BOCA RATON, Fla.--(BUSINESS WIRE)--May 24, 1999-- Fiscal 1999 Net Income Up 70% on 37% Increase in Total Revenues Fourth Quarter Timeshare Sales Exceed 50% of Total Sales Bluegreen Corporation (NYSE:BXG), a leading U.S. developer and marketer of timeshare resorts and residential land, today announced financial results for the fiscal year and fourth quarter ended March 28, 1999 (see attached table). Total revenues for fiscal 1999 increased 37.1% to a fiscal year record $257.7 million from $187.9 million last year. For the fiscal 1999 fourth quarter, total revenues increased 9.3% to a fourth quarter record $61.2 million from $56.0 million for the same period last year. Pre-tax income for the year rose 87.7% to an all-time record $31.9 million from $17.0 million in fiscal 1998, while pre-tax income for the fiscal 1999 fourth quarter rose 18.5% to $6.2 million from $5.2 million in the 1998 fourth quarter. Net income for the 1999 fiscal year rose 70.4% to a record $17.0 million, or $0.66 per diluted share, versus net income of $10.0 million, or $0.46 per diluted share, last year. Net income for the 1999 fiscal year includes an extraordinary loss of $0.06 per diluted share related to the early extinguishment of debt, net of taxes, incurred by Bluegreen in the fiscal 1999 first quarter in connection with a $110.0 million Rule 144 A private offering of the Company's Senior Secured Notes. Net income for the fiscal 1999 fourth quarter increased to a fourth quarter record $3.2 million, or $0.13 per diluted share, from $3.0 million, or $0.13 per diluted share, in the fiscal 1998 fourth quarter. The Company also noted that weighted average diluted shares outstanding in the fiscal 1999 year and fourth quarter increased by, respectively, approximately 3.2 million shares and 2.7 million shares, due primarily to the sale of Bluegreen common shares to Morgan Stanley Real Estate Fund III, L.P. and its affiliated real estate funds (collectively, "MSREF"). Bluegreen also announced that the fiscal 1999 fourth quarter marked the first time in Company history that timeshare sales exceeded 50% of total sales, reflecting the continued success of Bluegreen's strategy to expand its operations in this growing industry. Bluegreen anticipates that this trend will continue as existing timeshare properties mature and additional resorts are added to its timeshare portfolio. Fiscal 1999 timeshare sales soared 69.8% to a record $103.1 million from $60.8 million in fiscal 1998, while timeshare sales in the fiscal 1999 fourth quarter rose 35.3% to $28.2 million from $20.9 million in the prior year's like quarter. Higher timeshare sales for the 1999 year and fourth quarter are due primarily to increased revenues from existing resort properties and the emerging impact of the Company's two new off-site sales offices, which were opened during fiscal 1999. The impact of one full year of the operations of RDI Group, Inc. (acquired in September 1997) and the Company's 50% owned joint venture in Aruba (acquired in December 1997) also contributed to higher timeshare sales and greater resort operations revenue in fiscal 1999. Fiscal 1999 fourth quarter sales from the Company's residential land and golf division (lot sales) declined to $24.4 million compared to $27.2 million in last year's fourth quarter, primarily the result of a greater amount of sales being deferred under percentage-of-completion accounting along with fewer sales of scattered inventory in areas of the country which are no longer part of Bluegreen's focused residential land business (known as "asset management properties"). Residential land and golf sales for fiscal 1999 increased 12.1% to $118.9 million from $106.1 million in fiscal 1998, due to a significantly greater amount of sales being recognized under percentage-of-completion accounting during the first three quarters of the fiscal year as development was completed on certain projects. This increase in deferred revenues was partially offset by approximately $3.6 million fewer sales of asset management properties. Higher selling, general and administrative expenses ("S,G&A") as a percentage of total revenues in the fiscal 1999 fourth quarter and year are due primarily to the increase in timeshare division sales as a percentage of total Company revenues, as selling and marketing costs are greater for the timeshare division. In addition, the increase in S,G&A in both the year and fourth quarter results was impacted by start-up costs at the Company's two new offsite sales locations, its re-entry into the Orlando market and increased marketing costs at several of the Company's resorts. While higher S,G&A associated with this timeshare growth impacted fiscal 1999 fourth quarter results, higher timeshare sales also contributed to significant additions to the Company's notes receivable portfolio in fiscal 1999, which resulted in increased interest income and cash flow from sales of timeshare receivables. Interest income for fiscal 1999 rose to $14.8 million from $10.8 million last year, the result of greater amounts of excess invested cash along with a higher average notes receivables portfolio. For the fiscal 1999 fourth quarter, interest income was down slightly due to a decrease in net notes receivable as a result of the sale of $55.0 million of receivables during the year, offset by new notes generated from additional timeshare sales. George Donovan, President and Chief Executive Officer of Bluegreen, commented, "Fiscal 1999 was the most successful year in Bluegreen's history. Since implementing our timeshare growth strategy in fiscal 1994 we have generated more than $211 million in timeshare revenues and a ranking among the world's top-10 timeshare developers/operators. Our seasoned timeshare properties generated operating margins in excess of 16% during fiscal 1999. As we continue to expand our timeshare portfolio, it is important to note that we anticipate these more mature properties will have significantly lower marketing costs as a result of efficient in-house customer referral and owner trade-up programs. As the remainder of our properties mature, we believe that similar efficiencies will result and marketing costs at our newer properties should have less of an impact on overall results. "This past year we opened, acquired or began new construction on several new properties, including the acquisition of The Lodge Alley Inn, an historic hotel located in Charleston, South Carolina. This marks Bluegreen's first entry into the urban timeshare market. We also began the second phase of construction on Shore Crest Vacation Villas located in Myrtle Beach, South Carolina, which will produce an additional 6,552 timeshare intervals and is scheduled to be completed in June 1999. The groundbreaking for the six-story addition to Orlando's Sunshine Resort in Orlando, Florida also commenced this fiscal year and is planned for occupancy in December 1999. New construction is also ongoing at our existing resorts at Laurel Crest, Mountain Loft, Christmas Mountain Village and Shenandoah Crossing. In total, we believe we have sufficient land and zoning in place to build additional timeshare intervals which, once constructed and sold, will result in estimated remaining life-of-project sales of approximately $888 million, based on current pricing. "Another crucial development on the timeshare side of our business was the implementation of The Bluegreen Vacation Club, a new system that sells consumers points as opposed to traditional weekly vacation intervals. Timeshare owners may then utilize these points at any of Bluegreen's 25 Vacation Club resorts to suit their individual lifestyles and vacation desires. This new system provides timeshare owners with the flexibility they desire and can also generate additional, high margin revenues by selling existing members additional points and converting prior fixed week owners to the Vacation Club. We also strengthened our marketing efforts with the introduction of our Bluegreen Air marketing program, opening of new sales offices in Louisville and Cleveland, launching of the Sampler Program and the recent acquisition of A Plus Marketing in Orlando, Florida." Mr. Donovan continued, "Residential land and golf sales, located principally in Texas, North Carolina, Arizona, Colorado, Tennessee, Virginia and Wisconsin, also grew during fiscal 1999. This division remained a steady, predictable producer of revenues and cash flow. During fiscal 1999 we commenced development of new projects including The Lookout at Brushy Creek, Meadows at Castlewood and Christmas Mountain Village Golf Estates, a Bluegreen Golf Community. We also continued to sell in existing communities, such as our Woodlake Golf Community, Crystal Cove and our flagship Winding River Plantation golf community. Also during fiscal 1999 we opened the first 18 holes and commenced construction of nine additional holes at Carolina National Golf Club located at Winding River Plantation. Total estimated remaining life-of-project sales for our residential land and golf division are approximately $210 million, based on current pricing. All current projects are consistent with the Company's strategic vision of developing high-quality, residential properties located in the `exurbia' areas near major cities in proven markets that we understand." "We also partnered with some of the most respected names in the financial community this past year," noted Mr. Donovan. "During fiscal 1999 we completed a Rule 144 A private offering of $110 million in aggregate principal amount of 10 1/2% Senior Secured Notes due 2008, the proceeds of which were used to repay existing indebtedness and for working capital. Bluegreen also became one of the first companies in our industry to utilize a securitization product whereby the Company, at its option, can sell, in increments greater than $10 million, its timeshare receivables into a two-year, $100 million non-recourse timeshare receivables facility with Heller Financial, Inc. ("Heller"). To date Heller has purchased approximately $55 million of Bluegreen's timeshare receivables under this facility. This off-balance sheet financing simplifies our capital structure, reduces our loan exposure and increases our cash flow. In August 1998 we signed a milestone agreement with Morgan Stanley Real Estate Fund III, L.P. ("MSREF") and its affiliated real estate funds, wherein MSREF agreed to purchase up to $50 million in Bluegreen common stock over an 18-month period at a fixed purchase price of $8.50 per share. To date, MSREF has purchased $35 million, or approximately 4.1 million shares of Bluegreen stock. The proceeds from these purchases have been earmarked to fund the expansion of our business, including the pursuit of acquisitions, and for general corporate purposes. The remaining $15 million is anticipated to be funded during fiscal 2000, which will continue to improve our cash position, book value and equity ratios. These agreements and others like them have contributed to the strongest balance sheet in Bluegreen's history at March 28, 1999, highlighted by cash and cash equivalents of $55.6 million, book value of $4.76 per share and a debt-to-equity ratio of 1.49:1. We believe that we are well-capitalized to fund our growth strategy and are optimistic about our prospects for future growth." The Company also announced that it has, to date, repurchased approximately 1.3 million shares of its common stock, pursuant to its previously announced share repurchase program of up to 2.0 million shares of Bluegreen common stock. Bluegreen is one of the leading companies engaged in the acquisition, development, marketing and sale of timeshare resorts and residential land. The Company's timeshare resorts are located in a variety of popular vacation destinations including Orlando, Florida; the Smoky Mountains of Tennessee; Myrtle Beach, South Carolina; Charleston, South Carolina; Branson, Missouri; Wisconsin Dells, Wisconsin; and Aruba, while its land operations are predominantly located in the Southeastern and Southwestern United States. This press release contains forward-looking statements. Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. The words "believe," "expect," "intend," "anticipate," and "project," and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying such forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, regulatory changes, national or regional economic conditions that can affect the real estate market, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. BLUEGREEN CORPORATION FOURTH QUARTER EARNINGS REPORT (In Thousands, Except Per Share Data) Three Months Ended March 28, March 29, 1999 1998 REVENUES Timeshare sales $ 28,242 $ 20,871 Lot sales 24,385 27,241 Home sales 459 1,645 ------------ ------------- Total sales 53,086 49,757 Other resort and golf operations revenue 3,941 2,528 Interest income 3,443 3,495 Gain on sale of receivables 547 - Other income 182 192 ------------ ------------- Total operating revenues 61,199 55,972 ------------ ------------- EXPENSES Cost of sales: Timeshare cost of sales 6,580 5,507 Lot cost of sales 11,295 11,951 Home cost of sales 433 1,704 ------------ ------------- Total cost of sales 18,308 19,162 Cost of other resort and golf operations 3,417 1,710 Selling, general and administrative expense 29,124 25,433 Interest expense 2,894 2,769 Provisions for losses 1,239 1,653 ------------ ------------- Total operating expenses 54,982 50,727 ------------ ------------- Income before taxes 6,217 5,245 Provision for income taxes 2,330 2,029 Minority interest in income of consolidated subsidiary 638 200 ------------ ------------- Income before extraordinary item 3,249 3,016 Extraordinary loss on early extinguishment of debt, net of income taxes - - ------------ ------------- Net income $ 3,249 $ 3,016 ============ ============= Net income per share: Basic: Income before extraordinary item $ 0.14 $ 0.15 Extraordinary loss on early extinguishment debt, net of income taxes - - ------------ ------------- Net income $ 0.14 $ 0.15 ============ ============= Diluted: Income before extraordinary item $ 0.13 $ 0.13 Extraordinary loss on early extinguishment debt, net of income taxes - - ------------ ------------- Net income $ 0.13 $ 0.13 ============ ============= Weighted average number of common and common equivalent shares: Basic 23,084 20,389 ============ ============= Diluted 29,648 26,983 ============ ============= Year Ended March 28, March 29, 1999 1998 REVENUES Timeshare sales $ 103,127 $ 60,751 Lot sales 118,908 106,071 Home sales 3,781 5,837 ------------ ------------- Total sales 225,816 172,659 Other resort and golf operations revenue 12,832 4,113 Interest income 14,804 10,819 Gain on sale of receivables 3,692 - Other income 522 312 ------------ ------------- Total operating revenues 257,666 187,903 ------------ ------------- EXPENSES Cost of sales: Timeshare cost of sales 25,013 15,808 Lot cost of sales 53,183 52,703 Home cost of sales 3,299 5,928 ------------ ------------- Total cost of sales 81,495 74,439 Cost of other resort and golf operations 12,023 3,219 Selling, general and administrative expense 116,555 80,959 Interest expense 12,922 9,281 Provisions for losses 2,754 3,002 ------------ ------------- Total operating expenses 225,749 170,900 ------------ ------------- Income before taxes 31,917 17,003 Provision for income taxes 12,610 6,803 Minority interest in income of consolidated subsidiary 585 200 ------------ ------------- Income before extraordinary item 18,722 10,000 Extraordinary loss on early extinguishment of debt, net of income taxes (1,682) - ------------- ------------- Net income $ 17,040 $ 10,000 ============ ============ Net income per share: Basic: Income before extraordinary item $ 0.85 $ 0.49 Extraordinary loss on early extinguishment debt, net of income taxes (0.08) - ----------- ------------- Net income $ 0.77 $ 0.49 ============ ============= Diluted: Income before extraordinary item $ 0.72 $ 0.46 Extraordinary loss on early extinguishment debt, net of income taxes (0.06) - ----------- ------------- Net income $ 0.66 $ 0.46 ============ ============= Weighted average number of common and common equivalent shares: Basic 22,167 20,219 ============ ============= Diluted 28,909 25,746 ============ ============= BLUEGREEN CORPORATION Condensed Consolidated Balance Sheets ( in 000's) March 28, March 29, 1999 1998 ---- ---- ASSETS Cash and cash equivalents $ 55,557 $ 31,065 Contracts receivable, net. 20,167 15,484 Notes receivable, net 68,548 81,293 Inventory, net 142,628 107,198 Investment in securities 17,106 10,941 Other assets 19,064 9,759 Property and equipment, net 26,052 17,223 -------------- ------------ Total assets $ 349,122 $ 272,963 ============== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Accounts payable, accrued liabilities and other $ 26,226 $ 24,288 Deferred income 5,792 8,392 Deferred income taxes 18,850 8,011 Lines-of-credit and notes payable 27,499 121,090 10.50% senior secured notes payable 110,000 - 8.00% convertible subordinated notes payable 6,000 6,000 8.25% convertible subordinated debentures 34,371 34,739 ------------- ----------- Total liabilities 228,738 202,520 Minority interest 1,035 450 Total shareholders' equity 119,349 69,993 -------------- ------------ Total liabilities and shareholders' equity $ 349,122 $ 272,963 ============== ============  