ITEM 1. BUSINESS.
SUMMARY
Bluegreen Corporation (the "Company") is a leading marketer of vacation and residential lifestyle choices through its resorts and residential land and golf businesses. The Company's resorts business (the "Resorts Division") acquires, develops and markets timeshare interests in resorts generally located in popular high-volume, "drive-to" vacation destinations. "Timeshare Interests" are of two types: one which entitles the fixed-week buyer to a fully-furnished vacation residence for an annual one-week period in perpetuity and the second which entitles the buyer of the Company's points-based Vacation Club product to an annual allotment of "points" in perpetuity (supported by an underlying deeded fixed timeshare week being held in trust for the buyer). "Points" may be exchanged by the buyer in various increments for lodging for varying lengths of time in fully-furnished vacation residences at the Company's participating resorts. A Timeshare Interest also entitles the buyer to access to over 1,800 resorts worldwide through the Company's participation in timeshare exchange networks. The Company currently develops, markets and sells Timeshare Interests in ten resorts located in the United States and the Caribbean. The Company also markets and sells Timeshare Interests at four off-site sales locations. Prior to investing in new timeshare projects, the Company performs market research and testing and, prior to completion of development, seeks to pre-sell a significant portion of its Timeshare Interests inventory. The Company's residential land and golf business (the "Residential Land and Golf Division") acquires, develops and subdivides property and markets the subdivided residential lots to retail customers seeking to build a home in a high quality residential setting, in some cases on properties featuring a golf course and related amenities. The Residential Land and Golf Division's strategy is to locate its projects near major metropolitan centers outside the perimeter of intense subdivision development or in popular retirement areas. The Company has focused the Residential Land and Golf Division's activities in certain core markets in which the Company has developed substantial marketing expertise and has a strong track record of success. Prior to acquiring Residential Land and Golf Division properties, the Company typically utilizes market research, conducts due diligence and, in the case of new project locations, engages in pre-marketing techniques to evaluate market response and price acceptance. Once a parcel of property is acquired, the Company seeks to pre-sell a significant portion of its planned residential lots on such property prior to extensive capital investment as a result of the Company's ability to bond its projects to completion. The Company also generates significant interest income through its financing of individual purchasers of Timeshare Interests and, to a nominal extent, land sold by the Residential Land and Golf Division.
For the purposes of this discussion, "estimated remaining life-of-project sales" assumes sales of the existing, currently under construction or development, and planned Timeshare Interests or residential lots, as the case may be, at current retail prices. No assurances can be given that actual sales will meet expectations.
Market and industry data used throughout this Form 10-K were obtained from internal company surveys, industry publications, unpublished industry data and estimates, discussions with industry sources and currently available information. The sources for this data include, without limitation, the American Resort Development Association ("ARDA"), a non-profit industry organization. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as the accuracy and completeness of such information. The Company has not independently verified such market data. Similarly, internal Company surveys, while believed by the Company to be reliable, have not been verified by any independent sources. Accordingly, no assurance can be given that any such data are accurate.
The Resorts Division. The Company's Resorts Division was founded in 1994 to capitalize on the growth of the timeshare industry. According to ARDA and other industry sources, timeshare industry sales and the number of Timeshare Interest owners grew at compound annual rates of approximately 16% and 22%, respectively, from 1980 to 1997. No assurances can be given that these industry growth rates will continue. The Company currently markets and sells Timeshare Interests in ten resorts located in the Smoky Mountains of Tennessee; Myrtle Beach and Charleston, South Carolina; Orlando, Florida; Branson, Missouri; Gordonsville, Virginia; Wisconsin Dells, Wisconsin and Aruba. In addition, the Company also markets and sells Timeshare Interests at four off-site sales offices. Through April 2, 2000, the Company has sold approximately 36,221 Timeshare Interests at its resorts. As of April 2, 2000, the Company had 66,560 completed Timeshare Interests at its resorts, 416 Timeshare Interests under construction or development and plans to develop approximately 53,964 additional Timeshare Interests at existing resorts. Based on the foregoing, the Resorts Division's estimated remaining life-of-project sales were approximately $804 million as of April 2, 2000, based on retail prices at that date. The Company also manages 20 timeshare resorts (including nine of its own resorts) with an aggregate of approximately 73,000 members.
The Resorts Division uses a variety of techniques to attract prospective purchasers of Timeshare Interests, including targeted mailings, direct mail mini-vacations, kiosks in retail locations, telemarketing, marketing to current
owners of Timeshare Interests and referrals. The majority of the Company's Timeshare Interests have been sold through on-site sales presentations. To support its marketing and sales efforts, the Company has developed and continues to enhance its database to track its timeshare marketing and sales programs. Management believes that, as the Company's timeshare operations grow, this database will become an increasingly significant asset, enabling it to take advantage of, among other things, less costly marketing and referral opportunities.
According to ARDA, the primary reason cited by consumers for purchasing a Timeshare Interest is the ability to exchange a Timeshare Interest for accommodations at other resorts through worldwide exchange networks. Each of the Company's timeshare resorts is affiliated with either Resort Condominium International, Inc. ("RCI") or Interval International ("II"), the two largest worldwide timeshare exchange companies. Participation in an exchange network entitles owners to exchange their annual Timeshare Interests for occupancy at over 3,300 participating RCI resorts or over 1,800 participating II resorts worldwide. To further enhance the ability of its Timeshare Interest owners to customize their vacation experience, the Company has also implemented a points-based Vacation Club system which permits its Timeshare Interest owners to purchase an annual allotment of points which can be redeemed for occupancy rights at most Company-owned and certain participating managed resorts. At April 2, 2000, the Company's approximately 26,000 Vacation Club members could choose to use their points at 27 resorts in the Bluegreen system. The Company also has a Vacation Club Sampler program, which allows Sampler package purchasers to enjoy substantially the same amenities, activities and service offered to the Company's regular Vacation Club members for a one-year trial period. The Company benefits from the Sampler program by recapturing some of the costs incurred in initially marketing to prospective customers through the price of the Sampler package and having the opportunity to remarket the Company's products to the Sampler customers when they use their trial memberships at the Company's resorts.
Prior to acquiring property for resorts, the Resorts Division undertakes a full property review, including an environmental assessment, which is presented for approval to the Company's Investment Committee, which was established in 1990 and consists of certain key members of senior management. During the review process, acquisition specialists analyze market, tourism and demographic data as well as the quality and diversity of the location's existing amenities and attractions to determine the potential strength of the timeshare market in such area and the availability of a variety of recreational opportunities for prospective Timeshare Interest purchasers.
The Company has historically provided financing to approximately 95% of its timeshare customers, who are required to make a downpayment of at least 10% of the Timeshare Interest sales price and who typically finance the balance of the sales price over a period of seven to ten years. As of April 2, 2000, the Company had a timeshare receivables portfolio totaling approximately $61.5 million in principal amount, with a weighted-average contractual yield of approximately 15.7% per annum. During fiscal 2000, the Company maintained a timeshare receivables warehouse facility and a separate timeshare receivables purchase facility to accelerate cash flows from the Company's timeshare receivables. The timeshare purchase facility expired at the end of June 2000, and the Company is currently negotiating a new timeshare purchase facility. No assurances can be given that such negotiation will be successful or that the Company will obtain a new facility on attractive terms if at all. The warehouse facility has been extended through August 2000. See "Management's Discussion and Analysis of Results of Operations and Financial Condition"("MD&A").
The Residential Land and Golf Division. The Residential Land and Golf Division is focused primarily on land and golf community projects located in states in which the Company has developed marketing expertise and has a track record of success, such as Texas, North Carolina and Virginia. The aggregate carrying amount of Residential Land and Golf Division inventory at April 2, 2000 was $87.0 million. The Residential Land and Golf Division's estimated remaining life-of-project sales were approximately $416.3 million at April 2, 2000. The Company believes no other company in the United States of comparable size or financial resources markets and sells residential land directly to retail customers.
The Residential Land and Golf Division targets families seeking a quality lifestyle improvement which is generally unavailable in traditional suburban developments. Based on the Company's experience in marketing and selling residential lots to its target customers, the Company has been able to develop a marketing and sales program that generates a significant number of on-site sales presentations to potential prospects through low-cost, high-yield newspaper advertising. In addition, SIMS, STARS (expected to be implemented by the Company in fiscal 2001) and the other Residential Land and Golf Division databases enable the Company to compile, process and maintain information concerning future sales prospects within each of its operating regions. Through the Company's targeted sales and marketing program, the Company believes that it has been able to achieve an attractive conversion ratio of sales to prospects receiving on-site sales presentations.
The Residential Land and Golf Division acquires and develops land in two markets: (i) near major metropolitan centers but outside the perimeter of intense subdivision development; and (ii) popular retirement areas.
Prior to acquiring undeveloped land, the Company researches market depth and forecasts market absorption. In new market areas, the Company typically supplements its research with a structured classified ad test marketing system that evaluates market response and price acceptance. The Company's sales and marketing efforts begin as soon as practicable after the Company enters into an agreement to acquire a parcel of land. The Company's ability to bond projects to completion generally allows it to sell a significant portion of its residential land inventory on a pre-development basis, thereby reducing the amount of external capital needed to complete improvements. As is the case with the Resorts Division, all acquisitions of Residential Land and Golf Division properties are subject to Investment Committee approval.
In fiscal 1997, the Company began construction of its first daily-fee golf course as part of its long-term plan to participate in the growing daily-fee golf market. The Company believes that daily-fee golf courses are an attractive amenity that will increase the marketability of the Company's adjacent residential lots in certain projects. The Company's first golf course, the Carolina National Golf Club ("Carolina National"), is located near Southport, North Carolina, just 30 miles north of Myrtle Beach, South Carolina, one of the nation's most popular golf destinations, and was designed by Masters Champion Fred Couples. The Company opened the first 18 holes of Carolina National for play in July 1998. In fiscal 2000, the Company opened another nine holes at Carolina National along with a new clubhouse, featuring food and beverage operations and an expanded pro shop. In fiscal 2000, the Company began construction at Brickshire, a new residential land and golf course community in New Kent County, Virginia. The Company intends to expand its golf course community residential land offerings into markets with attractive demographics for such properties. There can be no assurances that the Company's strategy for this expansion will be successful.
The Company's business involves certain risks and uncertainties (This Annual Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1999. See "MD&A").
The Company's executive offices are located at 4960 Blue Lake Drive, Boca Raton, Florida 33431. The Company's telephone number at such address is (561) 912-8000.
See also MD&A Note 17 of Notes to Consolidated Financial Statements for additional financial information on the Company's business segments.
INDUSTRY OVERVIEWS
Resorts Division
The Market. The resort component of the leisure industry is serviced primarily by two separate alternatives for overnight accommodations: commercial lodging establishments and timeshare resorts. Commercial lodging consists principally of hotels and motels in which a room is rented on a nightly, weekly or monthly basis for the duration of the visit or rentals of privately-owned condominium units or homes. For many vacationers, particularly those with families, a lengthy stay at a quality commercial lodging establishment can be expensive, and the space provided to such vacationers by these establishments relative to the cost is often not economical. In addition, room rates at commercial lodging establishments are subject to change periodically and availability is often uncertain. The Company believes that Timeshare Interest ownership presents an attractive vacation alternative to commercial lodging.
First introduced in Europe in the mid-1960's, Timeshare Interest ownership has been one of the fastest growing segments of the hospitality industry over the past two decades. According to ARDA, timeshare industry sales and the number of Timeshare Interest owners have grown at compound annual rates of approximately 16% and 22%, respectively, from 1980 to 1997. No assurances can be given that such industry growth rates will continue.
The Company believes that, based on ARDA reports and other industry data, the following factors have contributed to the increased acceptance of the timeshare concept among the general public and the substantial growth of the timeshare industry:
- Consumer awareness of the value and benefits of Timeshare Interest ownership, including the cost savings relative to other lodging alternatives;
- Flexibility of Timeshare Interest ownership due to the growth of international exchange organizations such as II and RCI and points-based vacation club systems;
- The quality of the timeshare resorts and their management;
- Consumer confidence resulting from consumer protection regulation of the timeshare industry and an influx of brand name national lodging companies to the timeshare industry; and
- Availability of consumer financing for purchasers of Timeshare Interests.
The timeshare industry traditionally has been highly fragmented and dominated by a large number of local and regional resort developers and operators, each with small resort portfolios generally of differing quality. The Company believes that one of the most significant factors contributing to the current success of the timeshare industry is the entry into the market of some of the world's major lodging, hospitality and entertainment companies, such as Marriott, Disney, Hilton, Hyatt, Four Seasons, Starwood, Carlson and Bass Hotels. Although timeshare operations currently comprise only a small portion of these companies' overall operations, the Company believes that their involvement in the timeshare industry, together with other publicly-traded timeshare companies, has enhanced the industry's image with the general public.
The Consumer. According to information compiled by ARDA, customers in the 40-55 year age range represented approximately 45.1% of all Timeshare Interest owners in 1997. Historically, the median age of a Timeshare Interest buyer at the time of purchase was 48. The median annual household income of Timeshare Interest owners in the United States in 1997 was approximately $71,000, with approximately 24% of all Timeshare Interest owners having annual household incomes greater than $100,000 and approximately 12% of such owners having annual household incomes greater than $125,000. The Company believes that, despite the industry's growth, Timeshare Interest ownership has achieved only an approximate 5% market penetration among United States households with incomes above $50,000 per year.
Timeshare Interest Ownership. The purchase of a Timeshare Interest typically entitles the buyer to use a fully-furnished vacation residence, generally for a one-week period each year in perpetuity. Typically, the buyer acquires an ownership interest in the vacation residence, which is often held as tenant-in-common with other buyers of interests in the property. Under a points-based vacation club system, members purchase an annual allotment of points which can be redeemed for occupancy rights at participating resorts. Compared to other vacation ownership arrangements, the points-based system offers members greater flexibility in planning their vacations. The number of points that are required for a stay at any one resort varies, depending on a variety of factors, including the resort location, the size of a unit, the vacation season and the days of the week used. Under this system, members can select vacations according to their schedules, space needs and available points. Subject to certain restrictions, members are typically allowed to carry over for one year any unused points and to "borrow" points from the forthcoming year. In addition, members are required to pay annual fees for certain maintenance and management costs associated with the operation of the resorts based on the number of points to which they are entitled. As of April 2, 2000, all of the Company's sales offices, with the exception of its La Cabana Beach and Racquet Club sales office in Aruba, were selling Timeshare Interests within the Company's Vacation Club system.
The owners of Timeshare Interests manage the property through a nonprofit homeowners' association, which is governed by a board of directors or trustees consisting of representatives of the developer and owners of Timeshare Interests at the resort. The board hires a management company to which it delegates many of the rights and responsibilities of the homeowners' association, including grounds landscaping, security, housekeeping and operating supplies, garbage collection, utilities, insurance, laundry and repairs and maintenance. As of April 2, 2000, the Company's resort property management division managed 20 resorts (including 9 of the Company's resorts) and served an owner base of approximately 73,000.
Each Timeshare Interest owner is required to pay the homeowners' association a share of all costs of maintaining the property. These charges can consist of an annual maintenance fee plus applicable real estate taxes and special assessments, assessed on an as-needed basis. If the Timeshare Interest owner does not pay such charges, such owner's use rights may be suspended and the homeowners' association may foreclose on the owner's Timeshare Interest.
Participation in Timeshare Interest Exchange Networks. The Company believes that its Timeshare Interests are made more attractive by the Company's affiliation with Timeshare Interest exchange networks operated by RCI and II, the two largest timeshare exchange companies worldwide. Nine of the Company's timeshare resorts are affiliated with RCI and have been awarded RCI's highest designation (Gold Crown), while the La Cabana Beach and Racquet Club resort in Aruba (the "Aruba Resort") is affiliated with II. A Timeshare Interest owner's participation in the RCI or II exchange network (the fee for which is paid by the Company in the first year of such owner's participation) allows such owner to exchange his annual Timeshare Interest for occupancy at over 3,300 participating resorts in the case of RCI and over 1,800 participating resorts in the case of II, based upon availability and the payment of a variable exchange fee. A member may exchange his Timeshare Interest for an occupancy right in another participating resort by listing his Timeshare Interest as available with the exchange organization and by requesting occupancy at another participating resort, indicating the particular resort or geographic area to which the member desires to travel, the size of
the unit desired and the period during which occupancy is desired. The exchange network assigns ratings to each listed Timeshare Interest, based upon a number of factors, including the location and size of the unit, the quality of the resort and the period during which the Timeshare Interest is available, and attempts to satisfy the exchange request by providing an occupancy right in another Timeshare Interest with a similar rating. If the exchange network is unable to meet the member's initial request, it suggests alternative resorts based on availability. The failure of the Company or any of its resorts to participate in qualified exchange networks or the failure of such networks to operate effectively could have a material adverse effect on the Company.
Residential Land and Golf Division
The Residential Land and Golf Division operates within a specialized niche of the real estate industry which focuses on the sale of residential land to retail customers who intend to build a home on such land at some point in the future. The participants in this market are generally individual landowners who are selling specific parcels of property and small developers who focus primarily on projects in their region. Although no specific data is available regarding this market niche, the Company believes that no other company in the United States of comparable size or financial resources currently markets and sells residential land directly to retail customers.
Unlike commercial homebuilders who focus on vertical development, the Residential Land and Golf Division focuses primarily on horizontal development activities, such as grading, roads and utilities. As a result, the projects undertaken by the Company are significantly less capital intensive than those undertaken by the commercial homebuilders, which reduces the Company's risk of holding a large inventory of property. See "MD&A" for a discussion of these risks. The Company believes that its market is also the beneficiary of a number of trends, including the large number of people entering into the 40-55 year age bracket and the economic and population growth in certain of its primary markets.
The Residential Land and Golf Division is also focused on the development of golf courses and related amenities as the center-pieces of certain of the Company's residential land properties. As of April 2, 2000, the Company was marketing residential land lots in five projects that include golf courses developed either by the Company or a third party. The Company intends to acquire and develop additional golf communities, as management believes that the demographics and marketability of such properties are consistent with the Company's overall residential land strategy. Golf communities typically are larger, multi-phase properties which require a greater capital commitment than the Company's single-phase residential land projects. There can be no assurances that the Company will be able to successfully implement its golf community strategy.
COMPANY PRODUCTS
Timeshare Resorts
Set forth below is a description of each of the Company's timeshare resorts. All units at most of the properties have certain standard amenities, including a full kitchen, at least two televisions, a VCR player and a CD player. Some units have additional amenities, such as larger televisions and game systems. Most properties offer guests a clubhouse (with an indoor and/or outdoor pool, a game room, exercise facilities and a lounge) and a hotel-type staff. The Company manages all of its resorts with the exception of the Aruba Resort.
MountainLoft Resort--Gatlinburg, Tennessee. The MountainLoft Resort in Gatlinburg, Tennessee is located near the Great Smoky Mountains National Park and is minutes from the family attractions of Pigeon Forge, Tennessee. Units are located in individual chalets or mid-rise villa buildings. Each unit is fully furnished with a whirlpool bath and private balconies, and certain units include gas fireplaces.
Laurel Crest--Pigeon Forge, Tennessee. Laurel Crest is located in proximity to the Great Smoky Mountains National Park and the Dollywood theme park. In addition, visitors to Pigeon Forge can enjoy over 200 factory outlet stores and music shows featuring renowned country music stars as well as partake in a variety of outdoor activities, such as horseback riding, trout fishing, boating, golfing and white water rafting.
Shore Crest Vacation Villas--Myrtle Beach, South Carolina. Shore Crest Vacation Villas is located on the beach in the Windy Hill section of North Myrtle Beach a mile from the famous Barefoot Landing, with its restaurants, theaters, shops and outlet stores.
Harbour Lights--Myrtle Beach, South Carolina. Harbour Lights is located in the Fantasy Harbour Complex in the center of Myrtle Beach. Nearby are Theater Row, shopping, golf and restaurants. The resort's Activities Center overlooks the Intracoastal Waterway.
The Falls Village--Branson, Missouri. The Falls Village is located in the Ozark Mountains. Fishing, boating and swimming are available at nearby Table Rock Lake and Lake Taneycomo, and area theaters feature shows by country music stars. Most resort customers come from areas within an eight to ten hour drive of Branson.
Christmas Mountain Village--Wisconsin Dells, Wisconsin. The Company acquired the Christmas Mountain Village resort as part of the RDI Acquisition. Christmas Mountain Village offers an 27-hole golf course and seven ski trails served by two chair lifts. Other on-site amenities include horseback riding, tennis courts, a five-acre lake with paddleboats and rowboats and four outdoor swimming pools. Christmas Mountain Village attracts customers primarily from the greater Chicago area and other locations within an eight to ten hour drive of Wisconsin Dells.
Orlando's Sunshine--Orlando, Florida. Orlando's Sunshine Resort was also acquired as part of the RDI Acquisition. The resort is located on International Drive, near Wet'n'Wild water park and Universal Studios. During fiscal 2000, the Company commenced construction on Phase II of the Orlando's Sunshine Resort, which includes 60 units, an outdoor swimming pool, hot tub and tennis courts.
La Cabana Beach Resort & Racquet Club--Aruba. Bluegreen Properties N.V., a 50%-owned subsidiary of the Company, acquired the unsold Timeshare Interest inventory of the Aruba Resort (approximately 8,000 Timeshare Interests) in December 1997 and additional Timeshare Interests from time to time thereafter. Established in 1989, the Aruba Resort is a 449-suite ocean front property which offers one-, two- and three-bedroom suites, garden suites and penthouse accommodations. On-site amenities include tennis, racquetball, squash, a casino, two pools and private beach cabanas, none of which are owned or managed by the Company.
Shenandoah Crossing--Gordonsville, Virginia. Shenandoah Crossing features an 18-hole golf course, indoor and outdoor pools, tennis courts, horseback riding trails and a lake for swimming, fishing and boating.
The Lodge Alley Inn--Charleston, South Carolina. Located in Charleston's historic district, the Lodge Alley Inn includes one- and two-bedroom suites, many furnished with an equipped kitchen, living room with fireplace, dining room, jacuzzi, pine wood floors, and 18th century-style furniture reproductions. The resort, which features the on-site High Cotton restaurant, is within walking distance of many of Charleston's historical sites, open air markets and art galleries.
The following table sets forth additional data with respect to each of the Company's resorts:
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(1) Bluegreen Properties N.V., in which the Company owns a 50% interest, acquired approximately 8,000 unsold Timeshare Interests at this resort in December 1997 and additional Timeshare Interests from time to time thereafter.
(2) The number of Timeshare Interests completed, under construction or planned are intended to be sold in 52 weekly intervals per vacation home for the Company's Shore Crest, Harbour Lights, Orlando's Sunshine, La Cabana, and Lodge Alley Inn Resorts . The amounts for the remaining resorts include some vacation homes which can be subdivided and sold as two smaller vacation homes ("lock-out units"), each of which consists of 104 weekly intervals per vacation home.
(3) There can be no assurances that the Company will have the resources to complete all such planned Timeshare Interests or that such Timeshare Interests will be sold at favorable prices.
(4) Includes sales of Timeshare Interests that were sold on a biennial basis (i.e., sale of one-week periods every other year in perpetuity) as one Timeshare Interest sold. Therefore, the number of Timeshare Interests sold may exceed the total number of Timeshare Interests completed, under construction, and planned.
Certain Residential Land and Golf Division Projects
Set forth below is a description of the five largest projects currently marketed by the Residential Land and Golf Division, which are representative of the types of projects that the Company has been focusing on since 1993. These properties represented approximately 81.4% of the Residential Land and Golf Division's estimated remaining life-of-project sales at April 2, 2000.
Winding River Plantation -- Southport, North Carolina. The Company acquired approximately 1,300 acres located near Southport, North Carolina (between Myrtle Beach, South Carolina and Wilmington, North Carolina) for $3.4 million in fiscal 1997. The property has frontage along the Lockwood Folly River, a navigable waterway that leads to the Intracoastal Waterway and the Atlantic Ocean. The project will include river amenities, a beach club and tennis courts. In addition, the project is the site of the Company's first daily-fee golf course, the Carolina National Golf Club, which was developed by Master Champion Fred Couples. The first 18 holes of the course opened for play in July 1998, with the final 9 holes opening in fiscal 2000. The Company anticipates that the project will consist of a total of approximately 1,000 lots, which average approximately one acre. The Company began selling lots in February 1997, and aggregate sales through April 2, 2000 were $43.4 million. Aggregate development costs (net of costs capitalized separately in the golf course) through April 2, 2000 were $20.1 million and the Company anticipates that the aggregate capital expenditures to complete development at the project will be $2.9 million. The Company anticipates that the remaining lots will be sold-out over the next two years. Estimated remaining life-of-project sales for this project were approximately $33.0 million as of April 2, 2000, based on retail selling prices as of that date.
Lake Ridge at Joe Pool Lake -- Cedar Hill, Texas. The Company acquired 1,400 acres located approximately 19 miles outside of Dallas, Texas and 30 miles outside of Fort Worth, Texas in April 1994 for $6.1 million. In fiscal 2000, the Company acquired an additional 1,766 acres for $14.9 million. The property is located at Joe Pool Lake and is atop the highest elevation within 100 miles. The lake has in excess of 7,500 acres of water for boating, fishing, windsurfing and other water activities. Adjacent amenities (not owned or managed by the Company) include a 154 acre park with baseball, football and soccer fields, a fishing pool with a pier, camping areas and an 18-hole golf course. The existing acreage will yield approximately 1,600 lots based on preliminary phase development, with most lots ranging in size from 1/4 to five acres. The Company began selling lots in April 1994 and aggregate sales through April 2, 2000 were $68.7 million. Aggregate development costs through April 2, 2000 were $24.3 million and the Company anticipates that the remaining capital expenditures to complete development at the project will be $29.9 million. The Company anticipates that unsold lots will be sold-out over the next six years. Estimated remaining life-of-project sales for this project were approximately $106.3 million as of April 2, 2000, based on retail selling prices as of that date.
Mountain Lakes Ranch -- Bluffdale, Texas. The Company acquired 4,100 acres located approximately 45 miles from Fort Worth, Texas in October 1998 for $3.1 million. The property features rolling terrain with hilltop views, tree coverage and ample area to create private lakes. The Company anticipates that the property will yield approximately 1,390 lots ranging in size from one to five acres, including both lakefront and waterview parcels. The Company began selling lots in March 2000, with aggregate sales of $370,000 through April 2, 2000. Aggregate development costs through April 2, 2000 were $2.0 million and the Company anticipates that future capital expenditures to complete development at the project will be $10.4 million. Estimated life-of-project sales for Mountain Lakes Ranch were $34.5 million as of April 2, 2000, based on retail prices at that date, with a projected sell-out period of six years.
Mystic Shores --Canyon Lake, Texas. The Company acquired 6,966 acres located 25 miles north of San Antonio, Texas in October 1999 for $14.9 million. The project includes an estimated 2,700 homesites, ranging in size from one to three acres. Mystic Shores is situated on Canyon Lake and is in close proximity to the Guadeloupe River, which is well-known for fishing, rafting and water sports. The property will also feature a junior Olympic swimming pool, bathhouse, open-air pavillion, picnic area and boat ramps. Aggregate development costs through April 2, 2000 were $1.2 million, with projected remaining expenditures to complete development at the project of $29.5 million. The Company began selling lots in March 2000, with aggregate sales of $2.7 million through April 2, 2000. Estimated remaining life-of-project sales were approximately $106.6 million as of April 2, 2000, based on retail selling prices as of that date.
Brickshire -- New Kent, Virginia. The Company acquired 1,135 acres located 20 miles from Williamsburg and Richmond, Virginia, in September 1999 for $4.4 million. The property will consist of approximately 900 residential parcels and will feature an 18-hole golf course to be designed by U.S. Open champion Curtis Strange. The property will also offer residents a community club and pool, tennis courts and scenic walking trails. Aggregate development costs through April 2, 2000 were $2.0 million, with projected remaining expenditures of $24.0 million. The Company began selling lots in December 1999, with aggregate sales of $1.1 million through
April 2, 2000. Estimated remaining life-of-project sales were approximately $58.3 million as of April 2, 2000, based on retail selling prices as of that date.
ACQUISITION OF TIMESHARE AND RESIDENTIAL LAND AND GOLF INVENTORY
In order to provide centralized and uniform controls on the type, location and amount of timeshare and residential land and golf inventory that the Company acquires, all such inventory acquisitions have required the approval of the Investment Committee since 1990. The Investment Committee currently consists of George F. Donovan, President and Chief Executive Officer; John F. Chiste, Senior Vice President, Treasurer and Chief Financial Officer; Patrick E. Rondeau, Senior Vice President, Director of Legal Affairs; L. Nicolas Gray, Senior Vice President--Resorts Division; Daniel C. Koscher, Senior Vice President--Residential Land and Golf Division; and David D. Philp, Chief Investment Officer. The Investment Committee reviews each proposed inventory acquisition to determine whether the property meets certain criteria, including estimated cash flows and gross profit margins.
Resorts Division
The Company obtains information with respect to resort acquisition opportunities through interaction by the Company's management team with resort operators, lodging companies and financial institutions with which the Company has established business relationships. Prior to acquiring property for future resorts, the Resorts Division undertakes a full property review, including an environmental assessment, which is presented to the Investment Committee for approval. During the review process, acquisition specialists analyze market, tourism and demographic data as well as the quality and diversity of the location's existing amenities and attractions to determine the potential strength of the timeshare market in such area and the availability of a variety of recreational opportunities for prospective Timeshare Interest purchasers. Specifically, the Company evaluates the following factors, among others, to determine the viability of a potential new timeshare resort: (i) anticipated supply/demand ratio for Timeshare Interests in the relevant market, (ii) the market's potential growth as a vacation destination, (iii) competitive accommodation alternatives in the market, (iv) uniqueness of location and (v) barriers to entry that would limit competition. The Company anticipates that its timeshare resorts will generally have a sell-out term of approximately seven years.
The Company intends to continue to pursue growth by expanding or supplementing the Company's existing resorts operations through acquisitions in destinations that will complement such existing operations. Because the timeshare industry is highly fragmented, the Company believes that significant opportunities exist to make selected acquisitions at attractive valuations. Acquisitions the Company may consider include acquiring additional Timeshare Interest inventory, operating companies, management contracts, Timeshare Interest mortgage portfolios and properties or other timeshare-related assets which may be integrated into the Company's operations. In addition, the Company intends to continue to pursue timeshare resort locations in areas outside the United States, particularly in the Caribbean, as well as Central and South America. No assurances can be given that the Company will be successful in its acquisition strategy.
Residential Land and Golf Division
The Residential Land and Golf Division, through the Company's regional offices, and subject to Investment Committee review and approval, typically acquires inventory that (i) is located near a major population center outside the perimeter of intense subdivision development or in popular retirement areas, (ii) is suitable for subdivision, (iii) has attractive topographical features, (iv) for certain projects, could accommodate a golf course and related amenities and (v) the Company believes will result in an acceptable profit margin and cash flow to the Company based upon anticipated retail value. Properties are generally subdivided for resale into parcels typically ranging in size from two to five acres. During fiscal 1999, the Company acquired 8,293 acres in eight separate transactions for a total purchase price of $12.0 million, or $1,444 per acre and during fiscal 2000, the Company acquired 11,340 acres in seven separate transactions for a total purchase price of approximately $40.1 million or $3,537 per acre.
In connection with its review of potential residential land and golf inventory, the Investment Committee considers such established criteria as the economic conditions in the area in which the parcel is located, environmental sensitivity, availability of financing, whether the property is consistent with the Company's general policies and the anticipated ability of that property to produce acceptable profit margins and cash flow. As part of its long-term strategy for the Residential Land and Golf Division, the Company in recent years has focused on fewer, more capital-intensive projects. The Company intends to continue to focus the Residential Land and Golf Division on those regions where the Company believes the market for its products is strongest, such as the Southeast and Southwest regions of the United States and to replenish its residential land inventory in such regions as existing projects are sold-out.
The Residential Land and Golf Division has several specialists who assist regional management in locating inventory for acquisition. The Company has established contacts with numerous land owners and real estate brokers in
many of its market areas, and because of such contacts and its long history of acquiring properties, the Company believes that it is generally in a favorable position to learn of available properties, often before the availability of such properties is publicly known. In order to ensure such access, the Company attempts to develop and maintain strong relationships with major property owners and brokers. Regional offices regularly contact property owners, such as timber companies, financial institutions and real estate brokers, by a combination of telephone, mail and personal visits. In addition, prior to acquiring property in new areas, the Company will conduct test marketing for a prospective project prior to entering into an acquisition agreement to determine whether sufficient customer demand exists for the project. To date, the Company's regional offices generally have been able to locate and acquire adequate quantities of inventory which meet the criteria established by the Investment Committee to support their operational activities. In certain cases, however, the Company has experienced short-term shortages of ready-for-sale inventory due to either difficulties in acquiring property or delays in the approval and/or development process. Shortfalls in ready-for-sale inventory may materially adversely affect the Company's business, operating results and financial condition and adversely impacted the Company's results in fiscal 2000. See "MD&A".
Once a desirable property is identified, the Company completes its initial due diligence procedures and enters into a purchase agreement with the seller to acquire the property. It is generally the Company's policy to advance only a small downpayment of 1%-3% of the purchase price upon signing the purchase agreement and to limit the liquidated damages associated with such purchase agreement to the amount of its downpayment and any preliminary development costs. In most cases, the Company is not required to advance the full purchase price or enter into a note payable obligation until regulatory approvals for the subdivision and sale of at least the initial phase of the project have been obtained. While local approvals are being sought, the Company typically engages in pre-marketing techniques and, with the consent of the seller and the knowledge of prospective purchasers, occasionally attempt to pre-sell parcels, subject to closing its purchase of the property. When the necessary regulatory approvals have been received, the closing on the property occurs and the Company obtains title to the property. The time between execution of a purchase agreement and closing on a property has generally been six to 12 months. Although the Company generally retains the right to cancel purchase agreements without any loss beyond forfeiture of the downpayment and preliminary development costs, few purchase agreements have been canceled historically.
By requiring, in most cases, that regulatory approvals be obtained prior to closing and by making small downpayments upon signing purchase agreements, the Company is typically able to place a number of properties under contract without expending significant amounts of cash. This strategy enables the Residential Land and Golf Division to reduce (i) the time during which it actually owns specific properties, (ii) the market risk associated with holding such properties and (iii) the risk of acquiring properties that may not be suitable for sale. It also provides the Residential Land and Golf Division an additional source of available properties to meet customer demand. In certain circumstances, however, the Company has acquired properties and then strategically held such properties until their prime marketing seasons.
Prior to closing on a purchase of residential land, the Company's policy is to complete its own environmental assessment of the property. The purpose of the Company's assessment is to evaluate the impact the proposed subdivision will have on such items as flora and fauna, wetlands, endangered species, open space, scenic vistas, recreation, transportation and community growth and character. To obtain this information, the Company's acquisition specialists typically consult with various groups and agencies including the appropriate county and state planning agencies, environmental groups, state heritage programs, soil conservation agencies and forestry groups. If the Company's environmental assessment indicates that the proposed subdivision meets environmental criteria and complies with zoning, building, health and other laws, the Company develops a formal land use plan, which forms a basis for determining an appropriate acquisition price. The Company attempts, where possible, to accommodate the existing topographical features of the land, such as streams, hills, wooded areas, stone walls, farm buildings and roads. Prior to closing on an acquisition, the Company will typically have the property surveyed by a professional surveyor and have soil analyses conducted to determine the suitability of the site for septic systems. At closing, the Company also obtains title insurance on the property.
MARKETING AND SALE OF INVENTORY
Resorts Division
The Resorts Division utilizes a variety of techniques to attract prospective purchasers of Timeshare Interests, including targeted mailings, direct mail mini-vacation invitations, kiosks in retail locations, telemarketing, marketing to current owners and referrals. The Resorts Division provides hotel accommodations to prospective purchasers at reduced prices in exchange for their touring the timeshare resort. To support its marketing and sales efforts, the Company has developed and continues to enhance its database to track its timeshare marketing and sales programs. Management believes that, as the Resort Division's timeshare operations grow, this database will become an increasingly significant asset, enabling the Company to focus its marketing and sales efforts to take advantage of, among other things, less
costly marketing and referral opportunities. In June 2000, the Company entered into an exclusive marketing agreement with Big Cedar Lodge and Bass Pro Shops of Springfield, Missouri. Under the terms of the 10-year agreement, Bluegreen will market its Vacation Club product to Bass Pro Shops' estimated 30 million annual retail customers and 34 million catalog subscribers. Bluegreen intends to market its Vacation Club at each of Bass Pro Shops' national retail locations, using, among other means, interactive kiosks, affinity card programs and other retail promotions. Bluegreen will also have an exclusive timeshare marketing presence on Bass Pro Shops' web site -- www.basspro.com -- that will be linked to the Company web site -- www.bluegreenonline.com. The Company believes that this new marketing agreement will result in more effective and cost-efficient marketing for the Resorts Division although there can be no assurances that such effectiveness and efficiency will be achieved.
Timeshare resorts are staffed with sales representatives, sales managers and an on-site manager who oversees the day-to-day operations, all of whom are employees of the Company. Sales personnel are generally experienced in resort sales and undergo ongoing Company-sponsored training. During fiscal 1999, total advertising expense for the Resorts Division was $28.1 million or approximately 27% of such division's $103.1 million in sales. During fiscal 2000, total advertising expense for the Resorts Division was $37.2 million or 31.8% of the division's $117.2 million in sales. See MD&A for a discussion of the Company's sales, general and administrative expenses.
The Company requires its sales staff to provide each timeshare customer with a written disclosure statement regarding the Timeshare Interest to be sold prior to the time the customer signs a purchase agreement. This disclosure statement sets forth relevant information regarding timeshare ownership at the resort and must be signed by every purchaser. The Company believes that this information statement contains all material and relevant information a customer requires to make an informed decision as to whether or not to purchase a Timeshare Interest at one of its resorts.
After deciding to purchase a Timeshare Interest, a purchaser enters into a purchase agreement and is required to pay the Company a deposit of at least 10% of the purchase price. Purchasers are entitled to cancel purchase agreements within specified rescission periods after execution in accordance with statutory requirements. Substantially all timeshare purchasers visit one of the Company's resorts or one of the Company's off-site sales offices prior to purchasing.
In addition to sales offices located at its resorts, the Company also operates four off-site sales offices serving the Indianapolis, Indiana; Louisville, Kentucky; Cleveland, Ohio; and Detroit, Michigan markets. These off-site sales offices market and sell Timeshare Interests in the Company's points-based Vacation Club, and allow the Company to bring its products to markets with favorable demographics and low competition for prospective buyers. All of the off-sites except Indianapolis sell Timeshare Interests using the Company's "Bluegreen Air" virtual-reality jet airline experience as part of the sales presentation. During fiscal 2000, the "Bluegreen Air" offices generated $17.5 million and $1.7 million or 14.9% and 22.6% of the Resorts Division's sales and field operating profit, respectively. The Company intends to open additional "Bluegreen Air" off-site sales offices during fiscal 2001, although there can be no assurances that such additional offices will be opened or prove to be profitable.
The Company believes that the attractiveness of Timeshare Interest ownership has been enhanced significantly by the Company's Vacation Club program and the availability of exchange networks that allow Timeshare Interest owners to exchange the occupancy right in their Timeshare Interests in a particular year, for an occupancy right at another participating network resort at either the same or a different time. The Aruba Resort is affiliated with the timeshare exchange network operated by II, while the Company's nine other resorts are affiliated with RCI's timeshare exchange network. If the Company's resorts cease to qualify for the exchange networks or such networks cease to operate effectively, the Company's sales of Timeshare Interests and the performance of its timeshare receivables could be materially adversely affected.
For further information on sales and other financial information (including industry segment information) attributable to the Resorts Division, see "MD&A" and the Company's consolidated financial statements and the related Notes.
Residential Land and Golf Division
In general, as soon as practicable after agreeing to acquire a property and during the time period that appropriate improvements are being completed, the Company establishes selling prices for the individual parcels taking into account such matters as regional economic conditions, quality as a building site, scenic views, road frontage, golf course views (if applicable) and natural features such as lakes, mountains, streams, ponds and wooded areas. The Company also considers recent sales of comparable parcels in the area. Initial decisions on pricing of parcels in a given area are made by the Company's regional managers and, in all cases, are subject to approval by the Investment Committee. Once such selling prices are established the Company commences its marketing efforts.
The most widely used marketing technique by the Residential Land Division is advertising in major newspapers in metropolitan areas located within a one to three hour drive from the property and local newspapers. In addition, the Company uses its proprietary database and inventory management system, which enables the Company to quickly compile information on the previously identified prospects most likely to be interested in a particular project. The Residential Land and Golf Division also conducts direct mail campaigns to market property through the use of brochures describing available parcels, as well as television and radio advertising. Through this sales and marketing program, the Company believes that it has been able to achieve a high conversion ratio of sales to prospects receiving on-site sales presentations. The Company estimates that the conversion ratio of sales to prospects receiving on-site sales presentations has historically been approximately 20%. A sales representative who is knowledgeable about the property answers each inquiry generated by the Company's marketing efforts, discusses the property with the prospective purchaser, attempts to ascertain the purchaser's needs and determines whether the parcel would be suitable for that person, and arranges an appointment for the purchaser to visit the property. Substantially all prospective purchasers inspect a property before purchasing. During fiscal 1999, the Residential Land and Golf Division incurred $9.1 million in advertising expense, or approximately 7.4% of such division's $122.7 million in sales. During fiscal 2000, the Residential Land and Golf Division incurred $7.1 million in advertising expense, or 7.3% of such division's $97.2 million in sales.
The success of the Company's marketing efforts depends heavily on the knowledge and experience of its sales personnel. The Company requires that, prior to initiating the marketing effort for a property, all sales representatives walk the property and become knowledgeable about each parcel and applicable zoning, subdivision and building code requirements. Continued training programs are conducted, including training with regional office sales managers, weekly sales meetings and frequent site visits by an executive officer of the Company. The Company enhances its sales and marketing organization through the Bluegreen Institute, a mandatory training program, which is designed to instill the Company's marketing and customer service philosophy in middle and lower-level management. Additionally, the sales staff is evaluated against performance standards established by the executive officers of the Company. Substantially all of a sales representative's compensation is commission-based.
The Company requires its sales staff to provide each prospective purchaser with a written disclosure statement regarding the property to be sold prior to the time such purchaser signs a purchase agreement. This information statement, which is either in the form of a U.S. Department of Housing and Urban Development ("HUD") lot information statement, where required, or a Company generated "Vital Information Statement," sets forth relevant information with respect to, and risks associated with, the property and must be signed by each purchaser. The Company believes that these information statements contain all material and relevant information necessary for a prospective purchaser to make an informed decision as to whether or not to purchase such property, including the availability and estimated cost of utilities, restrictions regarding property usage, status of access roads and information regarding rescission rights.
After deciding to purchase a parcel, a purchaser enters into a purchase agreement and is required to pay the Company a deposit of at least 10% of the purchase price. Purchasers are entitled to cancel purchase agreements within specified periods after execution in accordance with statutory requirements. The closing of a residential land sale usually occurs two to eight weeks after payment of the deposit. Upon closing of a residential land sale, the Company typically delivers a warranty deed and a recent survey of the property to the purchaser. Title insurance is available at the purchaser's expense.
For further information on sales and other financial information (including industry segment information) attributable to the Residential Land and Golf Division, see "MD&A" and the Company's consolidated financial statements and the related Notes.
CUSTOMER FINANCING
General
During fiscal 1998, 1999 and 2000, the Company financed 33%, 40% and 52%, respectively, of the aggregate purchase price of its sales of Timeshare Interests and residential land to customers that closed during these periods and received cash for the remaining balance of the purchase price. The increase in the percentage of sales financed by the Company since 1998 is primarily attributable to an increase in the sales of Timeshare Interests over the same period. Sales of Timeshare Interests accounted for 35%, 46% and 55% of consolidated sales during fiscal 1998, 1999 and 2000, respectively. Approximately 95% of all purchasers of Timeshare Interests finance with the Company (compared to approximately 1% of residential land purchasers in fiscal 2000). In recent years, the percentage of residential land customers who utilized the Company's financing has declined materially due to, among other things, an increased willingness on the part of local banks to extend direct lot financing to purchasers.
The Company believes that its financing is attractive to purchasers who find it convenient to handle all facets of the purchase of residential land and Timeshare Interests through a single source and because the downpayments required by the Company are similar to those required by banks and mortgage companies which offer this type of credit.
The Company offers financing of up to 90% of the purchase price of its Timeshare Interests. The typical financing extended by the Company on a Timeshare Interest during fiscal 1998, 1999 and 2000, provides for a term of seven years and a fixed interest rate. Historically, at the closing, the Company and the purchaser executed a contract for deed agreement. After the obligation is paid in full, the Company delivers a deed to the purchaser. In connection with the Company's Timeshare Interest sales within its Vacation Club system, the Company delivers the deed on behalf of the purchasers to the trustee of the Vacation Club and secures repayment of the purchaser's obligation by obtaining a mortgage on the purchaser's Timeshare Interest. The Company does not believe that the transfer to a note and mortgage system will have a material adverse effect on its servicing operations or financial results, although no assurances can be given.
The Company also offers financing of up to 90% of the purchase price of all parcels sold under the Residential Land and Golf Division to all purchasers who qualify for such financing. The term of repayment on such financing has historically ranged from five to 15 years although the Company, by offering reduced interest rates, has been successful in encouraging customers during recent years to finance their purchases over shorter terms with increased downpayments. Management believes such strategy has improved the quality of the notes receivable generated by its Residential Land and Golf Division in recent years. An average note receivable underwritten by the Company during fiscal 1998, 1999 and 2000 has a term of ten years. Most notes receivable bear interest at a fixed interest rate and are secured by a first lien on the land.
The weighted-average interest rate on the Company's notes receivable was 14.9%, 15.0% and 15.1% at March 29, 1998, March 28, 1999 and April 2, 2000, respectively.
Loan Underwriting
Resorts Division. Consistent with industry practice, Timeshare Interest financing is not subject to extensive loan underwriting criteria. Customer financing on sales of Timeshare Interests requires (i) receipt of a minimum downpayment of 10% of the purchase price and (ii) a contract for deed or note and mortgage, as applicable, and other closing documents between the Company and the purchaser. The Company encourages purchasers to make increased downpayments by offering a lower interest rate. In addition, purchasers who do not elect to participate in the Company's pre-authorized payment plan are charged interest at a rate which is one percent greater than the otherwise prevailing rate. Historically, timeshare receivables have had a higher default rate than residential land receivables.
Residential Land and Golf Division. The Company has established loan underwriting criteria and procedures designed to reduce credit losses on its residential land loan portfolio. The loan underwriting process undertaken by the Company's credit department includes reviewing the applicant's credit history, verifying employment and income as well as calculating certain debt-to-income ratios. The primary focus of the Company's underwriting review is to determine the applicant's ability to repay the loan in accordance with its terms. This assessment is based on a number of factors, including the relationship of the applicant's required monthly payment to disposable income. The Company also examines the applicant's credit history through various credit reporting agencies. In order to verify an applicant's employment status, the Company generally contacts the applicant's employer. The Company also obtains current pay stubs, recent tax returns and other tax forms from the applicant, as applicable.
In order to obtain financing from the Residential Land and Golf Division, a prospective purchaser must submit a completed and signed credit application, purchase and sale agreement and pre-authorized checking agreement accompanied by a voided check, if applicable, to the Company's credit department. All credit decisions are made at the Company's corporate headquarters. Loan amounts under $50,000 are approved by designated personnel located in the Company's corporate headquarters, while loan amounts of $50,000 or more require approval from a senior executive officer. In addition, rejected applications and any material exceptions to the underwriting policy are also reviewed by senior management. Customers are notified of the reasons for credit denial by mail.
The Company encourages customers to increase their downpayment and reduce the loan term through the structure of its loan programs. Customers receive a lower rate of interest as their downpayment increases and the loan term shortens. Additionally, the Company encourages its customers to make timely payments through a pre-authorized payment arrangement. Customers who do not choose a pre-authorized payment plan are charged interest at a rate which is one percent greater than the prevailing rate.
After the credit decision has been made, the credit department categorizes the file as either approved, pending or declined. Upon receipt of a credit approval, the regional office schedules the closing with the customer. Closings are typically conducted at the office of the Company's local attorney or settlement agent, although in some cases the closing may take place at the sales site or by mail.
When the original closing documents are received from the closing agent, the Company verifies that the loan closed under terms approved by the Company's credit department. A quality control audit is performed to verify that required documents have been received and that they have been prepared and executed correctly. If any revisions are required, notification is sent to the regional office.
A loan file typically includes a copy of the signed security instrument, the mortgage note, a copy of the deed, Truth-in-Lending disclosure, purchase and sale agreement, credit application, local counsel opinion, Vital Information Statement or purchaser's acknowledgment of receipt of HUD lot information statement, HUD settlement statement and a copy of the assignment of mortgage and an original note endorsement from the Company's subsidiary originating the sale and the loan to the Company (if applicable). After the initial closing documents are received, the recorded mortgage and assignment and original title insurance policy are obtained in order to complete the loan file.
Collection Policies
Resorts Division. The Company's timeshare receivables have been historically documented by contracts for deed, which allows the Company to retain title to the Timeshare Interest until the obligation is paid in full, thereby eliminating the need to foreclose in the event of a default. Collection efforts and delinquency information concerning the Resorts Division are managed at the Company's corporate headquarters. Servicing of the division's receivables is handled by a staff of experienced collectors, assisted by an on-line mortgage collection computer system. Unless circumstances otherwise dictate, collection efforts are generally made by mail and telephone. If a contract for deed becomes delinquent for ten days, a reminder letter is mailed to the customer. If the customer fails to bring the account current, a late notice is mailed when the account is 15 days delinquent (and telephone contact commences). After an account is 30 days delinquent, the Company typically sends a third letter advising the customer that such customer has 30 days within which to bring the account current. Under the terms of the contract for deed, the borrower is in default when the account becomes 60 days delinquent. At this time a default letter is sent advising the customer that he or she has 30 days to bring the account current or lose his or her contractual interest in the timeshare unit. When the account becomes 90 days delinquent, the Company forwards a final letter informing the customer that the contract for deed has been terminated. At such time, the Timeshare Interest can be resold to a new purchaser. In connection with the implementation of its points-based Vacation Club system, the Company has converted to a note and mortgage system. In addition to the 10, 15 and 30 day collection correspondence outlined above, at 60 days delinquent, a lock-out letter is sent to the Vacation Club customer prohibiting such customer from making a reservation for lodging at a resort property. If the default continues, at 90 days delinquent, a Notice of Intent to Cancel Membership is mailed. This informs the customer that unless the default is cured within 30 days, membership in the Vacation Club will be terminated. If the default is not cured, a Termination Letter is sent, typically at 120 days. At such time, the Timeshare Interest can be resold to a new purchaser.
Residential Land and Golf Division. Collection efforts and delinquency information concerning the Residential Land and Golf Division are also managed at the Company's corporate headquarters. Servicing of the division's receivables is handled by a staff of experienced collectors, assisted by an on-line mortgage collection computer system. Unless circumstances otherwise dictate, collection efforts are generally made by mail and telephone. Collection efforts begin when an account is ten days past due, at which time the Company mails a reminder letter. Attempts are then made to contact the customer via telephone to determine the reason for the delinquency and to bring the account current. The determination of how to handle a delinquent loan is based upon many factors, including the customer's payment history and the reason for the current inability to make timely payments. If no agreement is made or the customer does not abide by the agreement, collection efforts continue until the account is either brought current or legal action is commenced. If not accelerated sooner, the Company declares the loan in default when the loan becomes 60 days delinquent. When the loan is 90 days past due, the accrual of interest is stopped (unless the loan is considered an in-substance foreclosure loan, in which case all accrued interest is reversed since the Company's means of recovery is determined through the resale of the underlying collateral and not through collection on the note) and the Credit/Collection Manager determines the action to be taken.
Loan Loss Reserves. The reserve for loan losses as a percentage of period end notes receivable was 2.5%, 3.5% and 4.1% at March 29, 1998, March 28, 1999 and April 2, 2000, respectively. The adequacy of the Company's reserve for loan losses is determined by management and reviewed on a regular basis considering, among other factors, historical frequency of default, loss experience, estimated value of the underlying collateral, present and expected economic conditions as well as the quality of the receivables. (See "MD&A" for further discussion of the Company's provision for loan losses.)
SALES OF RECEIVABLES/PLEDGING OF RECEIVABLES
Since 1986, the Company has sold or pledged a significant amount of its receivables, generally retaining the right and obligation to service such receivables. In the case of residential land and golf receivables, the Company historically transferred the receivables to a special purpose finance subsidiary, which in turn enters into a receivables securitization. The receivables were typically sold by such subsidiary with limited or no recourse. In the case of receivables pledged to a financial institution, the Company generally must maintain a debt to eligible collateral rate (based on outstanding principal balance of the pledged loans) of 90%. The Company is obligated to pledge additional eligible receivables or make additional principal payments in order to maintain this collateralization rate. Repurchases and additional principal payments have not been material to date.
Private placement REMIC financings have provided substantial capital resources to the Company, although the Company has not completed a REMIC financing since December 1996, due to the decrease in land sales financed by the Company. Under the terms of these transactions, the receivables are sold to a REMIC trust and the Company has no obligation to repurchase the receivables due to default by the borrowers. The Company does, however, have the obligation to repurchase the receivables in the event that there is any material defect in the loan documentation and related representations and warranties as of the time of sale.
On June 26, 1998, the Company executed a two-year timeshare receivables purchase facility with a financial institution. Under the purchase facility (the "Purchase Facility"), a special purpose finance subsidiary of the Company sold $103.1 million aggregate principal amount of timeshare receivables to the financial institution in securitization transactions. Receivables were sold without recourse to the Company or its special purpose finance subsidiary except for breaches of representations and warranties made at the time of sale. The Company acts as servicer under the Purchase Facility for a fee, and is required to make advances to the financial institution to the extent it believes such advances will be recoverable. Although the Purchase Facility has expired, the Company is currently negotiating a new $90.0 million timeshare receivables purchase facility with the same financial institution and another financial institution. There can be no assurances that the Company's negotiations will result in the Company obtaining such a facility on acceptable terms to the Company, if at all. In connection with the Purchase Facility, the Company also entered into a two-year warehouse facility with the same institution, pursuant to which the Company had the ability to borrow against receivables prior to their sale under the Purchase Facility. The Company is also currently negotiating a new warehouse facility. There can be no assurances that such negotiations will be successful. See further discussion of the terms of the Purchase Facility and the warehouse facility under "MD&A" -- Credit Facilities for Timeshare Receivables and Inventories".
RECEIVABLES SERVICING
Receivables servicing includes collecting payments from borrowers and remitting such funds to the owners, lenders or investors in such receivables, accounting for receivables principal and interest, making advances when required, contacting delinquent borrowers, foreclosing, or terminating a contract for deed or membership in the Vacation Club in the event that defaults are not remedied and performing other administrative duties. The Company's obligation to provide receivables servicing and its rights to collect fees are set forth in a servicing agreement. The Company has the obligation and right to service all of the receivables it originates and retains the obligation and right with respect to substantially all of the receivables it sells through REMICs and all of the receivables sold under the Purchase Facility. The Company typically receives an annual servicing fee ranging from approximately .5% to 2.0% of the principal balance.
REGULATION
The timeshare and real estate industries are subject to extensive and complex regulation. The Company is subject to compliance with various federal, state and local environmental, zoning and other statutes and regulations regarding the acquisition, subdivision and sale of real estate and Timeshare Interests and various aspects of its financing operations. On a federal level, the Federal Trade Commission has taken an active regulatory role through the Federal Trade Commission Act, which prohibits unfair or deceptive acts or competition in interstate commerce. In addition to the laws applicable to the Company's customer financing and other operations discussed below, the Company is or may be subject to the Fair Housing Act and various other federal statutes and regulations. The Company is also subject to various foreign laws with respect to the Aruba Resort. In addition, there can be no assurance that in the future, Timeshare Interests will not be deemed to be securities subject to regulation as such, which could have a material adverse effect on the Company. The Company believes that it is in compliance in all material respects with applicable regulations. However, no assurance can be given that the cost of complying with applicable laws and regulations will not be significant or that the Company is in fact in compliance with applicable law. Any failure to comply with applicable laws or regulations could have a material adverse effect on the Company.
The Company's sales and marketing of residential land are subject to various consumer protection laws and to the Interstate Land Sales Full Disclosure Act which establishes strict guidelines with respect to the marketing and sale of land in interstate commerce. HUD has enforcement powers with respect to this statute. In some instances, the Company has been exempt from HUD registration requirements because of the size or number of the subdivided parcels and the limited nature of its offerings. The Company, at its discretion, may formally request an exemption advisory opinion from HUD to confirm the exempt status of any particular offering. Several such exemption requests have been submitted to, and approved by, HUD. In those cases where the Company and its legal counsel determine parcels must be registered to be sold, the Company files registration materials disclosing financial information concerning the property, evidence of title and a description of the intended manner of offering and advertising such property. The Company bears the cost of such registration, which includes legal and filing fees. Many states also have statutes and regulations governing the sale of real estate. Consequently, the Company regularly consults with counsel for assistance in complying with federal, state and local law. The Company must obtain the approval of numerous governmental authorities for its acquisition and marketing activities and changes in local circumstances or applicable laws may necessitate the application for, or the modification of, existing approvals.
The Company's timeshare resorts are subject to various regulatory requirements including state and local approvals. The laws of most states require the Company to file with a designated state authority for its approval a detailed offering statement describing the Company and all material aspects of the project and sale of Timeshare Interests. Laws in each state where the Company sells Timeshare Interests generally grant the purchaser of a Timeshare Interest the right to cancel a contract of purchase at any time within a specified period following the earlier of the date the contract was signed or the date the purchaser has received the last of the documents required to be provided by the Company. Most states have other laws which regulate the Company's activities, such as real estate licensure; seller's of travel licensure; anti-fraud laws; telemarketing laws; prize, gift and sweepstakes laws; and labor laws. In addition, certain state and local laws may impose liability on property developers with respect to construction defects discovered or repairs made by future owners of such property. Pursuant to such laws, future owners may recover from the Company amounts in connection with the repairs made to the developed property. As required by state laws, the Company provides its timeshare purchasers with a public disclosure statement which contains, among other items, detailed information about the surrounding vicinity, the resort and the purchaser's rights and obligations as a Timeshare Interests owner.
Under various federal, state and local laws, ordinances and regulations, the owner of real property generally is liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, such property, as well as related costs of investigation and property damage. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner's ability to sell or lease a property or to borrow using such real property as collateral. Other federal and state laws require the removal or encapsulation of asbestos-containing material when such material is in poor condition or in the event of construction, demolition, remodeling or renovation. Other statutes may require the removal of underground storage tanks. Noncompliance with these and other environmental, health or safety requirements may result in the need to cease or alter operations at a property.
The Company's customer financing activities are also subject to extensive regulation, which may include, the Truth-in-Lending Act and Regulation Z, the Fair Housing Act, the Fair Debt Collection Practices Act, the Equal Credit Opportunity Act and Regulation B, the Electronic Funds Transfer Act and Regulation E, the Home Mortgage Disclosure Act and Regulation C, Unfair or Deceptive Acts or Practices and Regulation AA and the Right to Financial Privacy Act.
Management is not aware of any pending regulatory contingencies that are expected to have a material adverse impact on the Company.
COMPETITION
The real estate industry is highly competitive. In each of its markets, the Company competes against numerous developers and others in the real estate business. The Resorts Division competes with various high profile and well-established operators. Many of the world's most recognized lodging, hospitality and entertainment companies have begun to develop and sell Timeshare Interests in resort properties. Major companies that now operate or are developing or planning to develop timeshare resorts include Marriott, Disney, Hilton, Hyatt, Four Seasons, Starwood, Carlson and Bass Hotels. The Company also competes with other publicly traded timeshare companies, including Sunterra, Fairfield, Silverleaf and numerous other owners and operators of timeshare resorts. The Residential Land and Golf Division competes with builders, developers and others for the acquisition of property and with local, regional and national developers, housebuilders and others with respect to the sale of residential lots. Competition may be generally
smaller with respect to the Company's residential lot sales in the more rural markets in which it operates. The Company believes that it can compete on the basis of its reputation and the price, location and quality of the products it offers for sale, as well as on the basis of its experience in land acquisition, development and sale. Although, as noted above, the Resorts Division competes with various high profile and well-established operators, the Company believes that it can compete on the basis of its general reputation and the price, location and quality of its timeshare resorts. The development and operation of additional timeshare resorts in the Company's markets could have a material adverse impact on the demand for the Company's Timeshare Interests and its results of operations. In its customer financing activities, the Company competes with banks, mortgage companies, other financial institutions and government agencies offering financing of real estate. In recent years, the Company has experienced increased competition with respect to the financing of Residential Land and Golf Division sales as evidenced by the low percentage of residential land sales internally financed since 1995. The Company believes that, based on its interest rates and repayment schedules, the financing packages it offers are convenient for customers and competitive with those of other institutions which offer such financing.
PERSONNEL
As of April 2, 2000, the Company had 2,181 employees. Of the 2,181 employees, 170 were located at the Company's headquarters in Boca Raton, Florida, and 2,011 in regional field offices throughout the United States and Canada (the field personnel include 242 field employees supporting the Company's Residential Land and Golf Division and 1,769 field employees supporting the Company's Resorts Division). Only the Company's employees in Aruba are represented by a collective bargaining unit, and the Company believes that relations with its employees generally are excellent.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding the executive officers of the Company as of June 22, 2000.
GEORGE F. DONOVAN joined the Company as a Director in 1991 and was appointed President and Chief Operating Officer in October 1993. He became Chief Executive Officer in December 1993. Mr. Donovan has served as an officer of a number of other recreational real estate corporations, including Leisure Management International, of which he was President from 1991 to 1993, and Fairfield Communities, Inc., of which he was President from April 1979 to December 1985. Mr. Donovan holds a B.S. in Electrical Engineering and is a Registered Resort Professional.
JOHN F. CHISTE joined the Company in July 1997 as Treasurer and Chief Financial Officer. In 1998, Mr. Chiste was also named Senior Vice President. From January 1997 to June 1997, Mr. Chiste was the Chief Financial Officer of Compscript, Inc., an entity which provides institutional pharmacy services to long-term health care facilities. From December 1992 to January 1997, he served as the Chief Financial Officer, Secretary and Treasurer of Computer Integration Corporation, a publicly-held distribution company which provides information products and services to corporations nationwide. From 1983 through 1992, Mr. Chiste held various positions with Ernst & Young LLP, most recently serving as a Senior Manager. Mr. Chiste holds a B.B.A. in Accounting and is a Certified Public Accountant.
L. NICOLAS GRAY joined the Company in 1995 to oversee the Company's timeshare resorts operation and was named Senior Vice President in 1997. Mr. Gray has over 25 years of experience in the hospitality, timeshare and related resort industries. Mr. Gray served as Director of Development for Resort Condominium International, a timeshare exchange organization, from 1993 to 1995. Prior to that time, Mr. Gray was Executive Vice President and General Manager for the resort developments of Thousand Trails from 1989 to 1991 and Fairfield Communities from 1979 to 1989. Mr. Gray is a Registered Resort Professional.
DANIEL C. KOSCHER joined the Company in 1986. During his tenure, he has served in various financial management positions including Chief Accounting Officer, Vice President and Director of Planning/Budgeting. In 1997, he became Senior Vice President, Residential Land and Golf Division. Prior to his employment with the Company, Mr. Koscher was employed by the William Carter Company, a manufacturing company located in Needham, Massachusetts. He has also been employed by Cipher Data Products, Inc., a computer peripheral manufacturer located in San Diego, California, as well as the State of Nevada as an audit agent. Mr. Koscher holds an M.B.A. along with a B.B.A. in Accounting and is a Registered Resort Professional.
DAVID D. PHILP joined the Company in August 1999 as Chief Investment Officer. From February 1996 to August 1999, Mr. Philp was a Vice President and Corporate Officer directly responsible for new property acquisitions with Sunterra Corporation, a publicly-held timeshare resort developer. From September 1995 to January 1996, he served as a co-owner of E & O Development, an entity involved in the development of new restaurant concepts in California. From September 1994 to August 1995, Mr. Philp was a Regional Director of Development with responsibility for property acquisitions and hotel management contract negotiations for Doubletree Hotels Corporation, a national hotel chain. Mr. Philp holds a B.S. in Hotel Administration.
PATRICK E. RONDEAU joined the Company in 1990 and was elected Vice President and Director of Corporate Legal Affairs. He became Clerk in 1993 and Senior Vice President in 1997. For more than five years prior to his employment with the Company, Mr. Rondeau was a senior partner of Freedman, DeRosa & Rondeau, located in North Adams, Massachusetts, which firm serves as legal counsel to the Company on various matters. Mr. Rondeau holds a B.A. in Political Science along with a J.D.
ALLAN J. HERZ joined the Company in 1992 and was named Director of Mortgage Operations in September 1992. Mr. Herz was also elected Vice President in 1993. From 1982 to 1992, Mr. Herz worked for AmeriFirst Federal Savings Bank based in Miami, Florida. During his 10 year tenure with the bank, he held various lending positions, the most recent being Division Vice President in Consumer Lending. Mr. Herz holds a B.B.A. and a M.B.A.
JOAN A. MCCORMICK joined the Company in 1993 as its Director of Management Information Systems and was also elected Vice President in February 1995. In 1998, Ms. McCormick was named Chief Information Officer. Ms. McCormick has over 20 years of experience in information systems management in the real estate, hotel, banking and manufacturing fields. Prior to joining the Company, Ms. McCormick was Assistant Vice President of MIS for Atlantic Gulf Communities Corporation. She has also held management positions with Arvida/JMB Partners Ltd., Southeast Banking Corporation and General Motors Corporation. She holds a B.A. in Business Administration.
SUSAN J. MILANESE joined the Company in 1988. During her tenure, she has held various management positions in the Company including Assistant to the Chief Financial Officer, Divisional Controller and Director of Accounting. In 1995, she was elected Vice President and Director of Human Resources. From 1983 to 1988, Ms. Milanese was employed by General Electric Company in various financial management positions including the corporate audit staff. Ms. Milanese holds a B.B.A in Accounting.
ANTHONY M. PULEO joined the Company in October 1997 as Chief Accounting Officer. In 1998, Mr. Puleo was also elected Vice President. From December 1990 through October 1997, Mr. Puleo held various positions with Ernst & Young LLP, most recently serving as a Senior Manager in the Assurance and Advisory Business Services group. Mr. Puleo holds a B.B.A. in Accounting and is a Certified Public Accountant.
The Company's By-Laws provide that, except as otherwise provided by law or the charter and by-laws of the Company, the President, Treasurer and the Clerk hold office until the first meeting of the Board of Directors following the next annual meeting of shareholders and until their respective successors are chosen and qualified and that all other officers hold office for the same period unless a shorter time is specified in the vote appointing such officer or officers.
ITEM 2.
ITEM 2. PROPERTIES.
The Company's principal executive office is located in Boca Raton, Florida in approximately 65,000 square feet of leased space. On April 2, 2000, the Company also maintained regional sales offices in the Northeastern, Mid-Atlantic, Southeastern, Midwestern, Southwestern and Western regions of the United States as well as the Province of Ontario, Canada and the island of Aruba. See further description of the Company's resort and land properties under "Item 1 - -Company Products".
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
In the ordinary course of its business, the Company from time to time becomes subject to claims or proceedings relating to the purchase, subdivision, sale and/or financing of real estate. Additionally, from time to time, the Company becomes involved in disputes with existing and former employees. The Company believes that substantially all of the above are incidental to its business.
In addition to its other ordinary course litigation, the Company became a defendant in two proceedings during fiscal 1999. First, an action was filed in Colorado state court against the Company on December 15, 1998 (the Company has removed the action to the Federal District Court in Denver). The plaintiff has asserted that the Company is in breach of its obligations under, and has made certain misrepresentations in connection with, a contract under which the Company acted as marketing agent for the sale of undeveloped property owned by the plaintiff. The plaintiff also alleges fraud, negligence and violation by the Company of an alleged fiduciary duty owed to plaintiff. Among other things, the plaintiff alleges that the Company failed to meet certain minimum sales requirements under the marketing contract and failed to commit sufficient resources to the sale of the property. The complaint seeks damages in excess of $18 million and certain other remedies, including punitive damages.
Second, an action (the "Action") was filed on July 10, 1998 in the District Court for the State of Texas in the County of Montgomery against two subsidiaries of the Company and various other defendants. The Company itself is not named as a defendant. The Company's subsidiaries acquired certain real property (the "Property"). The Property was acquired subject to certain alleged oil and gas leasehold interests and rights (the "Interests") held by the plaintiffs in the Action (the "Plaintiffs"). The Company's subsidiaries developed the Property and have resold parcels to numerous customers. The Plaintiffs allege, among other things, breach of contract, slander of title and that the Company's subsidiaries and their purchasers have unlawfully trespassed on easements and otherwise violated and prevented the Plaintiffs from exploiting the Interests. The Plaintiffs claim damages in excess of $40 million, as well as punitive or exemplary damages in an amount of at least $50 million and certain other remedies.
The Company is continuing to evaluate these actions and their potential impact, if any, on the Company and accordingly cannot predict the outcomes with any degree of certainty. However, based upon all of the facts presently under consideration of management, the Company believes that it has substantial defenses to the allegations in each of the actions and intends to defend each of these matters vigorously. The Company does not believe that any likely outcome of either case will have a material adverse effect on the Company's financial condition or results of operations.
On September 17, 1999, the Company received a Notice of Proposed Audit Report (the "Notice") from the State of Wisconsin Department of Revenue (the "DOR") alleging that, subject to possible changes to be made in a final Notice of Field Audit Action, two subsidiaries now owned by the Company failed to pay sales and use taxes to the State of Wisconsin during the period from January 1, 1994 through September 30, 1997. The DOR contends that these taxes could approximate $2.5 million. The majority of the proposed assessment is based on the failure of the subsidiaries to charge sales tax to purchasers of Timeshare Interests at the Company's Christmas Mountain Village resort. In addition to the proposed assessment, the Notice indicated that interest would be charged, but no penalties would be assessed. These subsidiaries were acquired by the Company in connection with the acquisition of RDI Group, Inc. on September 30, 1997. Under the RDI purchase agreement, the Company has the right to set off payments owed by the Company to RDI's former stockholders under a note payable with a current outstanding balance of $1 million (see Note 9 of Notes to Consolidated Financial Statements) and to make a claim against such stockholders for certain amounts previously paid to them for any breach of representations and warranties up to a maximum of $500,000. The Company has notified the former stockholders that it intends to exercise these rights to mitigate any settlement with the DOR in this matter. If a Notice of Field Audit Action is issued by the DOR in this matter, the Company intends to vigorously appeal any assessment of sales tax on Timeshare Interest sales.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information provided on page 32 of the 2000 Annual Report is incorporated herein by reference.
The Company did not pay any cash or stock dividends during fiscal 1999 or fiscal 2000. The Company does not anticipate paying any dividends in the foreseeable future, as it currently anticipates that it will retain any future
earnings for use in its business. Restrictions contained in the Indenture related to the Company's $110 million 10 1/2% Senior Secured Notes due 2008 issued in April 1998, and certain of the Company's credit facilities may, in certain instances, limit the payment of cash dividends on its Common Stock.
On August 14, 1998, the Company entered into a Securities Purchase Agreement (the "Stock Agreement") with Morgan Stanley Real Estate Investors III, L.P., Morgan Stanley Real Estate Fund III, L.P., MSP Real Estate Fund, L.P., and Morgan Stanley Real Estate Fund III Special Fund, L.P. (collectively, the "Funds") pursuant to which the Funds purchased 4.1 million and 1.8 million shares of the Company's Common Stock for an aggregate of $35 million and $15 million during fiscal 1999 and 2000, respectively. Aggregate legal and other stock issuance costs totaled approximately $774,000. Subject to certain exceptions, the Funds have agreed not to offer, sell, transfer, assign, pledge or hypothecate any shares of common stock issued to them prior to August 14, 2000.
Shares of Common Stock sold to the Funds were exempt from registration under the Securities Act of 1933, by virtue of Section 4(2) and Rule 506 of Regulation D and issued thereunder.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
The information provided on page 17 of the 2000 Annual Report is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The information provided under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 18 through 31 of the 2000 Annual Report is incorporated herein by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information provided on pages 31 through 32 of the 2000 Annual Report is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of the Company and its subsidiaries and the related Notes thereto and report of independent certified public accountants on pages 33 through 59 of the 2000 Annual Report are incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
For information with respect to the Company's Directors, see the information provided under the headings "Proposal 1 - Election of Nominees for Director" and "Certain Relationships and Other Transactions" in the Proxy Statement, which sections are incorporated herein by reference. Information concerning the executive officers of the Company appears in Item 1 of Part I of this Annual Report on Form 10-K.
SECTION 16 COMPLIANCE
The information provided under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
The information provided under the headings "Proposal 1 - Election of Nominees for Director," "Board of Directors and its Committees," "Compensation Committee Report on Executive Compensation", "Compensation of Chief Executive Officer", "Executive Compensation" and "Certain Relationships and Other Transactions" in the Company's Proxy Statement is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information provided under the heading "Proposal 1 - Election of Nominees for Director" in the Proxy Statement is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information provided under the headings "Proposal 1 - Election of Nominees for Director," "Executive Compensation" and "Certain Relationships and Other Transactions" in the Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A)(1) AND (A)(2) LIST OF FINANCIAL STATEMENTS AND SCHEDULES.
1. The following Consolidated Financial Statements and Notes thereto of the Company and its subsidiaries and the report of independent certified public accountants relating thereto, included in the 2000 Annual Report on pages 33 through 59 are incorporated by reference into Item 8 hereof:
2. All financial statement schedules are omitted because they are not applicable, are not present in amounts sufficient to require submission of the schedules or the required information is presented in the Consolidated Financial Statements or related notes.
(A)(3) LIST OF EXHIBITS.
The exhibits which are filed with this Annual Report on Form 10-K or which are incorporated herein by reference are set forth in the Exhibit Index which appears at pages 22 through 24 hereof and are incorporated herein by reference.
(B) REPORTS ON FORM 8-K.
None.
(C) EXHIBITS.
See (a)(3) above.
(D) FINANCIAL STATEMENT SCHEDULES.
All financial statement schedules are omitted because they are not applicable, are not present in amounts sufficient to require submission of the schedules or the required information is presented in the Consolidated Financial Statements or related notes.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BLUEGREEN CORPORATION (Registrant)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 27th day of June, 2000.
EXHIBIT INDEX