances of (i)~~to extend the revolving credit period from June 2020 to June 2021, and the maturity from March 2023 to June 2024. In addition, the amendment decreased the advance rate with respect to Qualified Timeshare Loans from 85% to 80% of the unpaid principal balance of the Qualified Timeshare Loans ~~assigned to agent, and (ii)~~through September 2020. The advance rate is 60% of the unpaid principal balance of Non-Conforming Qualified Timeshare ~~Loans assigned to agent, during~~Loans. The amendment also reduced the ~~revolving credit period of the facility. Maximum~~maximum permitted outstanding borrowings ~~under the Liberty Bank Facility are~~from $50.0 million to $40.0 million, subject to the terms of the ~~facility. All borrowings outstanding under~~facility and commencing on July 1, 2020 decreased the ~~facility bear~~ interest ~~at an annual~~ rate ~~equal~~ to the Wall Street Journal (“WSJ”) Prime Rate ~~subject~~minus 0.10% with a floor of 3.40%

from the Prime Rate with a floor of 4.00%. In addition, recourse to ~~a 4.00% floor.~~Bluegreen under the restructured facility was reduced to $10 million, with certain exceptions set forth in the facility. Subject to the terms of the facility, principal and interest due under the Liberty Bank Facility are paid as cash is collected on the pledged receivables, with the remaining balance being due by maturity. ~~On February 11, 2020, the Liberty Bank Facility was amended solely to extend the revolving credit period from March 12, 2020 to June 10, 2020.~~

NBA Receivables Facility. Bluegreen/Big Cedar Vacations has a revolving VOI hypothecation facility (the “NBA Receivables Facility”) with National Bank of Arizona (“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 $70 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%). Subject to the terms of the facility, principal and interest payments received on pledged receivables are applied to principal and interest due under the facility, with the remaining outstanding balance being due by maturity.

Pacific Western Facility. We have a revolving VOI notes receivable hypothecation facility (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 subject to eligible collateral and customary terms and conditions. The revolving advance period expires in September 2021 and the Pacific Western Facility matures in September 2024 (in each case, subject to an additional 12-month extension at the option of Pacific Western Bank). Eligible “A” VOI notes receivable that meet certain eligibility and FICO score requirements, which we believe are typically consistent with loans originated under our 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. All borrowings outstanding under the Pacific Western Facility accrue interest at an annual rate equal to 30-day LIBOR plus 3.00%; provided, however, that a portion of the borrowings, to the extent such borrowings are in excess of established debt minimums, will accrue interest at 30-day LIBOR plus 2.75%. Subject to the 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 being due by maturity. The facility has limited recourse not to exceed $10.0 million.

KeyBank/DZ Purchase Facility. We have 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 up to $80.0 million and provides for an advance rate of 80% with respect to VOI receivables securing amounts financed. On December 27, 2019, the KeyBank/DZ Purchase Facility was amended to extend the advance period to December 2022 from December 2019 and amend the interest rate on borrowings under the facility as described below. The KeyBank/DZ Purchase Facility will mature and all outstanding amounts will become due 24 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. Pursuant to the December 2019 amendment, the interest rate payable under the facility is the applicable index rate plus 2.25% until the expiration of the revolving advance period (a decrease from 2.75% prior to the amendment) and thereafter will equal the applicable index rate plus 3.25% (a decrease from 4.75% prior to the amendment). Subject to the terms of the facility, we 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.

Quorum Purchase Facility. Bluegreen/Big Cedar Vacations has a VOI notes receivable purchase facility (the “Quorum Purchase Facility”) with Quorum Federal Credit Union (“Quorum”), pursuant to which Quorum has agreed to purchase eligible VOI 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. On March 17, 2020, the Quorum Purchase Facility was amended to extend the advance period to December 2020 from June 2020. The interest rate on each advance is set at the time of funding based on rates mutually agreed upon by all parties. The maturity of the Quorum Purchase Facility is in December 2032. Of the amounts outstanding under the Quorum Purchase Facility at ~~March 31,~~June 30, 2020, ~~$2.7~~$2.6 million accrues interest at a rate per annum of 4.75%, ~~$18.5~~$17.5 million accrues interest at a fixed rate of 4.95%, ~~$1.5~~$1.4 million accrues interest at a fixed rate of 5.0%, ~~$15.2~~$14.2 million

accrues interest at a fixed rate of 5.1%, and $1.0 million accrues interest at a fixed rate of ~~5.10%, and $1.1 million accrues interest at a fixed rate of 5.50%~~5.5%. The Quorum Purchase Facility provides for an 85% advance rate on eligible receivables sold under the facility, however Quorum can modify this advance rate on future purchases subject to the terms and conditions of the Quorum Purchase Facility. Eligibility requirements for VOI notes receivable sold include, among others, that the obligors under the VOI notes receivable sold be members of Quorum at the time of the note sale. Subject to performance of the collateral, we or Bluegreen/Big Cedar Vacations, as applicable, will receive any excess cash flows generated by the VOI notes receivable transferred to Quorum under the facility (excess meaning after payment of customary fees, interest and principal under the facility) on a pro-rata basis as borrowers make payments on their VOI notes receivable. While ownership of the VOI notes receivable included in the Quorum Purchase 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.

Other Credit Facilities

Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan. In December 2016, we 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, we 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”). Borrowings under the amended facility generally bear interest at LIBOR plus 2.00% - 2.50%, depending on our leverage ratio, are collateralized by certain of our VOI inventory, 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. On June 29, 2020, the facility was amended to modify the definition of certain customary covenants. As of ~~March 31,~~June 30, 2020, outstanding borrowings under the facility totaled ~~$207.5~~$166.3 million, including ~~$97.5~~$96.3 million under the Fifth Third Syndicated Term Loan with an interest rate of ~~3.61%~~3.71%, and ~~$110.0~~$70.0 million under the Fifth Third Syndicated Line of Credit with an interest rate of ~~3.32%~~2.49%. ~~As of March 31, 2020, we had $15.0 million available under the Fifth Third Syndicated Line of Credit.~~

We also have outstanding obligations under various credit facilities and securitizations that have no remaining future availability as the advance periods have expired.

Commitments

Our material commitments include the required payments due on our receivable-backed debt, lines-of-credit and other notes payable, junior subordinated debentures, commitments to complete certain projects based on our 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 required on all of our outstanding debt, non-cancelable operating leases and inventory purchase commitments by period due date, as of ~~March 31,~~June 30, 2020 (in thousands):



	Payments Due by Period												Payments Due by Period
Contractual Obligations	Less than ‎1 year		1 – 3 ‎Years		4 – 5 ‎Years		After 5 ‎Years		Unamortized ‎ Debt Issuance ‎Costs		Total		Less than ‎1 year		1 – 3 ‎Years		4 – 5 ‎Years		After 5 ‎Years		Unamortized ‎ Debt Issuance ‎Costs		Total

Receivable-backed notes payable	$	—	$	34,943	$	106,430	$	283,076	$	(4,752)	$	419,697	$	1,290	$	10,726	$	127,742	$	264,485	$	(4,438)	$	399,805
Lines-of-credit and notes payable		10,275		26,134		188,750		—		(1,374)		223,785		11,300		25,071		146,875		—		(1,338)		181,908
Jr. subordinated debentures ⁽¹⁾		—		—		—		110,827		—		110,827		—		—		—		110,827		—		110,827
Noncancelable operating leases ⁽²⁾		6,495		10,355		4,773		11,543		—		33,166		6,391		9,903		3,815		11,478		—		31,587
Bass Pro Settlement⁽³⁾		4,000		8,000		4,000		—		—		16,000		4,000		8,000		4,000		—		—		16,000
Total contractual obligations		20,770		79,432		303,953		405,446		(6,126)		803,475		22,981		53,700		282,432		386,790		(5,776)		740,127

Interest Obligations ⁽⁴⁾

Receivable-backed notes payable		15,706		29,977		26,787		76,254		—		148,724		13,958		27,538		24,384		69,225		—		135,105
Lines-of-credit and notes payable		7,798		14,209		9,753		—		—		31,760		5,879		10,278		5,714		—		—		21,871
Jr. subordinated debentures		7,122		14,243		14,243		77,459		—		113,067		6,549		13,098		13,098		69,541		—		102,286
Total contractual interest		30,626		58,429		50,783		153,713		—		293,551		26,386		50,914		43,196		138,766		—		259,262
Total contractual obligations	$	51,396	$	137,861	$	354,736	$	559,159	$	(6,126)	$	1,097,026	$	49,367	$	104,614	$	325,628	$	525,556	$	(5,776)	$	999,389

(1)Amounts do not include purchase accounting adjustments for junior subordinated debentures of ~~$38.5~~$38.3 million.

(2)Amounts represent the cash payment for leases and ~~includes~~include interest of ~~$9.6 million~~$9.3 million.

(3)Amounts represent the $4$4.0 million annual cash payment to Bass Pro during each of 2021, 2022, 2023, ~~2024~~ and ~~2025~~ 2024pursuant to the June 2019 settlement agreement and ~~includes~~include imputed interest of $2.7 million.

(4)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 ~~March 31,~~June 30, 2020.

In December 2019, our then-servicing President and Chief Executive Officer resigned. In connection with his resignation, we agreed to make payments totaling $3.5 million over a period of 18 months, ~~$2.9~~$2.4 million of which remained payable as of ~~March 31,~~June 30, 2020. Additionally, during 2019 we entered into certain agreements with other executives related to their separation from Bluegreen or change in position. Pursuant to the terms of these agreements, we agreed to make payments totaling $2.5 million through November 2020. As of ~~March 31,~~June 30, 2020, ~~$1.0~~$0.4 million remained payable under these agreements.

In lieu of paying maintenance fees for unsold VOI inventory, we may enter into subsidy agreements with certain HOAs. ~~We paid $1.9 million in subsidy payments in connection with these arrangements during each of~~During the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, we made payments related to such subsidies of $4.6 million and $4.8 million, respectively, which are included in cost of other fee-based services. As of ~~March 31,~~June 30, 2020, we had ~~$3.3~~$7.0 million accrued for such subsidies, which is included in accrued liabilities and other in the unaudited ~~Consolidated Balance Sheet~~consolidated balance sheet as of such date. As of December 31, 2019, we had no accrued liabilities for such subsidies.

We intend to use cash on hand and cash flow from operations, including cash received from the ~~sale/~~sale or pledge of VOI notes receivable, and cash received from new borrowings under existing or future debt facilities in order to satisfy the principal payments required on contractual obligations. While there is no assurance that we will be successful, we believe that we will be successful in renewing certain debt facilities and/or obtaining extensions. Based on this and the actions implemented in an effort to mitigate the impact of the COVID-19 pandemic, we believe that we will be in a position to meet required debt payments when we expect them to be ultimately due, however there is no assurance that this will be the case.

We believe that our existing cash, anticipated cash generated from operations, anticipated future permitted borrowings under existing or future credit facilities, and anticipated future sales of notes receivable under existing, future or replacement

purchase facilities will be sufficient to meet our anticipated working capital, capital expenditure and debt service requirements, including the contractual payment of the obligations set forth above, for the foreseeable future, subject to the success of our ongoing business strategies, the ongoing availability of credit and the success of the actions we have taken in response to the COVID-19 pandemic to mitigate the impact of the pandemic. We will continue our efforts to renew, extend or replace any credit and receivables purchase facilities that have expired or that will expire in the near term. We may, in the future, also obtain additional credit facilities and may issue corporate debt or equity securities. Any debt incurred or issued may be secured or unsecured, bear interest at fixed or variable rates and may be subject to such terms as the lender may require and management believes acceptable. There can be no assurance that our efforts to renew or replace credit facilities or receivables purchase facilities which have expired or which are scheduled to expire in the near term will be successful or that sufficient funds will be available from operations or under existing, proposed or future revolving credit or other borrowing arrangements or receivables purchase facilities to meet our cash needs, including debt service obligations. To the extent we are unable to sell notes receivable or borrow under such facilities, our ability to satisfy our obligations would be materially adversely affected.

Our receivables purchase facilities, credit facilities, indentures and other outstanding debt instruments include what we believe 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, we may be required to seek waivers of such covenants, but may not be successful in obtaining waivers, and such covenants may limit our ability to raise funds, sell receivables or satisfy or refinance our obligations, or otherwise adversely affect our financial condition and results of operations, as well as our ability to pay dividends. During April 2020, our board of directors suspended regular quarterly cash dividends on our common stock due to the impact of the COVID-19 pandemic. While we declared a special dividend during July 2020 which is payable on August 21, 2020 to shareholders of record as of the close of trading on August 6, 2020, no regular or any other special cash dividends are currently anticipated. In addition, our future operating performance and ability to meet our financial obligations will be subject to future economic conditions and to financial, business and other factors, many of which may be beyond our control.

Pursuant to a settlement agreement we entered into with Bass Pro and its affiliates during June 2019, we paid Bass Pro $20.0 million and agreed to make five annual payments to Bass Pro of $4.0 million, which commenced in January 2020. Additionally, in lieu of the previous commission arrangement, we agreed to pay Bass Pro a fixed annual fee of $70,000 for each Bass Pro and Cabela’s retail store that we are 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). We 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. Subject to the terms and conditions of the settlement agreement, we 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. In January 2020, we paid $5.2 million for this fixed fee, of which ~~$4.1~~$2.7 million was prepaid and is included in our unaudited consolidated balance sheet as of ~~March 31,~~June 30, 2020. We had marketing operations at 2115 Cabela’s stores at ~~March 31,~~June 30, 2020 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 agreement, including as a result of a reduction of traffic in the stores in excess of 25% year-over-year. In March 2020 as a result of the COVID-19 pandemic, we temporarily closed our retail marketing operations at Bass Pro Shops and Cabela’s stores. ~~We are currently developing a plan~~Beginning mid-May 2020, we started the process of recommencing our sales and marketing operations and by June 30, 2020, marketing operations at 64 Bass Pro Shops and Cabela’s stores (out of the 89 that were open in March 2020) were open with the remainder expected to reopen ~~these operations.~~by September 30, 2020.

Off-balance-sheet Arrangements

As of ~~March 31,~~June 30, 2020, we did not have any “off-balance sheet” arrangements.

‎

4851

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate risk and risks relating to inflation and changing prices. In addition, instability or volatility in the financial markets which restricts the availability of credit, including in connection with COVID-19 pandemic, may adversely impact our ability to borrow against or sell our VOI receivables, which has historically been a critical factor in our liquidity, ~~as well as~~or otherwise adversely impact our business, operating results, liquidity or financial condition. ~~For additional information, see~~Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2019.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act,~~Act), as of ~~March 31,~~June 30, 2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~March 31,~~June 30, 2020, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act has been recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and has been accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the three months ended ~~March 31,~~June 30, 2020, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

‎

4952

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~There~~Except as set forth below, there have been no material changes in our material legal proceedings from those disclosed in the “Legal Proceedings” section of our Annual Report on Form 10-K for the year ended December 31, 2019.

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

Robert Barban et al. v. Trustee Vacation Trust, Inc., in its capacity as the Trustee of the Bluegreen Vacation Club Amended and Restated Trust Agreement and Bluegreen Resorts Management, Inc., Case No. 4:20-cv-00897, United States District Court, Eastern District of Missouri, Eastern Division

Kenneth Johansen, individually and on behalf of a class of all persons and entities similarly situated v. Bluegreen Vacations Unlimited, Inc., Case No. 9:20-cv-81076, United States District Court, Southern District of Florida

Item 1A. Risk Factors.

Except as set forth below, there have been no material changes to the risk factors disclosed in the “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

The information presented below updates the related risk factor set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 and ~~should be read~~our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and is in ~~conjunction with, the~~addition to other risk factors and other ~~information~~risks and uncertainties disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

The COVID-19 pandemic has had, and the current and uncertain future outlook of the pandemic may continue to have, a significant adverse effect on our business, financial condition, liquidity and results of operations.

The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the U.S. economy and its rapid spread, as well as the escalating measures governments and private organizations have implemented in order to stem the spread of this pandemic, have had, and are expected to continue to have, a material adverse impact on our business, operating results and financial condition, including, without limitation, due to government ordered travel restrictions, restrictions on business operations, and stay at home orders and guidelines. Moreover, additional currently unknown restrictions or other events adversely impacting the vacation ownership industry may occur and the adverse effects of the COVID-19 pandemic on our business, operating results and financial condition may otherwise be lengthened or exacerbated.

On March 23, 2020 we temporarily closed all of our VOI sales centers; our retail marketing operations at Bass Pro Shops and Cabela’s stores and outlet malls; and our Choice Hotels call transfer program. In connection with these actions we canceled existing owner reservations through May 15, 2020 and new prospect guest tours through ~~June~~May 30, 2020. Further, some of our Club and Club Associate ~~resorts~~Resorts were closed ~~due to~~in accordance with government mandates and advisories. Beginning mid-May 2020, we started the process of recommencing our sales and marketing operations and our closed resorts began to welcome guests as government mandates were lifted. By June 30, 2020, 64 Bass Pro Shops and Cabela’s stores (out of the 89 that were open in March 2020) were open, we reactivated our Choice Hotels call transfer program, virtually all of our resorts were open, and 21 of our 26 VOI sales centers were open for sales to existing owners followed by sales to new prospects open at one sales center as of June 30, 2020. As of July 31, 2020, 23 VOI sales centers were open for sales to existing owners and sales to new prospects open at 17 VOI sales centers. However, increased COVID-19 cases in certain markets in July resulted in a slowdown in sales and significant cancelation of marketing guest stays and it is impossible to predict whether this trend will continue or worsen or the extent of the adverse impact this may have on Bluegreen.

~~In light~~As a result of the effect of the pandemic, ~~and its impact on our business,~~ we ~~took~~implemented several cost mitigating ~~steps,~~activities, including ~~the following:~~

~~we ceased marketing programs;~~

~~we implemented a reduction~~reductions in workforce of over ~~970~~1,600 positions and placed another ~~3,700~~approximate 3,200 of our associates on temporary furlough ~~and~~or reduced work ~~hours;~~hours. As of June 30, 2020, approximately 2,300 associates previously on temporary furlough or reduced work hours have returned to full time to support reopening activities. We also suspended the payment of regular quarterly cash dividends, reduced our new inventory acquisition and

~~in an effort to ensure adequate liquidity for a sustained period, we~~ development expenditures and drew down $60 million under our lines-of-credit, ~~and various receivable backed facilities.~~of which $40 million was repaid in June 2020.

While these steps were implemented to mitigate the effects of the pandemic on our business, the measures themselves had and may continue to have negative consequences with respect to our business and operations, including by reducing sales. In addition, ~~the~~ cost savings ~~which we are seeking to achieve~~ from these measures ~~will~~were not be recognized immediately and will not completely offset the decrease in revenues and other adverse impacts of the pandemic. Further, the increase in our debt position will, among other things, increase our vulnerability to adverse economic conditions and require us to meet ~~significant~~increased debt service obligations.

In addition, we have historically financed a majority of our sales of VOIs, and accordingly, are subject to the risk of defaults by our customers. While the full impact of ~~the~~ COVID- 19 pandemic ~~has~~through June 30, 2020 had not yet been reflected in our default or delinquency rates, we believe that the COVID-19 pandemic will have a significant impact on our VOI notes receivable. ~~As of March 31,~~Accordingly, during the six months ended June 30, 2020, we recorded an additional allowance for loan losses of ~~$12~~$12.0 million, which includes our estimate of customer defaults as a result of the ~~COVID – 19~~COVID-19 pandemic based on our historical experience, forbearance requests received from our customers, and other factors, including but not limited to, the seasoning of the ~~note~~notes receivable and FICO scores of the customers. The impact of the COVID-19 pandemic is rapidly changing and highly uncertain.

Accordingly, and due to other risks and uncertainties associated with assumptions and changing market conditions, our allowance may not prove to be accurate and may be increased in future periods, which will adversely impact our operating results for those periods.

Our operations could also be negatively affected further if our employees are quarantined or sickened as a result of exposure to COVID-19, or if they are subject to governmental COVID-19 curfews or “shelter in place” health orders. Measures restricting the ability of employees to come to work may ~~cause a further deterioration in~~impair our service or operations, all of which could negatively affect our business.

We are unable to predict how long these conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on our business. Furthermore, not only is the duration of the pandemic and combative measures unknown, the overall situation is extremely fluid, and it is impossible to predict the timing of future changes in the situation and what their impact may be on our business. At this time we are also not able to predict whether the COVID-19 pandemic will result in permanent changes to our customers' behavior, which may include, without limitation, continued or permanent decreases in discretionary spending and reductions in travel or vacation ownership stays or purchases, each of which would have a material adverse impact on our business, operating results and financial condition.

~~Item 2. Unrestricted Sales of Equity Securities and Use of Proceeds.~~

On November 26, 2018, our board of directors approved a share repurchase program which authorizes the repurchase of up to 3,000,000 shares of our common stock at an aggregate cost of up to $35.0 million. The repurchase program authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors. In March 2020, the Company purchased approximately 1.9 million shares of its common stock in a private transaction for $6.25 per share. The following table provides information concerning shares of our common stock repurchased during the quarter ended March 31, 2020:

Period
Total Number of Shares Purchased
Average Price Per Share
Total Number of Shares Purchased as a Part of Publicly Announced Programs
Maximum Number of Shares That May Yet Be Purchased Under the Program
January 1 - January 31, 2020
-
-
-
2,628,238
February 1 - February 29, 2020
-
-
-
2,628,238
March 1 - March 31, 2020
1,878,400
$
6.25
1,878,400
749,838
Total
1,878,400
$
6.25
1,878,400
749,838

‎

5154

Item 6. Exhibits.

EXHIBIT INDEX



Exhibit ‎Number		Description
10.1		First Amendment to Second Amended and Restated Receivables Loan Agreement, effective June 30, 2020, by and among Liberty Bank and Bluegreen Vacations Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 30, 2020)
10.2		Third Amended and Restated Receivables Loan Note by Bluegreen Vacations Corporation in favor of Liberty Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 30, 2020)
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1†		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2†		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels LinkBase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

† Exhibit is furnished, not filed, with this report.
‎

5255

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	BLUEGREEN VACATIONS CORPORATION

~~May 11,~~August 10, 2020	By: /s/ Raymond S. Lopez
	Raymond S. Lopez
	Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer

5356


Period	Total Number of Shares Purchased	Average Price Per Share		Total Number of Shares Purchased as a Part of Publicly Announced Programs	Maximum Number of Shares That May Yet Be Purchased Under the Program
January 1 - January 31, 2020	-		-	-	2,628,238
February 1 - February 29, 2020	-		-	-	2,628,238
March 1 - March 31, 2020	1,878,400	$	6.25	1,878,400	749,838
Total	1,878,400	$	6.25	1,878,400	749,838